Delhi District Court
Cbi vs . 1 Jitender Nath Malhotra, on 27 November, 2013
IN THE COURT OF MANOJ JAIN: SPECIAL JUDGE (PC ACT) (CBI)
SOUTH DISTRICT: SAKET DISTRICT COURTS
NEW DELHI
CC No. 32/2011
RC 2(E)/2005/EOW-I/DLI
U/s 120B r/w 420/467/471 & 477A IPC
& 13 (2) r/w 13(1)(d) of PC Act
Unique ID No. 02406R1035202007
CBI Vs. 1 Jitender Nath Malhotra,
Son of Sh. P.N. Malhotra,
Resident of 33-B, Cozy Apartment,
Sect-9, Rohini, Delhi-85.
(Proclaimed Offender)
2 Sumit Tandon,
Son of Sh. P.N. Tandon,
Resident of C-69, 2nd Floor,
Mahendru Enclave,
Opposite Model Town, Delhi.
3 Reema Tandon,
Wife of Sh. Sumit Tandon,
Resident of C-69, 2nd Floor,
Mahendru Enclave,
Opposite Model Town, Delhi.
4 Pran Nath Tandon,
Son of late Sh. H.N. Tandon,
Resident of Flat No. 263,
Prabhavi Apartments, Plot No. 29,
Sector-10, Dwarka, New Delhi-45.
(Since expired)
5 Sanjay Kishore Sharma,
Son of late Sh. R.K. Sharma,
Resident of H. No. 99, Shivaji Park,
Delhi-26.
i) Date of Institution : 28.09.2007
ii) Date on which case was received on
Transfer by this Court : 18.10.2011
iii) Date of framing of charge : 27.10.2009
iv) Date of conclusion of arguments : 27.11.2013
v) Date of Judgment : 27.11.2013
CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 1 of 49
Memo of Appearance
Sh. U.C. Saxena, learned Senior Public Prosecutor for CBI.
Sh. Ajay Burman, learned counsel for accused Sumit Tandon and
Reema Tandon.
Sh. Jai Gupta, learned counsel for accused Sanjay Kishore Sharma.
JUDGMENT
STORY OF PROSECUTION 1.0 Accused J.N. Malhotra was Manager in Union Bank of India (hereinafter referred to as "UBI"). He headed Kirti Nagar Branch of UBI from 09.09.2000 to 11.12.2003 and thereafter Rohini Branch from 15.12.2003 to 04.02.2004.
1.1 M/s Reema Polychem was a proprietorship concern of accused Reema Tandon. Such firm was dealing in chemicals and solvents. It opened one CC Account No. 128006 with UBI Kirti Nagar Branch and sought for cash credit (CC Limit) of Rs. 23 lacs on 30.11.2002 which was sanctioned by accused J.N. Malhotra, the then Branch Manager of UBI Kirti Nagar Branch on 01.12.2002. Such limit was eventually enhanced to Rs. 30 lacs as per the approval dated 17.02.2003. Since accused J.N. Malhotra could not have granted any further enhancement beyond Rs. 30 lacs without the approval of Regional Office, he, instead, sanctioned secured overdraft against FDR for Rs. 20 lacs knowing fully well that account was already undisciplined and irregular and was showing overdue of more than Rs. 50 lacs. There were heavy cash withdrawals indicating siphoning off the amount. A sum of Rs. 2,86,74,735/- was withdrawn by accused Reema Tandon and her husband Sumit Tandon (as authorized signatory) in cash by way of self-cheques and most of the cash amount had been collected by accused Pran Nath Tandon (father of accused Sumit Tandon). Cheques worth Rs. 19,74,800/- had been CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 2 of 49 issued in the name of M/s Diksha Trading Company (owned by accused Sumit Tandon).
1.2 Accused Sanjay Kishore Sharma was proprietor of M/s S.K. Petrochem and two cheques issued by his said proprietary concern favouring M/s Reema Polychem were purchased by UBI Kirti Nagar Branch but returned dishonoured due to insufficient funds. These cheques were inappropriately purchased by accused J.N. Malhotra and he also deliberately delayed the transmission of cheques to show undue favour to M/s Reema Polychem. These cheques were found to be accommodative in nature and revealed conspiracy amongst accused Sumit Tandon, Reema Tandon, Pran Nath Tandon, J.N. Malhotra and Sanjay Kishore Sharma. There was outstanding of Rs. 65.33 lacs in said account of M/s Reema Polychem.
1.3 It will not be out of place to mention here that accused J.N. Malhotra had also sanctioned various other loans which too remained unpaid. These are as under:-
S. Name of Beneficiary Type of Loan Amount Outstanding No. 1 Sumit Tandon Home Loan Rs. 9.68 lacs 2 Sumit Tandon Car Loan Rs. 1.98 lacs 3 Reema Tandon Car Loan Rs. 3.28 lacs 4 Reema Polychem SSI Scheme Rs. 58,000/-
5 Sumit Tandon Personal Loan Rs. 34,000/-
1.4 Accused J.N. Malhotra got transferred to Rohini Branch of UBI and accused Sumit Tandon opened an account (Account No. 14016) in the name of M/s Diksha Trading Company with said Branch. A cheque of Rs.
2,93,850/- issued by M/s S.K. Petrochem in favour of M/s Diksha Trading Company was purchased by UBI Kirti Nagar Branch but it also returned CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 3 of 49 unpaid and accused J.N. Malhotra permitted temporary overdraft without any security and there was outstanding of Rs. 4.68 lacs in said account.
1.5 Two more cheques issued by accused Sanjay Kishore Sharma as proprietor of M/s S.K. Petrochem favouring M/s Diksha Trading Company were purchased by accused J.N. Malhotra and were credited to the account of M/s Diksha Trading Company but the concerned bank of M/s S.K. Petrochem informed UBI, Rohini Branch that they had not received two cheques for payment whereas Cheque Collection Register reflected to the contrary. Transactions between M/s Diksha Trading Company and one M/s Petcon Thermal Pvt. Limited (of which Sanjay Kishore was director) were also found to be of fraudulent nature.
1.6 Accused J.N. Malhotra also issued three Letter of Credit (LC) for Rs. 30 lacs in all from said two branches on behalf of M/s Reema Polychem and M/s Diksha Trading Company and these LCs were not held on record and were found to be fraudulent and bogus.
1.7 Sh. U.S. Kohli, Chief Vigilance Officer of UBI made a complaint to Economic Offences Wing of CBI and on the basis of complaint dated 25.01.2005, FIR was registered by CBI on 28.01.2005 against accused J.N. Malhotra, Sumit Tandon, Reema Tandon and two other persons, namely, Geeta Narang and Shyam Narang.
1.8 Comprehensive investigation was carried out. It was found that Shyam Narang and Geeta Narang had merely offered their property as collateral security and acted as guarantor and there was no evidence showing their involvement in the siphoning off bank funds.
CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 4 of 491.9 Investigation brought to fore the crude and shocking involvement of accused J.N. Malhotra. He had shown unjustifiable and indigestible favour to the borrowers and acted in a covert and clandestine manner by not allowing any other official/junior officers of the bank to know about the transactions. So much so, he prepared most of the debit/credit vouchers himself and did not obtain signatures of any other bank official and passed various vouchers all by himself without second signatures. He issued cheques from loose booklets and offered SOD (FDR) without any security and raised fictitious entries. Accused J.N. Malhotra was dismissed by the bank albeit fact remains that he absconded immediately i.e. w.e.f. February 2004 and could never be contacted by CBI much less apprehended.
1.10 Investigation revealed that M/s Reema Polychem had submitted bogus audited reports purportedly issued by M/s Bubber and Jindal Company which reflected the mal-intention of the borrower right from the inception. It was also found that there was clear-cut criminal conspiracy amongst accused J.N. Malhotra, Sumit Tandon, Reema Tandon, Pran Nath Tandon and Sanjay Kishore Sharma and pursuant to such criminal conspiracy, facilities were fraudulently obtained from the bank and the amount so received was siphoned off and thereby bank was defrauded and cheated. The following amount was found outstanding:-
S. No. Fraudulent/illegal transactions Amount
M/s Reema Polychem
1 CC Account No. 128006 outstanding including cheque purchase (in Rs. 65,33,000/-
Kirti Nagar Branch)
2 Term Loan of Rs. 1 lac (Union SSI) (in Kirti Nagar Branch) Rs. 34,000/-
3 Adjustment of credits made to M/s Reema Polychem by fictitious Rs. 13,04,198/-
loan accounts (in Rohini)
4 Fictitious loan account no. 623 for Rs. 6 lacs of M/s Urilab Systems Rs. 6,00,000/-
Diagnostics (in Rohini Branch)
M/s Diksha Trading Company
CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 5 of 49
1 Cheque purchase & TOD (in Kirti Nagar Branch) Rs. 4,68,000/-
2 Cheque & Bill purchase (in Rohini Branch) Rs. 10,01,428/-
3 Letter of Credits issued but not paid (both branches) Rs. 30,00,000/-
Sumit Tandon (in Kirti Nagar Branch)
1 Union Miles (Car Loan) Rs. 3 lacs Rs. 1,98,000/-
2 Union Home (Housing Loan) Rs. 9 lacs Rs. 9,68,000/-
3 Union Comfort (Personal Loan) Rs. 1 lac Rs. 58,000/-
Reema Tandon (in Kirti Nagar Branch)
1 Union Miles (Car Loan) Rs. 3.30 lacs Rs. 3,28,000/-
Total Rs. 1,44,92,626/-
COGNIZANCE & CHARGES
2.0 Charge-sheet was filed in the Court on 23.09.2007.
2.1 Accused Shyam Narang and Geeta Narang were put in column
no. 2 as sufficient evidence did not come to the fore to link them with the aforesaid fraud.
2.2 Accused J.N. Malhotra (absconding accused), Sumit Tandon, Reema Tandon, Pran Nath Tandon (since expired) and Sanjay Kishore Sharma were ordered to be summoned.
2.3 Coercive process was issued against accused J.N. Malhotra and he was, eventually, declared proclaimed offender vide order dated 31.01.2009. Accused Pran Nath Tandon expired during the pendency of the matter. His death certificate was placed on record and proceedings qua him stood abated accordingly.
2.4 Accused Sumit Tandon, Reema Tandon and Sanjay Kishore Sharma vide order dated 21.10.2009 were ordered to be charged u/s 120B CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 6 of 49 r/w Section 420/467/471 IPC. Accused Sanjay Kishore Sharma was also directed to be charged for substantive offence u/s 420 IPC and accused Sumit Tandon and Reema Tandon were also separately charged for substantive offence u/s 420/467/471 IPC.
2.5 Charges were framed on 27.10.2009 and all the three accused pleaded not guilty and claimed trial.
2.6 It will not be out of place to mention here that this Court had suo moto exercising its power u/s 216 Cr.P.C. added charge u/s 13 (1) (d) r/w 13 (2) PC Act r/w Section 120B IPC. Accused Sumit Tandon, Reema Tandon and Sanjay Kishore Sharma pleaded not guilty to such added charge.
2.7 In terms of Section 217 Cr.P.C., both sides were given liberty to examine, recall or re-examine any witness in view of such additional charge. Prosecution, however, did not examine, recall or re-examine any witness. However, defence chose to further cross-examine PW4, PW5, PW7, PW14, PW16, PW18, PW20, PW23 & PW25.
PROSECUTION EVIDENCE 3.0 Prosecution was directed to adduce evidence and has examined 26 witnesses in all who can be classified as under:
(i) Officials from Union Bank of India.
(A) Related to Kirti Nagar Branch:
PW2 Sh. Rattan Lal Relia.
PW4 Sh. Kiran Kumar.
PW7 Sh. V.K. Varshney.
PW18 Sh. Rakesh Grover.
PW20 Sh. Raj Kumar Sharma.
PW23 Sh. D.K. Chatwal.
PW24 Sh. J.S. Basra.
CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 7 of 49
(B) Pertaining to Rohini Branch
PW3 Sh. Girish Kumar.
PW5 Sh. Rakesh Gupta.
PW8 Sh. Sat Prakash Gupta.
PW9 Sh. V.K. Sharma.
PW11 Sh. Ramesh Chandra Gupta.
PW21 Sh. Subhash Kumar Gupta.
(C) General
PW1 Sh. Jang Bahadur Lal Srivastava.
PW7 Sh. V.K. Varshney.
PW26 C.S.P. Narayanan.
(ii) Witness from other bank (s)
PW6 Sh. Gulshan Verma.
PW10 Sh. Ishwar Dass.
(iii) Private Witnesses
PW13 Sh. Kavya Kishore Tandon.
PW15 Sh. Ajay Kapur.
PW22 Sh. Rakesh Singhal.
PW26 Sh. Himanshu Singhal.
(iv) Other Witnesses
PW12 Sh. Roop Chand Jindal (for proving forgery in audit report). PW14 Sh. S. Naraynan (Chartered Accountant) PW17 Sh. Hemant Jai.
PW19 Sh. Ambrish Vashisht.
PW25 C.S.P. Narayanan (Investigating Officer).
STATEMENTS OF ACCUSED 4.0 All the accused pleaded innocence when they were examined u/s 313 Cr.P.C.
4.1 Accused Reema Tandon claimed that her husband-accused Sumit Tandon and her father-in-law were managing day-to-day affairs of M/s Reema Polychem and she had no knowledge about banking transactions and that she had merely gone to the bank for the purpose of signing some documents and did not know about the contents of such documents. She also desired to lead evidence in defence.
CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 8 of 494.2 Accused Sumit Tandon candidly admitted that he was managing the affairs of M/s Reema Polychem and that credit facilities of Rs. 30 lacs were sought. He, however, claimed that no secured overdraft (SOD) against FDR was ever sought. According to him, there were numerous cash withdrawals by self-cheques in which loose cheque-leaves had been used illegally by accused J.N. Malhotra, admittedly his relative, without their knowledge or consent. According to him, large amount had been withdrawn by accused J.N. Malhotra from said account of M/s Reema Polychem using loose cheques while forging signatures of Reema Tandon. According to him, J.N. Malhotra made bogus transfer entries of withdrawal from their account to other accounts and indulged in fraudulent transactions and recorded fictitious entries. As regard small loans, it was claimed that these were sanctioned as per law.
4.3 As regards account of M/s Diksha Trading Company, Sumit Tandon claimed that when accused J.N. Malhotra was transferred to Rohini Branch, he took undue advantage of the situation and manipulated the record and himself opened account in the name of M/s Diksha Trading Company without his knowledge and by forging his signatures. He claimed that J.N. Malhotra opened LCs in Rohini branch of his own. He claimed that he and his wife (Reema Tandon) had been rather cheated by accused J.N. Malhotra. He also desired to lead evidence in defence.
4.4 Accused Sanjay Kishore Sharma admitted that he was proprietor of M/s S.K. Petrochem but supplemented that such firm was in existence since 1957 and there were trading transactions running in crores between his concern and said two concerns i.e. M/s Reema Polychem and M/s Diksha Trading Company from 2002 till date as per duly audited account books. He claimed that various cheques had been issued on account of such CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 9 of 49 trading transactions and some of which might have returned unpaid but those were subsequently paid which is apparent as per the running account. He also claimed that he did not have any knowledge about the banking transactions carried out by M/s Reema Polychem and M/s Diksha Trading Company and had no idea as to how his some such cheques were shown purchased by UBI.
DEFENCE EVIDENCE 5.0 Accused Sumit Tandon and Reema Tandon examined DW1 Subhash Chander (Clerk, UBI, Kirti Nagar Branch), DW2 S.K. Gulati (Assistant Manager, UBI Rohini Branch), DW3 Ms. Saroj Chopra (Deputy Manager, PNB, Centralized Draft Payment Centre, Paharganj) and DW4 Devi Lal Meghwal (Record Keeper, DRT-III) in their defence.
5.1 Accused Sanjay Kishore Sharma moved application u/s 315 Cr.P.C. and was permitted to get himself examined.
RIVAL CONTENTIONS 6.0 Learned Prosecutor has contended that prosecution has been able to prove its case beyond shadow of doubt and from the testimony on record and various documents, it becomes very much evident that borrowers, in league with Sanjay Kishore Sharma, Pran Nath Tandon (since expired) and Bank Manager J.N. Malhotra (since absconding), hatched a pre-planned and calculated conspiracy and siphoned off huge amount and misutilized the funds and cheated the bank. According to prosecution, accused persons, who are facing trial at the moment, cannot be permitted to pass on the entire buck to the absconding accused and they themselves are also equally willing partners in the crime.
CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 10 of 496.1 Sh. Ajay Burman, learned defence counsel has defended accused Sumit Tandon and Reema Tandon and has claimed that they both are rather sufferers at the hands of accused J.N. Malhotra. According to him, it stands amply proved from the prosecution evidence itself that J.N. Malhotra had withdrawn huge amount and he had fabricated the record all by himself without any knowledge or consent of the borrowers and, therefore, borrowers cannot be hauled up for the misdeeds of accused J.N. Malhotra. He has out- rightly denied there being any symptom of conspiracy with accused J.N. Malhotra. According to him, J.N. Malhotra was having some wicked designs and he signal-handedly manipulated and fabricated the record and vanished with huge money.
6.2 Similarly, Sh. Jai Gupta has defended accused Sanjay Kishore Sharma and it has been argued by him that he has been unnecessarily roped in and entangled in criminal case whereas his firm had genuine transactions with M/s Reema Polychem and M/s Diksha Trading Company.
EVALUATION OF EVIDENCE 7.0 I have carefully considered the rival contentions and minutely gone through the entire material available on record.
7.1 Let me take up each fact one by one.
ALLEGED IRREGULARITIES AT KIRTI NAGAR BRANCH 8.0 I have carefully gone through the entire testimony led before me and at the very outset, I would not be hesitating even a bit in commenting that accused J.N. Malhotra is, principally and almost single-handedly, responsible CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 11 of 49 for the entire chaos and commotion. He seems to be the one who indulged in malpractices and displayed blatant misconduct. He misused and abused his office and committed various illegal acts and omissions and defrauded and cheated his own employer-bank. Curiously, he happens to be a close relative of accused Sumit Tandon and Reema Tandon and only it needs to be scruti- nized whether they both were also in league with J.N. Malhotra or not or whether they are justified when they claim themselves to be the victims at his hands.
8.1 As far as M/s Reema Polychem is concerned, it was, undoubtedly, a proprietary concern of accused Reema Tandon. However, merely because Ms. Reema Tandon happens to be the proprietor, she cannot be mechanically held liable for the alleged bungling in the account. It is required to be shown and established by prosecution that she was actively involved in the day-to-day affairs of such proprietary concern and that withdrawal was with her tacit knowledge and consent.
8.2 Curiously and astonishingly, charge-sheet itself depicts the hollowness of its case towards accused Reema Tandon. The opening page of charge-sheet would reveal that even as per the investigating agency, though accused Reema Tandon was sole proprietor of M/s Reema Polychem yet all the affairs of such firm were being looked after by Sumit Tandon.
8.3 I need not remind myself that investigating agency had reached such conclusion after the comprehensive investigation. If that was really so, prosecution should apprise the Court as to why accused Reema Tandon has been charge-sheeted when she was not involved with the affairs of the firm and rather her husband was at the helm of the affairs of such concern.
CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 12 of 49Account Opening Form, in original, of M/s Reema Polychem is found contained in D-5/1. Such Account Opening Form has not been proved by anyone but PW24 J.S. Basra, who was posted as Accountant in Kirti Nagar Branch, has made reference to such form. According to him, it is a partnership account signed by Reema Tandon at point A and signed by Sumit Tandon at point B. It contains signatures of both of them. It rather compounds the miseries of prosecution as it seems that prosecution itself is not clear as to what's the nature of composition of M/s Reema Polychem? I will though hasten to supplement that even as per such account opening form, said firm was proprietorship concern of Reema Tandon and Sumit Tandon signed as GPA of Reema Tandon.
8.4 However, fact remains that CBI cannot be permitted to deviate even a bit from its stand. Court has to proceed on the assumption that thought Reema was its sole proprietor yet Sumit Tandon was managing its affairs and is responsible for all the activities related to such account.
8.5 Application moved by M/s Reema Polychem for grant of sanction of Rs. 23 lacs of CC Limit has been proved as Ex. PW18/A ( page
893). PW18 Sh. Rakesh Grover has proved such application dated 30.11.2002. According to him, such application was signed by Ms. Reema as authorized signatory of M/s Reema Polychem and he also identified her signatures on such application. He was posted in the same Branch as Deputy Manager and was second man in the Branch. However, as regards, grant of sanction of limit, he, in no uncertain terms, deposed that there was nothing irregular related to pre-sanction procedure and sanction of limit. He had rather himself also signed Credit Report (Ex. PW2/B) as Credit Investigator. It is a different story that even he is found to be utterly negligent in his job as he himself also admitted that he had signed credit report without CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 13 of 49 going through the contents and at the behest of Mr. Malhotra. Such credit report is also found to be in the hand of accused J. N. Malhotra. Thus, Mr. Grover is also found to be lax and consequently somewhat responsible for the instant mess.
8.6 Process Note has been proved as Ex PW18/B (page 819) and is found signed by accused J.N. Malhotra and PW18 Sh. Rakesh Grover. Ex. PW2/A (page 617) is the sanction advice dated 01.12.2002 whereby CC Limit of Rs. 23 lacs was sanctioned in favour of M/s Reema Polychem. Such limit was enhanced to Rs. 30 lacs as per Ex. PW7/A (page689) dated 17.02.2003. Sanction, on both the occasions, was accorded by accused J.N. Malhotra.
8.7 PW7 Sh. V.K. Varshney is an important prosecution witness. He was attached with Zonal Audit Office and had conducted the inspection of the Kirti Nagar Branch and he had come across various instances of irregularities on the part of J.N. Malhotra the then Branch Manager. Such irregularities, as per his deposition, are as under:
(i) SOD (FDR) Limit of Rs. 20 lacs was permitted without obtaining any security/documents.
(ii) Sh. J.N. Malhotra purchased cheques in favour of M/s Reema Polychem and M/s Diksha Trading Company. These cheques bounced. Both the aforesaid firms were irregular.
(iii) Letter of Credit was issued by him without any entry in the bank records and with his own single signature. As per procedure, the letter of credit is issued with the signatures of two officials.
(iv) He opened new accounts in some other fictitious name and credit was made into the account of M/s Reema Polychem.CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 14 of 49
(v) No reporting was thereupon made to the higher
officers.
8.8 In his further deposition, Sh. Varshney deposed that any such
loan application is required to be processed by junior officer/Advance Officer and thereafter the Branch Manager is obliged to sanction the same but in the present case accused J.N. Malhotra did not follow the procedure and sanctioned SOD (FDR) of Rs. 20 lacs all by himself and without obtaining any security or document.
8.9 There is no dispute that initially M/s Reema Polychem had opened account with Kirti Nagar Branch of UBI. It is also not in dispute that it sought facility of Rs. 23 lacs which was eventually enhanced to Rs. 30 lacs. However, mere opening an account or seeking limit/facilities per se is not an offence.
8.10 According to prosecution, there were huge withdrawals and such cash withdrawals itself indicate that the facilities had been sought with some ulterior motive and the funds were misutilized and were not used for the purpose of loan. According to prosecution, a sum of Rs. 2,86,74,735/- had been withdrawn by Reema Tandon and Sumit Tandon in cash by means of self-cheques and most of the cash amount had been collected by Sh. Pran Nath Tandon (Father of Sumit Tandon). Undoubtedly, if such allegation is read in isolation, it would certainly create a prejudicial impact in the mind of the Court but when read in totality, the picture, which emerges out, is totally to the contrary. I can understand and imagine existence of ulterior motive if there are withdrawals only. However, the case before me is different as there are huge cash-deposits also in the same account of M/s Reema Polychem.
CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 15 of 498.11 PW18 Rakesh Grover, second man in the Branch has deposed that cash withdrawals through self-cheques were of Rs. 2,86,74,735/- through different 89 entries. He also admitted that there were total 185 entries of cash deposit where a total sum of Rs. 4,89,71,100/- were deposited. He was shown statement of account Ex. PW18/DA (D5/2) and he claimed that aforesaid fact regarding withdrawal and deposit was correct. In such a situation, mere withdrawal by self-cheques will not be labelled as penal.
8.12 Undoubtedly, self-withdrawals on numerous occasions may somewhat indicate that the funds are being utilized for some different purpose. It may even amount to siphoning off the funds but corresponding large cash-deposit entries nullify the real impact of cash-withdrawal in present context. Moreover, CBI has failed to place on record any circular or bank- guideline proscribing such cash withdrawal. Rather, I feel that on some occasions, cash withdrawal may be necessary for making payment of salary, wages, purchase of raw material on urgent basis, sundry expenses etc. 8.13 However, there is yet another twist in the case as it has come on record that a large number of such self-cheques were, in fact, drawn by accused J.N. Malhotra all by himself, processed and cleared by him single handedly and possibly without the knowledge and consent of the proprietor of the account.
8.14 Again, I revert to the testimony of PW18 Rakesh Grover. His testimony would indicate that various loose self-cheques were used by accused J.N. Malhotra for withdrawing cash from the said account of M/s Reema Polychem. As per common banking practice and even as per PW18 Rakesh Grover, if any customer fails to bring its cheque-book, it can make request for issuing loose cheque and such loose cheque-leaf is then given to CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 16 of 49 such applicant from a separate cheque-book or from a cheque book of any other account lying closed. He also deposed that such loose cheques are given in emergency or extraordinary situation only and not in routine. He also admitted that in the present case, loose cheques were used on number of occasions. It also admitted case of prosecution that whenever any loose cheque is issued, an entry is made in the register to such effect. No such register has been placed before the Court by CBI.
8.15 PW25 C.S.P. Narayanan is the investigating officer. He was cross-examined at length and when questioned about such register, he claimed that he did not remember whether he had seen any such register and whether he had seized any such register. He was asked to go through the entire record and after going through the entire record, he deposed that no such register was seized by him. He also claimed that he did not remember whether any banking instructions regarding issuance of loose cheques were also collected by him during the investigation. So much so, he even did not send signatures appearing in such loose cheques to handwriting expert for comparison. He did not take specimen signatures of accused Sumit Tandon and Reema Tandon and did not make any attempt to get the same compared with the handwriting and signatures appearing on such loose cheques/self cheques.
8.16 PW18 Rakesh Grover has admitted in his cross-examination that as per the circular issued by Reserve Bank of India, loose cheques can be issued to the account holder only when account holder comes personally with a requisition in this regard. IO C.S.P. Narayanan has admitted in cross- examination that it was learnt that during investigation stage itself that some of the cheques were filled by accused J.N. Malhotra and these cheques had been cancelled/passed singularly by him and even the amount under such CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 17 of 49 cheques was withdrawn and received by J.N. Malhotra. He also admitted that accused J.N. Malhotra had used loose cheques for such purpose. He also admitted that some of such cheques were not even signed by the account holder and some cheques had not been cancelled by the authorized official.
8.17 It seems to me that investigating agency was somehow convinced during the investigation that such withdrawals were none other than by the concerned account holder but the facts emerging out even from the bare statements u/s 161 Cr.P.C. tell a different tale and it becomes apparent that number of loose leaves were used by J.N. Malhotra alone for the withdrawal of cash amount from said account of M/s Reema Polychem.
8.18 No application by the account holder for supplying loose leaf is found to be there. Various such loose leaves contain handwriting of accused J.N. Malhotra and it becomes very much apparent that accused J.N. Malhotra had himself withdrawn the money from said account of M/s Reema Polychem illegally and unauthorizedly. He was the Branch Manager and was in a position to manipulate and manage everything.
8.19 Moreover, it was expected from the prosecution that it would, at least, intimate the Court as to which particular cheque books had been issued to the account holder. No prosecution witness has bothered to throw any light on this score at all.
8.20 DW-1- Sh. Subhash Chander, Clerk, Union Bank of India, Kirti Nagar has been examined by defence. He was asked to give details of various cheque books issued to M/s Reema Polychem and he also produced Loose-cheque Issuance Register.
CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 18 of 498.21 He, curiously enough, deposed that loose cheque register and related documents i.e. loose cheque request letters pertaining to account no. 128006 of M/s Reema Polychem for the period 01.12.2001 to 31.01.2004 maintained in Branch were seized by the CBI. Fact, however, remains that no such record has submitted by CBI. Either the witness has deposed incorrectly or there is deliberate suppression of facts by CBI.
8.22 This witness also deposed that following cheque books were issued to the account holder i.e. M/s Reema Polychem:-
S.N. Date Serial Number of Page Number of Exhibit Number Cheque Register 1 18.10.2002 43351-400 103 Ex. DW1/C 2 12.12.2002 45101-45150 103 Ex. DW1/D 3 16.04.2003 49701-49750 106 Ex. DW1/E 4 09.06.2003 52351-52400 108 Ex. DW1/F 5 13.11.2003 60101-60150 113 Ex. DW1/G 8.23 Undoubtedly, if any cheque leaf, not forming part of said series, is found used, it would indicate use of loose leaf.
8.24 Defence witness also brought register Ex DW1/X which seems to be the only available register containing entries for the period 2002 to 2006 with respect to issuance of loose cheques. He was then asked about 28 loose cheques and to clarify whether the account holder had made any request for issuance of any such loose leaf and whether there was any entry pertaining to said loose cheques in the register brought by him. He deposed that there was no entry in respect to issuance of said loose cheques in register. Thus, there CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 19 of 49 is no entry in the register whereby the party had acknowledged the receipt of loose cheque. No written request for issuance of looses cheque is either found to be in existence.
8.25 PW18 Rakesh Grover, in his exhaustive deposition, made reference to various cheques. According to him, some such cheques had been written by J.N. Malhotra himself and cancelled by him. In the banking parlance, the cancellation of cheques means passing of the cheque for clearance. PW18 Rakesh Grover has deposed that he was able to identify handwriting and signatures of Sh. J.N. Malhotra as he had seen him writing and signing during discharge of his official duties. According to him, all such cheques had been filled by Sh. J.N. Malhotra. These cheques having handwriting of accused Sh. J.N. Malhotra are as under:
S. Cheque Date Amount Written/ approved by D No. Exhibit No. No. No. 1 13682 11.02.02 3 lacs J.N. Malhotra D-10 (A) (23) PW18/29 2 54859 03.09.03 30,000/- Written & signed by J.N. Malhotra D-10 (A) (68) PW18/30 3 52384 29.07.03 3 lacs Approved by J.N. Malhotra D-10 (A0 (51) PW18/31 4 52385 29.07.03 5 lacs J. N. Malhotra D-10 (A) (50) PW18/32 5 36141 03.07.03 5 lacs J.N. Malhotra D-10 (A) (43) PW18/33 6 32530 27.10.03 80,000/- J.N. Malhotra D-10 (A) (77) PW18/34 7 56870 02.12.03 37,500/- J.N. Malhotra D-10 (A) (87) PW18/35 8 09498 11.12.03 70,000/- J.N. Malhotra D-10 (A) (89) PW18/36 9 09483 29.10.03 50,000/- J.N. Malhotra D-10 (A) (79) PW18/37 10 77298 13.03.03 1,22,000 Written by J.N. Malhotra but no D-10 (A) (28) PW18/38 approval endorsement for payment 11 45143 18.01.03 8,50,000 J.N. Malhotra D-10 (A) (9) PW18/39 12 45121 28.12.02 6 lacs Written by J.N. Malhotra D-10 (A) (4) PW18/40 approved by R.L. Relia 13 06614 20.01.03 1 lac Written by J.N. Malhotra D-10 (A) (11) PW18/41 approved by R.L. Relia 14 49933 05.09.03 42,000 J.N. Malhotra D-10 (A) (67) PW18/42 15 54871 21.10.03 50,000 Written by J.N. Malhotra D-10 (A) (76) PW18/43 approved by R.L. Relia 16 19440 02.08.03 2,65,000 Written by J.N. Malhotra but no D-10 (A) (54) PW18/44 CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 20 of 49 approval endorsement for payment.
17 54852 16.08.03 10,000 Unsigned cheque D-10 (A) (61) PW18/45
18 20492 20.08.03 25,235 J.N. Malhotra D-10 (A) (62) PW18/46
19 54867 13.10.03 1 lac Written by J.N. Malhotra but no D-10 (A) (71) PW18/47
approval endorsement for
payment.
20 56856 21.11.03 1,05,000 Approved by J.N. Malhotra D-10(A) (83) PW18/48
21 77226 01.03.03 25,000 Approved by J.N. Malhotra D-10 (A) (25) PW18/49
22 77211 10.02.03 6,50,000 Approved by none D-10 (A) (22) PW18/50
23 77297 04.03.03 6 lacs Approved by J.N. Malhotra D-10 (A) (26) PW18/51
24 85974 28.10.03 2,80,000 Approved by J.N. Malhotra D-10 (A) (78) PW18/52
25 52399 19.07.03 6,25,000 Approved by none D-10 (A) (46) PW18/53
26 20491 28.06.03 2,50,000 J.N. Malhotra D-10 (A) (42) PW18/54
Total 65,66,735/-
8.26 Even according to defence, there were following withdrawals
through loose cheques and such withdrawals were without any consent or knowledge of the account holder and Sh. J.N. Malhotra had dishonestly withdrawn the amount by using loose leaves. Such details are as under:
S.No. Cheque No. Date Amount in Rs. D Number Exhibit Number 1 014965 2003 4,00,000/- D-10(A)(33) PW7/DA 2 036129 24.05.2003 1,00,000/- D-(10(A) (37) 3 036132 05.06.2003 8,00,000/- D-10(A)(39) PW 18/14 4 020491 28.06.2003 2,50,000/- D-10(A)(42) PW18/54 5 036141 03.07.2003 5,00,000/- D-10(A)(43) PW18/33 6 019440 02.08.2003 2,65,000/- D-10(A)(54) PW18/44 7 035523 13.08.2003 15,000/- D-10(A)(59) 8 035524 16.08.2003 80,000/- D-10(A)(60) 9 054852 16.08.2003 10,000/- D-10(A)(61) PW18/45 10 020492 20.08.2003 25,235/- D-10(A)(62) PW18/46 11 049933 05.09.2003 42,000/- D-10(A)(67) PW18/42 12 054859 03.09.2003, 30,000/- D-10(A)(68) PW18/30 13 054867 13.10.2003 1,00,000/- D-10(A)(71) PW18/47 14 054871 21.10.2003 50,000/- D-10(A)(76) PW18/43 15 032530 27.10.2003 80,000/- D-10(A)(77) PW18/34 16 085974 28.10.2003 2,80,000/- D-10(A)(78) PW18/52 17 009483 29.10.2003 50,000/- D-10(A)(79) PW18/37 18 014571 17.11.2003 4,30,000/- D-10(A)(80) 19 014574 17.11.2003 1,00,000/- D-10(A)(81) 20 014575 19.11.2003 2,00,000/- D-10(A)(82) 21 056856 21.11.2003 1,05,000/- D-10(A)(83) PW18/48 22 056861 22.11.2003 2,00,000/- D-10(A)(84) PW18/27 23 056880 24.11.2003 2,00,000/- D-10(A)(85) PW18/28 24 056868 29.11.2003 4,00,000/- D-10(A)(86) PW18/22 CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 21 of 49 25 056870 02.12.2003 37,500/- D-10(A)(87) PW18/35 26 009498 11.12.2003 70,000/- D-10(A)(89) PW18/36 Total 48,19,735/-
8.27 Interestingly, in one cheque, the signatures of account holder are not there at all. In several cheques, there is no stamp of M/s Reema Polychem.
8.28 According to defence, cash withdrawal by way of self-cheques on some occasions was justifiable because nature of business of M/s Reema Polychem was such where cash was required for the purposes of purchase of zinc ash, a waste product used in manufacturing of zinc chloride.
8.29 Undoubtedly, whenever cheque is presented for encashment, it has to be presented at the counter where a token is issued and then stamp of the bank is put on the cheque along with token number and then cheque is sent for posting to ascertain availability of the funds and thereafter cheque is cleared. It seems to me that on various occasions in the present case, no such procedure was followed because loose leaves were used by accused J.N. Malhotra all by himself and while sitting in his cabin, he withdrew the money and pocketed the same as well.
8.30 PW18 Rakesh Grover has also admitted that in cheque Ex.
PW18/4 i.e. D-10 (A) (39), amount was initially mentioned as Rs. 5 lacs which was changed from Rs. 5 lacs to Rs. 8 lacs. There are no corresponding initials at the places where such alternations are found made and such cheque is also not from the cheque book issued to M/s Reema Polychem and Sh. Grover admitted that there was a possibility that signatures of Reema had been forged. Such cheque also does not bear stamp of M/s Reema Polychem. In his cross-examination, PW18 Rakesh Grover was confronted CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 22 of 49 with various other cheques whereby cash was withdrawn. All such cheques were not part of the regular cheque book issued to account holder and were rather loose leaves and the payment on all such occasions had been approved by accused J.N. Malhotra. PW18 Rakesh Grover admitted that loose cheque leaves had been used on number of occasions.
8.31 PW18 Rakesh Grover has also deposed that he could not say whether J.N. Malhotra had been withdrawing amount from various accounts without the knowledge and consent of account holder and had been falsifying their accounts by generating false entries.
8.32 Though in the next breath, he claimed that it was possible that J.N. Malhotra himself had forged loose cheques without the consent and knowledge of account holder and had withdrawn the amount mentioned under such loose cheques.
8.33 PW20 Sh. Raj Kumar Sharma was also posted in Kirti Nagar Branch and he had assisted Sh. J.N. Malhotra for a little while as J.N. Malhotra, despite transfer, had not handed over the charge to him. He also deposed in his cross-examination that after he took over the charge, he learnt that J.N. Malhotra had committed fraudulent transactions and had made fictitious entries in different accounts and committed fraud in many accounts.
8.34 PW23 Sh. D.K. Chatwal had joined Kirti Nagar subsequently i.e. in May 2005 as Branch Head and he did admit that CC Limit had been sanctioned in accordance with banking norms. He avoided the answer when he was confronted with the fact that Rs. 4.89 crores approximately had been deposited in such CC account by way of 185 cash deposit entries and merely claimed that statement of account be seen in this regard. He did admit that CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 23 of 49 cash withdrawal was not permitted in CC account but when asked whether there were any Rules to that effect, he failed to elaborate any further and merely stated that he was not carrying any such Rules. He also claimed that he had not given any such Rules or Guidelines to CBI either.
8.35 Be that as it may, even naked eyes would divulge that alleged signatures appearing on loose cheques are not of Reema Tandon at all. The manner and style of writing and signing is found to be evidently dissimilar. Curiously, bank otherwise doesn't clear the cheques unless the signatures tally completely. Here what to speak of matching, cheque was passed even when it had no signatures. Courtesy accused J. N. Malhotra. I don't find any reason or logic which may even remotely suggest that account holder was in league with him. Why would account holder allow these loose cheques debited in his account? If at all, there was some tacit consent or understanding, logically, account-holder would not have, at all, liked these entries to be recorded in his account. Situation might and could have been different if there was no entry, pertaining to loose cheques, in account of Reema Polychem.
FACILITY RELATED TO SOD (FDR) 9.0 Naturally, if anybody wants to avail any SOD (FDR), there has to be an application in writing to that effect and necessary security documents are also required to be provided to the bank to enable the bank to process such request and to accord the facility, if found eligible.
9.1 SOD (FDR) was also not sanctioned on the basis of any written request coming from the account holder. No document has been shown CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 24 of 49 which may suggest that there was any such request from the account holder.
9.2 As already noticed above, such SOD (FDR) was granted on 20.11.2003 as per Ex. PW23/A (page 291). As Branch Manager, accused J.N. Malhotra had already touched his outer limit as he had sanctioned CC Limit of Rs. 30 lacs. For extending the limit any further, he was required to obtain concurrence and approval of Regional Office. Such eventuality would have come into play only when there was any such application on behalf of M/s Reema Polychem.
9.3 PW16 Sh. A.K. Jain, who had carried out the inspection, has, in no uncertain terms, admitted in his cross-examination that he did not see any application of the account holder/ borrower for grant of any such SOD limit.
9.4 It has been admitted by defence that earlier CC Limit was sanctioned for Rs. 23 lacs which was later on enhanced to Rs. 30 lacs. According to defence, M/s Reema Polychem had, vide its letter dated 17.02.2003 which is at page 887 of D-5/3, applied for additional CC Limit of Rs. 20 lacs and blank promissory note without any date but duly signed was also submitted in anticipation of approval of such additional limit. It seems to me that such blank promissory note, having signatures of accused Reema Tandon, has somehow been misutilized by Sh. J.N. Malhotra and Ex. PW16/A was perhaps manufactured and misused by accused J.N. Malhotra in order to portray and project as if the party has prayed for SOD (FDR) facility.
9.5 I have seen the testimony of PW4 Sh. Kiran Kumar as well. He was posted in Kirti Nagar Branch as Manager in 2004. As per the charge- sheet, limits were enhanced to Rs. 30 lacs on 17.02.2003 and thereafter SOD (FDR) of Rs. 20 lacs was passed and sanctioned in November 2003.
CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 25 of 49However, such fact stands demolished as according to PW4 Kiran Kumar, there was no SOD limit either availed by the borrower or sanctioned to borrower even upto 11.10.2004. In this regard, he also made reference to status report Ex. PW4/DB which was prepared by him.
9.6 Thus, if at all M/s Reema Polychem had prayed for any SOD (FDR) in November 2003 or if at all any such limit had been sanctioned in November 2003, PW4 Kiran Kumar would have certainly mentioned the same in status report prepared by him in October 2004 whereas status report Ex. PW4DB is conspicuously silent on this score. So much so, according to Sh. Kiran Kumar, no limit by way of SOD (FDR) was ever enjoyed or provided or sanctioned to the borrower which persuades me to hold that entry in this regard was also fabricated and created by none other than accused J.N. Malhotra.
9.7 Since there is no application for grant of any such facility and since such fact has been admitted by PW16 Sh. A.K. Jain, Inspecting Officer, I cannot robotically assume that there was corresponding request from the account holder in this regard particularly keeping in mind the facts of the present case.
9.8 I have seen the testimony of various other officials of Kirti Nagar Branch. As far as PW2 Ratan Lal Relia is concerned, he has merely referred to documents and has proved the handwriting and signatures of accused J.N. Malhotra. He has not mentioned even a word about any irregularity of any sort in his entire examination-in-chief. In his cross-examination, he did agree that for any loose cheque leaf, account holder is required to move appropriate application.
CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 26 of 499.9 PW4 Sh. Kiran Kumar had joined Kirti Nagar Branch subsequently and the relevant transactions in question are not of his tenure. According to him, after the limits are sanctioned, drawing power (DP) is calculated and it is also marked in the computer and the transactions are entered as per the drawing power shown/reflected in the system. He admitted that debit can be made within the drawing power and that the cash is also allowed to be withdrawn as per the requirement of the account holder.
9.10 It will be important to mention that the investigation took off on the basis of complaint of Mr. U.S. Kohli, Chief Vigilance Officer of UBI. His such complaint has been proved as Ex. PW1/A but fact remains that Sh. U.S. Kohli is not even cited as witness. His name is conspicuously missing from the list of witnesses and it seems to me that the was never examined u/s 161 Cr.P.C. Even PW25 IO C.S.P. Narayanan has admitted that Sh. Kohli was neither examined nor made witness in the present case. His testimony was of vital significance as he had carried out internal inspection. He could have thrown desired light with respect to controversy in question but he has not been examined by the prosecution. Rather the complaint of Mr. Kohli has been got proved through PW1 J.B.L. Srivastava who admitted in his cross- examination that he had no personal knowledge about any of the transaction in question and did not deal with the complaint personally.
9.11 I would also like to supplement that another internal inspection was carried out by PW7 Sh. V.K. Varshney as per instructions of Deputy General Manager and he also learnt about various irregularities committed by accused J.N. Malhotra. Such irregularities have already been extracted in the earlier part of my judgment. However, even such inspection report or audit report has not been produced before the Court. Such inspection report should have also been made part of the relied upon documents at least for CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 27 of 49 the benefit of the Court. IO also admitted that the audit inspection report of Varshney was not seen by him. Sh. Varshney must have learnt during the inspection that self withdrawals on numerous occasions were by way of loose cheques. He also knows that a separate register is required to be maintained in the bank where entries are recorded regarding issuance of loose cheque leaves. He, however, does not remember whether he had inspected any such register.
9.12 It has also come on record that if cheque amount is more than Rs. 50,000/- then there is requirement of signatures of two bank officials and without thereby being signatures of two bank officials, cheque is not passed but fact remains that there are various instances in the present case where cheque has been passed/cancelled solely by accused J.N. Malhotra despite the fact that the cheque was for an amount well above Rs. 50,000/-. It gives strong impetus to the defence contention that J.N. Malhotra himself was managing and manipulating everything while sitting in his cabin and was passing the cheques and may be usurping the money as well. Cross- examination of PW18 Rakesh Grover also clearly indicates that various cheques had been unauthorizedly passed by J.N. Malhotra and he also clearly hinted that signatures appearing in some of the cheques could have been forged by J.N. Malhotra and the withdrawals might be without the knowledge and consent of the actual account holder.
9.13 I have also seen the testimony of PW13 Sh. Kavya Kishore Tandon who is running business under the name and style of M/s Shakti Organics Chemical Industries Pvt. Ltd. and also of PW15 Sh. Ajay Kapur, Managing Director of M/s Shubham Chemicals & Solvents Ltd. Their testimony would clearly indicate that there were dealings with M/s Reema Polychem and M/s Diksha Trading Company. Such two concerns, owned by CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 28 of 49 PW13 Kavya Kishore Tandon and PW15 Ajay Kapur, were also dealing in chemicals and there are various transactions in CC account in question related to said concerns and, therefore, it cannot be said that funds were misutilized. In fact, there are various cheques contained in D-10 (B7) to (B21) and D-10 (C-10) to (C-18) and though prosecution has not got proved these cheques but these cheques drawn by M/s Reema Polychem do indicate that there were transactions with various other concerns and prosecution has not brought on record any material which may show that there was any dealing with any non-existent or bogus concern to indicate fraud & misutilization of funds.
SUBMISSION OF FORGED DOCUMENTS BY M/S REEMA POLYCHEM 10.0 As per the case of prosecution, M/s Reema Polychem while applying for Cash Credit Limit (CCL) from Kirti Nagar branch of Union Bank of India had also submitted bogus finance documents i.e. audit report for financial year 2001-2002 (dated 15.09.2002) purportedly issued by M/s Bubber Jindal & Company, Chartered Accountant, Darya Ganj, Delhi.
10.1 According to CBI, said audit report was found to be bogus as the actually issued audit report was dated 30.10.2002 and, therefore, there was an intention to cheat the bank right from the inception. According to Prosecutor, even otherwise, any Chartered Accountant could not have issued two separate audit reports in one financial year.
10.2 I have seen testimony of PW12 Sh. Roop Chand Jindal. He has deposed that M/s Bubber Jindal & Company was a partnership concern having 5-6 partners. He also admitted that M/s Reema Polychem was their client and audit report used to be prepared once a year. He also deposed CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 29 of 49 that audit report for 2001-2002 was prepared in the month of October, 2002 and was signed by his partner Sh. S. Narayanan. PW15 Sh. S. Narayanan has also graced the witness box and has deposed that he had prepared and signed audit report dated 30.10.2002 concerning M/s Reema Polychem and such report was based on the information given to him by the client/assessee. Such actual and genuine audit reports have been proved as Ex. PW12/A-1 and Ex. PW12/A-2. These are dated 30.10.2002 and bear signatures of Ms. Reema Tandon as proprietor and also of Sh. S. Narayanan as partner of M/s Bubber Jindal & Company.
10.3 Alleged bogus report dated 13.09.2002 i.e. Mark PA (page 903 to page 931 of D5/3) has been referred by both the said witnesses i.e. PW12 Sh. R.C. Jindal and PW14 Sh. S. Narayanan. As far as PW14 Sh. S. Narayanan is concerned, he claimed that such report was not prepared by him and he also claimed that he did not know as to who had prepared such report but supplementing that there could not have been two audit reports for one financial year. Such allegedly bogus report Mark PA bears signatures of Sh. R.C. Jindal as partner and Sh. Jindal has denied his signatures on such report.
10.4 Though Sh. Jindal has denied his signatures on such report Mark PA, I am of the considered opinion that it would have been definitely better had investigating agency sent such allegedly forged document to forensic expert for comparison with the admitted or undisputed signatures of Sh. Jindal. Nothing of that sort has been done. Sh. Jindal has admitted in his cross examination that his specimen signatures were not taken during the investigation. IO PW25 Sh. C.S. Prakash Narayanan has also admitted in his cross examination that he did not obtain specimen signatures of Sh. Roop Chand Jindal to verify whether the signatures denied by him were in fact his CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 30 of 49 signatures or not. Moreover, he did not even try to verify from the income tax department as to which particular balance sheet was actually filed with them by M/s Reema Polychem.
10.5 Undoubtedly, the details as mentioned in the genuine report and alleged bogus report don't match but I am not able to find out any real motive and purpose behind submitting a forged report. M/s Bubber Jindal & Company had been the auditor for M/s Reema Polychem and various bank officials have already deposed before the court that there was no irregularity in sanctioning the facility in favour of M/s Reema Polychem.
10.6 Keeping in mind the overall facts and circumstances of the present case, mere bald denial of signatures by Sh. R.C. Jindal would not, in itself, be the conclusive proof of forgery. Investigating agency should have sought forensic opinion and should have also ascertained from the income tax office as to which particular balance sheet had been submitted by M/s Reema Polychem with them.
10.7 Though according to CBI, any assessee could not have filed two audit reports in one financial report yet prosecution's own witness PW14 Sh. S. Narayanan of M/s Bubber Jindal & Company has himself admitted that even as per the provisions of Income Tax Act, a revised report could be filed by assessee at any time before the expiry of one year from the end of relevant assessment year or before the completion of assessment which rather indicates that there was still a remote possibility of there being two audit reports in one financial year.
CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 31 of 49ALLEGATIONS QUA M/S DIKSHA TRADING COMPANY 11.0 According to prosecution, Sumit Tandon, as proprietor of M/s Diksha Trading Company, had opened one current account in Rohini Branch after his co-accused J.N. Malhotra was transferred from Kirti Nagar Branch to Rohini Branch. Such account was introduced by J.N. Malhotra and was given number as 1408.
11.1 According to defence, no such account was ever opened by Sumit Tandon.
11.2 Account opening form has been proved as Ex. PW3/B1 (page 1617). Admittedly, it is found filled up by none other than accused J.N. Malhotra. No stamp of M/s Diksha Trading Company is found to be on the account opening form or on the specimen card (Ex. PW3/B2). There is no photograph or identity proof of Sumit Tandon either. So much so, J.N. Malhotra, himself, is found to be the introducer of the account and the manner in which the signatures of account holder are appearing on account opening form and specimen card, it gives a strong indication that perhaps accused J.N. Malhotra himself had opened such account and himself signed as account holder. Again, services of handwriting expert were not taken to reach any definite conclusion on this score.
11.3 PW3 Sh. Girish Kumar has categorically admitted in his cross- examination that such account opening form was in the hands of J.N. Malhotra. He also admitted that the photograph of account holder was also not there. He also admitted that no seal impression of such firm was there and there was no document related to identity proof, address proof, PAN number etc. of the alleged account holder. PW3 Girish Kumar made CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 32 of 49 reference to various debit vouchers and credit vouchers pertaining to M/s Diksha Trading Company and in his cross-examination, he also categorically admitted that even all such vouchers were in the handwriting of J.N. Malhotra.
11.4 Accused J.N. Malhotra was merely a Branch Manager and had no business or occasion, unless he had an ulterior motive, to fill up such vouchers. Since all these debit and credit vouchers were being filled up by J.N. Malhotra and since no identity proof, incorporation proof, residence proof, photograph etc. of account holder were collected and since accused J.N. Malhotra himself is found to be the introducer as well, it would be very hard for me to hold that such account had been, in fact, opened by accused Sumit Tandon or to hold accused Sumit Tandon responsible for deposit or credit entries appearing in such account.
11.5 PW21 S. Kumar Gupta is also important official of Rohini Branch. He was second man in Rohini Branch and he also expressed apprehension that purported signatures of account holder on specimen card seem to be of J.N. Malhotra on the basis of flow and handwriting. He also deposed that later on it was found that accused J.N. Malhotra had opened various accounts fraudulently and misappropriated the money by making fraudulent entries.
11.6 Testimony of PW8 Sh. Sat Prakash Gupta is also very important. He was working as Head Cashier in Rohini Branch. He was confronted with two cheques i.e. Ex. PW3/B15 (dated 21.01.2004 for Rs. 2,20,000/-) and cheque Ex. PW8/A (dated 03.01.2004 for Rs. 30,000/-). He categorically deposed that he had made payment with respect to said two cheques to Sh. J.N. Malhotra and Sh. Malhotra had collected the payment from him. He claimed that since the cheques were presented by J.N. Malhotra, he made CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 33 of 49 payment to Sh. Malhotra. This clearly indicates that it was accused J.N. Malhotra who was managing and manipulating the account pertaining to M/s Diksha Trading Company and was also pocketing the money.
FRAUDULENT OPENING OF LETTER OF CREDITS (LC) 12.0 According to prosecution, three LCs worth Rs. 30 lacs in all were issued under the signatures of accused J.N. Malhotra from both the said Branches i.e. Kirti Nagar Branch and Rohini Branch. These have been issued on behalf of M/s Reema Polychem and M/s Diksha Trading Company and there was no record of these LCs in the Union Bank of India. Thus, these were created merely on the papers and, therefore, a decision was taken that the payment under such LC would not be made. According to prosecution, these LCs were prepared by accused J.N. Malhotra in connivance with his co- accused.
12.1 These LCs were favouring M/s Adhunik Niryat Ispat Pvt. Ltd. and M/s Hotshot Industries and let me see as to what concerned witnesses have to offer in this regard.
12.2 PW22 Sh. Rakesh Singhal is the Managing Director of M/s Adhunik Niryat Ispat Pvt. Ltd. According to him, he did not know M/s Reema Polychem and M/s Diksha Trading Company but he came into their contact through his one friend Himanshu Singhal. Himanshu Singhal has been examined as PW26 and he happens to be the proprietor of M/s Hotshot Industries.
12.3 As per PW22 Rakesh Singhal, on the basis of request of Sh. Himanshu Singhal, he agreed to sell chemicals on the basis of letter of credit CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 34 of 49 and supplied two consignments of titanium dioxide. He has also made reference to the invoices. I have seen both such invoices.
12.4 Ex. PW22/A is invoice dated 06.12.2003 issued by M/s Adhunik Niryat Ispat Pvt. Ltd. in favour of M/s Diksha Trading Company and by virtue of such invoice titanium dioxide worth Rs. 9,99,250/- was supplied to M/s Diksha Trading Company under LC No. JNM/FEX/106/2003 dated 05.12.2003 of Union Bank of India, Kirti Nagar Branch, New Delhi. Copy of such LC is also contained in D-19 at page 2137. It is signed by Sh. J.N. Malhotra as Branch Head of Kirti Nagar Branch.
12.5 Ex. PW22/B is invoice dated 24.12.2003 and is favouring M/s Diksha Trading Company whereby titanium dioxide worth Rs. 10,38,750/- was supplied to M/s Diksha Trading Company under of LC No. VKG 113/2003 dated 24.12.2003 issued by J.N. Malhotra as Branch Head of Rohini Branch. Such LC is contained in D-19 at page 2163. It is also signed by J.N. Malhotra.
12.6 Bill of exchange was signed by PW22 Rakesh Singhal and one such bill of exchange has been proved as Ex. PW22/C (D-19 page 2141) and other is at page 2164.
12.7 Sh. Rakesh Singhal was maintaining account with Prashant Vihar Branch of Union Bank of India and his branch accordingly sent concerned documents to Kirti Nagar Branch for acceptance and same were accepted by UBI Kirti Nagar Branch and payment was also released which landed in CC account no. 67 of M/s Adhunik Niryat Ispat Pvt. Ltd. Delivery was also made. However, when on the due date, Prashant Vihar Branch requested for payment, payment was refused claiming that the documents CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 35 of 49 were not available in their records.
12.8 Accordingly, PW22 Rakesh Singhal had to repay money to his bank.
12.9 As regards these two LCs, as per defence, only one consignment dated 06.12.2003 for Rs. 9,99,250/- was received against first LC but the firm never received any consignment under the other invoice/LC related Rohini Branch. According to defence, no LC was opened by M/s Diksha Trading Company or M/s Reema Polychem with Rohini Branch.
12.10 Undoubtedly, second LC bearing no. VKG 113/2003 is of Rohini Branch.
12.11 According to defence, all these documents are manipulated and have been manufactured by J.N. Malhotra perhaps in connivance with Himanshu Singhal. I do feel that if M/s Diksha Trading Company was to make any request to the branch for opening of any LC, it would have certainly submitted some sort of application in writing. I have not been able to find out any such written request whereby M/s Diksha Trading Company had requested for opening of any such letter of credit. Moreover, there are no signatures of anyone on behalf of M/s Diksha Trading Company either on bill of exchange or on invoice pertaining to LC of Rohini Branch. Though according to Sh. Rakesh Singhal, titanium dioxide was duly supplied to M/s Diksha Trading Company yet fact remains that acknowledgment given by representative of M/s Diksha Trading Company is not found to be there. Merely because invoice is in the name of M/s Diksha Trading Company, it cannot be automatically inferred that goods were also received by M/s Diksha Trading Company. Such fact cannot be left for imagination. Prosecution was CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 36 of 49 duty bound to place on record some material to clearly indicate that goods were actually received by M/s Diksha Trading Company. Any such receiver of consignment, on receiving the goods, would surely make some sort of acknowledgment on the invoice but no such acknowledgment or any other documentary proof has been submitted or proved by the prosecution.
12.12 Qua the invoice pertaining to LC related to Kirti Nagar Branch, there is stamp and signatures of M/s Diksha Trading Company in token of acceptance but unfortunately, even such fact has not been appropriately proved by CBI. This is otherwise not going to reflect adversely as accused Sumit Tandon has admitted that the aforesaid LC was got issued by him from Kirti Nagar Branch. PW20 Sh. Rajkumar Sharma has also admitted in his cross-examination that such LC of Rs. 9.90 lacs was duly recorded even in the books of the Branch. This letter of credit (LC) is not even disputed by the defence.
12.13 However, as already noticed above as regards the other LC purportedly issued by Rohini Branch, there is no requisite clarity. Invoice has been proved as Ex. PW22/B but it does not bear signatures of anyone on behalf of M/s Diksha Trading Company.
12.14 PW26 Himanshu Singhal has deposed that he did not have any connection with M/s Reema Polychem but he had business dealings with M/s Diksha Trading Company. He also identified Sumit Tandon during the trial and deposed that Sumit Tandon had asked him to supply bio-fertilizers under letter of credit. He accordingly supplied bio-fertilizer worth Rs. 10 lacs to M/s Diksha Trading Company but when LC documents were submitted and his bank i.e. Lord Krishna Bank asked for the payment from UBI, payment was refused as there was no entry of LC in their record.
CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 37 of 4912.15 Such third LC no. JNM/FEX 178/2004 allegedly issued by Rohini Branch of UBI has been proved as Mark PZ/7 (Part of D-3 page 1137). It is again signed by accused J.N. Malhotra and the applicant is shown as M/s Diksha Trading Company and the beneficiary is M/s Hotshot Industries. It is of Rs. 10 lacs. However, I have not been able to find corresponding invoice or bill of exchange and there is no proof showing that any bio-fertilizers were ever supplied by M/s Hotshot Industries to M/s Diksha Trading Company.
12.16 When Himanshu Singhal was cross-examined by defence, he failed to even apprise the Court about the Sales Tax number of his own concern or any document from any authority permitting him to run or carry out any such manufacturing of chemicals. He has not even placed on record any document to show that he was proprietor of M/s Hotshot Industries. According to Himanshu, M/s Hotshot Industries was not in the business of manufacturing and was only in the business of trading and he supplemented that his firm had purchased bio-fertilizer from Tilak Bazar and then it was supplied to M/s Diksha Trading Company. He has not placed on record any document or detail regarding his procuring bio-fertilizer. He does not remember whether he had raised any invoice or submitted any document relating to receipt of goods by M/s Diksha Trading Company or even bill of exchange. Although he admitted that these documents were required to be given to his bank and were to be forwarded to the concerned bank which had opened LC but despite that nobody knows as to where such invoice, acknowledgment, bill of exchange pertaining to present transaction have vanished? He does not even remember whether he had given these documents or copies thereof to CBI. He also did not bring any such document with him in order to substantiate such stand. When asked whether he had any document or whether he had given any document to CBI to show delivery of bio-fertilizer to M/s Diksha Trading Company, he merely claimed CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 38 of 49 that one LC was opened and one cheque had been given to him which returned dishonoured. Surprisingly, he has not filed any claim against M/s Diksha Trading Company either.
12.17 I need not remind myself that charge of corruption, forgery and cheating are serious charges and in criminal trial, prosecution is required to prove all the ingredients beyond shadow of doubt. It will, therefore, not possible for me to hold M/s Diksha Trading Company accountable for any such allegedly fraudulent letter of credit. It is also important to mention that none of the three LCs are found prepared at the behest of M/s Reema Polychem and applicant is found to be M/s Diksha Trading Company in all the three LCs.
12.18 Moreover, since UBI had taken a decision not to honour these LCs, it seems that there was no actual monetary loss to the bank though commission of forgery and falsification of record on the part of accused J.N. Malhotra stands proved amply.
12.19 PW20 Sh. Raj Kumar Sharma has also categorically deposed that payment with respect to LC of Rs. 9.90 lacs of Kirti Nagar was recovered by UBI and, therefore, there was no loss to the bank.
12.20 PW25 IO-C.S.P. Narayanan had admitted in his cross- examination that he had not seized original letter of credits (LC) allegedly opened in Rohini Branch. He also admitted that he did not collect any document related to transportation details or delivery-proof of the goods related to such LCs. He also admitted that he did not come across any complaint from the beneficiaries of such LCs.
CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 39 of 49ISSUE RELATED TO M/S URILAB SYSTEMS DIAGNOSTICS 13.0 A very careful scrutiny of case set up by CBI and evidence led before the court would establish that accused J.N. Malhotra is, alone, respon- sible for creating various fictitious entries related to account of M/s Urilab Systems Diagnostics.
13.1 PW19 Sh. Ambrish Vashisht was running business under the name and style of M/s Urilab System Diagnostic from 247 (First Floor), Jain Nagar, Karala, Delhi-81. He held account with UBI Kirti Nagar Branch. He categorically deposed that he did not have any kind of dealings with M/s Reema Polychem and M/s Diksha Trading Company. He also does not know the name(s) of the directors/proprietors of aforesaid companies. He claimed that from February 2003 till the end of 2003, there were number of entries in statement of account which had not been at all transacted by his firm. According to him, these transactions were not in his knowledge and were without their permission. He also deposed that he had no connection with account bearing no. 31017 opened in Union Bank of India, Rohini Branch. According to him, without his knowledge, certain documents like KVPs, NSCs etch which were filed in Kirti Nagar Branch were got transferred by J.N. Malhotra to Rohini Branch and he came to know about said fact only when he visited the Branch of Kirti Nagar later on. He deposed that he had no knowledge about the entries made in said accounts and these were created by J.N. Malhotra without his knowledge and consent and J.N. Malhotra was responsible for such entries. In his cross examination, he also claimed that when he went to the bank subsequently, he found many customers who were crying like him that Mr. J.N. Malhotra had committed fraud and made fraudulent transactions in their accounts as well.
CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 40 of 4913.2 He also wrote a letter to Union Bank of India regarding aforesaid unauthorized and illegal transactions. Such Letter dated 14.02.2004 is con- tained in D-24 and has been proved as Ex. PW19/A. 13.3 Record reflects that Mr. J.N. Malhotra unauthorizedly debited Rs. 8 lacs on 29.07.2003 from the current account of M/s Urilab Systems Di- agnostics maintained with UBI, Kirti Nagar Branch and corresponding credit entry was made in the account of M/s Reema Polychem and in order to adjust the unauthorized debit of Rs. 8 lacs, a new fictitious CC account was opened on 29.10.2003 in the name of M/s Urilab Systems Diagnostics (Karala) and said account was debited by Rs. 8 lacs and corresponding credit was given to the actual account of M/s Urilab Systems Diagnostics. In the similar manner, another sum of Rs. 5 lacs was unauthorizedly credited in the account of M/s Reema Polychem and such total transferred amount of Rs. 13 lacs were with- drawn in cash on the same dates resulting in further loss to the bank. Loan account in the name of M/s Urilab Systems Diagnostics in the Rohini Branch was created showing KVPs and NSCs as security whereas M/s Urilab Sys- tems Diagnostics had not requested for any loan and said KVPs and NSCs were actually offered by them as security for loan taken by them and accused J.N. Malhotra misused the documents, all by himself, for adjustment purpose.
13.4 Even I.O. has deposed that owner/proprietor of M/s Urilab Sys- tems Diagnostics were not prosecuted because it was found that account was opened in the name of their firm without their knowledge and in all probabilit- ies, such account was opened by J. N. Malhotra in a wrongful manner.
13.5 Against such a background and with no other material, it will not be possible for me to connect any other co-accused responsible for such bungling and fictitious entries related to M/s Urilab Systems Diagnostics.
CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 41 of 49These were the handiwork of accused J.N. Malhotra alone and none else.
13.6 At least, evidence on record suggests so.
ROLE & INVOLVEMENT OF ACCUSED SANJAY KISHORE 14.0 Sh. Saxena Sr. PP for CBI has contended that there is apparent connivance of accused Sanjay Kishore. It has been argued that there were no genuine transactions between M/s S.K. Petrochem on one side and M/s Diksha Trading Company and M/s Reema Polychem on the other. It has been argued that the cheques issued by Sanjay Kishore were apparently accommodative in nature and were purchased by J.N. Malhotra in collusion with other co-accused persons. So much so, accused J.N. Malhotra deliberately delayed the transmission of two such cheques as he very well knew that had he sent those for realization, those would have returned dishonoured. It has been argued that all the documents which have been produced and submitted by accused Sanjay Kishore in his defence are fabricated documents which have been prepared subsequently in order to falsely project that M/s S.K. Patrochem was having long term relationship with said two concerns.
14.1 It has also been argued that the cross examination of Sanjay Kishore would categorically indicate that he does not even know about the present outstanding qua said two concerns which fact would automatically go on to show that he was not having any sort of transaction with said two concerns. He has also argued that cheques issued by his concern returned dishonoured but neither M/s Diksha Trading Company nor M/s Reema Polychem took any step to recover amount under said cheques and such fact also demonstrates conspiracy and connivance amongst all the accused.
CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 42 of 4914.2 Sh. Jai Gupta has defended accused Sanjay Kishore Sharma and has contended that he has been unnecessarily made accused in the present case. According to Sh. Gupta, initially when the FIR was registered, there was reference of only one letter of credit (LC) related to M/s S.K. Petrochem of which accused Sanjay Kumar Sharma was admittedly proprietor. Fact, however, remains that even during investigation, no criminality was found attached/connected with the aforesaid letter of credit as has even been admitted by IO during his cross-examination. Additionally, according to Sh. Gupta, there were two other companies, namely, M/s Hotshot and M/s Adhunik Ispat related to issuance of letter of credit but the persons related to those LCs have rather been show as witnesses in the present case.
14.3 It has also been argued that accused Sanjay Kishore Sharma was maintaining running account with M/s Diksha Trading Company as well as M/s Reema Polychem and firm M/s S.K. Petrochem was in existence from time immemorial and such firm was having business with said two concerns w.e.f. 2003 and which is still continuing and there was umpteen transactions of sale and purchase of chemicals between M/s S.K. Petrochem and said two concerns and accused Sanjay Kishore Sharma was all along maintaining running account and in connection with such transactions only, from time to time, several cheques received by M/s S.K. Petrochem and issued as well.
14.4 I would like to comment that once the cheques are issued and such cheques are handed over to the concerned party, thereafter it is none of the concern of the cheque issuer as to in what manner and what way such cheques are ultimately going to be used by the holder of the cheques. Therefore, mere issuance of cheques would not make anyone accused or CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 43 of 49 conspirator. Accused Sanjay Kishore Sharma must have merely handed over cheques to the concerned party and he would not be aware as to how these cheques ultimately landed in the bank.
14.5 As regards M/s Petcon Thermal Pvt. Ltd., it seems to be a private limited company of which accused Sanjay Kishore Sharma admittedly happens to be one of the directors but he cannot be hauled up merely because he was director. Some specific overt act showing his involvement is also required to be shown by CBI.
14.6 It has also been argued that during investigation, accused Sanjay Kishore Sharma was called many a times and he always cooperated with the investigating agency and had shown all the related documents to CBI but CBI did not seize those documents for their own unknown fanciful reasons. Sh. Gupta has also expressed his surprise as to why five cheques in question and two bills have not even been made part of the relied upon documents. According to him, investigation was completely lopsided and merely because M/s S.K. Petrochem was having trading transactions with said two concerns, Sanjay Kishore could not have been made accused. I also do feel so.
14.7 Sanjay Kishore has entered into witness box and has also placed on record number of documents in order to show that he was having business transactions with said two concerns and was maintaining running account and CBI has projected the case in a manner as if there was no transaction related to M/s S.K. Petrochem except the five cheques and two bills in question. IO has categorically admitted in his cross-examination that various cheques issued by various other concerns were also purchased with respect to the account of M/s Reema Polychem but I.O has failed to assign CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 44 of 49 any cogent reason as to why M/s Petrochem alone was picked up. Merely because cheques returned bounced, it cannot be automatically inferred that there was any conspiracy between him and his co-accused.
14.8 I have been able to find out following details pertaining to cheques related to accused Sanjay Kishore Sharma:-
S. No. Cheque No. Date Amount Favouring 1 576105 - Rs. 3,01,450/- M/s Reema Polychem 2 576120 - Rs. 4,01,430/- M/s Reema Polychem 3 - 23.12.03 Rs. 2,04,406/- M/s Diksha Trading Co. 4 - 27.12.03 Rs. 3,71,512/- M/s Diksha Trading Co. 5 576122 - Rs. 2,93,000/- M/s Diksha Trading Co. 14.9 Material on record can be said to be hardly sufficient to bring
home charges qua him. Merely because, he had some transactions with his co-accused and merely because he had issued some cheques, it cannot be held that he was a co-conspirator. He cannot be hauled up merely because some cheques issued by him have been shown purchased cheques.
OTHER LOANS 15.0 As regards other loans, I have not been able to find out anything worth significant either. As per charge-sheet, following loans remain unpaid:-
S. No. Loans Amount
M/s Reema Polychem
1 Term Loan of Rs. 1 lac (Union SSI) (in Kirti Nagar Branch) Rs. 34,000/-
Sumit Tandon (in Kirti Nagar Branch)
2 Union Miles (Car Loan) Rs. 3 lacs Rs. 1,98,000/-
3 Union Home (Housing Loan) Rs. 9 lacs Rs. 9,68,000/-
4 Union Comfort (Personal Loan) Rs. 1 lac Rs. 58,000/-
CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 45 of 49
Reema Tandon (in Kirti Nagar Branch)
5 Union Miles (Car Loan) Rs. 3.30 lacs Rs. 3,28,000/-
Total Rs. 15,86,000
15.1 Merely because some of such personal loans remain unpaid
cannot automatically attract criminality. Non-payment may give rise to civil action but to show deceit, fraud and cheating, investigating agency was required to come up with indispensable ingredients. Unfortunately, no evidence has been brought which may insinuate that there was any cheating while these personal loans were sought. No bank-witness has whispered even a word about any criminality related to these personal loans. Mere reference to the fact these loans were given would not take the case anywhere. I.O. has, however, deposed as under in this regard:-
".....The other facilities offered to Sumit Tandon are Home Loan for Rs. 9 lacs which was sanctioned by accused J.N. Malhotra in August, 2003. Investigation revealed that the loan sanctioned for flat in Inder Puri was purchased from accused Sanjay Sharma. Investigation revealed that the loan of Rs. 9 lacs was sanctioned and disbursed in August, 2003 itself whereas the agreement to sell was made only in January, 2004. This act clearly shows the abuse of official position by accused J.N. Malhotra favouring accused Sumit Tandon. Investigation further revealed that without the knowledge of the bank an agreement to sell was made by Sumit Tandon favouring Hemant Jai the present owner in September, 2004 clearly showing his intention to cheat the bank. A total amount of Rs. 9.68 lacs is pending realization on account of this transaction.
Two car loans of Rs. 3 lacs each were sanctioned by accused J.N. Malhotra to accused Sumit Tandon and Reema Tandon respectively for purchase of two cars from Ajay Kapoor of Chemical Connection. Investigation revealed that the car sold to Sumit Tandon was re-sold without the knowledge of the bank and the documents from the Regional Transport Authority did not show any transfer in Sumit Tandon's name. This again showed the abuse of official position by accused J.N. Malhotra favouring accused Sumit Tandon as required documents were not held on record and transfer was not done in Sumit Tandon's name. In total, Rs. 6.68 CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 46 of 49 lacs is outstanding on account of this transaction. Accused Sumit Tandon and Reema Tandon were also sanctioned two loans, first under the personal loan scheme for Rs. 1 lac and second under the SSI loan scheme for Rs. 2 lacs. The amount outstanding in these two accounts are Rs. 58,000/- and Rs. 38,000/- respectively."
15.2 As regards housing loan as well, I have not been able to find out anything illegal as such. I.O himself admitted in his cross examination that it was correct that agreement to sell was of 10.8.2003 as per notary attestation in D5/7 i.e. Ex.PW25/DA. Thus the agreement to sell is found to be of prior date. Accused Sumit Tandon also did not keep the bank in dark as I.O. had to admit that as per letter dated 15.9.04 i.e.Ex.PW17/C, Sumit Tandon had requested the bank that he may be permitted to sell the house to clear the dues and also requested to give a consent letter for the same. He also admitted about one letter dated 25.9.04 (Ex.PW25/DC) written by branch manager to Sumit Tandon. This seems to be of Sh. Kiran Kumar, the then branch manager. As per said letter, the branch manager had asked Sumit to furnish documentary evidence regarding the rate at which Sumit Tandon was disposing of the flat. I.O. also admitted that the purpose for which aforesaid housing loan was obtained from the bank was achieved by execution of said sale deed. I have also seen the testimony of eventual buyer i.e. PW17 Hemant Jai. He has rather confused the miseries of prosecution by pleading ignorance about certain crucial facts including execution of sale deed. He claimed that the deal was through his brother. Be that as it may, there might be, at worst, some unpaid dues and there might be some civil dispute with Hemant Jai or bank but that would not tantamount to hold that loan was availed by playing any fraud.
15.3 As regards other loans, again, no bank official has whispered or conveyed the feeling that any such loan was availed by practising any CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 47 of 49 deception. As already referred above, non-repayment will not ipso facto give rise to criminal angle.
CONCLUSION 16.0 Undoubtedly, accused Sumit Tandon was required to keep vigil over the account in question of M/s Reema Polychem. He did not bother to take stock of the same. He was unmindful and unaware, according to him, about various bogus debit and credit entries. According to CBI, his such stand is not believable at all. Whatever might be the reason, merely because, he did not pay any heed or attention to such account, I will not be in a position to straight way hold that omission in this regard was penal, deliberate and in pursuance of some conspiracy with his co-accused.
16.1 In a criminal trial, material has to be sufficient and satisfactory and evidence should be of impeccable nature. There is no room for guess- work, imagination, surmises and conjectures.
16.2 Accused J. N. Malhotra is absconding and it would have been really interesting to see as to what would have been the stand of accused Sumit Tandon had J. N. Malhotra also been facing trial along with him. May be, Sumit Tandon is trying to dig out some advantage of the situation but from the material on record, it will not be possible for me to conclusively hold the involvement of accused Sumit Tandon and there is a strong possibility of J.N. Malhotra's cheating and duping Sumit Tandon and Reema Tandon as well and in the process making fortune and vanishing in the thin air with no trace.
16.3 As regards account of M/s Diksha Trading Company, again, accused Sumit Tandon cannot be held liable.
CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 48 of 4916.4 As already noted above, it is still not clear as to on what premises, accused Reema Tandon has been sent up to face trial when as per CBI she had no concern with the firm and her husband, all along and to the exclusion of all others, was looking after and managing the business of the firm. As per Sumit Tandon, he and his father (since deceased) were running such business and Reema had no concern with such business of M/s Reema Polychem.
16.5 Accordingly, I hereby grant benefit of doubt to accused Sumit Tandon, Reema Tandon and Sanjay Kishore Sharma and acquit them of all the charges.
16.6 They all would, however, submit bonds u/s 437- A Cr.P.C. Their previous bonds are cancelled and respective sureties are discharged.
16.7 File be consigned to Record Room and be revived as and when Accused J.N. Malhotra is apprehended. CBI would submit report about efforts made for catching him. It will also keep on submitting such report once every six months till such absconding accused is nabbed and produced before the court.
(MANOJ JAIN) Special Judge (PC Act) (CBI) South District, Saket Courts, New Delhi Announced in Open Court Wednesday, November 27, 2013 CC No. 32/2011 CBI Vs. J.N. Malhotra etc. Page 49 of 49