Bangalore District Court
Central Bureau Of vs K.Shivaram Shetty on 30 June, 2018
IN THE COURT OF THE XLVI ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE AND SPECIAL JUDGE FOR CBI
CASES, BENGALURU.
HOLDING CONCURRENT CHARGE OF XLVII ADDITIONAL
CITY CIVIL AND SESSIONS JUDGE AND SPECIAL JUDGE
FOR CBI CASES, BENGALURU.
Dated 30th day of June, 2018.
PRESENT:
Smt. S.H.PUSHPANJALI DEVI, B.A. LL.B.,
XLVI Additional City Civil and Sessions
Judge & Special Court for C.B.I.Cases,
Bengaluru.
Holding Concurrent Charge of XLVII
Addl.City Civil and Sessions Judge and
Spl.Judge for CBI Cases, Bengaluru.
SPECIAL CRIMINAL CASE No.69/1997
COMPLAINANT: Central Bureau of
Investigation,
A.C.B., Bengaluru.
(By Public Prosecutor)
-VERSUS-
2 Spl.C.C.No.69/1997
ACCUSED : 1 K.Shivaram Shetty,
Former Chairman and
Managing Director,
Vijaya Bank,
Bengaluru.
r/o.No.1154, 12th Main,
HAL II Stage,
Indiranagar,
Bengaluru-38.
(By Sri R.Nagenda Naik,
Advocate.)
2 Smt.Veena Sabharwal,
W/o.Late K.S.Sabharwal,
Managing Director,
M/s.Sabson Freiht
Containers Pvt.Ltd.,
Bengaluru.
r/o.No.624, Maria Villa,
Indiranagar, I Stage,
Bengaluru.
(By Sri Dhananjay Joshi,
Advocate.)
3 M/s.Sabson Freight
Containers Pvt.Ltd.,
No.38, Ulsoor Road,
Bengaluru-42.
Bengaluru.
Represented by accused
No.2 - Veena Sabharwal.
(By Sri Dhananjay Joshi,
Advocate.)
3 Spl.C.C.No.69/1997
Tabulation of Events
1. Date of Commission of : During the period
Offence
1989-1990.
2. Date of Report of Offence : 3.1.1994
3. Date of Arrest of accused : Not arrested
4. Date of release of accused : Accused Nos.1 to 3
on bail
enlarged on bail on
28.7.1997.
5. Period of undergone in : Nil
custody
6. Name of the complainant : Source Information
7. Date of commencement of : 20.3.2009
Evidence
4 Spl.C.C.No.69/1997
8. Date of closing of Evidence : 14.12.2015
9. Offences complained of : 120-B r/w.420 IPC
and Sec.13 (2) r/w.13
(1)(d) of Prevention of
Corruption Act, 1988.
10. Opinion of the Judge : As per final order
(S.H.PUSHPANJALI DEVI)
XLVI Addl. City Civil and Sessions Judge
and Special Judge for C.B.I. Cases,
Bengaluru.
Holding Concurrent Charge of XLVII
Addl.City Civil and Sessions Judge and
Spl.Judge for CBI Cases, Bengaluru.
5 Spl.C.C.No.69/1997
JUDGMENT
This charge sheet is filed by the Inspector of Police, CBI/SPE/Bengaluru against the accused Nos.1 to 3, registered on the basis of Source Information for the offences punishable under Sections 120B r/w.420 and Sec.13(2) r/w.13 (1)(d) of Prevention of Corruption Act, 1988.
2. The brief facts of the case of prosecution alleged against accused Nos.1 to 3 are that, the accused No.1 - K.Shivaram Shetty, while working as Executive Director and then as Chairman and Managing Director of Vijaya Bank, during the period 1989-90 entered into Criminal Conspiracy with accused No.2 - Veena Sabharwal, Managing Director of accused No.3 Company M/s.Sabson Freight Containers Pvt.Ltd., only to cheat Vijaya Bank in securing various credit facilities in the name of accused No.3 Company. The accused No.1 in furtherance of said Criminal Conspiracy abused his official position and got 6 Spl.C.C.No.69/1997 sanctioned various facilities, such as, packing credit, clear cash credit, import letter of credit, DPG facility etc.,to accused No.3 Company without actual process or merits of Proposal of the Company. The accused No.1 has favoured the said Company though it had failed to manufacture of proto type of the containers ordered earlier, even after availing facilities from the Bank and caused wrongful loss to the Vijaya Bank in a sum of Rs.466 lakhs and wrongful gain to accused Nos.2 and 3.
3. Further alleged that the accused No.3 M/s.Sabson Freight Containers Pvt.Ltd., a company incorporated for the manufacture of 20 feet containers, that accused No.1 was closely associated with accused No.2 Veena Sabharwal, who was business partner of M/s.Anupam Silk along with his wife, Smt.Mamatha Shetty, another partner as per the partnership deed. The accused No.1 was instrumental in getting sanctioned various facilities to accused No.3 from Vijaya Bank since 1985. Accused No.2 as a M.D. of Accused No.3 Company has 7 Spl.C.C.No.69/1997 approached Vijaya Bank for further funds during 1990 on the basis of orders received from M/s.ACTL London. Accused No.1 got approved various facilities and funds sanctioned were released to the company without properly ensuring the utilization, by using his official position, showed undue interest and fraudulently and dishonestly with ulterior motive provided the sanction of various facilities to accused No.3 company. Accused No.1 in violation of norms of the bank participated in the meeting held for the purpose of recommendation of various credit facilities to accused No.3 company has obtained pecuniary advantage by abusing his official position as public servant and committed criminal misconduct. Further Accused No.2 and 3 after entering into the Criminal Conspiracy with accused No.1, dishonestly induced the Bank to sanction various credit facilities and availed the benefit and thereby put the bank to wrongful loss of Rs.466 lakhs and undue wrongful gain to themselves. Therefore, the accused No.1 has committed offence punishable under Section 120B read with Section 420 of Indian Penal Code and Section 13(2) 8 Spl.C.C.No.69/1997 read with 13(1)(d) of Prevention of Corruption Act, 1988 and accused Nos.2 and accused No.3 company has committed the offence punishable under Section 120B read with 420 Indian Penal Code.
4. After receiving the source of information for the above said allegations against the accused Nos.1 to 3, the CBI has registered the case in RC No 1(A)/94 for the offences punishable under Sections 120-B r/w.420 IPC and Sec.13(2) r/w.13 (1)(d) of Prevention of Corruption Act, 1988 and forwarded FIR to the XXI Addl.City Civil and Sessions Judge, Bengaluru.
5. The Investigating Officer has conducted thorough investigation, recorded the statements of witnesses and collected different documents during investigation. After completing the investigation he has filed the charge sheet against the accused Nos.1 to 3, for the offences punishable under Sections 120B r/w.420 IPC and Section 13(2) read with 13(1)(d) of Prevention of Corruption Act, 1988. 9 Spl.C.C.No.69/1997 The Investigating Officer has not obtained Sanction to prosecute against accused No.1, since he was retired Official of Vijaya Bank, as on the date of receiving the report on 3.1.1994.
6. After filing the charge sheet, the Court has taken cognizance of the offence and case registered in Spl.C.C.No.69/1997. In response to the summons, accused No.1 and accused No. 2 the Managing Director of accused No.3 Company M/s.Sabson Freight Containers Pvt.Ltd., appeared before the XXI Addl.City Civil and Sessions Court and enlarged on bail.
7. After hearing prosecution and accused 1 to 3, on framing of charge, since the materials produced by CBI are prima facie prove the case against the accused, the Court has framed the charge against accused Nos.1 to 3 for the offences punishable under Sections 120B r/w.420 IPC and Sec.13(2) r/w.13 (1)(d) of Prevention of Corruption Act 1988, read over and explained to them. They have denied 10 Spl.C.C.No.69/1997 the charges leveled against them and claimed to be tried. Hence, the case was posted for trial.
8. Subsequently, as per the Notification No.PSJ(CBI)/AOW/1J/2012 dtd.7.6.2013 the case was withdrawn from XXI Addl.City Civil and Sessions Judge, Bengaluru (CCH-4) and made over to this Court for disposal in accordance with law.
9. The prosecution in proof of the case has examined 9 witnesses, out of 13 witnesses, as PWs.1 to 9. CW4 was reported to be dead and CWs.7, 10 and 11 were not examined by prosecution. The documents in support of prosecution case are marked as Exs.P1 to P61. Afterwards, Public Prosecutor closed the evidence of prosecution by filing a memo stating that the examination of CWs.7, 10 and 11 is unnecessary.
10. After closure of prosecution evidence, the incriminating circumstances in the evidence of prosecution 11 Spl.C.C.No.69/1997 witnesses, read over and explained to the accused Nos.1 to 3 under Section 313 of Cr.P.C. The accused Nos.1 to 3 have denied the evidence of prosecution witnesses and accused No.1 has filed written statement under Section 313 (5) Cr.P.C. The accused Nos.2 and 3 though stated that they have written statement to be filed, no statement has been filed. Accused Nos.1 to 3 has not chosen to lead defence evidence on their behalf.
11. Heard arguments of learned Public Prosecutor for prosecution and learned Counsel for accused Nos.1 to 3 on merits.
12. Perused the records.
13. The points that would arise for my consideration are:-
1) Whether the prosecution is able to prove that accused No.1 being Chairman and Managing Director of Vijaya Bank, during 1989-90 entered into Criminal 12 Spl.C.C.No.69/1997 Conspiracy with accused Nos.2 in securing various credit facilities in the name of A-3 Company - M/s.Sabson Freight Containers Pvt.Ltd. and accused Nos.1 to 3 have committed the offence punishable under Section.120-B of Indian Penal Code?
2) Whether the prosecution is able to prove that during the said period, the accused No.1 by corrupt or illegal means abused his official position got sanctioned various facilities to A-3 Company without processing the loan and knowing the manufacturing capacity of proto type of containers of said Company, cheated the Vijaya Bank and caused wrongful loss to the Bank and wrongful gain for himself and to the accused Nos.2 and 3 and committed the offence punishable under Section.420 of Indian Penal Code?
13 Spl.C.C.No.69/1997
3) Whether the prosecution is able to prove that accused No.1 being public servant as Chairman and Managing Director of Vijaya Bank during the above said period has abused his official position and obtained pecuniary advantage for himself by sanction of various loan facilities in favour of accused Nos. 2 and 3 and committed the offence of criminal misconduct punishable under Section.13(2) read with Sec.13(1)(d) of Prevention of Corruption Act, 1988?
4) Whether the prosecution is able to prove that accused No.1 has committed the offence punishable under Section 120-B read with 420 Indian Penal Code and under Section 13(2) read with 13(1) and (d) of Prevention of Corruption Act, 1988 and 14 Spl.C.C.No.69/1997 accused Nos.2 and 3 has committed the offence punishable under Section 120-B read with 420 of Indian Penal Code?
5) What Order?
14. My findings on the above points are as follows:-
Point-1: In the Negative Point-2: In the Negative Point-3: In the Negative Point-4: In the Negative Point-5: As per final order for the following:-
REASONS
15. Point Nos.1 to 3 :- These points are taken together for the sake of convenience and to avoid repetition of discussion. The prosecution has specifically made allegation that the accused No.1 - K.Shivaram Shetty, being public servant while working as Executive Director and afterwards as CMD, of Vijaya Bank, during the period 1989-90 entered in to Criminal Conspiracy with 15 Spl.C.C.No.69/1997 accused No.2 - Veena Sabharwal, Managing Director of accused No.3 Company M/s.Sabson Freight Containers Pvt.Ltd. Bengaluru, only to cheat the Vijaya Bank in getting sanction of various credit facilities in the name of accused No.3 Company. In order to prove the said allegation, the prosecution has relied on the evidence of witnesses PWs.1 to 9 and documents Exs.P1 to 61. Therefore, it is necessary to discuss their evidence in brief, particularly, the Bank officials.
16. PW1 - N.Vasantha Shetty, was the Asst.General Manager in Vijaya Bank, Bengaluru zone at Bengaluru from 1986-90 has stated about procedure of grant of loan by the Branch Manager. He has explained that if the Manager of the Branch was convinced of feasibility of grant of loan, the Proposal should have been sent to the Zonal Office, thereafter the credit wing was to examine the Proposal sent by the Branch Manager and after careful scrutiny, if any loopholes noticed, with necessary observations it was to be sent to higher officers 16 Spl.C.C.No.69/1997 for re-examination. Thereafter, the observation sent by the higher officers forwarded to the Deputy General Manager for signature. However the Branch Manager ought to have been clarified the queries and resubmit the letter along with his reply to Zonal Office, if Proposal sent by him returned by Deputy General Manager, after his signature. He has clearly stated that when he was working as Assistant General Manager in Zonal Office, accused No.3 company M/s.Sabson Freight Containers Pvt.Ltd. has availed credit facilities from Mayo Hall Branch of Vijaya Bank, which was exceeded limits of powers of Zonal Office. The memorandum also submitted to the Board of Directors through Credit Department is identified and marked as Ex.P1. The Sanction Advice letter dated 10.5.1990 relating to various credit limits approved by the Board of Directors of Vijaya Bank in favour of accused No.3 Company also identified and marked as Ex.P2 and his signature is Ex.P2(a). Further he has stated the Note dtd.6.7.1990 submitted by the then DGM namely Divakara Shetty to the then Chairman and Managing Director as per Ex.P3 and 17 Spl.C.C.No.69/1997 identified signature of said Divakara Shetty marked as Ex.P3(a). According to him, the document Ex.P3 was submitted with respect to waiver of loan condition. He has further deposed that after the Note Ex.P3 was put up before Chairman and Managing Director to waive sanctioned terms regarding creation of Pari-passu first charge and second charge on fixed assets, to approve action of the Branch while allowing overdrawing in the current account of the party at Rs.6.49 lakhs and allow TOD in current account was completed and also to approve the Bank Guarantee limit of Rs.3.37 lakhs on account of accused No.3 Company. He has further stated that Ex.P3 Note was not put up before him when he was working as AGM. Though recommendations made for waiver of conditions of the loan, two out of three conditions were negative and another one relating to Bank Guarantee was approved only for duration of three months.
17. Further he has stated that Note dated 7.7.1990 put up by the then DGM Divakara Shetty as per Ex.P4 for 18 Spl.C.C.No.69/1997 approval of action in releasing Import Letter of Credit limit to the tune of Rs.172.08 lakhs out of the sanctioned limit of Rs.320 lakhs to M/s.Sabson Freight Containers Pvt.Ltd. He has identified signatures of said Divakara Shetty marked as Ex.P4(a) and (b). He has also deposed that reason for not creating second charge was other financial institutions such as K.S.I.I.D.C. and K.S.F.C. did not agreed to cede second charge on the fixed assets. He has stated about observation made in the Note that Branch would have been obtained prior permission from Sanctioning Authority and the request of the Bank to release the remaining portion of the limit without insisting for second charge which was not to be allowed in view of the said limit. The remarks made in Ex.P4 was signed by officials of the Bank including accused No.1 and their signatures are marked as Ex.P4(c) to 4(g). The memorandum Ex.P5 dated 19.8.1990 signed by him as AGM, Divakara Shetty as DGM and General Manager K.K.Shetty are marked as Ex.P5(a) to (c). However, he has stated the said memorandum was placed before Board 19 Spl.C.C.No.69/1997 under Agenda No.A-126/90 dtd.14.8.1990 and Resolution was passed in the meeting of the Board on 22.9.1990, as per Ex.P6 and signature of Secretary Subramaniyam marked as Ex.P6(a). The Note dated 6.8.1990 marked as Ex.P7, under which request made to enhance the limit by Rs.30 lakhs that is from Rs.320 lakhs to Rs.350 lakhs in respect of Import of Letter of Credit pertaining to the loanee M/s.Sabson Freight Containers Pvt.Ltd. The reasons for enhancement also mentioned in the said document which was put up before this witness, who has in turn put up the same before DGM Divakara Shetty. Further he has deposed about procedure in respect of Import of Letter consisted of sending of Proposal to Internal Bank Division. The quarterly reports pertaining to accused No.3 Company dated 27.8.1990 and 31.3.1990 identified as Ex.P9 and Ex.P10. Further he has identified his signature and signature of DGM Divakara Shetty marked as Ex.P10(a) and 10(b) respectively. He has also identified signatures of other officials in the said Note 20 Spl.C.C.No.69/1997 which was said to be placed before General Manager Operations Mr.Krishnappa Shetty and others.
18. PW1 has particularly stated that Proposal was put up by Mayo Hall Branch of Vijaya Bank which was sent to Zonal Office and submitted to the Credit Department at the Head Office. According to him, accused No.1 was the Executive Director at the relevant point of time, who was promoted as Chairman and Managing Director of the Bank. PW1 has further identified the documents, Covering letter, Memorandum of the Board of Directors and other documents marked under Exs.P21 to 26. The Memorandum of Board of Directors dated 6.8.1990 and 15.10.1990 contains some decision taken in the Board regarding credit facilities sanctioned to the accused No.3 Company and accused No.1 was present in the said Board Meetings. However, the credit limit of M/s.Sabson Freight Containers Pvt.Ltd., admittedly enhanced from Rs.12 lakhs to Rs.30 lakhs. Likewise, as per the Resolution dated 8.1.1991 passed by the Board of Directors, OD limit 21 Spl.C.C.No.69/1997 relating to accused No.3 Company enhanced from Rs.18 lakhs to Rs.26.75 lakhs. Under the same Resolution, Packing Credit Limit enhanced from Rs.20.65 lakhs to Rs.36.15 lakhs. The Note put up by the Divisional Manager bears signatures of this witness and Deputy General Manager are marked as Exs.P24(a) to (c). He has identified Ex.P25 another Resolution passed by the Board of Directors of Vijaya Bank on 23.3.1991 under which the OD facility limit to accused No.3 Company enhanced from Rs.26.75 lakhs to 28.07 lakhs. He has admitted that as per the recommendation made by the Branch Office, Zonal Office has presented a Proposal for enhancing Over Draft limit from Rs.18 lakhs to Rs.21 lakhs. However, Divisional Office did not approve that Proposal through order dated 23.10.2010, marked as Ex.P26.
19. In the cross-examination, PW1 has admitted that procedure called 'level jumping' has been followed in the banking transactions which was meant for quick disposal of credit Proposals. Admittedly the loans said to be 22 Spl.C.C.No.69/1997 sanctioned to accused No.3 Company never processed through this witness and the loan facilities were sanctioned by the Board. He has also admitted that there were two persons namely K.S. Shetty - accused No.1 and another person working in the similar name and similar designation as Chairman and Managing Director in the same Bank. It is also admitted that subsequent to the retirement of another person namely K.S.Shetty, accused No.1 worked subsequently in the Mayo Hall Branch. He do not have personal knowledge of loan processed and thereafter credit Proposals were sanctioned by the Board. He was also attended Consortium Meeting and the decisions taken in the said meeting have no binding effect, if Board did not approve the decisions. PW1 has further admitted that all the loans borrowed by accused No.3 Company were sanctioned by the Board of Directors and he do not know basis for sanction of those loans.
20. PW2 - Anand Ramanna Shetty was the Branch Manager of Vijaya Bank, Mayo Hall Branch from 23 Spl.C.C.No.69/1997 1989 till March 1991. He has scrutinized all the accounts including the account relating to accused No.3 Company which was originally operated in Ulsoor Branch of Vijaya Bank, later transferred to Mayo Hall Branch. At the time of transfer of said account to Mayo Hall Branch, accused No.3 Company had already availed Over Draft facility of Rs.15 lakhs and Rs.4.50 lakhs under Bridge Loan. The outstanding Over Draft facility was Rs.16.01 lakhs and Bridge Loan was due at Rs.5.01 lakhs. The loans amount due along with interest was transferred to the Mayo Hall Branch and it was merged in the total amount. The Letter of Credit facility to the extent of Rs.22,000 pounds to import raw material from UK to enable them to manufacture five prototype containers also sanctioned in favour of Company in the month of March-1989. He has further deposed about the short term Over Draft of Rs.18 lakhs sanctioned for one term to start business and to generate income out of the export. Further since the Company has failed to manufacture the goods, could not export the same within stipulated time. Therefore, liability 24 Spl.C.C.No.69/1997 was fastened on the Mayo Hall Branch. He has particularly stated that Rs.320 lakhs was sanctioned by Board of Directors to purchase steel sheets from foreign seller for the purpose of manufacturing the container, which were to be exported to UK Company namely M/s.ACTL. However, the Company which was expected to keep raw material received from foreign seller failed to manufacture the container and export it. The letter said to be written to the Chairman of Vijaya Bank, Head Office, Bengaluru expressing thanks for the support offered by the Chairman of the Consortium Meeting marked as Ex.P27. The said letter is dated 14.3.1989.
21. In the cross-examination, PW2 has admitted that the sanction Proposal for the credit facility was mooted at Branch level and concluded at the Board and in the said process accused No.1 did not participate at any point of time. He has participated in Consortium Meeting in respect of other transactions and after discussion they used to 25 Spl.C.C.No.69/1997 arrive at conclusion for sanction of credit facility subject to approval of Sanctioning Authority.
22. PW3 - Chandrasekaran, worked as Senior Manager in Zonal Office, Vijaya Bank from 1989 to 1992 has deposed that he was working in Credit Department and verifying credit Proposals received by the Zonal Office. After verification, he was sending file along with his Note to Assistant General Manager. Thereafter, file was sent to the Zonal head DGM, who has power of sanction exceeding Proposal. If the credit limit were exceed the sanction power of Zonal head DGM, the file was sent to the Head Office. However, the credit facility relates to Export and Import Finance, the Proposal was sent to International Banking Division Branch of the Head Office. According to him, accused No.1 was one of the Board of Directors of Vijaya Bank, during 1989-92. He himself has processed the file relating to accused No.3 Company during his tenure in the Zonal Office and made note regarding position of Company at that point of time. He has also noted irregularities of 26 Spl.C.C.No.69/1997 the loan accounts of accused No.3 and also about request made on its behalf for sanction of Foreign/Inland Letter of Credit facilities etc. He has identified note made by him as per Ex.P34 and his signature Ex.P34(a). The memorandum was prepared in the Office after the Consortium Meeting as per Ex.P1 which was sent to IBD, was scrutinized by him.
23. PW4 - O.S.Ramamurthy, worked as Assistant General Manager in Vijaya Bank, International Banking Division, Head Office, Bengaluru from 1987 to 1992 has deposed about his work done in the said Office, who was processing and recommending credit Proposals in technical field involving International Business. He had received file relating to accused No.3 Company for credit Proposal for which the Consortium Meeting was held on 20.3.1990. With respect to the said Proposal he had interacted with accused No.2, who was Managing Director of accused No.3 Company. After death of husband of accusedNo.2, she has started project, but she had no technical competency to 27 Spl.C.C.No.69/1997 complete the project, as the project was already started she took over to complete the same. Further in the Consortium Meeting accused No.1 was said to be agreed for sanction of credit facility to the accused No.3 to the extent of Rs.320 lakhs towards Packing Credit. The remarks made by him in the Office Note dated 28.8.1990 marked as Ex.P37 and his signature marked as Ex.P37(a). The Memorandum for the Board of Directors dated 15.11.1990 marked as Ex.P40 is with respect to proposal made for sanction for enhancement of the Short Term Over Draft limit of 8.75 lakhs from Rs.18 lakhs to Rs.26.75 lakhs and enhancement of Packing Credit Limit by Rs.15.50 lakhs from Rs.20.65 lakhs to Rs.36.15 lakhs. The Branch Note dtd.12.9.1990 available in the IBD file referred relating to adverse features in the account of accused No.3 Company. The Note with signature marked under Ex.P40
(a) show that the proposal was not to be considered in view of adverse remarks made in the list and proposed enhancement of loans not granted with ratification of excess permitted by the Chairman and Managing Director 28 Spl.C.C.No.69/1997 in the Short Term Over Draft limit to the extent of 0.80 lakhs to be obtained from the Board. The document Note for the Chairman and Managing Director made by AGM dated 6.12.1990 marked as Ex.P41. In the said document the approval of the facilities sought on behalf of the accused No.3 Company mentioned as 'comes under the powers of Board of Directors'.
24. In the cross-examination PW4 has admitted that the credit facility was extended to the accused No.3 Company by four Financial Institutions, that is, KSFC, KSIDC, IDBI and Indian Bank apart from Vijaya Bank. He has admitted that the decision taken in the Consortium Meeting has to be processed by the Branch, Zonal Office and Head Office as per the Rules for according Sanction. He has further stated about accused No.1 has not played any extra role while performing his Banking business. Admittedly, all the Financial Institutions were accepted proposal while granting of credit facility to the accused 29 Spl.C.C.No.69/1997 No.3 Company since the said firm was dealing with Export Oriented Business.
25. PW6 - N.Devadas, worked as Assistant Manager Scale-I of Vijaya Bank, Zonal Office, Bengaluru in the year 1984 and he was handling Larger Credit Proposals received from Regional Office of Bengaluru. While processing the papers of Proposals, he was verifying as to Loan Proposals exceed the Sanctioning Power of Zonal Office, afterwards the papers were placed before Head Office and the Board of Directors for sanction, through higher Authorities. He has deposed about the Loan Proposal relating to accused No. 3 Company was received from Mayo Hall Branch, thereafter decision taken in the Consortium Meeting held in the month of March-1990. He has stated about other Credit Facilities sanctioned to accused Nos.2 and 3 by other Financial Institutions. He had processed the loan papers with Proposal and his recommendations placed before Board of Directors in a Meeting dated 3.5.1990 for sanction of various Credit 30 Spl.C.C.No.69/1997 Limits. The Sanction was accorded by Board of Directors on the basis of said Proposal under Ex.P2, the Sanction Order. Further he has stated about Bridge Loan of Rs.5 lakhs sanctioned on 7.10.1985, afterwards in view of urgency expressed by accused Nos.2 and 3, the Divisional Manager of Zonal Office issued Permission Letter which was ratified and Note was placed before the Chairman and Managing Director as per Ex.P43. However, he has also stated about Proposal sent for sanction of Non-Operative Over Draft facility of Rs.30 lakhs and Bank Guarantee facility of Rs.4.5 lakhs to the accused Nos.2 and 3. After receiving said Proposal, he has pursued papers with his recommendation Note placed before International Banking Division of Zonal Office. The credit facilities sanctioned to the accused Nos.2 and 3 after representatives of the Bank and other Financial Institutions visited the accused No.3 Company. Only after inspection they come to conclusion as it was suitable for sanction of Over Draft facilities and the Bank also enhanced Over Draft facilities after Note and approval. He has deposed about Consortium Meeting 31 Spl.C.C.No.69/1997 initially held in the month of February-1990 in respect of regular Credit facilities sanctioned to the accused Nos.2 and 3.
26. In the cross-examination he has admitted that all the Notes and his recommendations were based on the papers sent to him. He has further admitted that the ultimate sanction power of Credit facilities given to the Board of Directors and no other Person or Officer had that power of sanction of facility to accused Nos.2 and 3.
27. The important witness is PW8 - S.Narayana Shibaraya, worked as Manager, International Banking Division, Head Office of Vijaya Bank, Bengaluru has deposed about the Investigation of alleged irregularities and Reported the same to the bank. According to him, a Team constituted to investigate the matter in respect of affairs of accused Nos.2 and 3 relating to their loan transactions had with Mayo Hall Branch. He has deposed that originally their loan account was with Ulsoor Branch and it was 32 Spl.C.C.No.69/1997 transferred to Mayo Hall Branch subsequently. However, the Team of investigation was headed by Subramaniam, was also accompanied with other members K.P.Vittala Shetty, Shankar Raman and other members. During the investigation, they found many lacunas in the loan transactions of accused Nos.2 and 3 from the initial stage as the Company did not contribute anything towards business and the entire amount was financed only by the Bank itself.
28. P.W.8 has deposed that during the period of loan transaction of accused Nos.2 and 3, accused No.1 was General Manager looking after Operations and Credit in- charge of the Bank. Afterwards, the accused No.1 became the member of Board of Directors, Executive Director and in-charge Chairman of the Bank. He has further deposed that direction given by accused No.1 to release the loan amount in favour of accused Nos.2 and 3 even prior to Sanction of loan by the Chairman. The loan of TOD of Rs.25,000/- was granted to accused Nos.2 and 3 in the 33 Spl.C.C.No.69/1997 moth of January-1987 as per his instructions, the said proceedings is marked as Ex.P58(a). In the same document, the proceedings taken relating to TOD of Rs.20,000/- was granted to accused Nos.2 and 3 in the month of August-1987 is mentioned. However, the loan of Rs.9.95 lakhs said to be sanctioned by the accused No.1 for which, no margin money was taken by the Bank has been seriously denied by accused No.1. The proceedings relating to the said loan is identified under Ex.P43. He has further identified the file Ex.P59 and different proceedings. Ex.P59(a) is relating to proposal submitted by the Ulsoor Branch on account of accused No.3 Company in respect of revised cost of project and means of finance in detail. The said proposal was made on 23.12.1987 during the life time of husband of accused No.2. However, he has identified the signature of accused No.1 in the same document marked as Ex.59(b) which contains Note made by one K.S.Shetty as Executive Director of the Bank. The file containing details of accused No.3 Company for the period from 1990 34 Spl.C.C.No.69/1997 onwards marked as Ex.P60 and file containing Interpol reports marked as Ex.P61.
29. According to him, accused Nos.2 and 3 applied for fresh loan facilities in the month of December-1987 without clearing the earlier dues to the Bank. After verifying the account found 16 irregularities noted in the Proposal for sanction of loan facility to accused Nos.2 and 3. He has stated that Zonal Office rejected the Proposal for Working Capital Facility sought by accused Nos.2 and 3 with a direction to recover the earlier dues from them. At the same time, accused No.1 was said to be given instructions to the Bank not to take drastic action against accused Nos.2 and 3. He has stated that the Consortium Meeting dated 20.3.1990 attended by accused No.1 in which commitment made on behalf of Bank for sanction of Loan Facility to accused Nos.2 and 3 with NIL margin. The Proceedings passed in the said meeting marked as Ex.P35. However, it is pointed out that during the sanction of the loan facilities to the accused Nos.2 and 3 from the Bank, 35 Spl.C.C.No.69/1997 accused No.1-- was working as Executive Director, Member of Board of Directors and In-charge Chairman of the Bank. According to him, after investigation, the Team submitted the Report to the Head Office and Supplementary Report also submitted subsequently. But no such Reports are produced before the Court.
30. In the cross-examination he has stated that the original document perused by them during the investigation and those were collected from the Branch, Zonal Office, Regional Office and Head Office. He has admitted that accused No.1 did not sanction any Loan Facilities in favour of accused Nos.2 and 3. Though he has denied that the Board of Directors were sanctioned Loan Facilities to accused Nos.2 and 3 he has stated that after sanction of Loan Facilities by Chairman, the Board has approved it. He has further admitted that TOD will not granted to meet the exigencies of the Customers and the Branch Manager is having power to grant said facilities depending upon the circumstances and to certain limit. He has also admitted 36 Spl.C.C.No.69/1997 that TOD of Rs.25,000/- sanctioned in the month of January-1987 by the accused No.1 was brought to the notice of Chairman as per the document Ex.P58. Though he has denied loan of Rs.9.95 lakhs was not sanctioned in the month of November-1987 to accused Nos.2 and 3, admitted that the said grant of loan was cumulative decision of all the persons involved in it.
31. The prosecution has produced the evidence of PW5 - K.Venkatachalamaiah Chetty, worked as Chief Manager of Vysya Bank, Bengaluru. He has deposed about the account of Over Draft had in the bank in the name of M/s.Anupam Silks, doing silk export business, for which, accused No.2 and wife of accused No.1 were Partners. He has handed over the said account file to the CBI Officers in the year 1995 and the same is identified under Ex.P42. The Partnership Deed in the said document identified as Ex.P42(a). He has deposed about Packing Credit Loan sanctioned to the said firm on 16.3.1988 for which, accused No.1 was the guarantor. The notice sent by the Bank to 37 Spl.C.C.No.69/1997 the Partnership firm as it has not cleared the loan dues to the Bank, the accused No.1 as the guarantor to the Credit Facility sent reply to the notice issued by the Bank as per Ex.P42(d).
32. P.W.9 - G.Prabhakaran, Inspector of Police CBI, ACB, Chennai from January-1990 to May-1995 has conducted investigation as per the Orders of SP, CBI, Bengaluru. During the investigation he has scrutinized the documents and submitted Pointers for investigation to be done abroad and submitted to SP for onward transmission to Interpol. He has further recorded statements of prosecution witnesses and collected the documents from Vijay Bank, Bengaluru and file containing M/s.Anupam Silks from Vysya Bank, Reports from Auditors of Vigilance Department of Vijaya Bank and 59 Cheques from Mayo Hall Branch. Since he was transferred to Chennai, handed over case file to PW7 - Ashok Kumar for further investigation. 38 Spl.C.C.No.69/1997
33. The Additional SP, V.Ashok Kumar who has registered the FIR is examined as PW7. He has deposed about when he was Inspector, on 3.1.1994 registered the case and forwarded FIR to the Court, marked as Ex.P55 and he has identified the signature of Thomas John is marked as Ex.P55(a). He has conducted initial investigation and search in the Office of accused Nos.2 and accused No. 3 company. Thereafter, as he was transferred, the case file handed over to Prabhakaran, the then Inspector of Police, CBI on 26.5.1994, who has continued further investigation and examined the witnesses PWs.1 to 6, CWs.4, 7, 9 and 10 and recorded their statements. The documents collected by the said Inspector of Police were shown to him and he has identified those documents marked as Exs.P56 to 61. Those documents are containing Proceedings of Consortium Meeting held on 13.3.1989, the Proposal dated 21.4.1990, Domestic Credit Processing file relating to accused No.3 company, file relating to said company for the period from 1987 to 1989, another file of 1990 onwards and file relating to Interpol Reports. After transfer of said 39 Spl.C.C.No.69/1997 Prabhakaran, case file was again handed over to him for further investigation. Thereafter he has examined accused No.1 and recorded his statement. Further one Vineeth Sabharwal son of accused No.2 and accused No.2 were examined and their statements were also recorded by him. After collecting the documents and completing investigation he has filed charge sheet against accused Nos.1 to 3. He has admittedly not examined any of Board of Directors of Vijaya Bank.
34. The prosecution made specific allegation against accused No.1 that he has entered into Criminal Conspiracy with accused Nos.2 and 3, abused his official position as Executive Director of Vijaya Bank and subsequently as Chairman and Managing Director has suppressed material facts and induced the Board of Directors to sanction loans and other facilities in favour of accused No.3 Company. In support of the case, prosecution has relied on statements of PWs.1, 4 and 5 and documents Exs.P1 to P61, particularly Exs.P2, 4, 21 to 23, 32, 34 to 36, 42, 45, 54 40 Spl.C.C.No.69/1997 and 56. Ex.P1 is the Memorandum for the Board of Directors dated 10.4.1990 with reference to the subject - To approve the Proposal for sanction of various credit limits on account of M/s.Sabson Freight Containers Pvt.Ltd. at Mayo Hall, Bengaluru Branch. The Proposal made under the said Memorandum reveal that nature of facilities are Funded Interest Loan Rs.14.14 lakhs, Term Loan Rs.23.54 lakhs, Short Term Overdraft (Non-operative) Rs.18.00 lakhs, Deferred Payment Guarantee Rs.18.00 lakhs, Packing Credit (Hypothecation) Rs.20.65 lakhs and Import Letter of Credit (DA terms) Rs.320.00 lakhs. The said loans were on ought to be repayable in 18 equal monthly installments commencing from 1.4.1991, in 42 equal monthly installments from 1.10.1992, to be closed in full before December-1990, DPG to be issued covering payment of bills of tenor ranging upto 60 months and 5 and 6 nature of loan facilities for the period of one year. The document Ex.P2 dated 10.5.1990 is the Sanction similar to Ex.P32 under which the loans proposed as per Ex.P1 were approved and sanctioned by Board of Directors. 41 Spl.C.C.No.69/1997 Ex.P3 is the Note made by Chairman and Managing Director for waiving sanction terms regarding creation of pari-passu first charge and second charge on fixed assets. To approve/ratify the action of the Branch in allowing over drawings in the current account of the party to the tune of Rs.6.49 lakhs and to permit the Branch to allow TOD in current account and to approve the Proposal for sanction of Bank Guarantee Limit of Rs.3.37 lakhs on account of M/s.Sabson Freight Containers Pvt.Ltd., at the Branch of Mayo Hall, Bengaluru. Another Note made by Chairman and Managing Director under Ex.P4 with respect to IBD's Remarks signed by Assistant General Manager General Manager, Executive Director and Chairman and Managing Director of Vijaya Bank, in respect of arrange a meeting with other financial institutions to decide on sharing of charge on the fixed assets. The Memorandum for the Board of Directors dated 14.8.1990 marked under Ex.P5 discloses several loan facilities as mentioned above were sanctioned with different rate of interest and nature of charge to be created on the properties. The 42 Spl.C.C.No.69/1997 recommendations and observations of Credit Department also mentioned in the said document. The document Memorandum for the Board of Directors dated 14.8.1990 marked as Ex.P6 discloses about different loan facilities availed by accused No.3 Company, which was approved by General Manager (Operations) and ratification also made by Divisional Manager. Ex.P7 also Memorandum for Board of Directors dated 6.8.1990 discloses about above- mentioned different nature of loans sanctioned to accused No.3 Company after remarks of IBD Head Office. The letter Ex.P8 addressed by Assistant General Manager to accused No.3 Company to forward the copy of the minutes relating to the Consortium Meeting held on 17.8.1990. Copy of the Quarterly Report on Borrowal Accounts dated 27.8.1990 marked as Ex.P9. The Review Report relating to accused No.3 Company dated 19.9.1990 marked as Ex.P10, which is enclosed with copy of the Position as on 31.3.1990. The comments made by Zonal Head as per Ex.P10(a) also contains signatures of Deputy General 43 Spl.C.C.No.69/1997 Manager, General Manager, Executive Director and Chairman and Managing Director of Vijaya Bank.
35. However, the evidence deposed by PWs.1 and 2 regarding documents Exs.P11 to P20 has been deleted as the Hon'ble High Court of Karnataka in Crl.R.P. No.639/2011 set aside the order dated 4.8.2010 passed by the then Presiding Officer of this Court allowing CBI to mark the Xerox copies of the documents as Exs.P11 to 20. Therefore, those documents cannot be taken into consideration. However, Ex.P21 is the letter dated 6.8.1990 by Deputy General Manager to the Asst.General Manager, Vijaya Bank, Head Office, Bengaluru to approve the Proposal for enhancement of Import Letter of Credit Limit of accused No.3 Company at Branch of Mayo Hall. The Memorandum of Board of Directors dated 6.8.1990/23.10.1990 marked as Ex.P22 discloses the nature of six loans under different category sought to be enhanced and their balance outstanding as on 28.7.1990 also shown separately. The Note in the said document is 44 Spl.C.C.No.69/1997 with respect to enhancement of existing import LC limit sought for Rs.30.00 lakhs from Rs.320.00 lakhs to 350.00 lakhs. But since existing overdue loans was heavy, therefore, on the basis of Note made by Zone, Bank has come to conclusion that unable to assess when exactly the Unit would be able to commence commercial operations and opined that extending enhancement in the LC facility will not provide long term solution to the Company's predicament. Further it is opined that since the unit was yet to be started the commercial operation and has already procured enough raw material under the existing limit of Rs.320.00 lakhs, no need to accede the request made for enhancement of loan of Rs.350.00 lakhs. Further, under Ex.P23 Memorandum for the Board of Directors dated 15.10.1990 referred Remarks/ Recommendations of Credit Department and on the basis of Memorandum dated 23.10.1990 sanction accorded for DPG facility of Rs.30.00 lakhs which was enhancement in the existing facility by Rs.12.00 lakhs. The Note for the Chairman and Managing Director made by Divisional Manager is dated 10.11.1990 45 Spl.C.C.No.69/1997 marked as Ex.P24 under which accused No.3 Company made request for enhancement of clean Over Draft facility of Rs.8.75 lakhs for meeting recurring administrative expenses and payment of salary and wages, which was enhanced in the PCL facility by Rs.15.10 lakhs and Over Draft facility enhanced by Rs.0.80 lakh to enable the Company to make payment of salary and wages. The document Ex.P25 also another Memorandum for the Board of Directors dated 18.3.1991/23.3.1991 under which the decision taken that enhancement in the OD facility by Rs.3.00 lakhs as per the proposal cannot be considered as it further dilute promoters stake in the unit. Therefore, the decision taken no need for separate permission for release of already sanctioned facilities as long as the sanction terms.
36. The letter dated 14.3.1989 marked as Ex.P27 is with respect to the subject of Establishing Letter of Credit for Proto type manufacture submitted by husband of accused No.2 - V.Sabharwal as Managing Director of 46 Spl.C.C.No.69/1997 accused No.3 Company to the Chairman, Vijaya Bank, Head Office, Bengaluru. The copy of the letter sent to the Branch Manager - Mr.Prakash Shetty and Executive Director of Head Office, Bengaluru. The additional Proposal marked as Ex.P28 discloses about input capacity of the Company and manufacture of Proto type containers as a regular order for 500 containers received to the Company. Further letter Ex.P29 is approval of opening of Import Letter of Credit for Rs.6.00 lakhs on account of the accused No.3 Company at Vijaya Bank, Mayo Hall Branch. Further, the letter of details of accused Nos.2 and 3 seen from Ex.P30. The Board of Directors of Vijaya Bank, accorded sanction of different loans under Ex.P32. The copy of the Proceedings of the Consortium Meeting held on 20.3.1990 is one of the important documents marked as Ex.P35. It contains Members present in the Consortium Meeting held in respect of accused No.3 Company as on 20.3.1990 in the Board Room of Karnataka State Financial Corporation. Under the said document observation made regarding sanction of working capital limits under different heads of 47 Spl.C.C.No.69/1997 Letter of Credit Rs.320.00 lakhs, Packing Credit Rs.20.00 lakhs, Clean/Cash Credit Rs.18.00 lakhs and DPG facility Rs.12.00 lakhs. The MD, KSFC, requested the Dy.General Manager, IDBI to release the additional equity capital of Rs.3.30 lakhs immediately for enabling the Company to complete the pending works. The Proposal for sanction of various credit limits in favour of accused No.3 Company has been kept by the Board of Directors and approved as per the Memorandum dated 21.4.1990 marked as Ex.P36. The Office Note for Chairman and Managing Director of Vijaya Bank, Mayo Hall Branch dated 28.8.1990 marked as Ex.P37 contains the Remarks of IBD relating to accused No.3 Company. Likewise the document Ex.P38 another Note for Chairman and Managing Director dated 14.6.1991 discloses permission sought for to pay the salaries and other expenses for the month of May-1991 on account of accused No.3 Company M/s.Sabson Freight Containers Pvt.Ltd. The Note before the General Manager (Operations) dated 15.12.1990 marked as Ex.P39 shows 48 Spl.C.C.No.69/1997 Nature of facilities and the balance outstanding due by the said Company.
37. According to prosecution, accused No.1 has sanctioned loan facility to the accused Nos.2 and 3 and relied on the document Ex.P41 Note for the Chairman and Managing Director (Current Charge) dated 6.12.1990. The Note placed before the Chairman and Managing Director for Bridge Loan of Rs.5.00 lakhs sanctioned to the accused No.3 Company as per Ex.P43. The Proposal made in the said document reveal about the project was not yet implemented and the unit was enjoying Term Loan from KSFC/KSIIDC and also working capital facilities with Indian Bank. Ex.P42 is the file containing loan documents relating to M/s.Anupam Silks which is not connected to the present alleged sanction of different loan facilities in favour of accused Nos.2 and 3. However, the Report on the joint inspection of the Project Meeting on 30.12.1987 in respect of accused No.3 Company, Ulsoor Branch is dated 31.12.1987 marked as Ex.P45. The additional Over Draft 49 Spl.C.C.No.69/1997 facility of Rs.50,000/- towards meeting of pre-operatives on account of accused No.3 Company has been put up before Chairman and Managing Director of Vijaya Bank as per Ex.P51. In the said Proposal, the Nature of facility showed as Bridge Loan of Rs.5.00 lakhs, Over Draft (Non- operative) Rs.15.00 lakhs. The balance amount towards both the loans shown at Rs.3.36 lakhs and clean towards genuine pre-operatives leading up to delayed commencement of commercial production. Ex.P52 is the letter dated 10.1.1989 written by Assistant General Manager on the reference to Credit limits sanctioned to accused No.3 Company at Mayo Hall Branch as per the recommendation of Chairman and Managing Director under Proceedings No.CH:KSS:6/89 dated 10.1.1989. Under the said recommendation the enhancement of Rs.0.50 lakhs in the existing in-operative overdraft limit of Rs.15.00 lakhs sanctioned with permission to the borrower Company to avail the full limit of the sanctioned in-operative Over Draft limit of Rs.15.00 lakhs. The ratification made by Chairman and Managing Director also mentioned regarding action of 50 Spl.C.C.No.69/1997 the Branch in releasing of Rs.35,000/- on 29.12.1988 to the Company and Over Draft limit of Rs.15.00 lakhs by exceeding the limit to the extent of unadjusted interest portion. Further, the proceedings of the Consortium Meeting held on 13.3.1989 forwarded to the Executive Director, of the Vijaya Bank under the document Ex.P53. The observations made under the letter Ex.P54 is with reference to sanction of Credit Limits of accused No.3 Company. The case has been registered by CBI under FIR Ex.P55 discloses that the offences alleged against accused Nos.1 to 3 are punishable under Sections 120-B read with 20 Indian Penal Code and Section 13(2) read with 13(1)(d) of Prevention of Corruption Act, 1988. The Proceedings of the Consortium Meeting held on 13.3.1989 marked under Ex.P56. The Memorandum of Board of Directors dated 21.4.1990 with reference to approve the Proposal for sanction of various credit limits in respect of accused No.2 Company marked as Ex.P57.
51 Spl.C.C.No.69/1997
38. The prosecution though relied on the above documents, has failed to establish how those will prove the alleged Criminal Conspiracy of accused No.1 with accused Nos.2 and 3 while various loan facilities sanctioned in favour of accused No.3 Company. Because, all the loans were sanctioned by Board of Directors during the lifetime of husband of accused No.2 after coming to proper conclusion and taking into consideration the capacity of the Company relating to the manufacture of proto type containers. The sanction of loans of Rs.25,000/- and Rs.20,000/- respectively on different dates by the accused No.1 is not disputed before the Court.
39. However, the sanction of loan of Rs.9.96 lakhs by accused No.1 has been seriously denied and he has relied on the documents produced along with his written argument. Those documents are Xerox copies of Statement of Liabilities, Report given by accused No.1 with respect to small business started by his wife Smt.Mamatha Shetty, after borrowing loan. The letter addressed to 52 Spl.C.C.No.69/1997 Additional Secretary, Ministry of Finance, discloses the said aspect which has been reported to M.S.Seetharaman, Under Secretary to the Government of India, says about guidelines in respect of acquisition and disposal of assets. The letter dated 29.4.1988 addressed by said M.S.Seetharaman to K.S.Shetty, Executive Director of Vijaya Bank referred about the small business of exporting silk material to the U.K. to be started by his wife. Further, the letter discloses about Consortium Meeting Notice issued to accused No.2 and also meeting held in respect of accused No.3 Company on 19.3.1990 in the Board Room of Karnataka State Financial Corporation. The accused No.1 has clearly stated that he joined Vijaya Bank in September-1974 as Deputy General Manager, Industrial Finance, thereafter promoted as General Manager in the year 1981. Subsequently, he became the Executive Director in the year 1987 and charge took in the month of September-1990.
53 Spl.C.C.No.69/1997
40. It is made out from the records that husband of accused No.2 namely K.S.Sabharwal was the customer of Vijaya Bank, Ulsoor Branch and also Managing Director of accused No.3 Company. However, after his death, his wife accused No.2 Veena Sabharwal became the Managing Director of A-3 Company and continued the business of her husband in whose name several loan facilities were already sanctioned by the Board of Directors of Vijaya Bank. The prosecution though alleged Criminal Conspiracy between accused No.1 and accused No.2, no proof either oral or documentary produced before the Court to prove the agreement entered between accused No.1 either with husband of accused No.2, or with her, while making any Proposal for different loan facilities sanctioned by the Board of Directors in favour of accused No.3 Company. No doubt, the Memorandum of Meeting held by Board of Directors proves the attendance of accused No.1 who was present in the Meeting. Only on the basis of his presence in the Consortium Meeting, it cannot be said that he has induced the Board of Directors to sanction different loans 54 Spl.C.C.No.69/1997 in favour of accused No.3 Company. Because the way of alleged inducement by accused No.1 to the Board of Directors is absent in the case of prosecution.
41. Moreover, the prosecution has failed to establish any agreement entered between husband of accused No.2 during his lifetime with the accused No.1 while availing loan facilities from the Bank. The records show that husband of accused No.2 had loan account, initially in the Ulsoor Branch of Vijaya Bank, subsequently it has been transferred to Mayo Hall Branch. It is also made out from the records that no loans sanctioned in favour of accused No.2 as she has continued the business of her husband after his death in the year 2009.
42. From the above discussed oral and documentary evidence produced by prosecution, I Come to conclusion that the prosecution has failed to establish that accused No.1 being Chairman and Managing Director of Vijaya Bank has entered into Criminal Conspiracy with accused No.2 in 55 Spl.C.C.No.69/1997 the year 1989-90 and got sanctioned various credit facilities in the name of accused No.3 Company without processing the loan papers knowing fully well that the manufacturing capacity of proto type of containers of Company and cheated the Vijaya Bank. The prosecution has further failed to prove the wrongful loss of Rs.466 lakhs caused to Vijaya Bank and wrongful gain for himself and accused Nos.2 and 3 and abused his official position as a Chairman and Managing Director of Vijaya Bank during 1989-90. Therefore, after perusing entire materials in detail in absence of corroboration of evidence for the alleged Criminal Conspiracy, wrongful loss caused to the Bank and wrongful gain for accused No.1 along with accused Nos.2 and 3 and Criminal Misconduct by accused No.1, I am of the view that prosecution has failed to prove the allegations made against accused Nos.1 to 3 in the charge sheet and answer point Nos.1 to 3 in 'Negative'.
43. Point No.4:- My findings given on point Nos.1 to 3 establish that the prosecution has utterly failed to 56 Spl.C.C.No.69/1997 place oral and documentary evidence to prove the allegations made against accused Nos.1 to 3. I do not find any corroboration in the evidence of prosecution witnesses in proof of the alleged offences committed by accused No.1, who was said to be entered into Criminal Conspiracy with accused Nos.2 and 3 and misused his power as a Executive Chairman and Managing Director of Vijaya Bank, Mayo Hall Branch and committed the offence punishable under Section.120-B read with 420 Indian Penal Code and Section.13(2) read with 13(1) (d) of Prevention of Corruption Act, 1988. The prosecution has further not placed any proof against accused No2 and accused No.3 Company that accused No.2 had entered into Criminal Conspiracy with accused No.1 and induced him to get various facilities in the name of accused No.3 Company sanctioned by the Board of Directors of Vijaya Bank, and all the accused nos.1 to 3 cheated the Vijaya Bank, resulted in loss of Rs.466 lakhs caused to Bank and wrongful gain for themselves.
57 Spl.C.C.No.69/1997
44. The learned Public Prosecutor has filed written argument under Section 314 of Cr.P.C. and pointed out that the accused No.1 while working as Executive Director of and then CMD of Vijaya Bank and Member of Board of Directors of said Bank, during 1989-90 had entered into Criminal Conspiracy with accused No.2 to cheat Vijaya Bank in securing various credit facilities to accused No.3 Company. It is also pointed out that in furtherance of Criminal Conspiracy, accused No.1 has committed Criminal Misconduct by abusing his official position, got sanctioned various facilities such as Packing Credit Facilities, Import Letter of Credit etc. to accused No.3 Company. The evidence of PWs.1 to 9 also discussed in brief with points for consideration. However, the Government Notification issued by Government of Karnataka, Notification issued by Government of India are produced before the Court, under which the exercise of powers conferred under Section 6 of the Delhi Special Police Establishment Act, 1946 (Central Act No.25 of 1946) and Section 6 of DSPE Act 1946 read with Section 21 of the General Clauses Act, 1897 (Central 58 Spl.C.C.No.69/1997 Act X of 1897), under which, permission or consent of Government is not necessary to arrest the Government employee.
45. However, the learned Counsel for accused No.1 has submitted that he being one of the employee of the Bank acted as per the Bank norms and performed his duties properly. The prosecution has not proved dishonest intention of accused Nos.1 and 2 and accused No.3 Company to cheat Vijaya Bank. Further pointed out the transactions were made by the husband of accused No.2 in Vijaya Bank since 1984 and he was the Managing Director of accused No.3 Company till his death. The evidence of prosecution witnesses elicited regarding their admission is important to consider that the Board of Directors has sanctioned various facilities to the accused Nos.2 and 3. It is brought to the notice of the Court that the predecessor of accused No.1 in the Bank had sanctioned the loan and the Thanks letter addressed to Chairman, Consortium Meeting, which was attended by the officials of the Vijaya 59 Spl.C.C.No.69/1997 Bank. Further no proof placed to prove the allegation made against accused No.1 that he was instrumental in getting sanction of loan of accused No.3 Company by colluding with accused No.2 as well as the Criminal Conspiracy entered between them has not been proved before the Court. Admittedly, the accused No.1 has sanctioned only the loans of Rs.25,000/- to accused Nos.2 and 3 and no other loans sanctioned by him. The documents reveal that all the loan facilities were sanctioned in their favour by the Board of Directors of Vijaya Bank, after conducting several meetings and considering the manufacturing capacity of containers by accused No.3 Company.
46. The learned Counsel for accused No.1 has relied on the following citations:
(2002) 1 Supreme Court Cases 241 in the case of S.W.Palanitkar and others Vs. State of Bihar and another.
The Hon'ble Supreme Court of India held that to make out the offence of cheating, the stage at 60 Spl.C.C.No.69/1997 which fraudulent or dishonest intention existed and such intention must be shown to exist at the time of making of the inducement. The failure to keep up promise subsequently, held, cannot be presumed to be an act leading to cheating.
(1972) 3 Supreme Court Cases 661 in the case of State of Kerala Vs. A.Pareed Pillai and another.
The observation made by Hon'ble Supreme Court of India that the evidence to prove misappropriation and cheating to be placed by prosecution with supporting documents. The copy of the The Delhi Special Police Establishment Act, 1946 Act No.25 of 1946 produced before the Court says that The Central Government may by Notification in the official gazette, specify the offences or clauses of offences which are to be investigated by the Delhi Special Police Establishment. Section 5 of the said Act says about extension of powers and jurisdiction of Special Police Establishment to other areas and Section 6 says about consent of State Government to exercise powers and jurisdiction.
61 Spl.C.C.No.69/1997
47. However, the Public Prosecutor has submitted copies of Notifications issued by Central Government reveal that no consent or permission of Government is necessary for CBI to prosecute against Government Servants.
48. The learned Counsel for accused No.2 and accused No.3 Company has filed written argument and pointed out definition of Criminal Conspiracy required under Section 120A Cr.P.C. which reads as under:
Where two or more persons agree to do, or cause to be done-
(1) An illegal act, or
(2) An act which 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 beside the agreement is done by one or more parties to such agreement in pursuance thereof.62 Spl.C.C.No.69/1997
49. The learned Counsel for accused Nos.2 and 3 has relied on the following citations:
(2010) 8 Supreme Court Cases 233 in the case of S.Arul Raja Vs. State of Tamil Nadu.
In relevant paras, the Hon'ble Supreme Court of India has discussed about proof Criminal Conspiracy and its requisites by way of agreement between parties to commit unlawful act. The prosecution has to prove meeting of minds to form a Criminal Conspiracy by adducing substantive evidence. (1999) 5 Supreme Court Cases 253 in the case of State through Superintendent of Police, CBI/SIT Vs. Nalini and others.
The observation made by Hon'ble Supreme Court of India relating to independent evidence has to be placed by prosecution in proof of existence of Criminal Conspiracy to do unlawful act.
50. I have perused the documents produced by prosecution. The memorandum produced before the Court 63 Spl.C.C.No.69/1997 along with Notes of several Deeds proves the loans sanctioned in favour of husband of accused No.2, subsequently, charge created over the properties offered as security. Further, the loan facilities sanctioned to husband of accused No.2 - Veena Sabharwal and in the name of Company by several institutions including KSFC, KSIIDC and other Banks apart from Vijaya Bank. Further, the prosecution alleged wrongful loss of Rs.466/- lakhs caused to the Vijaya Bank from failure to manufacture and export of proto type containers to London, the exact loss is not proved by producing documents. It is true for the questions put to accused Nos.2 and 3 under Section 313 Cr.P.C., in which, for some of the questions not relevant to accused No.2, she has answered as ' I have no comments', ' I have nothing to say' and 'I had no role' and for some question she has answered as 'true'. However, the said answer of 'true' will not establish the case alleged against her or her husband.
64 Spl.C.C.No.69/1997
51. The offence alleged against accused Nos.1 to 3 relating to cheating under Section 420 Indian Penal Code requires proof as per the ingredients of Section 415 of Indian Penal Code reads as:
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".
52. The important proof for the offence Criminal Misconduct by accused No.1 has not been produced by prosecution, therefore cannot be accepted as no corroboration in the evidence of PWs.1 to 8. Moreover, the ingredients for the offence under Section 13(2) read with 65 Spl.C.C.No.69/1997 13(1)(d) of Prevention of Corruption Act, 1988 are not produced before the Court. The said Sections read as:
Section 13.Criminal misconduct by a public servant.-
(1) A public servant is said to commit the offence of criminal misconduct,-
(a)------
(b)------
(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 -----
(2) Any public servant who commits criminal misconduct shall be punishable with imprisonment for a term which shall 66 Spl.C.C.No.69/1997 be not less than one year but which may extend to ten years and shall also be liable to fine.
53. The important aspect is prosecution has not produced the original documents available in the Vijaya Bank and relied on Xerox copies of the documents to prove the alleged offences against the accused Nos. 1 to 3. Therefore, after perusing all the materials placed by prosecution, I am of the opinion that the prosecution has utterly failed to prove that accused No.1 has committed the offence punishable under Section 120-B read with 420 of Indian Penal Code and under Section 13(2) read with 13(1)(d) of Prevention of Corruption Act, 1988 and accused No.2 has committed the offence punishable under Section.120-B read with 420 of Indian Penal Code. Hence, I answer this point in 'Negative'.
54. Point No.5 :- For the above discussed reason, I proceed to pass the following:
67 Spl.C.C.No.69/1997
: ORDER :
Acting Under Section 235(1) Cr.P.C., accused No.1 - K.Shivaram Shetty is hereby acquitted for the offence punishable under Section 120-B read with 420 Indian Penal Code and Section 13(2) read with 13(1)(d) of Prevention of Corruption Act, 1988 and Accused No.2 - Smt.Veena Sabharwal and accused 3 - Sabson Freight Containers Pvt.Ltd., represented by accused No.2 - Veena Sabharwal are hereby acquitted for the offence punishable under Section 120-B read with 420 Indian Penal Code.
The bail bonds executed by accused Nos.1 to 3 at the initial stage are hereby stand cancelled.68 Spl.C.C.No.69/1997 The bail bonds of accused Nos.1 to 3
executed in compliance of Section 437(A) Cr.P.C.
are in force till the completion of appeal period.
(Dictated to Judgment Writer, transcribed and computerized by him, corrected, signed and then pronounced by me in the open court today on 30th day of June, 2018.) (S.H.PUSHPANJALI DEVI) XLVI Addl. City Civil and Sessions Judge and Special Judge for C.B.I. Cases, Bengaluru.
Holding Concurrent Charge of XLVII Addl.City Civil and Sessions Judge and Spl.Judge for CBI Cases, Bengaluru.
ANNEXURE
1. LIST OF WITNESSES EXAMINED ON BEHALF OF THE PROSECUTION :-
P.Ws. Witness Names C.Ws.
P.W.1 N.Vasantha Shetty C.W.2
P.W.2 Ananda Ramanna Shetty C.W.3
P.W.3 Chandrashekaran C.W.8
P.W.4 O.S.Ramamurthy C.W.5
P.W.5 K.Venkatachalamaiah Chetty C.W.5
P.W.6 N.Devadas C.W.1
P.W.7 V.Ashok Kumar C.W.13
69 Spl.C.C.No.69/1997
P.W.8 S.Narayana Shibaraya C.W.9
P.W.9 G.Prabhakaran C.W.12
2. LIST OF DOCUMENTS MARKED ON BEHALF OF PROSECUTION :-
EXHIBITS PARTICULARS
Ex.P.1 : Memorandum for the Board of Directors Dated
10.4.1990
Ex.P.1(a) : Initials of P.W.3
& (b)
Ex.P.2 : Sanction Advice Dated 10.05.1990 in respect of
various Credit Limits approved by the Board of Directors of Vijaya Bank in favour of M/s.Sabson Freight Containers Private Limited.
Ex.P.2(a) : Signature of P.W.1
Ex.P.3 : Note for the Chairman & Managing Director
Dated 6.7.1990.
Ex.P.3(a) : Signature of Deputy General Manager-
Sri.Diwakara Shetty
Ex.P.4 : Note for the Chairman & Managing Director
Dated 7.7.1990.
Ex.P.4(a) : Signature of Deputy General Manager-
Sri.Diwakara Shetty
Ex.P.4(b) : Signature of Deputy General Manager-
Sri.Diwakara Shetty
Ex.P.4(c) : Remarks of International Banking Division
(IBD) at Page-3.
70 Spl.C.C.No.69/1997
Ex.P.4(d) : Signature of Assistant General Manager-
Sri.Ramamurthy
Ex.P.4(e) : Signature of General Manager-Sri.K.K.Shetty Ex.P.4(f) : Signature of Executive Director-Sri.K.S.Shetty Ex.P.4(g) : Signature of Chairman & Managing Director-
Sri.Sadananda Shetty(A-1) Ex.P.5 : Memorandum for the Board of Directors Dated 14.8.1990.
Ex.P.5(a) : Signature of P.W.1 Ex.P.5(b) : Signature of Deputy General Manager-
Sri.Diwakara Shetty Ex.P.5(c) : Signature of General Manager-Sri.K.K.Shetty Ex.P.6 : Memorandum for the Board of Directors Dated 14.8.1990 pertaining to Agenda Item No.126/90.
Ex.P.6(a) : Signature of Secretary-Sri.Subramanyam Ex.P.6(b) : Signature of General Manager(Operations)-
Sri.Krishnappa Shetty Ex.P.7 : Memorandum for the Board of Directors Dated 6.8.1990.
Ex.P.7(a) : Signature of Deputy General Manager-
Sri.Diwakara Shetty Ex.P.8 : Letter Dated 30.08.1990 addressed to AGM, IBD, Bengaluru regarding not received the Copy of the Minutes held on 17.8.1990.
71 Spl.C.C.No.69/1997
Ex.P.8(a) : Signature of P.W.1 Ex.P.9 : Quarterly Report of Borrowal accounts Dated
27.8.1990 pertaining to M/s.Sabson Freight Containers (P) Limited.
Ex.P.10 : Letter Dated 19.9.1990 regarding Review Report on Account of M/s.Sabson Freight Containers (P) Limited for the Quarter Ended March-1990.
Ex.P.10(a) : Signature of P.W.1 at Page-5. Ex.P.10(b) : Signature of Deputy General Manager -
Sri.Diwakara Shetty Page-5.
Ex.P.10(c) : Signature of General Manager (Operations) -
Sri.Krishnappa Shetty at page 6 Ex.P.10(d) : Signature of Executive Director-Sri.Shivarama Shetty at page 6 Ex.P.10(e) : Signature of Chairman & Managing Director-
Sri.Sadananda Shetty at page 6 Ex.P.11 : Certified Copy of Memorandum for the Board of Directors Dated 15.10.1990.
Ex.P.12 : Certified Copy of Memorandum for the Board of Directors Dated 24.11.1990.
Ex.P.13 : Certified Copy of Memorandum for the Board of Directors Dated 08.01.1991.
Ex.P.14 : Certified Copy of Memorandum for the Board of Directors Dated 18.3.1991/23.03.1991. Ex.P.15 : Certified Copy of Letter Dated 24.2.1988 written by Managing Director of M/s.Sabson Freight Containers Private Limited-
72 Spl.C.C.No.69/1997Sri.K.S.Sabharwal regarding Request for Transfer of Accounts.
Ex.P.16 : Certified Copy of Sanction Letter Dated 10.5.1990.
Ex.P.17 : Certified Copy of Letter Dated 9.9.1990 of Sri.A.C.B.Nair.
Ex.P.18 : Certified Copy of Letter Dated 22.7.1990 of Sri.A.C.B.Nair.
Ex.P.19 : Certified Copy of Chartered Accountant's Report Dated 15.9.1990.
Ex.P.20 : Certified Copy of Memorandum for the Board of Directors Dated 6-8-1990/ 23.10.1990.
Ex.P.21 : Covering Letter Dated 06.08.1990 pertaining to Ex.P.22.
Ex.P.22 : Memorandum for the Board of Directors Dated 06.08.1990 sent by the Deputy General Manager.
Ex.P.23 : Memorandum for the Board of Directors Dated 15.10.1990.
Ex.P.24 : Note put-up by the Divisional Manager Dated 10.11.1990.
Ex.P.24(a) : Signature of P.W.1 Ex.P.24(b) : Signatures of the Deputy General Manager & (c) Ex.P.25 : Resolution Dated 23.3.1991 passed by the Board of Directors of Vijaya Bank.
Ex.P.26 : Proposal and Order for enhancing Over Draft 73 Spl.C.C.No.69/1997 Limit from Rs.15 Lakhs to Rs.21 Lakhs.
Ex.P.27 : Letter Dated 14.3.1989 written by the Accused-
2 to the Chairman of Vijaya Bank, Head Office, Bengaluru.
Ex.P.28 : Note Dated 10.3.1989 put-up by the Assistant General Manager of Zonal Office, Assistant General Manager of Credit Department (IBD) and Deputy General Manager (Credit Department).
Ex.P.28(a) : Signatures of Assistant General Manager & (b) Ex.P.28(c) : Signature of Assistant General Manager (Credit Department) (IBD) Ex.P.28(d) : Signature of Deputy General Manager (Credit) Ex.P.28(e) : Signature of Chairman and Managing Director Ex.P.29 : Sanction Letter Dated 15.3.1989 issued by the Assistant General Manager, Credit Department (IBD).
Ex.P.30 : Sanction Letter Dated 15.03.1989 by the Head Office of Vijaya Bank.
Ex.P.31 : Letter Dated 24.12.1990 sent by the Accused-2 requesting to Co-accept the Bills of Exchange. Ex.P.32 : Sanction accorded by the Board of Directors of Vijaya Bank. (refer to Ex.P.2 also).
Ex.P.33 : Xerox Copy of the Proceedings of the Consortium Meeting held on 19.3.1991.
Ex.P.34 : Copy of the Note made by P.W.3.
Ex.P.34(a) : Initial of P.W.3 at page no.4 74 Spl.C.C.No.69/1997 Ex.P.35 : Copy of Proceedings of the Consortium Meeting held on 20.03.1990.
Ex.P.36 : File pertaining to the Proceedings of the Consortium Meeting held on 20.03.1990.
Ex.P.37 : Office Note Dated 28.8.1990 regarding Credit Proposal of the Accused-3.
Ex.P.37(a) : Remarks Portion with Signature of P.W.4 at Page-5.
Ex.P.38 : Office Note Dated 14.6.1991 regarding Sanction of Permission to pay Salaries and Other Expenses of the Accused-3.
Ex.P.38(a) : Remarks Portion with Signature of P.W.4 at Page-7.
Ex.P.39 : Office Note Dated 15.12.1990 regarding Payment in respect of the Documents of the Accused-3.
Ex.P.39(a) : Remarks Portion with Signature of P.W.4 at Pages-3 to 5.
Ex.P.40 : Proposal Dated 15.11.1990 for encashment of Over Draft Facility and Packing Credit Limit relating to the Accused-3.
Ex.P.40(a) : Note with Signature of P.W.4 at Pages-7 & 8. Ex.P.41 : Note containing the Approval made by the Accused-1.
Ex.P.41(a) : Signature of A-1 with Approval Ex.P.42 : File relating to M/s.Anupam Silk's Over Draft 75 Spl.C.C.No.69/1997 Account.
Ex.P.42(a) : Copy of Partnership Deed Dated 12.2.1988 Ex.P.42(b) : Copy of Sanction Letter in respect of Packing Credit Loan Ex.P.42(c) : Copy of Letter Dated 12.6.1989 Ex.P.42(d) : Reply Dated 15.6.1989 Ex.P.42(e) : Information of loan clearance on 7.6.1991 sent to Chief Manager, IBD Branch, Vysya Bank. Ex.P.43 : Note placed before the Chairman and the Managing Director of the Vijaya Bank by the Divisional Manage and the Assistant General Manager and Ratification Order ratified by the Chairman.
Ex.P.44 : Proposal for sanctioning Non-operative Over Draft Facility of Rs.30 Lakhs and Bank Guarantee Facility of Rs.4.5 Lakhs to A-2 and A-3.
Ex.P.44(a) : Signature of P.W.6 Ex.P.45 : Report sent by Vijaya Bank to International Banking Division.
Ex.P.46 : Letter sent by Vijaya Bank to International Banking Division.
Ex.P.47 : Letter sent by Vijaya Bank to International Banking Division.
Ex.P.48 : Note placed before the Chairman and the Managing Director for taking action.
76 Spl.C.C.No.69/1997Ex.P.49 : Communication Letter sent by the International Banking Division to the Office of the Vijaya Bank.
Ex.P.50 : Sanction Order Dated 26.02.1988. Ex.P.51 : Note placed before the Chairman and the Managing Director for enhancing the Over Draft Facility to Rs.15.5 Lakhs to Rs.15 Lakhs and Approval.
Ex.P.52 : Letter Dated 10.01.1989.
Ex.P.53 : Copy of Proceedings of Consortium Meeting
held on 13.03.1989 sent by KSFC.
Ex.P.54 : Letter Dated 23.06.1990 sent by Chairman's
Secretariat to the International Banking Division.
Ex.P.55 : FIR Dated 03.01.1994.
Ex.P.55(a) : Identified Signature of I.O - Sri.Thomas John Ex.P.56 : Proceedings of Consortium Meeting held on 13.03.1989.
Ex.P.57 : Proposal Dated 21.04.1990.
Ex.P.58 : Domestic Credit Proceeding File relating to the
Accused-3.
Ex.P.58(a) : Proceedings at Pages-1 and 2 directed the Branch to release the amount to A-2 and A-3 Ex.P.59 : File relating to the Accused-3 for the period from 1987 to 1989.
Ex.P.59(a) : Proceedings at Pages-353 to 355 regarding 77 Spl.C.C.No.69/1997 Loan Facilities pertaining to A-2 and A-3 Ex.P.59(b) : Note and Signature of A-1 Ex.P.60 : File relating to the Accused-3 for the period from 1990 onwards.
Ex.P.61 : File relating to Interpol Reports.
3) LIST OF WITNESS EXAMINED AND DOCUMENTS MARKED ON BEHALF OF ACCUSED Nos.1 to 3:-
- Nil -
(S.H.PUSHPANJALI DEVI) XLVI Addl. City Civil and Sessions Judge and Special Judge for C.B.I. Cases, Bengaluru.
Holding Concurrent Charge of XLVII Addl.City Civil and Sessions Judge and Spl.Judge for CBI Cases, Bengaluru.Digitally signed by SAKE HARIDAS PUSHPANJALI DEVI DN: cn=SAKE HARIDAS
SAKE HARIDAS PUSHPANJALI
PUSHPANJALI DEVI,ou=HIGH COURT OF
KARNATAKA,o=GOVERNM
DEVI ENT OF
KARNATAKA,st=Karnataka,
c=IN
Date: 2018.06.30 13:43:27
IST