Delhi District Court
C.B.I vs Sudhir Kumar Arora And Others on 7 September, 2024
DLCT110000612019
Presented on : 26.03.2019
Registered on: 27.03.2019
Decided on : 07.09.2024
Duration : 5 years 5 months 11 days
IN THE COURT OF
SPECIAL JUDGE (PC ACT) (CBI-21)
AT ROUSE AVENUE COURT
(PRESIDED OVER BY SH. RAJEEV BANSAL)
CBI/27/2019
CBI ...Prosecution
(Mr. Amjad Ali, Ld. PP for CBI)
VERSUS
1. Sudhir Kumar Arora
S/o Late Sh. Mahindra Lal Arora,
R/o House No. KF-16, Kavi Nagar,
Ghaziabad, UP
2. Er. Birender Prasad Singh @ B P Singh
S/o Sh. Ram Dass Singh,
R/o K-36 F, 2nd floor, DDA Flats,
Saket, New Delhi-110017.
Digitally
signed by
RAJEEV
RAJEEV BANSAL
BANSAL Date:
2024.09.07
10:16:34
+0530
CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 1 of 123
3. Vikas Garg
S/o Late Sh. Shiv Charan Garg,
R/o House No. 302, Tower-2,
Unitech Escape, Sector-50, Gurgaon, Haryana.
(Discharged vide Order dt. 23.08.2022)
4. Pavan Arya,
S/o Late Sh. M R Gandhi,
R/o 29-14-178, Nagaram Palam,
Guntur, Andhra Pradesh-522004.
5. Chakradhar Muduli
S/o Sh. Maguni Charan Muduli,
R/o 177, C-3, Ward No. 2,
Green View Apartments, Mehrauli,
New Delhi-110030.
6. Shiv Kumar Verma
S/o Late Sh. Puran Chand Verma,
R/o B-347, NRI City, Omega-II,
Greater Noida, Gautam Budh Nagar, UP.
7. M/s Solomon Consulting Pvt. Ltd.
809, 8th Floor, Arunachal Building, 19
Barakhamba Road, New Delhi.
(Discharged vide Order dt. 23.08.2022)
... Accused
(through Mr. Akhand Pratap Singh,
Mr. Shree Singh
and
Mr. Akash Chauhan, Advocates)
Offences punishable under:
u/s 120-B IPC r/w S. 420 IPC and
S. 13(2) r/w S. 13(1)(d) of PC Act.
13(1)(b) r/w 13(2) of the PC Act
Digitally signed
by RAJEEV
RAJEEV BANSAL
Date:
BANSAL 2024.09.07
10:16:40
+0530
CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 2 of 123
JUDGMENT
07.09.2024
1. FIR in the present case was registered on the basis of a written complaint dt. 01.06.2017 made by Sh. S K Mehta, Dy. General Manager of the then Corporation Bank (now Union Bank of India) wherein it was alleged that Sudhir Kumar Arora, Proprietor of M/S Supreme Steels, approached Branch of Corporation Bank in the year 2013 for grant of working capital facility of Rs. 3.10 Crore. It was stated that Aali Branch forwarded the proposal for CVPOD limit of Rs. 3.10 Cr and the Zonal Office Level Credit Committee (ZLCC) of Corporation Bank sanctioned the said credit loan, based on the security of the stock in trade and collateral security of an industrial property at Khasra No. 476 & 477 in Village Bhonja, Dist. Ghaziabad, which was valued at Rs. 4.34 Cr. It was stated that on 01.03.2013 the Aali Branch disbursed Corp. Vyapar OD Loan of Rs. 3.10 Cr to Sh. Sudhir Kumar Arora in his capacity as proprietor of M/S Supreme Steels. It was stated in the complaint that within 25 days of disbursal of the loan limit, an amount of Rs. 3.02 Cr was used by Sh. Sudhir Kumar Arora as on 25.03.2013 and only two credits of Rs. 30 lac were made, out of which Rs. 25 lac was from M/s Supreme Electrocast Pvt. Ltd., whose Promoter/ Director was Sudhir Kumar Arora, himself which had its limits with Syndicate Bank, Ghaziabad. It was stated that the loan account became NPA on 16.12.2013. It was stated that serious irregularities were noted and pointed out - that the net worth statement was not certified by CA; that an amount of Rs. 51.60 lac was siphoned off to the account of Apna Enterprises, a firm owned by a middleman Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:16:46 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 3 of 123 Mr. Shiv Kumar Verma - who had brought the said proposal for loan to the Branch; the collateral security was found to be over-valued to Rs. 4.34 Cr. by M/s S & G Advisory Services Pvt. Ltd., whereas subsequently, this property was valued by another valuer at Rs. 1.45 Cr on 03.04.2014; that the credit limit by and large was siphoned off to sister associate concerns of the borrower; misuse of bank finance, diversion of funds, non-compliance of sanction terms, non-conducting of post-sanction visits, non-verification of genuineness of title deeds etc. As per the complaint, Mr. Pavan Arya, the then Chief Manager was stated to have disregarded the banking norms such as the Due Diligence Report being missing, confidential opinions from existing bankers and Statement of Account of the party not being obtained. He was also found to have not discussed the discrepancies in the legal opinion and the inflated and doctored Valuation Report of the property. That apart, money trail was also stated to have been traced in the personal accounts of Mr. Pavan Arya and his close relatives. Similarly, one Sudhir Kumar, Sr. Manager of the Aali Branch was also found to have not followed the banking norms and even in his account and his close family members' accounts, money trail was noticed.
2. On the aforesaid complaint, FIR in the present case was registered on 21.06.2017. After investigation, chargesheet was filed by CBI on 26.03.2019 against Sudhir Kumar Arora (borrower ~ A-1), B P Singh (valuer ~ A-2), Vikas Garg (CA), Pavan Arya (Chief Manager of Zonal Office ~ A-4), Chakradhar Muduli (Advocate-middleman ~ A-5), S. K. Verma (middleman ~ A-6) and Solomon Consulting Pvt. Ltd., Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:16:52 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 4 of 123 through its Director Vikas Garg, CA, (being empanelled Due Diligence Agency), Sudhir Kumar (Branch Manager, Aali Branch), G. Balasubramanyam (AGM, Zonal Office) and A. R. K. Prasad (DGM, Zonal Office).
3. Sanction for Prosecution qua Sudhir Kumar, G. Balasubramanyam and A.R.K. Prasad was declined by the Competent Authority and hence vide Order dt. 11.03.2020, all these three accused persons, stood discharged.
4. Vide Order dt. 23.08.2022, Charges were directed to be framed against the accused persons namely A-1 Sudhir Kumar Arora, A-2 B P Singh, A-4 Pavan Arya, A-5 Chakradhar Muduli and A-6 Shiv Kumar Verma u/s 120-B IPC r/w S. 420 IPC and S. 13(2) r/w S. 13(1)(d) of the PC Act. A substantive Charge u/s 13(1)(b) r/w 13(2) of the PC Act was also directed to be framed against A-4 Pavan Arya. Besides, substantive charge u/s 420 IPC was also directed to be framed against accused A-1 Sudhir Kumar Arora and A-2 B P Singh.
5. By the same Order, Vikas Garg and Solomon Consulting Pvt. Ltd., were discharged.
6. Accordingly, Charges were framed against all the accused persons on 07.09.2022. For ready reference, the charges framed against all the accused persons are reproduced below:Digitally signed by RAJEEV
RAJEEV BANSAL BANSAL Date:
2024.09.07 10:16:57 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 5 of 123 6.1 That you the abovenamed accused (ALL FIVE ACCUSED PERSONS) during the period between December 2012 till 2014 entered into criminal conspiracy with each other and pursuant to the said conspiracy dishonestly and fraudulently got sanctioned a sum amounting to Rs. 3.10 crores under CVPOD (Corp Vyapar Overdraft) in favour of the firm M/s Supreme Steel (through proprietor Sudhir Kumar Arora) based on exaggerated valuation of collateral property at Khasra no. 467 and 477, Patel Marg, Village Bhonja, Loni, Ghaziabad, UP at a much higher side violating existing bank norms and CVPOD scheme guidelines with the help of Pawan Arya, Chief Manager, Head of CCPC (Centralized Credit Processing Centre) and Member of ZLCC, B.P. Singh (valuer) and Chakradhar Muduli and S.K. Verma (middlemen), thus causing wrongful loss to Corporation Bank, Aali Gaon Branch and wrongful gain to yourselves and thereby you all committed an offence punishable U/s 120-B read with Section 420 IPC and Section 13 (2) read with Section 13 (1) (d) P.C. Act and within my cognizance.
6.2 That you the above named accused (PAVAN ARYA) during the period between December 2012 till 2014 by abusing your official position being the Chief Manager, Head of CCPC (Centralized Credit Processing Centre) and Member of ZLCC caused wrongful loss to Corporation Bank, Aali Gaon Branch and wrongful gain to yourself by processing the CVPOD (Corp Vyapar Overdraft) amounting to Rs. 3.10 crores (much beyond the permissible limit of loan of Rs. 2 crores) in favour of the firm M/s Supreme Steel (through Sudhir Kumar Arora) without complying with the conditions of sanction of loan imposed on CCPC and ZLCC, without examining the documents of the borrower as per the banking norms and flouting various circulars / guidelines while sanctioning the loan and ensuring disbursal of loan amount to Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:17:03 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 6 of 123 the accused borrower within a short period of time and thereby you committed an offence punishable Section 13 (2) read with Section 13 (1) (d) P.C. Act and within my cognizance.
6.3 That you the above named accused (B.P. Singh) during the period between December 2012 till 2014 dishonestly and fraudulently got sanctioned a sum amounting to Rs. 3.10 crores from Corporation Bank, Aali Branch under CVPOD (Corp Vyapar Overdraft) in favour of the firm M/s Supreme Steel (through Sudhir Kumar Arora) based on exaggerated valuation of collateral property at Khasra no. 467 and 477, Patel Marg, Village Bhonja, Loni, Ghaziabad, UP at a much higher side violating existing bank norms and CVPOD scheme guidelines. The said valuation amounting to Rs. 4,82,63,250/- was got done by you by preparing the inflated valuation report of the property in question on the false letter head of M/s S&G Advisory Services Pvt. Ltd using its false seal and incorporating your private telephone number on the letter head, at the instance of Sudhir Kumar Arora without the valuation being assigned by the Aali Branch of Corporation Bank to you or M/s S&G Advisory Services Pvt. Ltd, the empaneled valuer and thus receiving Rs. 10,000/- for the same. You thereby caused wrongful loss to the Corporation Bank, Aali Gaon Branch and wrongful gain to yourself and thereby you committed an offence punishable Under Section 420 IPC and within my cognizance.
6.4 That you the above named accused (S.K. Arora) being the proprietor of M/s Supreme Steels during the period between December 2012 till 2014 submitted a letter dated 24.12.2012 addressed to Branch Manager, Corporation Bank requesting for fund based working capital finance of Rs. 4.25 crores against mortgage of property at Khasra no. 467 and 477, Patel Marg, Village Bhonja, Loni, Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:17:10 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 7 of 123 Ghaziabad, UP, without mentioning the specific name of the branch. You further dishonestly and fraudulently got sanctioned a sum amounting to Rs. 3.10 crores under CVPOD (Corp Vyapar Overdraft) in favour of the firm M/s Supreme Steel (through you) based on exaggerated valuation of collateral property at Khasra no. 467 and 477, Patel Marg, Village Bhonja, Loni, Ghaziabad, UP at a much higher side violating existing bank norms and CVPOD scheme guidelines with the help of Pawan Arya, Chief Manager, Head of CCPC (Centralized Credit Processing Centre) and Member of ZLCC, middleman, S.K. Verma and Chakradhar Muduli. You further immediately after sanction of the CVPOD limit availed the entire limit of 3.10 crores between 01.03.2013 to 25.03.2013 thereby exhausting the entire CVPOD limit, thus causing wrongful loss to Corporation Bank, Aali Gaon Branch and wrongful gain to yourself and thereby you committed an offence punishable Under Section 420 IPC and within my cognizance.
6.5 All accused persons pleaded not guilty and claimed trial.
PROSECUTION EVIDENCE
7. Prosecution examined 30 witnesses to prove its case. Relevant part of the depositions of the prosecution witnesses is as under:-
7.1 PW-1/ S K Mehta is the complainant, on whose complaint dt. 01.06.2017, the FIR in question was registered. He proved his complaint as Ex. PW-1/A. A subsequent letter of the same date by Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:17:16 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 8 of 123 which he confirmed to have all the original documents was proved as Ex. PW-1/B. In his deposition, he stated that a proposal for sanction of loan was forwarded by Aali Branch under CVPOD Scheme, which was applied by Sudhir Kumar Arora (A-1) on behalf of M/s Supreme Steel for an amount of Rs. 4.25 Cr. He stated that he had filed the complaint Ex. PW-1/A based on the Report dt. 27.05.2014 of the Vigilance Department of the Bank. Chapter No. 12 of Manual of Instructions, 2013, No. 22, dealing with Corp. Vyapar Scheme was proved as Ex. PW-1/C. Various other documents/Bank Circulars were proved as Ex. PW-1/D to Ex. PW-1/Z. He stated that the basic purpose of CVPOD loan is to finance short-term working capital facility. He stated that Zonal Manager is the final authority for sanction or rejection of the loan proposal. He stated that in the present case, the loan application was submitted to ZLCC with recommendations to allow deviations from the scheme guidelines i.e. sanction of loan amount of Rs. 3.10 Cr., as against the maximum permissible limit under the said scheme of Rs. 2 Cr.; and maximum loan for urban areas is Rs. 50 lacs whereas the proposal in question was for Rs. 3.10 Cr. He stated that as per the Branch Manager of Aali Gaon Branch, the property was located in one of the posh areas of UP and therefore, the deviation may be permitted. He stated that ZLCC finally recommended the loan amount of Rs. 3.10 Cr to be sanctioned to M/s Supreme Steels and thereafter, Credit Sanction Intimation dt. 27.02.2013, was sent by ZLCC to Aali Gaon Branch. He stated that CCPC is formed to process various loan applications, which are forwarded by different branches and CCPC is a part of Zonal Office. He stated that during processing of the loan Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:17:21 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 9 of 123 applications, CCPC looks into the feasibility of the loan from different angles like marketing, technical know-how, contribution from the borrowers, etc. He also stated that CCPC also take into consideration, the type of activity and the feasibility of the said activity in the available market. He stated that during this process, CCPC also goes through the Net Worth Statement, Income-tax Returns, Sales-tax Returns, financial documents of the firm for the last three years. He stated that under CVPOD Scheme, the loan can extend upto 20% of the projected turnover of the firm for the coming financial year. He stated that the applicant goes directly to the Branch and submits his loan application and the Branch Manager will verify as to whether all the papers are available with the loan application, as per the Manual of Instructions, for sanction of loan. He stated that on being so satisfied, the Branch Manager then conducts the due diligence of the borrower himself and after being satisfied, he forwards the loan proposal to Zonal Office, and the Zonal Head gives the work of processing of proposal to CCPC and after completion of the processing, CCPC prepares a note and forwards it to ZLCC.
7.1.1. He stated that once the loan is sanctioned by ZLCC, its intimation is sent to the Branch and it is the duty of the Branch Head to comply with all the terms and conditions as per the Credit Sanction Intimation before releasing the loan amount to the borrower. He stated that the Branch Head is required to submit compliance report to the Sanctioning Authority within 7 days of the disbursement of loan facility.
He stated that if the compliance of the stipulated terms and conditions Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:17:26 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 10 of 123 mentioned in the Credit Sanction Intimation is not made by the Branch, then he has to get a confirmation from the Zonal Office regarding the deviations of the compliance terms. He stated that if this is not done then it is the responsibility of the Branch Head for any lapse which may cause financial loss to the bank. He further stated that after disbursement, the Branch Manager is required to ensure that the operations of the account are as per the requirement of a particular business. He stated that Branch Manager is required to go through the transactions in the account and to ensure that the funds are not going to unwarranted parties.
7.1.2 Regarding valuation of the collateral security, he stated that the Bank has a number of Valuers on its panel, whose job is to find out the market value and realizable value as well as distress value of the property. He stated that in the present case, the property valuation was done by M/s S & G Advisory Services Pvt. Ltd., and the report was submitted to the Aali Gaon Branch which carried a stamp of Er. B P Singh (A-2), Regn. No. CAT-I-288/95, E1138. He further stated that Pavan Arya (A-4) was the Chief Manager (Credit) at the relevant time and his duty was to ensure that Due Diligence of the party has been done properly, confidential opinion has been obtained from previous banker, the guarantor has a marketable title, free from all encumbrances of the property which was proposed as collateral security. He also stated that his duty also required that the valuation of the property was realistic and not inflated. He referred to certified copy of letter dt. 05.03.2013 of M/s S & G Advisory Pvt. Ltd., written by its Director Sh.
Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:17:31 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 11 of 123 Girish Sharma, wherein it was stated that the company never introduced their ex-employee Er. B P Singh to Jaitpur Branch Head. The witness also stated that before sending proposal for sanction to CCPC, the Branch Manager is also required to give photocopies of the title documents of the proposed collateral security property to Panel Advocate to ensure that the owner of the property has a clear and indisputable right in the property so as to mortgage the same with the Bank. He referred to Legal Opinion Report dt. 18.01.2013 with respect to Khasra No. 476 & 477 in Village Bhonja, Dist. Ghaziabad, of Advocate Sandeep Sharma wherein he stated that Sudhir Kumar Arora (A-1) has become the absolute owner of the property as on that date.
7.1.3 In his cross-examination for A-1, he stated that he was complainant in multiple cases of Corporation Bank. He denied the suggestion that M/s Supreme Steels Pvt. Ltd., through A-1, never mis-
utilized the funds or that it never siphoned off the funds of the Corporation Bank.
7.1.4 In his cross-examination for A-4 & A-6, he stated that for obtaining Corp. Vyapar Scheme Loan, the borrower should be a commercial enterprise including small-scale enterprises and that the eligible loan amount is equal to 65% of the realizable value of the security. He admitted that it is the duty of the Branch Manager to specifically recommend as to whether the loan should be sanctioned or not, in the proposal sent by him to CCPC, including requirement for deviations, if any. He admitted that except few conditions, deviation is Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:17:36 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 12 of 123 permissible to a certain extent. He admitted that it is the duty of the Branch Manager to annex all the documents while sending a proposal to Zonal Office. He stated that Zonal Office marks the file to the Credit Officer of CCPC for preparation of appraisal note and the Credit Officer has to place the appraisal note before the CCPC Incharge for vetting purposes and thereafter CCPC Incharge recommends sanction of loan to the sanctioning authority i.e. ZLCC. He stated that it was well within the rights of CCPC to question the Valuation Report filed by the empanelled Valuer. He denied the suggestion that A-4 Pavan Arya, being a CCPC Chief, complied with all the terms and conditions and followed all the Circulars prescribed by the bank.
7.1.5 The above cross-examination carried out on behalf of A-4 & A-6 was also adopted by A-5.
7.1.6 In his cross-examination conducted on behalf of A-2, he stated that he cannot say as to whether A-2 B P Singh was the only qualified valuer in M/s S & G Advisory Services. He stated that as per Circular No. 828/2011 (Ex. PW-5/DA) the Branch Manager is required to counter check the valuation submitted by the valuer. He further voluntarily added that the value of the property assessed by the approved valuer has to pass through the lens of all the persons till sanction whoever is a part of the team. He admitted that if the Branch Manager is not satisfied by the valuation conducted by the Valuer, he can visit the property or appoint another Valuer rejecting the previous Valuation Report. He admitted that after an account is declared NPA, a Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:17:41 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 13 of 123 Valuer is appointed by the Branch Manager to conduct fresh valuation of a collateral security. He admitted that the Branch Manager needs to verify the valuation conducted by the fresh Valuer as well, by physically visiting the property. He could not tell if the conclusion regarding over valuation of a collateral security came after the Valuation Report of Mr. Amarjeet Singh and Mr. Ashutosh Nirmal.
7.2 PW-2/ Ms. Neeti Saini, the then Law Officer in Delhi South Zone of Corporation Bank, stated that her duties inter-alia included scrutiny of the legal opinions given by the advocates regarding the properties to be mortgaged with the bank for various kinds of loans.
She proved the Legal Opinion Report dt. 18.01.2013, prepared by Sh. Sandeep Sharma, Advocate, regarding Khasra No. 476 & 477 in Village Bhonja, Dist. Ghaziabad as Ex. PW-2/A. She proved the Credit Sanction Intimation dt. 27.02.2013 to M/s Supreme Steels as Ex. PW- 2/B. She proved her email dt. 11.03.2013 as Ex. PW-2/C, to Branch Head of Aali Gaon Branch of the Corporation Bank in response to email dt. 28.02.2013 through which Legal Opinion Report dt. 18.01.2013 of Sh. Sandeep Sharma, Advocate was forwarded and in the said letter the witness had pointed out a few precautions to be taken before disbursal of loan to M/s Supreme Steel. She stated that as per Credit Sanction Intimation terms contained in letter dt. 27.02.2013 (Ex. PW-2/B), the legal opinion was to be approved by the Law Officer before disbursal of the loan but in the present case, loan had been disbursed by the Branch on 01.03.2013 itself before the legal opinion of Mr. Sandeep Sharma, Advocate could be approved and hence, there was violation of Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:17:46 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 14 of 123 Credit Sanction Terms of the loan.
7.2.1 In her cross-examination conducted on behalf of A-1, she stated that a joint property can be mortgaged with the bank if both the joint owners agreed to it and one of them became the guarantor.
7.2.2 No cross-examination was carried out on behalf of A-2 & A-5.
7.2.3 On behalf of A-4 & A-6, when cross-examined, she stated that it was the duty of Dy. GM, being Zonal Head to ensure that the Branch Manager is complying with the terms and conditions of the Credit Sanction Intimation. She stated that it is the duty of the Branch to get the genuineness of the original property documents verified through empanelled advocate.
7.3 PW-3/Ashutosh Nirmal, a Government approved Valuer, stated that he was empanelled as an approved Valuer of Corporation Bank since 2010-2011. He proved his Valuation Report dt. 30.10.2014 with regard to property Khasra No. 476 & 477 in Village Bhonja, Dist.
Ghaziabad as Ex. PW-3/A, according to which the market value of the property was assessed at Rs. 1,32,43,000/- with realizable value of Rs. 1,05,94,400/- and distress value of Rs. 92,70,100/-. He stated that the valuation was done as per oral directions of the Branch Manager of Aali Gaon Branch, for which he had raised a bill of Rs. 7,000/- to the bank.
Digitally signed by RAJEEVRAJEEV BANSAL Date:
BANSAL 2024.09.07 10:17:50 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 15 of 123 7.3.1 No cross-examination of this witness was conducted on behalf of A-4 and A-6 and by A-5.
7.3.2 In his cross-examination of behalf of A-2, he stated that his Valuation Report Ex. PW-3/A is based upon the field visit made by his employee Mr. Anil Kumar. He denied the suggestion that different values given in the Report Ex. PW-3/A are the assessments of Mr. Anil Kumar. He admitted that he was an accused in a case titled 'CBI v Pavan Arya' RC No. DST/2017/A/0001, 0002 & 0003. He admitted that in the said case, his valuation report was questioned. He admitted that valuation of a property is time sensitive, which can change from year to year and that it can also change after an account is declared NPA.
No suggestion was given to him that the valuation of the property made by A-2 on 24.12.12 at Rs. 4,82,63,250/- was correct or that the property was valued wrongly and deliberately by this witness too low at Rs. 1,32,43,000/-.
7.3.3 In his cross-examination for A-1, he stated that he does not know the borrower. He admitted that there were fluctuations in the value of the properties from 2013 to 2016.
7.4 PW-4/ Amarjeet Singh is another Government approved Valuer who was enrolled on the panel of Corporation Bank in the year 2003. He proved his Valuation Report dt. 03.04.2014 with regard to property no. Khasra No. 476 & 477 in Village Bhonja, Dist. Ghaziabad Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:17:55 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 16 of 123 as Ex. PW-4/A, according to which he had valued the aforesaid property at Rs. 1.45 Cr., and its realisable value at Rs. 1.15 Cr. He stated that he had personally visited the site, which was in the name of M/s Supreme Steel, whose proprietor was Mr. Sudhir Kumar Arora. He stated that the valuation was carried out as per oral directions of the Branch Manager of Aali Gaon for which he had raised a bill of Rs. 9,065/- to the Bank but only Rs. 3,000-4,000/- was paid to him.
7.4.1 In his cross-examination by A-1, he stated that owner of the property was not traceable.
7.4.2 In his cross-examination on behalf of A-2, he stated that he submitted his Report on the same day on which he inspected the property. He stated that after an account is declared NPA, the value of the property is reduced. He stated that he was not given any other valuation figure before he carried out the valuation of this property. No suggestion was given to him that the valuation of the property made by A-2 on 24.12.12 at Rs. 4,82,63,250/- was correct or that the property was valued wrongly and deliberately by this witness too low at Rs.
1,45,00,000/-.
7.4.3 No cross-examination of this witness was conducted by any other accused person.
7.5 PW-5/ Gopal Krishnan Ravindran was Chief Manager of Recovery Department of Corporation Bank in Delhi South Regional Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:18:01 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 17 of 123 Office in the year 2017. He stated that according to Chapter 12 of Corp. Scheme relating to Corp Vyapar, a loan upto Rs. 2 Cr., can be sanctioned by the bank. He stated that any person willing to avail loan under the Corp. Vyapar Scheme has to approach the nearest branch of the place where he runs his commercial activity with audited balance sheet of the last three years of his business. He stated that after satisfaction about the performance of the business, the Branch Manager would conduct the unit visit. He stated that after being satisfied and on the basis of turnover of a business of the borrower, loan application is processed. He stated that usually loan is given @20% of the projected turnover for 3 to 5 years. He further stated that thereafter, the applicant has to submit various documents alongwith the application, including Net Worth Statement duly certified by a Chartered Accountant. He stated that if the loan amount is within the powers of the Branch Manager, then he can sanction it but if the loan amount is higher, then it can be sanctioned only by the Zonal Office. He stated that it is the duty of the Branch Manager to ensure that the loan amount is used for the purpose it has been sanctioned. He stated that as a rule, cash transfers into personal account is not permissible from the loan account by the borrower. He stated that practically, oral directions are given to the empanelled valuers to carry out valuation of a property. He stated that at any stage of the processing of the loan if the Branch Head or the Zonal Office comes to the conclusion that false or forged documents have been furnished by the borrower then the process for the sanction of the loan has to be stopped immediately by the concerned department and the loan will not be sanctioned to the borrower. He stated that even after the Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:18:07 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 18 of 123 disbursal of the loan and before it is utilized fully by the borrower, if the bank comes to know about any forgery, then the bank can freeze the amount lying unutilized till that date in the loan account.
7.5.1 In his cross-examination, conducted on behalf of A-4 & A-
6, he stated that it is general practice in all the banks that the CCPC Head supervises the compliance of the terms and conditions by the Branch Manager, but he could not point out any such Circular in this regard. He stated that once the Branch Manager himself is satisfied about the loan proposal, then only he makes unit visit and prepares the Internal Due Diligence Report. He stated that after receiving and scrutinizing all the records like Valuation report, Legal Search Report, External Due Diligence Report, CIBIL Report- the Branch Manager prepares a proposal for sending it to the Zonal Office if the loan amount is beyond his sanctioning power. He stated that if the borrower already has a pre-existing account with some other bank, then the Branch Manager has to call for a confidential opinion about the customer from the said concerned bank. He stated that if allowed by Circulars, the Branch Manager can also seek certain permitted deviations in the proposal sent by him to the higher authorities. He stated that if there is no negative report by the Processing Officer of CCPC while preparing the Appraisal Note, it will be treated that there is no short-coming in the Appraisal Note. He stated that the Note of the Processing Officer is also required to be vetted by CCPC Head. He stated that after the vetting procedure is over, the Appraisal Note is placed before the ZLCC and every member of ZLCC is entitled to place his remarks on the said Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:18:12 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 19 of 123 Note. He stated that as per CVPOD Scheme, the borrower should be sent to the nearest possible branch which is 25 Kms radial distance. He admitted that sanctioning of Corp Vyapar Loan of Rs. 4.95 Cr was within the delegated powers of ZLCC.
7.5.2 In his cross-examination conducted on behalf of A-2, he admitted that the Branch Manager has also to conduct a discreet enquiry in the neighbourhood for checking a Valuation report and that the value mentioned in the Report by the Valuer is not inflated.
7.5.3 No cross-examination of this witness was conducted by any other accused person.
7.6 PW-6/ Rishikesh stated that he was transferred to Aali Gaon Branch of Corporation Bank as Assistant Manager in 2012 and at that time, Mr. Sudhir Kumar was the Branch Manager. He proved the application for loan of Rs. 4.25 Cr., in this case as Ex. PW-6/A. He stated that the Form is not accompanied by the check-list nor loan details are filled therein, although, details of the collateral security i.e. Property no. Khasra No. 476 & 477 in Village Bhonja, Dist. Ghaziabad, is mentioned and stock and debtors have been detailed therein at Rs. 4 Cr., & Rs. 3.90 Cr., respectively. He proved the Net Worth Statement of Sudhir Kumar Arora as Ex. PW-6/B. He stated that the Net Worth Statement Ex. PW-6/B is not certified by CA. He proved the Unit Visit Report as Ex. PW-6/C and stated that the unit visit was done on 23.02.2013 by the Bank and at that time value of the stock was found Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:18:17 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 20 of 123 to be Rs. 1 Cr., and this Report is in the handwriting of Mr. Sudhir Kumar. He proved the Due Diligence Report as Ex. PW-6/D and the Loan Recommendation Letter prepared by Sudhir Kumar as Ex. PW- 6/E. He stated that the Note for processing of the loan was prepared by Sh. Ajay Pathak in CCPC and its vetting was done by Pavan Kumar Arya, whereafter the note was placed before ZLCC for approval and was approved by Pavan Arya, AGM and finally DGM. The recommendation was proved as Ex. PW-6/F (Colly). He stated that Mr. Amish Arora was the guarantor of the loan and his net worth was shown as Rs. 59.98 lacs. He proved the Unit Visit Report dt. 24.01.2013, of the business establishment of Supreme Steels, as Ex. PW-6/B. The Credit Sanction Intimation was proved by him as Ex. PW-6/H. The Statement of Account of M/s Supreme Steels for account no. CEPOD/1/130003 for the period 1st March 2013 to 31st March 2013; for the financial years 2013-2014 and 2014-2015 was proved as Ex. PW- 6/J (Colly). He stated that as per this statement, on 02.09.2013, there was a cash withdrawal of Rs. 1,40,000/-. He stated that on 14.05.2013, an amount of Rs. 5 lacs and another amount of Rs. 14 lacs were transferred through RTGS in the personal saving bank account of Pankaj Chanana. He stated that there was another transfer of Rs. 24 lacs on 15.05.2013 through RTGS in the personal saving bank account of Pankaj Chanana. He stated that as per banking norms, such huge transactions from the loan account to the personal saving bank account or cash transfers should not have been made. He stated that these transfers were authorized by Sudhir Kumar, the then Branch Manager. He stated that the loan application of M/s Supreme Steels was pursued Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:18:23 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 21 of 123 by Sudhir Kumar Arora and the Branch Manager should have rejected the loan application because of several discrepancies therein, but he failed to do so. He stated that he had seen Chakradhar Muduli once or twice in the Branch. He proved a covering schedule as Ex. PW-6/I. He proved the Notice dt. 19.12.2013 under SARFESI Act given to Sudhir Arora as Ex. PW-6/A (Colly).
7.6.1 In his cross-examination on behalf of A-2, he admitted that all the documents mentioned in Annexure 12.1 of Corp Vyapar Scheme are required for sanctioning of loan and it was the duty of only the Branch Manager to ensure that all the documents were annexed with the loan application. He admitted that the primary responsibility for processing of loan and of disbursement is of Branch Manager only. He admitted that Branch Manager has to scrutinize the Valuation Report and for that purpose he has to conduct a discreet enquiry at the property.
He stated that it is compulsory for the Branch Manager to verify the market value of the property. He admitted that Valuation Report of the empanelled valuer is not binding upon the Branch Manager.
7.6.2 In his cross-examination for A-4 & A-6, he admitted that all the details necessary to be filled by the borrower in the Loan Application Form were duly filled therein.
7.6.3 In cross-examination for A-1, he admitted that it was the duty of CCPC to apply its mind and to conduct independent assessment on the basis of documents provided by the borrower, while preparing Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:18:29 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 22 of 123 the Loan Processing Note.
7.7 PW-7/ Ajay Pathak was posted in CCPC from 2011-2014.
He stated that in 2013, Pavan Arya was the Head of CCPC and he himself (Pavan Arya) was a Member of CCPC alongwith other members. He stated that CCPC used to process the proposals, prepare recommendations, process deviations etc. He stated that ZLCC was headed at that time by Mr. A R K Prasad, DGM and the main function of ZLCC was to approve the credit proposals, deviation proposals etc. He stated that Ex. PW-6/I is the memorandum of M/s Supreme Steels to ZLCC. He stated that the recommendation for the sanction of loan under CVPOD was Rs. 3.10 Cr., which was received from Aali Gaon Branch. He stated that it was processed by him (witness) and he forwarded it to ZLCC. He stated that at that time there was a lot of pressure from Pavan Arya to process the CVPOD loan within a day and not to put many objections or questions in the processing of the said loan. He also stated that the customers used to approach Pavan Arya directly and he used to meet them prior to processing of the loan recommendations. He stated that the customers also used to meet DGM in his cabin. He stated that the proposal received from the Branch Office used to remain with Pavan Arya only, who would give it to the witness for processing after visiting the unit of the borrower or the Branch. He stated that thereafter, the proposals were used to be given to him (the witness) by Pavan Arya for immediate processing. He stated that in most of the proposals the applicants were seeking credit facilities for the first time and despite his (witness) asking that the sanction Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:18:34 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 23 of 123 should be for lower credit facility, both DGM & Pavan Arya used to tell that in order to grow business, it was important to sanction loan as per the request of the customer. He stated that in the present case, the promoter of M/s Supreme Steel had another company and he had asked for the details of the same. He stated that there were some documents available but he was asked by Pavan Arya to prepare the memorandum as per the available information. He stated that the documents provided were insufficient for processing of loan and he had asked Pavan Arya to take additional documents from the party but Pavan Arya told him that the proposal was to be processed on a stand alone basis and that ZLCC will take a decision on merits of the case with the available information. He stated that a party cannot make cash withdrawals from the loan account and it cannot be utilized for any other purpose except the business of the borrower. He stated that if he used to raise any objection, Pavan Arya and A R K Prasad used to get angry.
7.7.1 In his cross-examination for A-4 & A-6, he denied the suggestion of no pressure of the superior officers. He reiterated that there was pressure to process the file on urgent basis.
7.8 PW-8/ Krishan Kumar Gahlawat, stated that in 2017, he was posted as Chief Manager in Zonal Office of Corporation Bank. He stated that CCPC prepared a Note by which it was recommended that loan of Rs. 3.10 Cr., be sanctioned in favour of M/s Supreme Steels through its Proprietor Sudhir Kumar Arora. He stated that as per ZLCC Note, the proposal was sanctioned with deviation from scheme Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:18:40 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 24 of 123 guideline to the extent that loan amount was sanctioned for Rs. 3.10 Cr., against the maximum permissible limit of Rs. 2 Cr., and secondly, maximum loan for urban branch was Rs. 50 lacs while in the present case, loan was sanctioned for Rs. 3.10 Cr.
7.8.1 In his cross-examination for A-2, he admitted that the valuation furnished by the empanelled valuer is to be cross-checked by the Branch Manager. He admitted that in the present case, the Branch Manager cross-checked the same by visiting the property and prepared his Due Diligence Report in this regard.
7.9 PW-9/ Diwakar M. Shenoy stated that in the year 2015, he was serving as AGM in Recovery Department of Zonal Computer Center of Corporation Bank.
7.9.1 In his cross-examination on behalf of A-2, he stated after seeing the Note dt. 26.02.2013 (Mark PW-9/1) that S & G Advisory Services Pvt. Ltd., had to re-apply for its empanelment as B P Singh was no longer a part of the said Organization.
7.10 PW-10/ Prakash Narayan Naik stated that he was working as Sr. Manager of Aali Gaon Branch from 2016-2019. He proved the Statement of Accounts of Mamta Muduli from 20.03.2013 to 25.08.2017 as Ex. PW-10/A and the Statement of Account of Chakradhar Muduli as Ex. PW-10/C for the same period.Digitally signed by RAJEEV
RAJEEV BANSAL BANSAL Date:
2024.09.07 10:18:47 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 25 of 123 7.11 PW-11/Yogendra Pal Singh is a Chartered Accountant.
He stated that he knew Sudhir Kumar Arora being a resident of the same colony where he (the witness) lived. He stated that he knew Shiv Kumar Verma but was not knowing Chakradhar Muduli. He stated that Sudhir Kumar Arora approached him (witness) for grant of a bank loan, for which he arranged a meeting between Sudhir Kumar Arora and S K Verma as S K Verma had told him earlier that he can assist in grant of loan from Corporation Bank. He stated that he prepared Credit Monitoring Analysis (CMA) for M/s Supreme Steels at that time and gave it to S K Verma. He stated that S K Verma had asked for 4-5% commission for facilitating the grant of loan. He identified Sudhir Kumar Arora in Court while Shiv Kumar Verma was not present in the Court on that day and his identity was not disputed by his Advocate. He denied that Shiv Kumar Verma handed over an amount of Rs. 15 lacs in cash to Chakradhar Muduli, who in turn, gave that amount to Sudhir Kumar- the then Branch Manager, in token of commission of 5% to facilitate the loan.
7.11.1 On this point, he was declared hostile and was cross- examined by the Ld. Prosecutor for CBI, but he maintained his stand. He stated to have prepared CMA at the instance of Sudhir Kumar Arora and stated that the projections as filled in the CMA Data, were filled by him (witness) at the instance of Sudhir Kumar Arora. He stated that all the entries in the CMA data, including the entries regarding the net worth of Rs. 178.85 lakhs as estimated and Rs. 191.85 lakhs as projected, was mentioned in the CMA Data at the instance of Sudhir Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:18:52 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 26 of 123 Kumar Arora.
7.12 PW-12/ Rathnakar is the Sanctioning Authority for grant of Sanction for Prosecution. He stated that at the relevant time, he was working as General Manager and had the authority to remove Chief Manager of the Bank from his services. He stated that Pavan Arya was the Chief Manager and he had accorded Sanction for Prosecution of Pavan Arya, as he (witness) was competent to remove Pavan Arya from service. He proved the Order dt. 22.04.2019, being Sanction for Prosecution as Ex. PW-12/A. 7.12.1 In his cross-examination on behalf of A-4, he admitted that the Model Sanction Order was sent to him by CBI. He denied the suggestion of non-application of mind while granting Sanction or that the Sanction Order was based on the S P Report sent to him by CBI. He stated that his opinion regarding Sanction was based upon the documents sent by CBI and other documents.
7.13 PW-13/Sanjeev Gupta stated that accounts of M/s Silky Pharmaceuticals and Chemicals Pvt. Ltd., M/s Supreme Steels and M/s Aarti Enterprises were declared NPA and were transferred to Asset Recovery Management Branch, which is the designated Branch to deal with all the NPA accounts.
7.14 PW-14/ Deepak Verma stated that he used to work as Photographer for the purpose of valuation of the property. He stated Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:18:57 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 27 of 123 that in 2012, he was doing the same thing with B P Singh and had visited property bearing No. Khasra No. 476 & 477 in Village Bhonja, Dist. Ghaziabad at the directions of B P Singh since he (witness) had received work from Bank and he (witness) had informed B P Singh about it. He deposed to have clicked photographs of the property from outside as well as from inside and to have handed over the photographs to B P Singh. He stated that he had also collected title documents of the aforesaid property from Sudhir Kumar Arora's representative and had handed them over to BP Singh and B P Singh prepared Valuation Report of the property. He identified the signatures of B P Singh on the Valuation Report which was in the name of S & G Advisory Services Pvt. Ltd., for the aforesaid property and proved the same as Ex. PW- 14/A. He stated that Sudhir Kumar Arora's representative collected the said Report from him (witness) and paid Rs. 15,000/- in cash to him, out of which he kept Rs. 5000/- with himself and paid the balance amount of Rs. 10,000/- to B P Singh.
7.14.1 In his cross-examination on behalf of A-2, he stated that he does not have any document to show that he was working with B P Singh in the year 2012. He stated that he had handed over the negatives of the photographs, clicked by him, to B P Singh alongwith the developed photographs.
7.14.2 In his cross-examination on behalf of A-1, he stated that he does not know Sudhir Kumar Arora personally nor had even seen him but he was told by Sudhir Kumar Arora that he is sending his Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:19:03 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 28 of 123 representative and accordingly, he (witness) identified the person who came to him as the representative of Sudhir Kumar Arora.
7.15 PW-15/ Santosh Kumar Sinha stated that in the year 2012, he was Branch Head at Jaitpur Branch of Corporation Bank and at that time, Pavan Kumar Arya was Chief Manager, ZLCC. He stated that during that period, he received a call from Pavan Arya that since he (witness) was unable to meet the business targets, Pavan Arya was sending a proposal of Northern Communication Pvt. Ltd., to him. He stated that Pavan Arya told him to prepare the recommendation for the said proposal as Pavan Arya had already seen the documents. He stated that thereafter, S K Verma, Chakradhar Muduli and Manoj Kumar (Director of Northern Communication Pvt. Ltd.) visited the Branch and handed over the proposal to him. He stated that the proposal was thereafter sanctioned by ZLCC for an amount of Rs. 4.5 Cr., which was subsequently reduced to Rs. 3.9 Cr., due to deficient security documents. He also stated that S K Verma and Chakradhar Muduli had also visited him with the proposal of Supreme Steels but he refused because he was not comfortable with the proposal. He stated that they had also brought proposal, legal opinion and Valuation Report with them in original. He stated that he also received a call from Pavan Arya as well but he refused. He stated that there was only one pressure from Pavan Arya that he (witness) would be transferred to South if he does not meet the targets. He identified Chakardhar Muduli in Court and identity of S K Verma was not disputed as he was exempted from appearance on that day.Digitally signed by RAJEEV
RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:19:08 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 29 of 123 7.15.1 Nothing substantial came out in his cross-examination.
7.16 PW-16/ M Sripad Kamath stated that in the year 2017, he was posted in Asset Recovery Management Branch of the Corporation Bank. He stated that all the documents relating to recovery proceedings against M/s Supreme Steels, after its account became NPA, were provided by him and he proved the same as Ex. PW-16/A and Ex.
PW-16/B (Colly).
7.17 PW-17/ Satyeshwar Singh Parmar stated that in the year 2017, he was posted as Branch Head in Syndicate Bank, Vikas Puri Delhi. He stated that all documents relating to M/s Apna Enterprises of Proprietor Mr. Verma alongwith its bank statement were provided by him, which he proved as Ex. PW-17/A & Ex. PW-17/B. He stated that as per the Statement of Account, an amount of Rs. 51,60,300/- was credited from the account of M/s Supreme Steel on 01.03.2013; Rs. 45 lacs were transferred to M/s Silky Pharmaceuticals & Chemicals on 02.03.2013; and amount of Rs. 5 lacs were transferred to M/s Glass House on 08.03.2013 and an amount of Rs. 80,000/- was withdrawn in cash on 09.03.2013.
7.17.1 Nothing substantial came out in his cross-examination.
7.18 PW-18/ Narayan Singh Martolia stated that in the year 2017, he was posted as Chief Manager in Syndicate Bank, Navyug Market, Ghaziabad. He stated that he had provided Credit Sanction Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:19:14 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 30 of 123 Intimation of M/s Supreme Alloys Limited issued by his bank regarding a loan of Rs. 42 Cr. He stated that Director of this Company were Mr. M L Arora, J K Arora and Sahil Arora. He stated that as per the Statement of Account, an amount of Rs. 68 lacs and Rs. 32 lacs were received in the account of the aforesaid company on 01.03.2013 from M/s Supreme Steels and on the same date, an amount of Rs. 1 Cr., was sent from the aforesaid account to M/s Supreme Electrocast. He further stated that on 11.03.2013, another amount of Rs. 10 lacs was received in the aforesaid bank account of M/s Supreme Alloys Ltd., on 11.03.2013. He stated that the account of M/s Supreme Alloys Ltd., was declared NPA. He proved the documents with regard to M/s Supreme Alloys Ltd., as Ex. PW-18/A to Ex. PW-18/D. 7.18.1 He also stated that a loan of Rs. 22.5 Cr., was also sanctioned by their bank to M/s Supreme Electrocast Pvt. Ltd., of which Mr. M L Arora, J K Arora and S K Arora were the Directors. He stated that as per the Statement of Account, an amount of Rs. 1 Cr was received from M/s Supreme Alloys Pvt. Ltd., on 01.03.2013; Rs. 25 lacs were received from M/s Supreme Steels in the account of the aforesaid company on 04.03.2013 and another amount of Rs. 30 lacs was received from M/s Supreme Steels on 11.03.2013. He stated that the account of M/s Supreme Electrocast Pvt. Ltd., was declared NPA.
7.18.2 Nothing substantial came out in his cross-examination.
7.19 PW-19/ Ms. Mukta Kumari stated that in the year 2017, Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:19:19 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 31 of 123 she was posted as Branch Manager of Lajpat Nagar Branch of Indian Overseas Bank. She stated that she had handed over documents Ex. PW-19/A to Ex. PW-19/J relating to current account of P K Industries of which Pankaj Chanana was Proprietor and account statement of Pankaj Chanana. She stated that on 14.05.2013, an amount of Rs. 5 lacs was credited in the account of Pankaj Chanana from Corporation Bank and thereafter, the amount was withdrawn through cheque. She further stated that on the same day, an amount of Rs. 14 lacs were received in the same account from Corporation Bank and thereafter, it was transferred to the account of P K Industries. She also stated that on 16.05.2013, an amount of Rs. 24 lacs were received from Corporation Bank and thereafter, Rs. 4 lacs were transferred on the same date to M/s P K Industries and an amount of Rs. 20 lacs was transferred on 18.05.2013 to Sanjay Batra.
7.19.1 Similarly, she stated that in the account statement of P K Industries, an amount of Rs. 4 lac was credited on 16.05.2013 from saving account of Pankaj Chanana and was withdrawn in cash on the same day.
7.19.2 No cross-examination was carried by any accused of this witness.
7.20 PW-20/ Mr. Sashi Raj stated that in 2017, he was posted as clerk in Nehru Nagar Ghaziabad Branch of Punjab National Bank.
He proved the Account Opening Form of M/s Supreme Electrocast Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:19:24 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 32 of 123 (Sudhir Kumar Arora as Director) as Ex. PW-20/B and its account statement as Ex. PW-20/C. He stated that on 04.03.2013, Rs. 30 lacs were credited from the account of M/s Supreme Alloys Ltd. He stated that an amount of Rs. 25 lacs was transferred into the account of M/s Supreme Steels and Rs. 5 lacs was withdrawn in cash on the same day. He further stated that on 08.05.2013, Rs. 6 lacs by way of three entries of Rs. 2 lacs each were credited from the account of M/s Supreme Steels and the amount of Rs. 6 lacs was withdrawn in cash in three entries of Rs. 2 lacs each.
7.20.1 No cross-examination was carried by any accused of this witness.
7.21 PW-21/ Ashok Kumar Gupta stated that in 2017, he was posted as AGM in Sector-27, Noida Branch of Punjab National Bank.
He proved the Account Opening Form of M/s Divya Impex (Pankaj Chanana and Divya Verma- its partners). The documents were proved by him as Ex. PW-21/A to Ex. PW-21/E. He stated that on 25.07.2013, an amount of Rs. 24,45,000/- were credited in the account of M/s Divya Impex from M/s Supreme Steels and Rs. 24,75,000/- was debited on the same day by way of transfer. He stated that on 26.07.2013, Rs. 22 lacs were credited in this account from M/s Supreme Steels and the said amount was debited on 27.07.2013. He also stated that on 30.07.2013, an amount of Rs. 24,80,000/- was credited through RTGS from account no. 166801801130003 and Rs. 24,79,000/- were debited from this account on the same day. He stated that on 13.09.2013, Rs. 15,50,000/-
Digitally signed by RAJEEVRAJEEV BANSAL BANSAL Date:
2024.09.07 10:19:29 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 33 of 123 and Rs. 14,50,000/- were credited in this account through RTGS from account no. 166801801130003 and on the same day Rs. 25 lacs were transferred to M P Associates and Rs. 5 lacs to M P. He further stated that on 16.09.2013, Rs. 30 lacs were credited in this account through RTGS from account no. 166801801130003 and on 28.09.2013, Rs. 52 lacs and Rs. 47,80,000/- were transferred from this account.
7.21.1 No cross-examination was carried by any accused of this witness.
7.22 PW-22/ Mr. Hemant Kumar Singh stated that in the year 2018, he was posted as Sr. Manager in Sector-18 Noida Branch of Punjab National Bank. He proved the Account Opening Form of M/s Supreme Alloys Ltd., (Jagjiv Kumar Arora- Director). The documents were proved by him as Ex. PW-22/A to Ex. PW-22/E. He stated that on 04.03.2013, Rs. 30 lacs were received in this account through RTGS and on the same date, this amount was transferred. He stated that on 25.03.2013, an amount of Rs. 45 lacs were received from M/s Supreme Steels and transferred to the account of M/s Supreme Electrocast Pvt.
Ltd. He stated that the account of M/s Supreme Alloys Ltd., is NPA.
7.22.1 No cross-examination was carried by any accused of this witness.
7.23 PW-23/ Mr. Ajay Singh Chauhan stated that in the year 2017, he was posted at Nehru Nagar Branch of Axis Bank. He proved Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:19:35 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 34 of 123 the Account Opening Form of Aman Chatwal. The documents were proved by him as Ex. PW-23/A to Ex. PW-23/E. He stated that on 06.09.2013, Rs. 20 lacs and Rs. 30 lacs were received in the account no.
912010049427999 of Aman Chatwal through RTGS from the account of M/s P K Industries. He stated that on 09.09.2013, an amount of Rs. 50 lacs was debited from this account through cheque/ DD no. 307461.
7.23.1 No cross-examination was carried by any accused of this witness.
7.24 PW-24/Mr. Varun Kohli stated that he is a Chartered Accountant. He stated that he knows Sudhir Kumar Arora as he used to conduct audit of his firm M/s Supreme Electrocast since its incorporation till 2012. He proved the ITRs, the balance sheets and audit reports for the assessment years 2010-2011 to 2012-2013 as Ex. PW-24/A to Ex. PW-24/C (Colly).
7.24.1 No cross-examination was carried by any accused of this witness.
7.25 PW-25/ Mr. Sunil Aggarwal stated that he was posted as Manager Advance Section at Navyug Market, Ghaziabad of Syndicate Bank from 2016 to September, 2018. He proved the Statement of Account of M/s Supreme Electrocast as Ex. PW-25/A & Ex. PW-25/B. 7.25.1 No cross-examination was carried by any accused of this Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:19:40 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 35 of 123 witness.
7.26 PW-26 /Sh. Jagjiv Kumar Arora stated that he was one of the original Promoters of M/s Supreme Electrocast at the time of its inception around 2001-2002. He stated that his father M L Arora and his younger brother Sudhir Arora were other promoters of M/s Supreme Electrocast. He stated that in 2005-2006, he resigned as Director of this company and Sudhir Arora resigned as Director from his (witness) company namely M/s Supreme Alloys Ltd. He stated that a credit limit of Rs. 42 Cr., was granted by Syndicate Bank to M/s Supreme Alloys Ltd. He proved the documents in this regard as Ex. PW-26/A to Ex.
PW-26/C. He further stated that M/s Supreme Steels had placed some orders on his company i.e. M/s Supreme Alloys Ltd., for which they released some money in his account and later on M/s Supreme Steels represented that they are unable to get excise number and hence, they (witness) were asked to refund the money to their sister concerned M/s Supreme Electrocast Pvt. Ltd., and that the order shall be executed to M/s Supreme Electrocast Pvt. Ltd., which was later on executed by M/s Supreme Alloys Ltd. He refused to accept the signatures of Sudhir Kumar on seizure memo dt. 06.04.2018.
7.26.1 Ld. PP sought permission to cross-examine this witness on this score which was allowed. He denied the suggestion that he was deliberately not identifying the signatures of his brother.
7.26.2 In his cross-examination on behalf of A-1, he admitted Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:19:47 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 36 of 123 that business transactions took place between M/s Supreme Alloys Ltd., and M/s Supreme Steels and M/s Supreme Electrocast Pvt. Ltd.
7.26.3 However, no documents were brought on record to substantiate the claim that there were business transactions between the aforesaid three business entities.
7.27 PW-27/ Sh. Aman Singh Chhatwal stated that he knew Pankaj Chanana as they studied together and that M/s P K Industries was run by Pankaj Chanana. He stated that he had sold the machinery of his factory M/s Vrinda Forgings Pvt. Ltd., to Pankaj Chanana and received Rs. 50 lacs, Rs. 35 lacs and Rs. 15 lacs- out of which Rs. 15 lacs was received in cash for labour payment and the other two payments were received in his bank account at Axis Bank. He stated that he had no business dealings with Mr. Sudhir Kumar Arora. He stated that in his Statement of Account, he had received payments of Rs. 20 lacs and Rs. 30 lacs from M/s P K Industries on 06.09.2013.
7.27.1 No cross-examination was carried by any accused of this witness.
7.28 PW-28/ Sharad Mohan Soi stated that he knows Ashok Sharma of Oriental Bank of Commerce, under whom he had worked. He identified the signatures of Mr. Ashok Sharma on letter dt. 31.08.2017 by which the Account Opening Form and Statement of Account of M/s P K Industries were handed over under signatures of Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:19:52 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 37 of 123 Mr. Ashok Sharma to CBI.
7.28.1 No cross-examination was carried by any accused of this witness.
7.29 PW-29/ Mr. Prabhat Singh Jamwal is the first IO. He stated that after conducting the investigation for some time, he handed over the matter to Sh. Mukesh Kumar Meena for further investigation at his end.
7.29.1 In his cross-examination on behalf of A-1, A-4 & A-6, he stated that he remained the IO in this case from the date of registration of FIR till August 2018. He stated that Clause 12.4.1, 12.4.4, 12.7.1, 12.13, 12.14 and 12.18 of Chapter 12 of CVPOD Manual were violated.
He stated that the Legal Search Report was addressed to Jaitpur Branch instead of Aali Gaon Branch. He admitted that Sudhir Kumar Arora had paid an amount of Rs. 91 lacs approximately to Shiv Kumar Verma for the purchase of iron scrap and that Shiv Kumar Verma returned the entire Rs. 91 lacs (approx.) to Sudhir Kumar Arora as the deal could not mature, but stated that the return of amount of Rs. 91 lacs was excluding the amount of Rs. 15 lacs. He admitted that the loan was sanctioned on or about 26.02.2013 and it was communicated to Aali Gaon Branch on 27.02.2013.
7.29.2 In his cross-examination on behalf of A-2, he stated that CBI's conclusion regarding over-valuation of the mortgaged property/ Digitally signed RAJEEV by RAJEEV BANSAL BANSAL Date: 2024.09.07 10:19:57 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 38 of 123 collateral security was based upon the reports of Amarjeet Singh and Ashutosh Nirmal and also on the basis of partition deed as executed by borrower's family. He admitted that there was difference between the valuations provided by Amajeet Singh, Ashutosh Nirmal and the valuation of the property mentioned in the partition deed.
7.29.3 In his cross-examination on behalf of A-5, he stated that he could not find any evidence which could show movement of money from one accused to another.
7.30 PW-30/ Insp. Mukesh Kumar Meena stated that he was entrusted the investigation of this case on its transfer from Prabhat Singh Jamwal. He stated that he filed the chargesheet in the case and proved the same as Ex. PW-30/A. The application seeking Sanction for Prosecution was proved by him as Ex. PW-30/B. He proved the seizure memo dt. 06.04.2018 as Ex. PW-30/C. 7.30.1 In his cross-examination on behalf of A-2, he admitted that the conclusion of CBI with regard to over-valuation of the collateral security was based upon the reports of Amarjeet Singh (Ex. PW-4/A) and Ashutosh Nirmal (Ex. PW-3/A). He voluntarily stated that CBI also relied upon the registered partnership deed for the value of mortgaged property. He admitted that M/s S & G Advisory Services Pvt. Ltd., was empanelled with Corporation Bank on 27.06.2011. He stated that there was no written document to show that Jaitpur Branch had asked M/s S & G Advisory Services Pvt. Ltd., to conduct valuation.
Digitally signed by RAJEEVRAJEEV BANSAL BANSAL Date:
2024.09.07 10:20:03 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 39 of 123 He admitted that the Legal Search Report dt. 18.01.2013 (Ex. PW-2/A) was originally addressed to Jaitpur Branch but he volunteered to add that there was a slip pasted on it addressed to Aali Gaon Branch Manager. He stated that during investigation, he found out that the said slip was pasted by Adv. Sandeep Sharma.
7.30.2 In his cross-examination on behalf of A-5, he stated that he did not make any investigation with regard to establishing money trail because there was already a statement of Y P Singh recorded in that regard.
7.30.3 In his cross-examination on behalf of A-1, A-4 & A-6, he stated that the report of valuer B P Singh was found over-valued and the external Due Diligence Report was also found to be incorrect on certain facts. He stated that Circular No. 590/207 was violated in this case as according to this Circular, the Branch was required to submit the documents received from the borrower alongwith reports in prescribed format i.e. Annexure-1 to this Circular, but it was not complied with the Branch and no objections were raised in this regard by CCPC. He stated that the Valuation Report of B P Singh was addressed to Jaitpur Branch and not to Aali Gaon Branch and Legal Search Report by empaneled advocate was also addressed to Jaitpur Branch.
8. All the accused persons were examined u/s 313 CrPC when the incriminating circumstances were put to all of them, to which all of them denied, pleading innocence and false implication. Written Digitally signed RAJEEV by RAJEEV BANSAL BANSAL Date: 2024.09.07 10:20:08 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 40 of 123 submissions u/s 313(5) CrPC were filed on behalf of A-2. A-1 sought permission to lead Defence Evidence.
9. Defence Evidence:
9.1 A-1/ Sudhir Kumar Arora examined Mr. Vinod Kumar Sondhi, Chief Manager from Union Bank of India as DW-1. He stated that an email dt. 07.03.2024 was received from Sudhir Arora, addressed to Chief Manager, Asset Recovery Branch of Union Bank with regard to proposal for One-Time Settlement (OTS) of the account of M/s Supreme Steels. The email was proved as Ex. DW-1/1. He stated that an amount of Rs. 10 lac was received in the Branch on 19.03.2024. He further stated that the One-Time Settlement offer was for an amount of Rs. 1 Cr., but the same is still under consideration at appropriate level.
9.2 In his cross-examination on behalf of Prosecution, he stated that according to the running ledger, an amount of Rs. 9.17 Crore is recoverable by the Bank from M/s Supreme Steels, out of which Rs. 3.10 Cr., is the principal balance amount and the rest is interest portion thereon. He stated that the collateral security Khasra No. 476 & 477 in Village Bhonja, Dist. Ghaziabad, was sold in auction and it fetched Rs. 1.27 Crore.
9.3 In his cross-examination on behalf of A-2, he admitted that while evaluating any OTS proposal, its acceptance is guided by commercial wisdom but stated that such decisions are taken at the Digitally signed RAJEEV by RAJEEV BANSAL BANSAL Date: 2024.09.07 10:20:13 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 41 of 123 Board Level of the Bank.
10. Arguments on behalf of CBI 10.1 It was argued on behalf of CBI by the Ld. Prosecutor Sh.
Amjad Ali, that in the present case, credit facility was applied by A-1 Sudhir Kumar Arora under Corp. Vyapar Overdraft (CVPOD) Scheme. It was argued that on 04.02.2013, such a proposal was sent to Zonal Office of Corporation Bank and it was based on a collateral security in the form of an immovable property bearing Khasra No. 476 & 477 in Village Bhonja, Dist. Ghaziabad. It was argued that as per the Scheme, maximum amount of loan against a collateral security under CVPOD Scheme could have been 65% of its market value. It was argued that A-2 B P Singh prepared a Valuation Report and assessed the value of this property at Rs. 4,82,63,250/-, and on the basis of such valuation, loan of Rs. 3.10 Cr was recommended. He stated that this valuation was exaggerated as two other valuers had assessed this property at lesser price and even the auction could fetch only Rs. 1.27 Cr., and all this cumulatively show that the property worth Rs. 1.25 Cr., to Rs. 1.50 Cr., was deliberately over-valued at Rs. 4.82 Cr., only to get credit facility of Rs. 3.10 Cr., being about 65 % of the permissible ceiling of loan of the value of the property.
10.2 It was argued that the Report was prepared by A-2 B P Singh with the intent to cheat the Bank as no date of preparation of the said Report was mentioned on the Report and concealment of date is a Digitally signed RAJEEV by RAJEEV BANSAL BANSAL Date: 2024.09.07 10:20:21 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 42 of 123 part of cheating. Secondly, it was argued that the Report was addressed to Jaitpur Branch and not to Aali Gaon Branch, although it should have been addressed to Aali Gaon Branch. It was argued that this lapse shows malafide intention of A-2 B P Singh. Further, it was argued that the empaneled valuer of the Bank was M/s S & G Advisory Services Pvt. Ltd., which was owned by Girish Sharma and B P Singh was only an Engineer in the said concern. It was next argued that Girish Sharma had by his email dt. 04.03.2013, intimated Zonal Office regarding the misdeeds of B P Singh to the extent that B P Singh was in the habit of preparing valuation reports without any authorization, but no action was taken on the said email, due to connivance of Bank officials in Zonal Office, where Pavan Arya was also posted. He argued that neither any proof could be brought on record by the accused as to who/which branch of Corporation Bank had entrusted him the task of preparation of Valuation Report of the property in question nor any proof could be brought on record by the accused to show the payment of remuneration by the Bank towards preparation of the Valuation Report by B P Singh. It was argued that the site was inspected by Valuer on 24.12.2012 and the request for loan was also made on 24.12.2012 which shows the meeting of mind on the part of A-1 & A-2 and goes on to show that the Valuation Report was prepared with an intent to cheat the Bank. It was argued that on 24.12.2012, A-1 was not the absolute owner of the collateral security Khasra No. 476 & 477 in Village Bhonja, Dist. Ghaziabad., as the Partition Deed was prepared on 15.01.2013 and it clearly shows the intention of A-1 to cheat the Bank as he claimed to be owner of the said property at the time of applying for the loan on Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:20:29 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 43 of 123 24.12.2012.
10.3 It was argued that a perusal of the application form show that the said application was not made on the prescribed form for CVPOD loans and that further there was no date mentioned on the said form as to when the loan was applied. He stated that CCPC which used to process the recommendations received from the Branch for grant of loan, should have rejected the application on this ground alone that the application is not in proper CVPOD form but A-4 Pavan Arya ignored this lapse. He also failed to point out that the application form does not bear any date and these two grounds alone show complicity of A-4 Pavan Arya. It was stated that the loan was applied by M/s Supreme Steels and a perusal of the application form showed that the said firm was established only in December, 2012 i.e. just a few days prior to submission of the loan application. However, no objections in this regard were put on record by anyone including A-4 Pavan Arya. It was argued that the application form itself was accompanied by Valuation Report of the property, although such a Report should have been called by the Bank and this factor again shows complicity of borrower with the Valuer i.e. A-2 B P Singh. It was stated that the photographs of the property Khasra No. 476 & 477 in Village Bhonja, Dist. Ghaziabad, showed that it was just a building having no plant and machinery or stock, where no commercial activity was even visible and yet it was valued at Rs. 4.82 Cr., by A-2/ B P Singh. It was argued that net worth of Sudhir Kumar Arora was mentioned at Rs. 713.17 lakhs in the application form but the corresponding documents showed his net Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:20:36 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 44 of 123 worth at Rs. 695.76 lacs and this discrepancy was ignored by A-4/ Pavan Arya which shows that he was not protecting the interest of the bank but was only serving the interest of the accused.
10.4 It was argued that Credit Sanction Intimation was received on 26.02.2013 and the loan was started to be disbursed from 01.03.2013 and within a short span of 25 days, the entire limit was exhausted by A- 1 Sudhir Kumar Arora by diverting the funds to his sister concerns and by withdrawing cash amounts for his personal use, which was against the norms of CVPOD loan according to which the loan could have been utilized only for the purpose of business transactions of M/s Supreme Steels and not for any other purpose. It was argued that no evidence was brought on record by A-1 that the loan amount was utilized for bonafide business transactions of M/s Supreme Steels and was not misused.
10.5 It was argued that A-4 Pavan Arya failed to perform his duty diligently by properly processing the loan application of M/s Supreme Steels represented by A-1. It was argued that PW-7 Ajay Pathak clearly deposed that Pavan Arya used to put pressure on him asking him not to put many objections on the loan proposal. It was argued that PW-7 also stated that customers alongwith A-5 Chakradhar Muduli used to approach Pavan Arya directly and would give proposals directly to Pavan Arya and Pavan Arya used to send such proposals thereafter to Branch. It was argued that PW-15 Santosh Kumar Sinha also stated that A-5 Chakradhar Muduli came alongwith A-6 S K Verma Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:20:43 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 45 of 123 to Jaitpur Branch with the loan proposal, legal opinion and Valuation Report of the property but Santosh Kumar Sinha did not feel comfortable with the proposal and hence, refused the same, whereafter he received a call from Pavan Arya as well but that too was not acceded to by Santosh Kumar Sinha, at which Pavan Arya threatened him that he would be transferred to South. It was further argued that PW-11 Yogender Pal Singh stated that he arranged a meeting of A-1 Sudhir Kumar Arora and A-6 Shiv Kumar Verma for the purpose of bank loan as A-6 S K Verma had told Yogender Pal Singh that he can assist in granting of loan from Corporation Bank and that A-6 S K Verma had asked for a commission of 4-5% for facilitating the grant of loan. It was thus argued that a criminal conspiracy was hatched by all the accused persons to cheat the bank as exaggerated valuation report was prepared of a property, based on which working capital of Rs. 3.10 Cr., was got sanctioned from Corporation Bank by the accused persons and loan amount was never utilized for the purpose it was sanctioned but was transferred to sister concerns and was withdrawn in cash within a short span of only 25 days from the grant of credit facility. He thus argued that all the accused persons be convicted for commission of offence u/s 120-B IPC r/w 420 IPC & A-1 Sudhir Kumar Arora be also convicted u/s 420 IPC and A-4 Pavan Arya be also convicted for commission of offence u/s 13(2) r/w 13(1) (d) of PC Act.
11. Arguments on behalf of accused persons 11.1.1 Mr. Akhand Pratap Singh Advocate argued on behalf of Digitally signed RAJEEV by RAJEEV BANSAL BANSAL Date: 2024.09.07 10:20:49 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 46 of 123 three accused persons namely A-1 Sudhir Kumar Arora, A-4 Pavan Arya and A-6 Shiv Kumar Verma.
Arguments on behalf of A-4 Pavan Arya 11.1.2 Arguments were addressed on behalf of A-4 Pavan Arya first. While arguing for A-4 Pavan Arya he argued that the Order granting Sanction for Prosecution is not sustainable in the eyes of law in as much as the same is based on insufficient documents furnished by the CBI to the Bank for the purpose of deciding as to whether Sanction for Prosecution should be granted or not. Reliance has been placed on the judgment of Hon'ble Supreme Court of India in State of Tamil Nadu v M. M. Rajendran (1998) 9 SCC 268 and Central Bureau of Investigation v Ashok Kumar Aggarwal (2014) 14 SCC 295.
11.1.3 It was argued that the Hon'ble Supreme Court of India in the aforesaid judgments has laid down that the Prosecution is duty bound to supply all the material to the Sanctioning Authority including the statements of the witnesses recorded by the Investigating Officer u/s 161 CrPC and the statements got recorded by him through Court u/s 164 CrPC.
11.1.4 It was argued that a perusal of the material supplied by the CBI to the Sanctioning Authority demonstrate that statement of witnesses recorded u/s 161 CrPC was not supplied to the Competent Authority and hence, the decision of the Competent Authority granting Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:21:04 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 47 of 123 Sanction for Prosecution against A-4 Pavan Arya is ab-initio defective.
11.1.5 It was stated that though competence of the Sanctioning Authority to give the Sanction for Prosecution is not disputed by the accused but the Order granting Sanction for Prosecution shows complete non-application of mind by the Sanctioning Authority as the Order is a non-speaking Order.
11.1.6 On merits, it was argued that Pavan Arya was head of CCPC and CCPC was directly not competent to grant credit sanction to the borrower. It was argued that the borrower approached the Branch for grant of credit sanction, where he was required to complete the paper work and on being satisfied with the proposal, the Branch Head would make recommendations on the proposal and would send it to Zonal Office for sanction. Zonal Office, in turn would send the proposal to CCPC and at CCPC, the Credit Officer would check the proposal and on being satisfied, would send it to CCPC Head (A-4 Pavan Arya was CCPC Head at the relevant time) and CCPC Head would 'vet' the proposal and send it to ZLCC for sanction of credit. It was argued that if there was any defect in the valuation of the collateral security, it was the duty of the Branch Head to check the same and it was not within the duties of the CCPC Head to satisfy itself in this regard. It was further argued that post sanction of loan, again it was the duty of either the Branch Head to see that the funds were properly utilized or of Credit Risk Management Department to ensure correct usage of the credit limit by the borrower. It was argued that it was the duty of either the Branch Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:21:10 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 48 of 123 Head to be satisfied about the loan proposal or of the Credit Officer - who processed the loan, or of the ZLCC which sanctioned the credit limit. It was argued that A-4 Pavan Arya, being not the loan sanctioning authority, cannot be indicted. It was argued that there was neither any violation of any Circular by A-4 Pavan Arya nor was there any illegality or irregularity in performance of his duties.
11.1.7 Written arguments running into 28 pages were also filed on behalf of A-4 Pavan Arya, reiterating therein the oral arguments.
Arguments on behalf of A-1 Sudhir Kumar Arora 11.2 While arguing on behalf of A-1 Sudhir Kumar Arora, Mr. Akhand Pratap Singh argued that as per Charge Sheet this accused is stated to have given a false Net Worth Statement, his collateral security was over valued, he siphoned off the funds and caused wrongful loss to the bank. It was argued that none of the allegation is proved as no witness deposed that the Net Worth Statement of this accused was false. It was argued that the accused gave his Net Worth at Rs. 713 Lakhs in his loan application and the same was valued at Rs. 695 Lakhs by his Chartered Accountant. It was argued that the difference in the valuation cannot be called to be dishonest and at best it could be a case of careless lapse on the part of the accused. Regarding ownership of property, it was argued that Sudhir Kumar Arora had become absolute owner of the property on 12.01.2013 and the Legal Report of the property was proper. It was argued that so far as Valuation Report of the immovable Digitally signed RAJEEV by RAJEEV BANSAL BANSAL Date: 2024.09.07 10:21:14 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 49 of 123 property is concerned, the valuation was done by A-2 B.P. Singh and hence the same cannot be attributed to Sudhir Kumar Arora. Regarding siphoning off, it was argued that although the accused utilised the entire credit limit within 25 days but at the same time, it was deposited back as the purpose of credit limit is to withdraw money as and when required. It was argued that the account turned NPA for reasons beyond the control of the accused as the power rates increased at that time which made running of iron ingots business commercially non viable, and due to this reason there were delays in repayment of the loan. It was further argued that the accused never caused any wrongful loss to the Bank as the loan was granted to the accused borrower against his property, and the bank auctioned the property to realise its dues and for the balance dues, the accused borrower is in One Time Settlement Talks with the bank, which was confirmed by DW-1 as well. It was argued that the accused borrower had, at least on 50 previous occasions taken business loans from Banks and no such loan turned NPA as the accused borrower repaid all the loans in time. Written arguments running into 24 pages were also filed.
Arguments on behalf of A-5 Shiv Kumar Verma 11.3 On behalf of A-5 Shiv Kumar Verma, Mr. Akhand Pratap Singh argued that Shiv Kumar Verma and Sudhir Kumar Arora had previous business relations and that he had received an amount of Rs. 91 Lakhs from A-1 Sudhir Kumar Arora, but the said amount was received on account of sale of scrap and subsequently, the deal could Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:21:28 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 50 of 123 not materialize and hence the amount was returned by A-5 Shiv Kumar Verma in instalments through bank transfers and in cash. Written arguments running into 15 pages were also filed.
Arguments on behalf of A-2 Engineer B.P. Singh 11.4 Mr. Shree Singh, Advocate argued on behalf of A-2 Engineer B.P. Singh. It was argued that the accused B.P. Singh was acquitted in two identical cases in which the borrowers were different but Valuation Reports therein were prepared by A-2 B.P. Singh. It was argued that the present case is materially similar to the earlier two cases.
It was argued that the allegations against the accused were that he had overvalued the immovable property at Rs. 4,82,63,250/- in his Valuation Report dt. 24.12.2012 due to which a credit limit of Rs. 3.10 Cr was granted in favour of the borrower. It was argued that the accused was charged for commission of offence u/s 120-B read with Section 420 IPC and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, alongwith four other accused persons, and a specific and separate charge u/s 420 IPC was also framed against him. Mr. Singh bifurcated the charge u/s 420 IPC into seven parts i.e. the valuation was inflated, that the Report was prepared on false letter head of S & G Advisory Services Pvt. Ltd., that the accused used false seal, that the accused used his private telephone number on the Letter Head, that the inflated Report was prepared at the instance of A-1 Sudhir Kumar Arora, that the valuation work was never assigned by Aali Branch to B.P. Singh or to M/s S & G Advisory Services Pvt. Ltd. and Digitally signed RAJEEV by RAJEEV BANSAL BANSAL Date: 2024.09.07 10:21:33 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 51 of 123 that the accused received Rs. 10,000/- for the same.
11.4.1 It was argued that the Valuation Report prepared by A-2 was not defective as the same was approved firstly by the Branch Manager, then by the Credit Officer at CCPC and then by ZLCC although all of them had the authority to not only object to the valuation put forth by A-2, but also to call for fresh valuation of the property from some other Valuer on Bank's panel but that having not been done at any level - from Branch to ZLCC, no criminality can be attributed to the bonafide act of A-2 in preparation of the Valuation Report. It was argued that the Bank asked him to give value of the property which he did, to the best of his competence, and if the account later on turned NPA, it is the borrower who is at fault and not the Valuer.
11.4.2 It was further argued that there is no contemporary relative or comparable Valuation Report or such other thing on record by comparing which, it can be said that the Valuation done by A-2 was inflated.
11.4.3 It was argued that no seal or Letter Head of M/s S & G Advisory Services Pvt. Ltd. were seized by the IOs and sent to CFSL and hence the charge of forgery goes.
11.4.4 It was argued that the Investigating Officers namely PW- 29 and PW-30 did not make any investigation to bring on record any evidence that the valuation done by A-2 was defective or that he over Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:21:41 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 52 of 123 valued the property. It was argued that a property cannot be valued at par with the Circle rate as the same is only for the purpose of Stamp Duty and that it is always different from the market value. It was argued that the IOs did no investigation as to whether PW- 14 Deepak Verma was at all an employee of A-2 or not, and that having not been done by the IOs, the deposition of PW-14 Deepak Verma is not trustworthy.
11.4.5 Regarding receipt of Rs. 10,000/- it was argued that except the deposition of PW-14 Deepak Verma, there is no other evidence of this payment and since the prosecution failed to prove the employer-
employee relationship between A-2 B.P. Singh and PW-14 Deepak Verma, the same cannot be believed.
11.4.6 'Brief' written arguments running into 32 pages in single line spacing were also filed on behalf of A-2 reiterating therein the oral arguments.
Arguments on behalf of A-5 Chakradhar Muduli 11.5 On behalf of accused Chakradhar Muduli, it was argued by Mr. Akash Chauhan, Advocate that the role attributed to this accused is that of being a middleman who is alleged to have taken commission for facilitating and ensuring grant of loan to the accused Sudhir Kumar Arora. Attention of the Court was drawn to the deposition of PW-11 Y.P. Singh wherein he emphatically stated that no money was paid to Chakradhar Muduli. Similarly, deposition of PW-15 Santosh Sinha was Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:21:47 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 53 of 123 pointed out to show that the proposal of M/s Supreme Steels was made before him in end of February 2013 or early March 2013. It was thus argued that there was no occasion for the accused to go to this witness as the loan had already been processed in mid of February 2013. Deposition of PW-7 Ajay Pathak was thereafter relied upon wherein he stated in his cross examination that he does not know Chakradhar Muduli by face or he ever met him.
11.5.1 It was argued that no money trail could be found in the account of this accused, as was admitted by both the IOs.
11.5.2 It was argued that similar allegations, as are made against the accused in this case, were made against him in two other cases namely CBI v Parth Kumar Verma and CBI v Shiv Kumar Verma and in both those cases, this accused was acquitted.
11.5.3 It was argued that the applicant has been falsely implicated in this present case and hence may be acquitted.
11.5.4 Written arguments were filed on behalf of this accused as well.
12. Analysis
12.1 I have heard both the sides and have carefully perused the records of the case. My findings are as under:
Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:22:03 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 54 of 123
13. Corp Vyapar Scheme 13.1 Corp Vyapar Scheme (Mark -B/PW-1) was introduced by Corporation Bank w.e.f. 10.08.1999. Clause 2 of the Scheme provided that the purpose of the Scheme is to provide short term working capital facilities.
13.2 As per Clause 1 of the Scheme, traders engaged mainly in buying and selling of goods are eligible to seek credit facility. Individual borrowers engaged in trading activities for at least a period of 1 year prior to seeking sanction of loan are eligible. Clause 1 of the Scheme also specifically provided that units engaged in manufacturing are not eligible for loan under this Scheme.
13.3 Para 4 of the Scheme provided that for the branches located in Metro cities, loan upto Rs. 50 Lakhs (revised to Rs. 200 Lakhs vide Circular No. 848/2011 dt. 15.12.2011 - PW 1/O) could be granted. It further provided that the business Unit should be located within 25 kms of radial distance from the Branch. It also provided that the permissible credit limit would be upto 20% of the projected turnover and the projected turnover should not exceed 25% of the last turn over.
13.4 Para 5 of the Scheme provided that for collateral of immovable property, 35% of its assessed market value shall be margin. In other words, the maximum credit limit that could be sanctioned, would be 65% of the assessed market value of the immovable property.
Digitally signed by RAJEEVRAJEEV BANSAL BANSAL Date:
2024.09.07 10:22:09 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 55 of 123 13.5 Vide Circular No. 590/2007 dt. 14.08.2007 (Ex. PW-1/E) Centralized Credit Processing Centers (CCPC) were created at all Zonal Offices for processing loans above Rs. 25 Lakhs.
13.6 Circular No. 155/2011 dt. 26.2.2011 (Ex. PW-1/K) inter-
alia provided that Branches were to monitor end use of the funds and for that purpose, amongst other steps, undertaking was to be obtained from the borrower for proper end use of the funds. The Circular also provided for immediate recalling the advances on observing misuse of the funds.
13.7 Circular No. 170/2011 dt. 05.03.2011 (Ex. PW-1/L) provided that there is restriction on dealing with borrowers through Middlemen. By this Circular, all the Branches and Offices of Corporation Bank were advised to be on guard and not to entertain/ encourage business through middlemen/agent and to deal with the customers directly on credit related matters.
13.8 Deviations were permitted from the Scheme Guidelines vide Circular No. 338/2012 dt. 14.6.2012 (Ex. PW-1/Q).
14. Since accused persons have been charged for commission of offences under section 120-B and 420 of IPC and Section 13(2) and 13 (1)(d) of the Prevention of Corruption Act 1988, it is necessary to have a look at the relevant legal provisions in this regard.
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14.1.1 Section 120-A defines criminal conspiracy as under:-
"When two or more person agree to do, or cause to be done, (1) An illegal act, or (2) An act which is not illegal by illegal means, such an agreement is designated a criminal conspiracy:
Provided that no agreement except an agreement to commit an offence shall amount to a criminal conspiracy unless some act besides the agreement is done by one or more parties to such agreement in pursuance thereof.
Explanation: - It is immaterial whether the illegal act is the ultimate object of such agreement, or is merely incidental to that object."
14.1.2 Thus, ingredients of the offence of criminal conspiracy are:
(i) an agreement between two or more persons;
(ii) the said agreement must relate to doing or causing to Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
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(a) an illegal act; or
(b) an act which is not illegal in itself but is done by illegal means.
14.1.3 To establish a charge of conspiracy, indulgence in either an illegal act or a legal act by illegal means is necessary. The definition of 'illegal' is provided for in section 43 of the Indian Penal Code.
"43. The word 'illegal' is applicable to everything which is an offence or which is prohibited by law, or which furnishes ground for a civil action; and a person is said to be 'legally bound to do' whatever it is illegal in him to omit."
14.1.4 The word 'illegal' as defined u/s 43 of Indian Penal Code has been given a very wide meaning. It consists of three ingredients:
a) everything which is an offence or ;
b) everything which is prohibited by law; or
c) everything which furnishes ground for civil action.
14.1.5 Direct independent evidence of criminal conspiracy is generally not available and its existence is a matter of inference, which is normally deduced from acts of parties in pursuance of a purpose in common between the conspirators. It is not always possible to give Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:22:27 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 58 of 123 affirmative evidence about the date and time of the formation of the criminal conspiracy, about the persons who took part in the formation of the conspiracy, about the object, which the conspirators set before themselves as the object of conspiracy, and about the manner in which the object of conspiracy is to be carried out, all is necessarily a matter of inference. Meeting of minds of two or more persons for doing an illegal act or an act by illegal means is sine qua non of the criminal conspiracy but it may not be necessary to prove the agreement between them. The existence of conspiracy and its objectives can be inferred from the surrounding circumstances and the conduct of the accused involved. Incriminating circumstances must form a chain of events from which a conclusion about the guilt of the accused could be drawn. A conspiracy may further be a general one and a separate one. A smaller conspiracy may be a part of a larger conspiracy. {See V.C. Shukla v State 1980 (2) SCC 665; State v Nalini 1999 (5) SCC 253; State of Kerala v P. Sugathan 2000 (8) SCC 203; GNCT of Delhi v Navjot Sandhu 2005 (11) SCC 600.
14.1.6 Court while drawing an inference from the materials brought on record to arrive at a finding as to whether the charges of the criminal conspiracy have been proved or not, bears in mind that a conspiracy is hatched in secrecy and it is, thus, difficult, if not impossible, to obtain direct evidence to establish the same. The manner and circumstances in which the offences have been committed and the level of involvement of the accused persons therein are relevant factors.
To establish an offence of criminal conspiracy, it is not required that a Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
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14.1.7 In the absence of direct evidence to prove 'conspiracy' the same can also be proved by way of circumstantial evidence, and the principles with regard to circumstantial evidence are:
(a) circumstances from which the conclusion is drawn be fully established;
(b) all the facts should be consistent with the hypothesis of guilt;
(c) circumstances should be of a conclusive nature and tendency;
(d) circumstances should, by a moral certainty, actually exclude every hypothesis but the one proposed to be proved; {See Sharad Birdichand 1984 (4) SCC 116} 14.1.8 Cumulative effect of the proved circumstances has to be taken into account in determining the guilt of the accused rather than adopting an isolated approach to each of the circumstances and each one of the circumstances has to be proved beyond reasonable doubt, while appreciating evidence relating to the conspiracy, Court takes care to see that the acts or conduct of the parties must be conscious and clear enough to infer their concurrence as to the common design and its execution.Digitally signed by RAJEEV
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14.1.10 The Hon'ble Supreme Court in the decision in R. Venkatakrishnan v CBI 2009 (11) SCC 737, held that criminal conspiracy, in terms of Section 120B, IPC, is an independent offence and its ingredients are:
(i) an agreement between two or more persons;
(ii) the agreement must relate to doing or causing to be done either -
(a) an illegal act;
(b) an act which is not illegal in itself but is also done by illegal means.
14.1.11 An important facet of law of conspiracy is that apart from it being a distinct offence, all conspirators are liable for the acts of each other of the crime or crimes which have been committed as a result of conspiracy. {See Mohd. Naushad v State 2023 SCC Online SC 784}. A careful scanning of the provisions under Sections 120A and 120B, IPC, would reveal that the sine qua non for an offence of criminal conspiracy is an agreement to commit an offence. It consists of agreement between two or more persons to commit the RAJEEV Digitally signed by RAJEEV BANSAL BANSAL Date: 2024.09.07 10:24:11 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 61 of 123 criminal offence, irrespective of the further consideration whether or not the offence is actually committed as the very fact of conspiracy constitutes the offence (See the decision in K.S. Narayanan v G Gopinathan 1982 Crl LJ 1611).
14.1.12 In Ajay Aggarwal v Union of India 1993 (3) SCC 609, the offence of criminal conspiracy was characterized as an agreement between two or more persons to do an illegal act or a legal through illegal means and it was held that commission of the offence would be complete as soon as, there is consensus ad idem and it would be immaterial whether or not the offence is actually committed.
14.2.1 Section 420 IPC provides that:
"S. 420 Cheating and dishonestly inducing delivery of property Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine."
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"S. 415. Cheating.-- Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat".
14.2.3 The word 'fraudulenty has been defined u/s 25 in the Penal Code as under:
"A person is said to do a thing 'fraudulently' if he does that thing with an intent to defraud but not otherwise".
14.2.4 The word 'dishonestly' has been defined u/s 24 in the Penal Code as under:
"Whoever does anything with the intention of causing wrongful gain to one person or wrongful loss to another person, is said to do that thing 'dishonestly".Digitally signed by RAJEEV
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15. As mentioned earlier, the accused persons have been charged for commission of offences under Section 120-B read with 420 IPC and Section 13 (1)(d) read with 13(2) of the Prevention of Corruption Act 1988. A substantive Charge u/s 13(1)(d) r/w 13(2) of the PC Act was also framed against A-4 Pavan Arya. Besides, separate substantive charge u/s 420 IPC was also framed against accused A-1 Sudhir Kumar Arora and A-2 B P Singh. In the light of above noted legal provisions and the evidence brought on record, it is required to be considered as to whether prosecution has been able to establish existence of necessary ingredients to prove the charge of conspiracy, cheating as well as other substantive offences against the accused persons.
16. For the convenience of decision in this matter, the following List of Dates showing the chronology of events has been culled out:
Date Event Remarks Exhibit
Sudhir Kumar Arora (A-1) Habitual Loan
Managing Director of Seeker.
Supreme Electrocast Pvt.
Ltd. has availed loan at
least 50 times from his
banker Syndicate Bank,
Ghaziabad.
Dec. 12 Sudhir Kumar Arora starts New business Stated
a new Proprietorship started only to so in
business M/s Supreme avail fresh credit 6/A
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Steels, at 476-477 Village limit
Bhonja, Ghaziabad (317
sq yds property)
24.12.12 Sudhir Kumar Arora - Instead of going 6/A
approaches Corporation to his banker
Bank, Delhi with Loan Syndicate Bank, or
Application of M/s Punjab National
Supreme Steels for grant Bank, Sudhir
of Credit facility of Rs. Kumar Arora
4.25 Cr against the approaches
collateral of aforesaid Corporation Bank,
property Delhi which is
more than 25 kms
from the Bank
Branch, which is
contrary to
CVPOD norms
24.12.12 Loan Request Letter Concealment 17/2
about previous
30/DX
loan from
Syndicate Bank
and Bank Account
with Punjab
National Bank
24.12.12 Valuation Report of A-2 A Property in Tin 14/A
B.P. Singh valuing the 317 Shed worth only
7/DF
sq yds property in Bhonja about Rs. 1.25 Cr
Village, Ghazaibad at Rs. was falsely valued
4,82,63,250/- @ Rs. at Rs. 4.82 Crore to
1,50,000/- per sq. yds secure loan.
Sudhir Kumar
Arora was falsely
stated to be the
owner of the
property as per
Sale Deed. But the
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Sale Deed was in
favour of Supreme
Engineers (Regd.)
and not in the name
of Sudhir Kumar
Arora.
He became owner
of the property by
virtue of Partition
Deed registered on
15.1.13.
Photographs show
poor condition of
property with no
stock and no
commercial
activity.
12.01.13 Partition Deed qua Shows that Sudhir
Immovable Property of Kumar Arora was
317 sq yds not the absolute
owner of the
property prior to
this date.
14.01.13 A-2 B.P. Singh resigned Even in the past he
from M/s S & G Advisory had given false
Valuation Reports
15.01.13 Partition Deed was got Value of property
Registered giving the was stated as only
property in question Rs. 92.76 Lakhs.
valuation of Rs.
92,76,529/- as per Circle Shows A-2 B.P. Rate @ Rs. 35,000/- per sq Singh over valued mtr = Rs. 25,400/- per sq the property.
yds including cost of
construction of Rs.
12,23,420/-
Digitally signed
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18.01.13 Legal Opinion by Sandeep This Report was 2/A
Sharma, Advocate originally
originally addressed to addressed to
Jaitpur Branch Jaitpur Branch, but
(discharged) subsequently he
pasted a paper slip
over the address of
the addressee as
'Aali Gaon'.
Shows that the
accused persons
had first
approached Jaitpur
Branch for loan
where they could
not succeed
19.01.13 Due Diligence Report Maker discharged
23.01.13 Unit Visit Report by Stock worth Rs. 1 6/C
Branch Head Aali Gaon crore was shown to
Corporation Bank be found at the spot
at the time of visit
and that the Unit
was functioning
satisfactorily.
However,
photographs with
Valuation Report
(Ex. 14/A) show
there is no stock
and there is no
commercial
activity
04.02.13 Aali Gaon Branch No stock or 6/E
forwards Loan Proposal to commercial
Zonal Office for sanction activity is visible of Rs. 3.10 Cr credit limit in photographs yet under CVPOD scheme proposal was sent Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:25:02 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 67 of 123 against security of firm's and this vital Godown valued at Rs. aspect was 4.82 Cr overlooked by A-4 Pavan Arya 16.02.13 Manu Verma, son of A-6 Neither Manu S.K. Verma sent Sales Tax Verma nor S.K. Receipt of Supreme Steels Verma is borrower to Aali Village Branch or Guarantor yet they sent this document through email 26.02.13 CIBIL Report generated Huge liabilities are 7/DA for Sudhir Kumar Arora visible but were overlooked by A-4 Pavan Arya 26.02.13 At the request of Sudhir It should have been 1/DA Kumar Arora, his banker called i.e. Syndicate Bank issues confidentially by NOC regarding loan Corporation Bank.
sanction by any Bank to Supreme Steels NOC is silent about health of loan accounts of Sudhir Kumar Arora and his companies/ firms.
26.02.13 Credit Sanction Note The property is in 6/F
approved by A-4 Pavan village having
Arya, being Head of open drain of about
CCPC for sanction of Rs. 2 feet size right at 3.10 Cr credit limit stating its entrance but therein that the property shown to be in was located in one of the 'posh' area of 'Posh' areas of Ghaziabad Ghaziabad, only to and on this ground sanction loan and deviation from CVPOD justify deviations.
maximum loan ceiling,
was also recommended A-4 Pavan Arya
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fails to notice the
patent defects in
the property.
27.02.13 Credit Sanction Intimation Violation of 2/B
(CSI) sent by Zonal Office condition that
to Aali Gaon Branch Funds were not to
be transferred to
others.
28.02.13 Borrower Sudhir Kumar
Arora was informed about
sanction of Credit Limit
01.03.13 Sudhir Kumar Arora The withdrawals/ 6/J
started transferring/ transfers were so
withdrawing huge blatant that almost
amounts to his sister entire limit of Rs.
concerns from the Loan 3.10 Cr was
Account exhausted in 25
days of the
sanction.
Even thereafter
huge amounts were
transferred for
purposes other
than business
requirements of
M/s Supreme
Steels
04.03.13 Email of Girish Sharma, Cautions Bank
Director of M/s S & G about the illegal
Advisory Services to activities of A-2
Corporation Bank B.P. Singh.
Still the credit limit
sanctioned is
neither reviewed
nor freezed.
05.03.13 Letter of Girish Sharma, Stated that he met Mark
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Director of M/s S & G Pavan Arya on PW-
Advisory Services to 4.3.13 and told him 29/1
DGM of Corporation that the Valuation
Bank with copy to Pavan Report was not
Arya on his email issued by M/s S &
G Advisory
Services
11.03.13 Letter of PW-2 Neeti Saini As per point 1(f) of 2/C
regarding taking CSI, legal opinion
precautions before is to be approved
disbursal of loan by Law Officer
before disbursal of
Loan but Loan was
disbursed before
approval of Legal
Opinion
By Out of the credit limit of The amounts were 6/J
25.03.13 Rs. 3.10 crore, practically transferred to sister
entire limit i.e. Rs. 3.02 cr. concerns of
was utilized by the borrower firm and
borrower cash withdrawals
were made.
26.03.13 Huge amounts were Shows siphoning
6/J
withdrawn/transferred off of the funds
to
from the loan account in
16.09.13 violation of the CVPOD
loan norms
16.12.13 Loan Account turned NPA Other loan
Accounts of A-1
and his sister
concerns were also
reported to be NPA
by witnesses
03.04.14 PW-4 Amarjeet Singh 4/A
values the property at Rs.
1,45,00,000/-
27.05.14 Report by Vigilance Mark X
Department of the
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Corporation Bank
30.10.14 PW-3 Ashutosh Nirmal 3/A
values the property at Rs.
1,32,43,000/-
03.02.17 A-4 Pavan Arya is
awarded the penalty of
dismissal from Service by
the Bank after a
Departmental Enquiry as
per Bank Rules
01.06.17 PW-1 S.K. Mehta, Dy. GM 1/A
of Corporation Bank
makes a formal written
complaint to CBI
regarding cheating by
Supreme Steels
21.06.17 FIR No.
RC/DST/2017/A/0004
was registered by CBI
06.12.18 Vigilance Department of
Bank requested for Grant
of Sanction against A-4
Pavan Arya
26.03.19 CBI filed Charge sheet in 30/A
Court
22.04.19 A-12 Rathnakara granted 12/A
sanction for prosecution
against A-4 Pavan Arya
13.01.21 This Court took
cognizance of the offence
2024 Property auctioned by This rate is in
Bank for a mere Rs. 1.27 consonance with
Crore the rate given by
Ashutosh Nirmal,
Amarjeet Singh
and Circle Rate.
The property was
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highly over valued
in 2012 by A-2 B.P.
Singh in
conspiracy with
Sudhir Kumar
Arora and other
accused persons
only to cheat the
bank.
As on Total recoverable amount
Date by Bank is Rs. 9.17 Crore
out of which, Rs. 3.10
crore is the principle
outstanding amount.
17. Having noted the features of Corp Vyapar Scheme, the legal provisions with regard to the offence of criminal conspiracy and cheating, the charges levelled against the accused persons and the above chronology of events, I now proceed to decide the present case.
18. Sanction 18.1 The first and foremost question, which needs to be decided, in the context of public servants facing prosecution under the Prevention of Corruption Act, is that of Sanction u/s 19 of Prevention of Corruption Act. It was argued, as noted above, that the purported 'sanction' is non-est in the eyes of law, being contrary to law. Reliance was placed on the judgment of Ashok Kumar Agarwal (supra) wherein it was held that all material must be placed before the competent authority so as to enable it to take an independent decision as to whether Digitally signed by RAJEEV RAJEEV BANSAL Date:
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18.2 In Vinod Kumar Garg v. State (NCT of Delhi), (2020) 2 SCC 88 it was held that:
24. Therefore, what the law requires is the application of mind by the sanctioning authority on the material placed before it to satisfy itself of prima facie case that would constitute the offence.
25. On the said aspect, the later decision of this Court in State of Maharashtra v Mahesh G. Jain (2013) 8 SCC 119 has referred to several decisions to expound on the following principles of law governing the validity of sanction:
"14.1. It is incumbent on the prosecution to prove that the valid sanction has been granted by the sanctioning authority after being satisfied that a case for sanction has been made out.
14.2. The sanction order may expressly show that the sanctioning authority has perused the material placed before it and, after consideration of the circumstances, has granted sanction for prosecution.
14.3. The prosecution may prove by adducing the evidence that the material was placed before the sanctioning Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
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14.4. Grant of sanction is only an administrative function and the sanctioning authority is required to prima facie reach the satisfaction that relevant facts would constitute the offence.
14.5. The adequacy of material placed before the sanctioning authority cannot be gone into by the court as it does not sit in appeal over the sanction order.
14.6. If the sanctioning authority has perused all the materials placed before it and some of them have not been proved that would not vitiate the order of sanction.
14.7. The order of sanction is a prerequisite as it is intended to provide a safeguard to a public servant against frivolous and vexatious litigants, but simultaneously an order of sanction should not be construed in a pedantic manner and there should not be a hyper technical approach to test its validity."
18.3 The take home from the above pronouncement are that the sanctioning authority is required to prima facie reach the conclusion that relevant facts would constitute an offence; that if Sanctioning authority has perused all the material placed before it, the sanction order will not be vitiated even if some such material is not proved; that Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:25:43 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 74 of 123 adequacy of material cannot be gone into by Court as the Court does not sit in appeal over the sanction order; that the purpose of grant of sanction is to protect the public servant from frivolous litigants and that there should not be a hyper technical approach to test the validity of the order of sanction.
18.4 It is not in dispute that the FIR in the present case was registered on the complaint (Ex. PW-1/A) of PW-1 Mr. S.K. Mehta, the General Manager of the Corporation Bank itself wherein he stated that the own employees of the Bank, in conspiracy with others, got sanctioned credit limits based on bloated valuation of an immovable property, whereafter the funds were siphoned off and the account turned NPA. In other words, it is not a case where the FIR was registered on a direct complaint made to CBI by a member of public or an unknown person or on the basis of some secret information, who had made wild and unsubstantiated allegations of commission of cheating and conspiracy in the bank and asked the police to investigate therein and in this background, the Sanctioning Authority was called upon by CBI to examine as to whether 'sanction' for prosecution should be granted or not. Rather, it is a case where the discrepancies were noticed by the internal vigilance department of the bank itself, wherein role of its own bank employees was noted and the same was brought to notice of CBI for investigation and for taking action against the offenders, as per law.
18.5 On the basis of such a complaint, FIR was registered and investigation was carried out by CBI into commission of offences under Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:25:48 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 75 of 123 IPC and Prevention of Corruption Act, which culminated in Charge Sheet (Ex. PW-30/A). PW-12 Sh. Rathnakara, General Manager of the Bank is the Authority who gave sanction for prosecution of the accused A-4 Pavan Arya. There is no challenge to the competence per se of this witness to accord sanction for prosecution of Pavan Arya. The dispute is however, with regard to the inadequacy of material placed before him so as to enable him to form his independent opinion to grant 'Sanction' against accused A-4 Pavan Arya. It is alleged that in the absence of sufficient material before him, the Order (Ex. PW-12/A) granting sanction became unsustainable in the eyes of law.
18.6 As noticed prior, it is not a case wherein the FIR was registered on the complaint of a stranger. On the contrary, the FIR in the present case was registered on the basis of a written complaint (Ex.
PW-1/A) filed by PW-1 who is General Manager of the bank. The Vigilance Department of the bank noticed discrepancies in the sanction of credit limit to the borrower. The Sanctioning Authority, PW-12 Mr. Rathnakar, being another Senior Officer of the rank of General Manager of the Bank, who is very well versed with the banking procedures and practices, can easily detect and see through as to who played foul at any stage of the processing of loan. In his deposition, he stated that he accorded sanction (Ex. PW-12/A) after going through the documents sent to him by CBI. In his cross examination he stated that not only the documents Mark 12/1 running into 76 pages were sent to him, but other documents which were internally investigated, were also sent to him. It is thus clear that the internal investigation documents were also placed Digitally signed RAJEEV by RAJEEV BANSAL BANSAL Date: 2024.09.07 10:25:53 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 76 of 123 before him alongwith the document Mark PW-12/1 which consisted of 76 pages.
18.7 Much emphasis was laid on the cross examination of PW- 12 Mr. Rathnakar (Sanctioning Authority) wherein he stated that only 76 pages (Mark PW-12/1) were sent to him and that he did not call for any other document from CBI to decide the question of granting Sanction against A-4 Pavan Arya. A perusal of Mark PW-12/1 shows that the said document is dated 06.12.2018 by which Chief Vigilance Officer of Corporation Bank forwarded the CBI Report to the General Manager for the purpose of deciding as to whether 'sanction' should be accorded or not. In other words, no document which came to life after 06.12.2018 could have been sent alongwith this letter dt. 06.12.2018. This letter is Page 1 of this document. A further perusal of this document shows that CBI Report is at pages 3 to 27. Pages 28 to 30 are the List of Witnesses. Pages 31 to 36 are the List of Documents. Pages 37 to 40 consist of Order dt. 22.4.2019 by which Sanction for prosecution of the public servant A-4 Pavan Arya (Dismissed Senior Manager) was granted. Pages 41 to 50 is the Order dt. 11.4.2019 by which sanction for prosecution against Sudhir Kumar (Senior Manager of Corporation Bank) was declined. Pages 51 to 62 is the Order dt. 22.4.2019 by which sanction for prosecution against ARK Prasad, (Dismissed DGM) was declined. Pages 63 to 74 is the Order dt. 8.4.2019 by which sanction for prosecution against Balasubramanian (AGM of the bank) was declined. It is thus seen that practically it was not possible that the pages 37 to 76 could have been placed before the Digitally signed RAJEEV by RAJEEV BANSAL BANSAL Date: 2024.09.07 10:25:59 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 77 of 123 competent authority to decide grant of Sanction against A-4 Pavan Arya. Most of the documents (Pages 36-76) consisting of pages 1 to 76 are of the year 2019, whereas the Sanctioning Authority was asked to decide 'sanction' vide letter dt. 06.12.2018 and hence they could not have been placed before the competent authority as these documents never existed when the competent authority was called upon to decide sanction against A-4. Thus, the answer of the Sanctioning Authority that pages 1 to 76 were placed before him to decide the sanction against A-4 Pavan Arya is contrary to record and cannot be believed. The Sanctioning Authority clearly stated in his cross examination that not only the documents Mark 12/1 running into 76 pages, but also the documents which were internally investigated, were sent to him. File VI contains the CBI Report pertaining to the present case, as also the CBI Report pertaining to other cases in which A-4 Pavan Arya was indicted in grant of the Loans/credit limits to other borrowers and discrepancies were noticed by the Senior Officers of the bank even in those loans, due to which reason A-4 Pavan Arya was 'dismissed from service' vide Order dt. 3.2.2017. The Sanctioning Authority, being General Manager of the Bank, would very well be knowing as to how the banking procedures were tweaked by A-4 Pavan Arya, who was Head of CCPC (who vetted the proposal for sanction of credit limit in the present case) and was also a part of ZLCC (which sanctioned the said proposal). All the documents were available with the Bank which were later seized by the CBI for the purpose of investigation. Thus, it cannot be said that the Order passed by the Sanctioning Authority suffered either from non-application of mind or was based on Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:26:03 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 78 of 123 insufficient material. As was held in Mahesh G Jain (supra) there should not be a hyper technical approach to test the validity of the order of sanction. This Court feels that the test laid down in Mahesh G Jain (supra) stands satisfied.
18.8 Even otherwise, A-4 Pavan Arya having already been dismissed from bank service vide Order dt. 3.2.2017, ceased to be a public servant thereafter and was surely not a public servant on 22.4.2019, when the sanction for his prosecution was accorded by the competent authority. It is well settled that Sanction for Prosecution under the Prevention of Corruption Act is not required if at the time of taking cognizance, the accused was not a public servant {See N. Bhargavan Pillai v State of Kerala 2004 (13) SCC 217 and Chittaranjan Das v State of Orrisa 2011 (7) SCC 167}. In this case, charge sheet was received on 26.03.2019 and cognizance of the offence was taken on 13.01.2021. A-4 Pavan Arya, having already been dismissed from service vide Order dt. 3.2.2017 was not a public servant on 13.01.2021 when the cognizance of the offence was taken.
18.9 It is well settled that ratio of each case is dependent upon the facts and circumstances of the said case and hence the same cannot be applied in an omnibus manner. Ratio of the judgment of Ashok Kumar Aggarwal (supra) is distinguishable as the said case was a case of accumulation of disproportionate assets to the tune of 7615 times of his known sources of income by the accused therein and hence the directions in the said case were given that even the statements of the Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:26:09 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 79 of 123 witnesses recorded during investigation ought to have been sent to the Sanctioning Authority so as to enable him to decide the question of grant of Sanction as the Sanctioning Authority would not be knowing, in the absence of such material, as to what material was collected during investigation which could prima facie show that it was a case of accumulation of disproportionate assets. In the circumstances of the said case, the Sanctioning Authority could not have formed his opinion qua grant of sanction, unless the material collected/statements recorded during investigation was supplied to the Sanctioning Authority. However, the same is not the case here. In the present case, a written complaint was made to CBI by the General Manager of the Bank itself on 01.06.2017 stating therein that its own employees are instrumental in causing loss to the bank by getting sanctioned credit limits on the basis of over valuation of a property and thereafter the limit was siphoned off within 25 days and subsequently the loan account turned NPA. In the present case, the bank had already done vigilance inquiry and all the documentary evidence was available with the Bank. A-4 Pavan Arya had already been awarded the penalty of dismissal from service on 3.2.2017 by the Bank, which shows that entire misdeeds of Pavan Arya had already surfaced. In this view of the matter, the present case is clearly distinguishable from the facts of the case of Ashok Kumar Agarwal (supra).
18.10 Taking a cue from the dicta in the case of Mahesh G. Jain (supra) reiterated in Vinod Kumar Garg (supra) it cannot be said that it is a case wherein the sanction for prosecution was accorded by the Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:26:14 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 80 of 123 Sanctioning Authority without there being sufficient material before him. Thus, the objection that the sanction order is untenable, being not based on sufficient material or being contrary to law, is liable to be rejected.
19. Application of Section 120-B & 420 IPC 19.1 Bank cheatings are done by borrower and middlemen in connivance with Bank employees and hence it becomes very difficult to pin pointedly lay hands on the exact acts which were done malafidely and deliberately. No borrower can defraud or cheat a Bank unless the employees of the bank itself are involved in the said conspiracy. Although, there are enough inbuilt safeguards in the banking systems to protect the interest of the bank, and in turn the public money, but frauds take place when banking systems are either malafidely bypassed or deliberately tweaked by bank employees to read in between the lines of banking instructions and guidelines, to help unscrupulous borrowers for vested interest. If a common man approaches a Bank for a simple loan, he is asked to furnish scores of documents, besides being asked volley of questions, making it difficult for him to get the loan and if, after crossing all those hurdles he is lucky enough to get a loan, it becomes impossible for him to cause loss to the Bank because the bank has already protected its interest by knowing about other movable and immovable properties of the borrower. It is not that the documents are sought or questions are asked with the purpose to desist him from taking bank loan, but on the contrary, the same is with a view to safeguard the Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:26:19 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 81 of 123 public money, which is held by the Bank as custodian. However, all these safeguards do not pose any hinderance for unscrupulous borrowers and they succeed in getting sanctioned the loans and thereafter allowing those loan accounts to turn NPA. It is the cartel of the borrower and other middlemen that they approach the Bank officials having compromisable integrity, who then facilitates the grant of credit limits/loans by tweaking the procedural requirements for unlawful personal gains, thereby causing loss to the bank.
19.2 In the present case also, borrower A-1 Sudhir Kumar Arora, who has admittedly taken loans on more than 50 previous occasions (as was disclosed during the course of arguments by his Ld. Counsel), shows his desire for yet another loan. However, this time he does not approach his own Banker Syndicate Bank or Punjab National Bank, Ghaziabad for this purpose. If his intentions were bonafide, in all fairness, he should have approached his own Bankers this time also, but he does not do so, probably because he knew that he will not be able to get the loan as he had already taken loan for his company Supreme Electrocast Pvt. Ltd. from Syndicate Bank. PW-18, Narain Singh Martolia, Chief Manager of Syndicate Bank deposed that the loan accounts of Supreme Electrocast Pvt. Ltd. and of Supreme Alloys Ltd.
(of which his brother was a Director) had turned NPA. Sudhir Kumar Arora does not approach Punjab National Bank, Noida as well where his sister concern Supreme Alloys Ltd. had its bank account and from where loans were taken and the said account had also turned NPA as was deposed by PW-22 Hemant Kumar Singh. He thus needed a new Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:26:23 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 82 of 123 Bank to take loan.
19.3 Deposition of PW-11, a Chartered Accountant Y.P. Singh (who had never rendered any professional service to Sudhir Kumar Arora) is important on the aspect of conspiracy. He deposed that Sudhir Kumar Arora talked to him to get him a bank loan. The Chartered Accountant tells him that he knows one Shiv Kumar Verma (A-6 herein) who will facilitate the sanction of loan, for which Shiv Kumar Verma will charge commission of 4-5% of the loan amount. (During the course of this trial, Shiv Kumar Verma used to be produced before this Court in custody as he was serving a sentence in another Bank Fraud case, meaning thereby that he is involved in such nefarious activities). The borrower readily agrees and a meeting is fixed between the borrower and Shiv Kumar Verma. Shiv Kumar Verma assures the borrower that he will get the loan sanctioned. Then they meet Chakradhar Muduli, Advocate (A-5) who had on various previous occasions got sanctioned bank loans for other business entities through Pavan Arya, Senior Manager of Corporation Bank (A-4). During the course of arguments, it transpired that Pavan Arya was named as an accused in about 7-8 CBI cases, and was already convicted. (At present, he is dismissed from bank service). Chakradhar Muduli (who also faced other trials in bank fraud cases but he was acquitted therein) assures Sudhir Kumar Arora that he will get the loan sanctioned from Vasant Vihar or Vasant Kunj or Jaitpur or Aali Gaon branch of the Bank. No one can be so sure to get the bank loan sanctioned unless he is in league with the Bank official. They meet Pavan Arya (A-4) at CCPC office, although he had Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:26:29 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 83 of 123 no business to meet the borrower directly at pre- application stage (as it is not a Branch doing public dealing as was disclosed during the course of arguments by the Ld. Defence counsel and HO Circular 170/2011 PW-1/L prohibited Branches and Offices of the Bank from dealing with middlemen). Pavan Arya sends them to Jaitpur Branch and instructs the Branch Head there to 'look' into the loan application, as was stated by PW-15 Santosh Kumar Sinha.
19.4 They also conspire with B.P. Singh, Valuer (A-2, who had also faced other trials but got acquitted therein) who prepares a Valuation Report Ex. PW-14/A (showing therein that he had visited the property on 24.12.2012) of a practically 'dead' property and over values it at Rs. 4,82,63,250/- because loan of Rs. 3 crores was required and under Corp Vyapaar OD Loan scheme, credit limit of maximum upto 65% value of the collateral security could have been granted. The Valuation Report is accordingly prepared in advance.
19.5 PW-14 Deepak Verma stated that he was paid Rs. 15,000/-
by agent of Sudhir Kumar Arora for preparation of the Valuation Report. This is not denied by Sudhir Kumar Arora in his Statement recorded u/s 313 Cr PC.
19.6 PW-11 Y.P. Singh also stated that he prepared Credit Monitoring Analysis (CMA) data for M/s Supreme Steels on the basis of projected data, at the instance of Sudhir Kumar Arora and handed it over to Shiv Kumar Verma (A-6) as he was assisting Sudhir Kumar Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:26:34 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 84 of 123 Arora in the grant of loan. Although this witness (PW-11) was declared hostile by the Prosecution on the aspect of payment of money by Shiv Kumar Verma to Chakradhar Muduli but it is well settled that the mere fact that a witness is declared hostile by the party calling him and allowed to be cross examined, does not make him a totally unreliable witness so as to exclude his entire evidence from consideration altogether. {See Rabindra Kr Dey v State of Orissa 1976 (4) SCC 233}. The underlying principle on appreciation of evidence is the quality, over quantity of witnesses. Since he was declared hostile only on the aspect of payment of money by Shiv Kumar Verma to Chakradhar Muduli, to which he denied, his other deposition, as noted above, cannot be discarded.
19.7 Deposition of PW-15 Santosh Kumar Sinha, Branch Head of Jaitpur Branch is also very important. He deposed that he had received a telephonic call from Pavan Arya that he was sending one proposal of Northern Communication Pvt. Ltd. (some other borrower) to him for preparation of recommendation as he (Pavan Arya) had already seen the proposal and all the documents, and that thereafter A- 6 S.K. Verma and A-5 Chakradhar Muduli came to his office alongwith the Director of Northern Communications Pvt. Ltd. and handed him over the proposal. He stated that he recommended the proposal and an amount of Rs. 4.5 crore was sanctioned by ZLCC to the said customer, which was subsequently reduced to Rs. 3.9 crore due to deficient security documents.
Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:26:39 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 85 of 123 19.8 An argument was raised on behalf of A-5 Chakradhar Muduli that this witness had stated in his cross examination that A-6 S.K. Verma and A-5 Chakradhar Muduli came to meet him in end of February 2013 or in March 2013 and his deposition is thus of no consequence as by that time loan proposal had already been processed.
The argument is bereft of merit. The Valuation Report Ex. PW-14/A clearly show that it was prepared on the asking of Jaitpur Branch and also stated that the property was inspected by A-2 B.P. Singh on 24.12.2012. Hence, the time period of visit appears to be wrongly stated.
19.9 This deposition shows that borrower and middlemen like A-6 S.K. Verma and A-5 Chakradhar Muduli used to visit A-4 Pavan Arya directly and Pavan Arya used to instruct the Branch Head to process the loan proposal and make recommendation for its approval. The deposition also shows that A-6 S.K. Verma and A-5 Chakradhar Muduli used to act as middlemen for the purpose of sanction of loans through A-4 Pavan Arya. Circular No. 170/11 (Ex. PW-1/L) specifically provides that middlemen must be desisted, yet A-4 Pavan Arya blissfully flouted these instructions of the Bank, indulged with the middlemen and sent them alongwith Borrower to the Branch and instructed the Branch Head to recommend the loan proposals as he himself had seen all the documents and the proposal. This deposition also shows that higher credit limits used to get sanctioned through CCPC(headed by Pavan Arya), which used to be reduced subsequently due to deficient security documents.
Digitally signed by RAJEEVRAJEEV BANSAL Date:
BANSAL 2024.09.07 10:26:44 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 86 of 123 19.10 Thereafter, PW-15 Santosh Kumar Sinha deposed that Chakradhar Muduli and S.K. Verma met him at Jaitpur Branch with all papers, including Legal Opinion and Valuation Report in original(which could not have been there as the same can be prepared only at the asking of the Branch Head) of an immovable property (which was claimed to be exclusively owned by the borrower - which was factually incorrect at that point of time). However, the Branch Head of Jaitpur Branch refuses to entertain their application (as deposed by PW-15 Santosh Kumar Sinha himself- the then Branch Head of Jaitpur Branch). No Branch Head of a Bank would refuse to give loan if the proposal is commercially viable. PW-15 Santosh Kumar Sinha also stated that he was threatened by Pavan Arya with his transfer to South India, but he did not succumb to the pressure mounted upon him by A-4 Pavan Arya.
He also identified A-5 Chakradhar Muduli in Court.
19.11 The borrower then lands at Aali Branch on 24.12.2012 with loan application and already prepared Valuation Report made by A-2 B.P. Singh. PW-6 Rishikesh stated that he had seen A-5 Chakradhar Muduli in the Branch once or twice. Thus, two steps involved in a loan application took place on 24.12.2012 itself - firstly, Loan Application was submitted on 24.12.2012; secondly, alongwith the loan application, the undated Valuation Report was brought wherein it was stated that the property was visited by A-2 B.P. Singh on 24.12.2012 itself. Both these steps in the life cycle of the loan application happen on one single day, and nothing foul was smelled in Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:26:49 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 87 of 123 it by Bank Officials including A-4 Pavan Arya. The borrower was not the exclusive owner of the said property at the time of loan application, but he conceals it from the Bank. The Valuation Report (Ex. PW-4/A) given with the loan application on 24.12.2012 falsely stated that Sudhir Kumar Arora was the owner of the property. (Sudhir Kumar Arora became its exclusive owner only on 12.1.2013 by virtue of registered Partition Deed dt. 12.1.2013). A business entity 'Supreme Steels' of which Sudhir Kumar Arora (A-1) is the Sole Proprietor, is formed only in December 2012 (loan was also applied in December 2012) but no doubts are raised about the past or present performance or future projections of this newly created business entity by anyone, including Pavan Arya. The Net Worth Statement (Ex. PW-6/B) is filed, as required, but the same is not certified by CA, unlike required. It is not even signed by the Guarantor. It is undated. No objections are raised for these deficiencies by anyone including Pavan Arya, who was heading CCPC.
19.12 Four photographs of the property at Bhonja Village, Ghaziabad are attached with the Valuation Report Ex. PW-14/A. Two photographs are from outside of an old constructed property, which is shuttered down, having no Business Bill Board, but having about two feet wide open drain right at the entrance of the property. Other two photographs are of interior of a property which undoubtedly demonstrate that no commercial or industrial activity had been taken at the said property in past. B.P. Singh falsely valued the property at Rs. 4.82 crores and this value of the property is not doubted by any Banker Digitally signed RAJEEV by RAJEEV BANSAL BANSAL Date: 2024.09.07 10:26:54 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 88 of 123 including Pavan Arya. PW-1 stated in his cross examination that as per Circular No. 828/2011 (Ex. PW-5/DA) the value of the property assessed by the approved valuer has to pass through the lens of all the persons till sanction whoever is a part of the team. He further stated in his cross examination that it was the duty of CCPC to apply its mind and to conduct independent assessment on the basis of documents provided by the borrower, while preparing the Loan Processing Note.
He also stated that CCPC is well within its right to question the valuation put by the Valuer, but despite having power, A-4 Pavan Arya keeps silent over the obvious 'over valuation' of the property and rather 'vets' the proposal for sanction of credit limit.
19.13 As per CVPOD Scheme, the borrower should approach a Branch within 25 kms radius of its place of work for proper management of the loan but the borrower goes well past it and no doubts are raised on this point by any banker including Pavan Arya as to why the borrower did not approach the Corporation Bank near his place of business and why did he come beyond 25 kms to Delhi for grant of loan. Though it may not be an illegality in itself if the loan proposal is made at some other branch, beyond the radius of 25 kms., but at the same time, the provision with regard to distance needs to be adhered to as it was incorporated in the Scheme for some reasons, and the only obvious reason for incorporating such a condition is that a Branch would know its neighborhood better and it becomes easier for such a neighborhood Branch to supervise a loan in this manner. The conduct of the borrower in approaching Aali Gaon Branch in Delhi was highly suspicious, but Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:27:00 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 89 of 123 strangely it is not objected to by any bank officer including CCPC Head Pavan Arya.
19.14 The recommendation (Ex. PW-6/E) for grant of credit limit were sent from the Branch to the Zonal Office, where a Credit Officer was deputed to check the proposal. Ajay Pathak - PW-7 is the said Credit Officer. Pavan Arya, immediate superior of the said Credit Officer asks him to expedite the processing and also instructs him not to put objections on the proposal (as deposed by Ajay Pathak). Ajay Pathak also deposed that at that time there was a lot of pressure from Pavan Arya to process the CVPOD loan within a day and not to put many objections or questions in the processing of the said loan. He also stated in his cross examination that Zonal Office used to supervise 70- 80 branches and it used to get 7-8 new proposals on an average, in a month. No suggestion was given to this witness that more than 7-8 proposals were being received on an average in the Zonal Office. One would wonder that if only 7-8 loan proposals were being received in the Zonal Office in a month, what was the hurry in clearing the proposals in a day? Ajay Pathak also stated that the customers used to approach Pavan Arya directly and he used to meet them prior to processing of the loan recommendations. No contrary suggestion was given during cross examination of this witness. Ajay Pathak stated that the proposal received from the Branch Office used to remain with Pavan Arya only, who would give it to him (Ajay Pathak) for immediate processing after visiting the unit of the borrower or the Branch. He stated that in most of the proposals, the applicants were seeking credit facilities for the first Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:27:05 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 90 of 123 time and despite his (witness) asking that the sanction should be for lower credit facility, Pavan Arya used to tell him that in order to grow business, it was important to sanction loan as per the request of the customer. He also deposed that in the present case, the promoter of M/s Supreme Steel had another company and he (Ajay Pathak) had asked for the details of the same. Ajay Pathak further stated that there were only a few documents available with this proposal but he was asked by Pavan Arya to prepare the memorandum as per the available information. He stated that the documents provided were insufficient for processing of loan and he had asked Pavan Arya to take additional documents from the party but Pavan Arya told him that the proposal was to be processed on a stand alone basis and that ZLCC will take a decision on merits of the case with the available information. He stated that if he used to raise any objection, Pavan Arya used to get angry. The Credit Officer, thus pressurized, forwards the proposal to Pavan Arya, and as expected, Pavan Arya 'vets' it without raising any kind of objection on the recommendation received from the Branch. In the note (Ex. PW-6/F) put up by CCPC to ZLCC, it is falsely stated that the property was situated in a 'posh' area (knowing very well that the property was in a village) and based on it, two deviations from CVPOD Scheme are recommended - that loan of Rs. 3.10 Crore may be sanctioned against the maximum limit of Rs. 2 crore and that limit for urban Branch is Rs. 50 Lakh but the recommendation was for Rs. 3.10 crore. In a hurry to get the proposal sanctioned, he places it before ZLCC (of which he himself is a member) for sanctioning the credit limit. The ZLCC sanctioned the Credit Limit of Rs. 3.10 Crore next Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:27:09 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 91 of 123 day itself, purely based on the over-valued 'Valuation Report' and the same is intimated to the Branch vide Ex. PW-6/H. 19.15 Letter dt. 5.3.2013 Mark PW -29/1 is the letter written by Girish Sharma to Zonal Office of Corporation Bank, with its email copy to Pavan Arya that the Valuation Report Ex. PW-14/A was not issued by M/s S & G Advisory Services Pvt. Ltd. and that it was also informed to Pavan Arya on 4.3.2013 by personally meeting him. No action is taken by Pavan Arya. PW-10/F is a letter dt. 09.03.2018 issued by Corporation Bank wherein it was stated that no payment was made by Corporation bank to M/s S & G. Advisory Services Pvt. Ltd. for preparation of Valuation Report Ex. PW-14/A pertaining to valuation of mortgaged property of Supreme Steels. Although an objection was raised regarding admissibility of this document being hit by Section 162 Cr PC, but the objection deserves to be turned down as the witness PW- 10 Prakash Narayan Naik had appeared before this Court and had identified his signatures on the said letter. The bar u/s 162 Cr PC would operate if the police rely upon a signed statement made to it, without producing the author of the said statement for his cross examination.
The Letter dt. 05.03.2013 Mark PW-29/1 and letter dt. 09.03.2018 PW- 10/F thus in itself show that the Valuation Report Ex. PW-14/A was false.
19.16 PW-2 Niti Saini, Legal Officer of the Bank stated that she had approved the Legal Opinion Report dt. 18.01.2013 (Ex. PW-2/A) only on 11.03.2013 vide Ex. PW-2/C. She stated that as per Credit Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:27:14 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 92 of 123 Sanction Intimation terms contained in letter dt. 27.02.2013 (Ex. PW- 2/B and PW-6/H), the legal opinion was to be approved by the Law Officer before disbursal of the loan but in the present case, loan had already been disbursed by the Branch on 01.03.2013 itself before the legal opinion of Mr. Sandeep Sharma, Advocate could be approved on 11.03.2013 and hence, there was violation of Credit Sanction Terms of the loan.
19.17.1 PW-1 S.K. Mehta in his examination in chief and PW-5 Gopal Krishan Raveendran in his cross examination done on behalf of A-4 & A-6 stated that a banker is required to call for confidential opinion from the earlier Banker of the borrower, before processing the loan proposal and sanctioning the credit limits to a borrower. However, no such steps were taken by the Branch Head. Even A-4 Pavan Arya, despite being CCPC Head, does not point out this lapse. He neither asks the Branch Head to call for the said 'confidential' opinion from his earlier Banker i.e Syndicate Bank nor he himself calls for such a Report.
The accused would argue that NOC dt. 26.2.2013 (PW-1/DA) from Syndicate Bank was there before CCPC and hence this condition stood complied with. However, it is not so. A perusal of this NOC dt. 26.02.2013 (Ex. PW-1/DA) would show that the same was only an NOC and not a confidential Report. The NOC was issued at the request of A- 1 Sudhir Kumar Arora himself, meaning thereby that A-1 Sudhir Kumar Arora had asked his Banker to give a Certificate, on the lines as desired by him and therefore Syndicate Bank issued an NOC as requested. The Certificate stated only three things - one, that Supreme Steels has not RAJEEV Digitally signed by RAJEEV BANSAL BANSAL Date: 2024.09.07 10:27:19 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 93 of 123 availed any credit facility from Syndicate Bank; two, Sudhir Kumar Arora had given his personal guarantee for credit facilities availed by Supreme Electrocast Pvt. Ltd. and three, that Syndicate Bank has no objection for grant of credit facility to Supreme Steels.
19.17.2 The requirement is that of calling for a 'confidential' opinion by the Corporation Bank from the banker of the borrower. The 'confidential' opinion would be relating to the financial health of the loan accounts of the borrower in his individual capacity as well as of the financial health of the loans availed by companies of the borrower i.e. Supreme Electrocast Pvt. Ltd. of which he was Managing Director.
19.17.3 The NOC dt. 26.02.2013 (Ex. PW-1/DA) is only an empty formality as it was only with regard to Supreme Electrocast Pvt. Ltd. over the three aspects noticed earlier. The Certificate does not talk about the extent of credit facility availed and the status of repayment thereof by Supreme Electrocast Pvt. Ltd. The Certificate does not talk about the credit facilities availed by other sister company of the borrower namely M/s Supreme Alloys Ltd. The NOC deserved to be discarded and 'confidential opinion' ought to have been called for by Pavan Arya - being CCPC Head, to make an objective assessment about the financial health of the borrower.
19.17.4 PW-18 Narayan Singh Martolia stated in his deposition that Supreme Alloys Ltd. and Supreme Electrocast Pvt. Ltd. - both were maintaining their accounts at Navyug Market Branch, Ghaziabad of Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:27:24 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 94 of 123 Syndicate Bank and both were enjoying separate credit facility of Rs. 42 crore and Rs. 22.5 crore respectively. The NOC is silent about the extent of these credit facilities. PW-18 Narayan Singh Martolia also stated that the loan accounts of both the companies i.e. Supreme Alloys Ltd. and Supreme Electrocast Pvt. Ltd had turned into NPA. Since the NOC dt. 26.2.2013 (Ex. PW-1/DA) was issued at the request of the borrower himself, and it was silent on material points, it was bounden duty of A-4 Pavan Arya to have got called the 'confidential opinion' from Syndicate Bank, qua the borrower, who was not only a new customer for the Corporation Bank, but had sought huge credit limit for Supreme Steels, a Firm which in itself was formed not even a month before applying for loan on 24.12.2012. That having not been done by A-4 Pavan Arya, his inaction speaks volumes about his integrity and the same cannot be countenanced.
19.18 There is complete lack of banking wisdom, commercial intelligence and common sense on the part of the bank officials including Pavan Arya, who was at the helm of affairs. The loan application (Ex. PW-6/A) was not on prescribed CVPOD loan application format. A-4 Pavan Arya raised no objection on it. There was no date mentioned on the application form. Again, A-4 Pavan Arya kept quiet. By looking at the photographs of the property filed with the Valuation Report (Ex. PW-14/A), no person of even ordinary prudence would accept that the value of such dilapidated property at a village would be Rs. 4.82 crore. He failed to satisfy himself as to whether the property was actually worth Rs. 4.82 crore as claimed in the Valuation Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:27:29 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 95 of 123 Report or whether the property was located in a 'posh' area as recommended by the Branch Head so as to justify deviations from the CVPOD Scheme although that it was the duty of CCPC to apply its mind and to conduct independent assessment on the basis of documents provided by the borrower, while preparing the Loan Processing Note. Circular No. 828/2011 (Ex. PW-5/DA) also casted such a duty on all the persons whoever is a part of the team till sanction. The exaggerated value put to the said property should have been enough for any Banker to be on guard against the proposal for sanction of credit limit, which was based purely on the collateral of the said 'over valued' property. Pavan Arya, being CCPC Head, and being an experienced and responsible Officer of the Bank, manning such an important portfolio, ought to have seen through the fake proposal, which was based on over valuation of a property, but since he himself was part of the conspiracy, he not only himself turned blind eye to all these aspects but also ensured that no such objections are put by even Credit Officer on the loan proposal. The conspiracy of Sudhir Kumar Arora, B.P. Singh, Pavan Arya, S.K. Verma and Chakradhar Muduli to cheat the bank is writ large on the face of it, which can be easily deciphered from the series of events noted above.
19.19 The over valuation of the property in question is apparent as the said property could fetch only Rs. 1.27 crores in auction carried out early this year i.e. in 2024. Our country is regaining normalcy after Covid pandemic, and as is common knowledge, value of the immovable properties have steeply risen all around, as compared to their valuation Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:27:33 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 96 of 123 10 years ago i.e. in the year 2012. No immovable property would today, after about 12 years, be available at the same rates which prevailed in the year 2012. Contrary to it, in the present case, the immovable property, which was kept as a collateral security, on the basis of which the credit limits were sanctioned, could be auctioned for only Rs. 1.27 Crores in 2024, which is only approximately 26% of the value given to it by the Valuer A-2 B.P. Singh in the year 2012 at Rs. 4.82 crores. Such low sale price of the collateral security property suggests only one thing, that the property was highly over valued in 2012 by B.P. Singh. This very property was valued at Rs. 1.45 Crore (Ex. PW-4/A) by PW-4 Amarjeet Singh, Bank Valuer on 03.04.2014 and at Rs. 1,32,43,000/- (Ex. PW-3/A) by PW-3 Ashutosh Nirmal, another Bank Valuer on 30.10.2014. Value of this property was mentioned at Rs. 92,76,529/-
on 15.01.2013 at the time of registration of the Partition Deed, which is the most contemporary valuation of the property in question. The property rates as assessed by Valuer Amarjeet Singh and Ashutosh Nirmal and for the purpose of Circle rate, are all in the same range but they do not compare at all with the valuation given to it by A-2 B.P. Singh. Clearly, the property was deliberately over valued as part of the conspiracy.
19.20 In the Note dt. 26.02.2013 (Ex. PW-6/F) prepared by CCPC for the purpose of Credit sanction, the property was stated to be located in one of the 'posh' areas of Ghaziabad whereas on the contrary, actually it was located in a 'village' called 'Bhonja Village'. To get the loan sanctioned against such a rural property, it was falsely stated in the Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:27:38 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 97 of 123 Bank proposal that the property was located in 'posh' area of Ghaziabad. An abandoned kind of property, situated in a village, worth not even Rs. 1 crore as per Circle Rate, could never have been worth five times more of its Circle Rate at that point of time, as was valued by A-2 B.P. Singh. A bare look at the photographs of the property attached with the Valuation Report Ex. PW-14/A would clarify that there is no sign of any commercial or industrial activity at the said property. No evidence was brought in defence by either A-1 Sudhir Kumar Arora or by A-2 B.P. Singh that the value of the similar properties in vicinity in December 2012 or so, was around Rs. 5 crore. On the contrary, prosecution has brought on record four rates of the said property. As per Circle rate, this property was valued at just Rs. 92.76 lakhs on 15.01.2013 as per Partition Deed, at Rs. 1.45 crore on 03.04.2014 by PW-4 Amarjeet Singh (i.e. about 50% more than the Circle rate), at Rs. 1.32 crore on 03.04.2014 by PW-3 Ashutosh Nirmal and Rs. 1.27 crore in early 2024 in auction (as deposed by DW-1). The very fact that the property in question could be auctioned only for Rs. 1.27 crores, demonstrate that the property was not at all worth about Rs. 5 crore, unlike claimed in 2012 by B.P. Singh in his Valuation Report, because had it been carrying such value at that time, it would have valued much more in 2024 and hence the bidders would have definitely put higher bids for the said property so as to buy it at a price reasonably comparable at its market value. Be that as it may, one thing is clear that a property genuinely worth Rs. 5 crore would have fetched much more in auction than the paltry amount of Rs. 1.27 crore which it could barely fetch in auction. Clearly, the valuation of the property was over Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:27:43 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 98 of 123 projected, in conspiracy by all accused persons so as to secure credit limit of Rs. 3.10 crore.
19.21 Out of the four rates available for the property in question, apart from the bloated Valuation Report of A-2, the maximum rate assessed is Rs. 1.45 crore (Ex. PW-4/A), and taking this as the maximum value of the collateral security property, the maximum credit limit which could have been sanctioned was Rs. 94.25 Lakhs (being 65% of its value as per CVPOD Scheme), but as noted above, the property worth Rs. 1.45 crore was deliberately and malafidely over valued by A-2 B.P. Singh at Rs. 4.82 crore and hence a credit limit of Rs. 3.10 crore was got sanctioned, which is unlawful and illegal.
20. Valuation Report
20.1 The Valuation Report (Ex. PW-7/DF & PW-14/A) is undated. The Report says inspection was done on 24.12.2012. It is not mentioned in the Report as to at what time the property was inspected. The request for loan was also made on the same day i.e. on 24.12.2012 (Ex. PW-6/A) and it was produced at Aali Branch alongwith loan proposal on 24.12.2012 and this factor in itself show meeting of mind of A-1 Sudhir Kumar Arora and A-2 B.P. Singh. It is not addressed to any particular Branch of Corporation Bank. There is no stamp of the Bank showing receipt of the Report. Girish Sharma, Director of M/s S & G Advisory Services informed Zonal Office vide his letter dt. 5.3.2013 (Mark PW-29/1) that the company never introduced their ex-
Digitally signedRAJEEV by RAJEEV BANSAL BANSAL Date: 2024.09.07 10:27:48 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 99 of 123 employee Er. B P Singh to Jaitpur Branch Head. PW-10/F is a letter dt. 09.03.2018 issued by Corporation Bank wherein it was stated that no payment was made by Corporation bank to M/s S & G. Advisory Services Pvt. Ltd. for preparation of Valuation Report pertaining to valuation of mortgaged property of Supreme Steels.
20.2 The job of property Valuation was given by the Branch Head to a non-Valuer (may also be called a middleman namely Deepak Verma). Deepak Verma deposed as PW- 14 and stated that he received the work of valuation of the property in question from the Bank. In his deposition, Deepak Verma did not say that he was an employee of M/s S & G Advisory Services (which was the actual empaneled Valuer of the Bank). He rather stated that he worked with A-2 B.P. Singh. He stated that he clicked the photographs of the property and took title documents of the property from an agent of Sudhir Kumar Arora and handed over the photographs, their negatives and the title documents of the property to A-2 B.P. Singh, who prepared the Valuation Report. He further stated that an agent of Sudhir Kumar Arora (A-1) collected the Valuation Report from him and paid him Rs. 15,000/-, out of which he kept Rs. 5,000/- for himself and gave the balance Rs. 10,000/- to A-2 B.P. Singh. The covering letter of the Report says that Sudhir Kumar Arora is the owner of the property admeasuring 317 sq yards. Valuation Report gives purpose of Valuation as "Fair Market value for Corporation Bank, Jaitpur, New Delhi". Name and Owner of the property is mentioned as "Sudhir Kumar Arora" and the type of ownership was stated to be 'Single Ownership'. It has come on record Digitally signed RAJEEV by RAJEEV BANSAL BANSAL Date: 2024.09.07 10:27:53 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 100 of 123 that Sudhir Kumar Arora became legal exclusive owner of the property in question only on 15.012013 when the Partition Deed was registered in his name. In other words, he was not the lawful and exclusive owner of the property on 24.12.2012 when B P Singh gave his Report Ex. PW- 14/A falsely describing therein Sudhir Kumar Arora as the owner of the said property. The value of the property as per Circle Rate was mentioned as Rs. 25,000/- per sq. yd - hence Rs. 79,25,000/- and Rs. 7,17,250/- was added as its cost of construction, totalling to Rs. 86,42,250/-. However, market value of the land was assessed @ Rs. 1,50,000/- per sq yd - hence Rs. 4,75,50,000/- and value of building was assessed @ Rs. 250/- sq feet - hence 7,13,250/-, totalling to Rs. 4,82,63,250/-. No basis or any comparative sale deed or any other material was annexed with the Valuation Report so as to justify its market value at Rs. 4.82 crore. Clearly, the rate of Rs. 1,50,000/- per sq. yd was not based on any material but was arbitrarily mentioned only to facilitate A-1 Sudhir Kumar Arora to secure a credit limit of his choice as A-2 B P Singh knew it in advance that the limit can be only 65% of the value of the collateral security property. The undated Valuation Report stated in the end that the inspection of the property was carried out on 24.12.2012 by B.P. Singh (A-2) in the presence of representative of the owner. It further states that the Valuation was done by Valuer, based upon the request of the Jaitpur Branch of Corporation Bank. Corporation Branch in its letter dt. 09.03.2018 (PW-10/F) stated that no payment was made by the bank to M/s S & G. Advisory Services Pvt. Ltd. for preparation of Valuation Report pertaining to valuation of mortgaged property of Supreme Steels. Clearly, no such instructions Digitally signed RAJEEV by RAJEEV BANSAL BANSAL Date: 2024.09.07 10:27:58 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 101 of 123 were ever issued by Corporation Bank to the empanelled Valuer M/s S & G. Advisory Services Pvt. Ltd. to evaluate the property in question and a false statement was made in the Valuation Report by B.P. Singh in this regard. In column 23 of the Report, it was stated that Sudhir Kumar Arora (A-1) was owner of the property as per Sale Deed. The construction over the Plot was stated to be old and ordinary. The photographs attached with the Report show that there is neither any Board mentioning the name of the business entity over the property nor any property number is mentioned on the exterior of the property. The photographs of interior of the property show that the property is kind of abandoned, with no signs of any industrial activity having taken place there in near past. The Valuation Report, in short, did not inspire confidence but Pavan Arya found nothing wrong with the said Report, based on which, the credit limit of Rs. 3.10 crore was sanctioned.
21. Loan Application Form 21.1 Loan was applied by Supreme Steels, a proprietorship firm of Sudhir Kumar Arora (A-1), located at Village Bhonja, Ghaiabad, which was stated to have been established only in December 2012. It (Ex. PW-6/A) is not addressed to any particular Branch of Corporation Bank. It is not the prescribed application form for grant of credit facility under the CVPOD. The date of making the application is not mentioned. The date of receipt of application is not there. Sudhir Kumar Arora had two bank accounts of his company Supreme Electrocast Pvt. Ltd. - one, at Syndicate Bank (as stated by PW-18 Digitally signed RAJEEV BANSAL by RAJEEV BANSAL Date: 2024.09.07 10:28:03 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 102 of 123 Narain Singh Martolia, Chief Manager of Syndicate Bank, Ghaziabad) and the other at Punjab National Bank (as stated by PW-20 Shashi Raj of PNB, Ghaziabad). However, he concealed his Bank account with Punjab National Bank in his Loan Application. Net worth was mentioned as Rs. 713.17 Lakhs in undated Net Worth Statement (Ex. PW-6/B). This statement was neither signed by the Guarantor nor was counter signed by the CA. Existing business activity was mentioned as trading, manufacturing of ingots ferrous and non ferrous metals. Corp Vyapar Scheme (Ex. PW-1/C) specifically provided that units engaged in manufacturing are not eligible for loan under the Scheme. Credit facility of Rs. 425 Lacs was prayed. The purpose of requirement of credit facility was mentioned as Stocks and Debtors.
21.2 With these kind of details, the Loan proposal was liable to be rejected as Supreme Steels and Sudhir Kumar Arora - both were new customers for Aali Branch of Corporation Bank. The business was mentioned as manufacturing, which was beyond the scope of CVPOD Scheme. The work place of Supreme Steels was that of Village Bhonja, which was more than 25 kms which was in violation of Condition 12.4.4 of CVPOD Scheme prescribed that the business unit must be situated within 25 kms from the Branch.
21.3 CCPC did not call for financial papers of the parent business entity of Sudhir Kumar Arora though it should have been called on account of banking wisdom because the borrower was a new customer - not only for Aali Branch but also a new business entity Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:28:08 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 103 of 123 having come into existence only in December 2012. No supporting documents of Net Worth proof of the borrower and guarantor were called for by CCPC or ZLCC. The Net Worth Statement only bore self signatures of the borrower, but was not counter signed by the Chartered Accountant and the Guarantor. No scrutiny of status of loan already obtained by Supreme Electrocast (P) Ltd. (of which A-1 Sudhir Kumar Arora was the Managing Director) was done.
21.4 Besides the acts of S.K. Verma noted above, his role also becomes further explicit as his son Manu Verma sent Salex Tax Receipt of Supreme Steels to Aali Village Branch on 16.2.2013 through email.
Neither S K Verma nor Manu Verma are borrower or Guarantor in the present loan proposal, yet they were involved, which shows their active involvement in the conspiracy.
21.5 HO Circular No. 170/2011 dt. 5.3.2011 Ex. PW-1/L clearly cautioned all the Branches and other Offices to be on guard and not to entertain/encourage or solicit business through middlemen/agents/ intermediaries and to deal with the customers directly on credit related matters. Sourcing of proposals through middlemen/consultants were directed to be not to be entertained, yet the proposal was entertained in the present case and credit limits were sanctioned. Similarly, another Circular issued by Head Office i.e. HO Circular No. 642/2011 dt. 19.09.2011 (Ex. PW-1/N) provided that every officer taking a decision and putting his signatures, must apply his mind in the matter. There is no compliance of these Circulars by A-4 Pavan Arya. It was his duty to Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:28:15 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 104 of 123 have ensured that the proposal is not originated through Middlemen and despite there being so many short comings in the proposal, still he 'vetted' the proposal as CCPC head and placed his recommendations for the proposal before ZLCC, of which he himself was a constituent, and played role in sanction of the credit limits to Sudhir Kumar Arora.
21.6 PW-14 Deepak Verma, deposed that in 2012 he was doing valuation of property with B.P. Singh and that he had received the work from the Bank for valuation of 476-477, Patel Nagar, Ghaziabad and that A-1's representative took the Valuation Report from him and paid him Rs. 15,000/-, out of which he kept Rs. 5,000/- for himself and gave Rs. 10,000/- to A-2 B.P. Singh. He is an important witness of prosecution but material and relevant questions were not asked from this witness by the defence. He was not asked as to who gave him the work of valuation. He was not given any suggestion that the work of preparation of Valuation Report was given to A-2 by the bank or that the Report was not handed over by this witness to A-1's representative or that the Report was submitted by A-2 B.P. Singh to the Bank. In his cross examination of A-1 he stated that he was told by A-1 that A-1 is sending his representative. It thus becomes clear that the Branch Manager never assigned the work of preparation of Valuation Report to A-2 B.P. Singh. No such document by which valuation of the property in question was assigned to A-2 was brought on record by A-2 to prove his bonafide. This also becomes clear from the documents itself that the Loan application was dt. 24.12.2012 and with it, the Valuation Report was attached and hence the Valuation Report existed at least at Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:28:20 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 105 of 123 the time when the loan application was made. If the Valuation Report existed even at the time when the loan application was made, there cannot be any occasion for the Branch Manager to ask the Valuer A-2 B.P. Singh to prepare a Valuation Report for the property in question. It is not even the case of A-2 B.P. Singh that he had been asked by Branch Manager of Aali Branch or of Jaitpur Branch or of some other Branch to prepare a Valuation Report of the property in question. Clearly, the Valuation Report lacks bonafide.
21.7 PW-3 Ashutosh Nirmal and PW-4 Amarjeet Singh had valued the same property at Rs. 1,32,43,000/- (Ex. PW-3/A) and Rs.
1,45,00,000/- (Ex. PW-4/A) in 2014. No questions were put to these witnesses as to what could be value of this property in December 2012 when it was evaluated by A-2. No suggestion was given to either of them that the value of the property in question was Rs. 4.82 Cr on 24.12.2012 or that the valuation of property done by them was wrong or that deliberately the valuation was kept low.
21.8 In this background, the moment, the credit limit was sanctioned and communicated by Zonal Office to the Branch Office, based on defective loan proposal and over valued Valuation Report, the offence of conspiracy to cheat by all the accused persons got completed. Individual offence of cheating also got completed on the part of the borrower A-1 Sudhir Kumar Arora and A-2 B.P. Singh in the aforesaid manner and the same got further confirmed from the manner in which the funds were usurped immediately on its sanction.
Digitally signed by RAJEEVRAJEEV BANSAL BANSAL Date:
2024.09.07 10:28:25 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 106 of 123
22. BANK ACCOUNTS 22.1 The following bank accounts surfaced during the course of trial in the present case in which the movements of funds were noticed to and fro from the loan account.
Sl. Account Name & Director Bank
No. Number
1 Supreme Electrocast Pvt. Sudhir Kumar Arora PNB,
Ltd. Amish Arora (Son of A-1) Nehru Nagar,
1116005500006117 Ghaziabad
(Proved by PW-20)
2 Supreme Electrocast Pvt. Sudhir Kumar Arora Syndicate
Ltd. Amish Arora (Son of A-1) Bank,
85561250000440 Navyug
(Proved by PW-18) Market,
Ghaziabad
3 Supreme Alloys Ltd. M.L. Arora (father of A-1) Syndicate
85561250000831 J.K. Arora (brother of A-1) Bank,
(Proved by PW-18) Sahil Arora (Nephew of A-1 Navyug
Market,
Ghaziabad
4 Supreme Alloys Ltd. J.K. Arora (brother of A-1) PNB, Sector
3702008700001781 Sahil Arora (Nephew of A-1 18, Noida
(Proved by PW-22)
22.2 It appears that under 'Supreme' Group, different
companies under different names were floated by Sudhir Kumar Arora and his other family members, and bank accounts were opened in different Banks by these different companies. Sudhir Kumar Arora, in his loan application made to the Corporation Bank, disclosed that he had a Bank Account of Supreme Electrocast Pvt. Ltd. at Syndicate Bank, Ghaziabad. He however, did not disclose therein that he had another Bank Account in the name of Supreme Electrocast Pvt. Ltd. at Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:28:34 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 107 of 123 Punjab National Bank, Nehru Nagar Branch, Ghaziabad. PW-18 Narain Singh Martolia, PW-20 Shashi Raj and PW-22 Hemant Kumar Singh deposed about these bank accounts which are held by his family members in different names. Since funds have travelled amongst these accounts of blood relatives of Sudhir Kumar Arora, from the loan account in the present case, the malafide intention of Sudhir Kumar Arora is apparent and the same cannot be ignored.
23. SIPHONING OFF THE LOAN AMOUNT 23.1 The intention to cheat was there from the very inception and this gets confirmed from the manner in which the credit limits were hurriedly used by borrower Sudhir Kumar Arora. As per CVPOD Scheme, credit limit could have been used only for business purpose of the borrower 'Supreme Steels' and no cash withdrawals could have taken place, but just in 25 days of the sanction of the limit, almost entire limit is exhausted and in the said process, not even a single transaction was done for business purpose of the borrower firm Supreme Steels. In the Loan recommendation letter dt. 4.2.2013 (Ex. PW-6/E) it was mentioned that the main suppliers of Supreme Steels are CVS Steels Pvt. Ltd, Divya Impex, Hindon Forge Pvt. Ltd. and Kunj Forgings Pvt. Ltd. etc. No transaction was done with any of these suppliers by A-2 Sudhir Kumar Arora in first 25 days after sanction of the credit limit (though thereafter between 25.07.2013 to 16.09.2013 there are a few transactions with Divya Impex). Most of the amounts were transferred to his other two sister companies by A-1 Sudhir Kumar Arora. The Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:28:42 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 108 of 123 following transactions as reflected in Account Statement Ex. 6/J took place from the Loan Account in first 25 days of the sanction of the credit limit:
Sl. Date Details Dr. Cr. Balance
No.
1 1.3.13 Transferred to 68,00,000
Supreme
Alloys Ltd. in
Syndicate
Bank A/c
(Sister
Company of
Supreme
Group)
2 1.3.13 Transferred to 32,00,000
Supreme
Alloys Ltd. in
Syndicate
Bank A/c
(Sister
Company of
Supreme
Group)
3 1.3.13 Transferred to 40,00,000
Pharma
Markets (Firm
of Parth Kumar
Verma, son of
Shiv Kumar
Verma)
4 1.3.13 Transferred to 51,60,300
Apna
Enterprises
(Firm of Shiv
Kumar Verma)
5 4.3.13 Received 25,00,000
from
Digitally signed
by RAJEEV
RAJEEV BANSAL
BANSAL Date:
2024.09.07
10:28:52 +0530
CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 109 of 123
Supreme
Electrocast
Pvt. Ltd.,
PNB
Ghaziabad
(Company of
Sudhir Kr
Arora)
6 4.3.13 Transferred to 30,00,000
Supreme
Alloys Ltd. in
PNB, Noida
A/c
(Sister
Company of
Supreme
Group)
7 4.3.13 Transferred to 25,00,000
Supreme
Electrocast
Pvt. Ltd. in
Syndicate
Bank A/c
(Company of
Sudhir Kr
Arora)
8 9.3.13 Received 5,00,000
from Narula
Electrical
9 11.3.13 Transferred to 30,00,000
Supreme
Electrocast
Pvt. Ltd.
Syndicate
Bank
(Company of
Sudhir Kr
Arora)
10 11.3.13 Transferred to 10,00,000
Supreme
Digitally
signed by
RAJEEV
RAJEEV BANSAL
BANSAL Date:
2024.09.07
10:29:01
+0530
CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 110 of 123
Alloys Ltd.
Syndicate
Bank
(Sister
Company of
Supreme
Group)
11 16.3.13 Cash 50,000
withdrawal
12 25.3.13 Transferred to 45,00,000
Supreme
Alloys Ltd.
PNB, Noida
(Sister
Company of
Supreme
Group)
Total 3,32,10,300 30,00,000 3,02,10,300
23.2 The above transactions show that entry No. 3 & 4 totalling
to Rs. 91.60 Lakhs are transfers from the CVPOD account to the business entities owned by A-6 S.K. Verma and his son Parth Kumar Verma. Receipt of Rs. 51.60 Lakhs in the Bank Account of S.K. Verma, Prop. of Apna Enterprises was confirmed by PW-17 Satyeshwar Singh Parmar, Branch Head of Syndicate Bank, Vikas Puri where Apna Enterprises had its Bank Account.
23.3 All other amounts have been transferred by Sudhir Kumar Arora from CVPOD account to his own sister concerns M/s Supreme Alloys Ltd. and Supreme Electrocast Pvt. Ltd, besides cash withdrawal.
Clause 22 of Credit Sanction Intimation (Ex. PW-2/B) specifically provided that the borrower shall not transfer/invest funds of the Digitally signed RAJEEV by RAJEEV BANSAL BANSAL Date: 2024.09.07 10:29:09 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 111 of 123 company in whatsoever manner in any other concern without obtaining prior consent of the Bank. Despite this condition and embargo on the use of funds, the borrower transferred huge sums to his other business entities.
23.4 PW-18 Narain Singh Martolia, Chief Manager of Syndicate Bank, Ghaziabad where Supreme Alloys Ltd. had it Bank Account, confirmed that this Bank account had received Rs. 68 lacs and Rs. 32 lacs on 1.3.2013 (Entry No. 1 & 2 above) from Supreme Steels and on the same date, an amount of Rs. 1 crore was transferred to the account of Supreme Electrocast Pvt. Ltd. In other words, Rs. 1 crore was transferred by Sudhir Kumar Arora on 01.03.2013 from Supreme Steels to Supreme Alloys and on the same day this amount of Rs. 1 crore was transferred by Supreme Alloys to Supreme Electrocast Pvt. Ltd., which is another company of Sudhir Kumar Arora. He also deposed about receipt of Rs. 10 Lac in the aforesaid bank account on 11.3.2013 (Entry No. 10 above) from Supreme Steels.
23.5 He also stated that he was the banker of Supreme Electrocast Pvt. Ltd. also and in the said account, Rs. 1 crore was received from Supreme Alloys Pvt. Ltd. on 1.3.2013; Rs. 25 Lacs were received from Supreme Steels on 4.3.2013 (Entry No. 7 above) and an amount of Rs. 30 Lacs was received from Supreme Steels on 11.3.2013 (Entry No. 9 above).
23.6 PW-20 Shashi Raj is the Clerk of Punjab National Bank, Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:32:43 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 112 of 123 Ghaziabad where Supreme Electrocast Pvt. Ltd. had an Account. He proved receipt of Rs. 30 Lacs in this account on 4.3.2013 from Supreme Alloys Ltd. He also stated that an amount of Rs. 25 lacs was paid from this account to Supreme Steels (Entry No. 5) on the same day and Rs. 5 lac was withdrawn in cash.
23.7 PW-22, Hemant Kumar Singh is Sr. Manager of Sector 18 NOIDA branch of Punjab National Bank where Supreme Alloys Ltd.
had its Account. He stated that on 25.03.2013, an amount of Rs. 45 lacs was received in the said account from the account of Supreme Steels (Entry No. 12 above) and the said amount was transferred to the account of Supreme Electrocast Pvt. Ltd.
23.8 In subsequent period also, there are various transactions which are contrary to the CVPOD scheme as amounts were transferred to personal saving bank accounts. An amount totalling to Rs. 43 Lakhs was transferred in three transactions on 14.5.2013 and 15.5.2013 in the personal saving bank account of Pankaj Chanana.
23.9 An amount of Rs. 50 lakhs was transferred in two tranches to P.K. Industries on 06.09.2013.
23.10 Similarly, an amount of Rs. 1,31,25,000/- was transferred to Divya Impex in 6 tranches from 25.07.2013 to 16.09.2013.
23.11 Even cash withdrawals were made which were permitted Digitally signed by RAJEEV RAJEEV BANSAL Date:
BANSAL 2024.09.07 10:32:50 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 113 of 123 by the Bank. An amount of Rs. 1,40,000/- was withdrawn in cash on 02.09.2013. The account, no wonder, soon turned NPA and the series of events lead to the inescapable conclusion that the credit limit was got sanctioned only to siphon off the money as the money was rotated from one account to another. Neither any of these banking transactions has been denied by accused Sudhir Kumar Arora in his statement u/s 313 Cr PC nor any explanation/justification has been given by him regarding these transactions.
23.12 Many witnesses namely PW-17 Satyeshwar Singh Parmar, PW-18 Narayan Singh Martolia, PW-19 Mukta Kumari, PW-20 Shashi Raj, PW-21 Ashok Kumar Gupta, PW-22 Hemant Kumar Singh, PW- 23 Ajay Singh, PW-27 Aman Chatwal and PW-28 Sharad Mohan Soi deposed about the transfer of huge amounts of money from the Loan Account to self Personal accounts or to personal accounts of non business relation entities. No evidence was brought on record or proved by the accused Sudhir Kumar Arora that the said bank transactions were carried out by him from the loan account purely towards the business requirements of 'Supreme Steels'. No supporting documents or sale vouchers commensurating those banking transactions were brought in evidence by accused Sudhir Kumar Arora.
23.13 All these transactions were admitted by Sudhir Kumar Arora in his statement recorded u/s 313 Cr PC.
23.14 PW-5 Gopal Krishan Raveendran stated that Zonal Office Digitally signed RAJEEV by RAJEEV BANSAL BANSAL Date: 2024.09.07 10:32:56 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 114 of 123 was also empowered to direct freezing of any account even after disbursal of loan if it comes to its knowledge that false or forged documents have been furnished to secure a loan. He also deposed that as a general banking practice, it is the duty of CCPC Head to monitor and supervise the compliance of the terms and conditions by the Branch Head. However, no such action is taken by the Bank, which shows the complicity of the Bank Officials, in particular of A-4 Pavan Arya in the present case.
23.15 Transfer of Rs. 91.60 Lakhs to the firm of Shiv Kumar Verma (A-6) has been tried to be explained in their respective statements recorded in their examination u/s 313 Cr PC by A-6 Shiv Kumar Verma and A-1 Sudhir Kumar Arora that Shiv Kumar Verma had 'business agreement' with Sudhir Kumar Arora, who was purchasing scrap from Una Plant of S.K. Verma and in this connection, Shiv Kumar Verma had received about Rs. 90 Lakhs from Sudhir Kumar Arora. It was further stated by both of them that later on, the said deal could not materialize and hence the amount received, was returned by Shiv Kumar Verma in different tranches through banking channels and through cash. However, neither any such 'business agreement' was brought on record and proved nor any other document in support of this stand was brought on record and proved by the accused persons.
Clearly, the stand taken does not get substantiated from any other independent evidence and appears to be an after thought and an unsuccessful attempt only to 'justify' the transfer of money.
Digitally signed by RAJEEVRAJEEV BANSAL BANSAL Date:
2024.09.07 10:33:02 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 115 of 123 23.16 The discussion held above show, beyond doubt, that the accused Sudhir Kumar Arora knowingly and willfully diverted the funds from Loan Account of Corporation bank for his personal use, which was against the purpose of CVPOD Scheme. The offence of 'cheating' is clearly made out against A-1 Sudhir Kumar Arora.
Similarly, A-2 B.P. Singh, by way of his false Valuation Report, also dishonestly induced Corporation Bank to part with the loan amount of Rs. 3.10 crore to A-1 Sudhir Kumar Arora and hence he also committed the offence of 'cheating' punishable u/s 420 IPC.
24. NPA 24.1 PW-18 Narayan Singh Martolia, Chief Manager of Syndicate Bank deposed that loan accounts of Supreme Alloys. Ltd. (of which brother of Sudhir Kumar Arora was a Director and the loan was of Rs. 42 crore) turned NPA.
24.2 He also deposed that the loan account of Supreme Electrocast Pvt. Ltd. (of which Sudhir Kumar Arora was a Director and the loan was of Rs. 22.5 crores) also turned NPA.
24.3 PW-22 Hemant Kumar Singh, Sr. Manager of Punjab National Bank, Noida also deposed that the loan account of Supreme Alloys Ltd. (of which brother of Sudhir Kumar Arora was a Director) turned NPA.
Digitally signedRAJEEV by RAJEEV BANSAL BANSAL Date: 2024.09.07 10:33:07 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 116 of 123 24.4 The loan account of Rs. 3.10 crore in the present case, i.e. of Supreme Steels also turned NPA.
24.5 A lame argument was made that power/electricity rates were hiked due to which reason the repayments could not be made by the borrower in the present case. Why the loan account turned NPA in the present case, is not the question for consideration in these proceedings. The question is whether the loan amount was got sanctioned by conspiracy to cheat the bank and was then misutilised for purposes other than business needs of 'Supreme Steels'.
24.6 It has already been noticed that amounts were rotated between the different companies of 'Supreme' Group by Sudhir Kumar Arora and his other blood relations. It cannot be a sheer chance that the aforesaid loan accounts turned NPA and 'Supreme' Group is involved in all the aforesaid loan accounts. It appears that the banking systems have been taken for granted by Sudhir Kumar Arora for securing loans and later allowing the accounts to turn NPA, leaving the Banks to run to different Forums to recover the public money. Be that as it may, offence of cheating is clearly made out against A-1 Sudhir Kumar Arora.
25. Irregularities in Investigation 25.1 It is also contended on behalf of defence that there are Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:33:16 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 117 of 123 irregularities and deficiencies in conducting investigation, on the part of IO and hence, the accused persons deserve acquittal. It was argued that the Investigating Officers did not send the original letter head and original seal of M/s S & G Advisory Services Pvt. Ltd. to CFSL to find out as to whether the letter head and the seal used for preparation of Valuation Report was genuine or not.
25.2 The argument is bereft of merit for two reasons. One, the same was not required in view of letter dt. 5.3.2013 (PW-29/1) of Girish Sharma wherein he stated that their office had never issued the Valuation Report in question. Two, framing of charge for commission of the offence of forgery of documents by the accused persons was not pressed in the charge sheet in this case.
25.3 It is held by Hon'ble Supreme Court in a number of decisions including in Kashinath Mondal v State of W.B. 2012 (7) SCC 699 that irregularities or deficiencies in conducting investigation by the prosecution are not always fatal to the prosecution case. It was held that:
"20. ... If there is sufficient evidence to establish the substratum of the prosecution case then irregularities which occur due to remissness of the investigating agency, which do not affect the substratum of the prosecution case, should not weigh with the court."Digitally signed by RAJEEV
RAJEEV BANSAL BANSAL Date:
2024.09.07 10:33:22 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 118 of 123 25.4 In Hema v State AIR 2013 SC 1000 it was held that defects in investigation is not in itself a ground for acquittal of the accused; and that Court in such cases has to evaluate reliability of prosecution evidence, dehors the lapses and find out whether lapses affect the object of finding truth.
25.5 This Court feels that the lapses, if any, in investigation are not so material so as to cast aspersion on the entire investigation and render it untrustworthy. The prosecution has brought on record sufficient evidence and proved the same that there was criminal conspiracy between all the accused persons to cheat the bank, in which they succeeded by getting sanctioned the credit limit of Rs. 3.10 crore.
Subsequently, the entire amount was siphoned off and the account turned NPA.
26. Offence u/s 13 (1)(d) of Prevention of Corruption Act 26.1 Accused Pavan Arya was also charged for having committed the offence u/s 13 (1)(d) and 13(2) of the Prevention of Corruption Act. Section 13(1) (d) of Prevention of Corruption Act deal with the 'criminal misconduct' by a public servant, who by using corrupt or illegal means or by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage. The statutory provisions are reproduced below for ready reference:
Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:33:29 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 119 of 123 "13. Criminal misconduct by a public servant--(1) A public servant is said to commit the offence of criminal misconduct,--
(a)-(c)***
(d) if he,--
(i) by corrupt or illegal means, obtains for himself or for any other person any valuable thing or pecuniary advantage; or
(ii) by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage; or
(iii) while holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest; or
(e)*** *** (2) Any public servant who commits criminal misconduct shall be punishable with imprisonment for a term which shall be not be less than one year but which may extend to seven years and shall also be liable to fine."
26.2 In so far as the charge under Section 13 (1) (d) of the PC Act is concerned, its ingredients are:-
• that the accused should be a public servant; • that he should use some corrupt or illegal means or otherwise abuse his position as a public servant;
• he should have obtained a valuable thing or pecuniary Digitally signed RAJEEV by RAJEEV BANSAL BANSAL Date: 2024.09.07 10:33:34 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 120 of 123 advantage for himself or any other person.
26.3 A reading of Section 13(1)(d) of the PC Act would reveal that a public servant can be prosecuted only if he has employed corrupt or illegal means or has abused his position as a public servant and thereby obtained for himself or for any other person, any valuable thing or pecuniary advantage. The intention of the legislation is not to punish a public servant for erroneous decision, but to punish for corruption.
For attracting the term 'abuse', the prosecution must establish that the position was used by public servant for doing something which the official was not supposed to do, making dishonest intention as the centre point of the offence.
26.4 Dishonest intention being the gist of the offence under Section 13(1)(d) is implicit in the words used i.e. corrupt or illegal means and abuse of position as a public servant. {See M. Narayanan Nambiar v State of Kerala AIR 1963 SC 1116 and C.K. Jaffer Shareif v State 2013 (1) SCC 205.} 26.5 Both the ingredients namely 'abuse' as well as 'obtain' are explicitly present in this case. A-4 Pavan Arya, abused his position as a public servant by deliberately ignoring lapses in the loan proposal and relying on an untrustworthy Valuation Report and thereby obtained pecuniary advantage for the borrower Sudhir Kumar Arora in as much as credit limits were got sanctioned by him in criminal conspiracy with A-1 Sudhir Kumar Arora, A-2 B.P. Singh, A-5 Chakradhar Muduli and Digitally signed RAJEEV by RAJEEV BANSAL BANSAL Date: 2024.09.07 10:33:42 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 121 of 123 A-6 Shiv Kumar Verma thereby performed his duty with dishonest intention, as explained in detail in preceding paras of this Judgment. Therefore, the main ingredient 'obtaining the pecuniary advantage by using corrupt or illegal means or abusing the position with dishonest intention' is clearly made out and hence A-4 Pavan Arya is held to have committed the offence u/s 13(1)(d) of the PC Act, punishable under section 13(2) of the PC Act.
CONCLUSION
27. In view of the detailed discussion held above and in the net result, all the accused persons stand convicted as under:
27.1 A-1 Sudhir Kumar Arora is convicted for commission of offences u/s 120-B IPC read with section 420 IPC and Section 13 (1)(d) of Prevention of Corruption Act. He is also convicted for commission of offence u/s 420 IPC.
27.2 A-2 B.P. Singh is convicted for commission of offences u/s 120-B IPC read with section 420 IPC and Section 13 (1)(d) of Prevention of Corruption Act. He is also convicted for commission of offence u/s 420 IPC.
27.3 A-4 Pavan Arya is convicted for commission of offences u/s 120-B IPC read with section 420 IPC and Section 13 (1)(d) of Digitally signed by RAJEEV RAJEEV BANSAL BANSAL Date:
2024.09.07 10:33:48 +0530 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 122 of 123 Prevention of Corruption Act. He is also convicted for commission of offence u/s 13 (1)(d) and 13 (2) of Prevention of Corruption Act.
27.4 A-5 Chakradhar Muduli is convicted for commission of offences u/s 120-B IPC read with section 420 IPC and Section 13 (1)(d) of Prevention of Corruption Act.
27.5 A-6 Shiv Kumar Verma is convicted for commission of offences u/s 120-B IPC read with section 420 IPC and Section 13 (1)(d) of Prevention of Corruption Act.Digitally signed
Announced in the open court RAJEEV by RAJEEV BANSAL Date: today dated 07.09.2024 BANSAL 2024.09.07 10:33:54 +0530 (Rajeev Bansal) Special Judge (PC Act) CBI-21 RACC/New Delhi/07.09.2024 CBI No. 27/2019 CBI v Sudhir Kumar Arora & Ors. Page 123 of 123