Kerala High Court
Joseph Alappat vs C.B.I on 10 March, 2011
Author: V.Ramkumar
Bench: V.Ramkumar
IN THE HIGH COURT OF KERALA AT ERNAKULAM
CRL.A.No. 614 of 2003()
1. JOSEPH ALAPPAT
... Petitioner
Vs
1. C.B.I.,COCHIN
... Respondent
For Petitioner :SRI.B.RAMAN PILLAI
For Respondent :SRI.P.S.SREEDHARAN PILLAI, SC FOR CBI
The Hon'ble MR. Justice V.RAMKUMAR
Dated :10/03/2011
O R D E R
V. RAMKUMAR, J.
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Crl.Appeal No. 614 of 2003
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Dated:
JUDGMENT
In this appeal filed under Sec.374 (2) Cr.P.C. the appellant who was the first accused in Crime No. RC 2(A)/91 of the Special Police Establishment , CBI, Cochin and the sole accused in C.C. 14 of 1996 on the file of the Court of the Special Judge (SPE/CBI) - 1, Ernakulam, challenges the conviction entered and the sentence passed against him for offences punishable under Sec. 120 B read with Secs. 420, 468 and 471 I.P.C. and Sec. 13 (2) read with Section 13 (1)(d) of the Prevention of Corruption Act, 1988 ("the P.C. Act" for short).
Crl.Appeal No. 614 of 2003 -:2:-
2. The case of the prosecution can be summarised as follows:-
During the period 1988-1990 he first accused (Joseph Alappatt) was working as the Manager of the Quilon Branch of the Punjab National Bank (PNB for short). Some time in October, 1989 A1 & A2 (H.M. Shahabhuddin-Managing Partner, M/s. Barrels and Metals, Quilon), Shine Cottage, Pallithottam and now residing in Flat No. 5, Ponnamma Amma Bhavan, Kochupilamood, Quilon - 6 entered into a criminal conspiracy to cheat PNB, Quilon In pursuance of the said conspiracy, on 21-10-1989 A2 submitted a false loan application before A1 for a term loan of ` 75,000/- and cash credit limit of ` 3,00,000/- in the name of his unit Barrels and Metals. The term loan was for purchasing machinery for reconditioning empty barrels. Along with the loan application A2 had enclosed a forged quotation from a fictitious and non- existing firm by name M/s. Mohamamed Ismayil, Chinnakkada, Madurai for ` 97,225/- for the supply of drums, hydraulic testing Crl.Appeal No. 614 of 2003 -:3:- unit with hydraulic water pressure pump, gas welding unit etc. Knowing fully well that the loan application was false and the quotation submitted along with the loan application was forged, A1 sanctioned the term loan and cash credit limit on the same day by abusing his official position as public servant in order to obtain pecuniary advantage to A2 . A2 utilised the help of one Nawas, S/o. Fakkir Muhammed through M/s. Bakyia Finance, Madurai. A1 who was a public servant employed as the Manager of PNB by corrupt or illegal means or by otherwise abusing his position as such public servant had obtained for A2, pecuniary advantage to the extent of ` 75,000/- by sanctioning the loan amount knowing fully well that the loan application was false and the forged quotation was from a non-existing and fictitious firm by name M/s. Mohammed Ismayil, Madurai. A1 had allowed A2 to transfer ` 31,947/- from the cash credit loan amount to facilitate A2 to raise the margin money purportedly for the purchase of the said machinery and had also handed over to A2 directly a Crl.Appeal No. 614 of 2003 -:4:- demand draft for ` 106947.50 issued in favour of M/s. Mohammed Ismayil without crossing the Demand Draft so as to facilitate A2 to encash it. A2 thereafter encashed the D.D. without utilising the amount for purchasing machinery as stated in the loan application. A1 A2 have thereby committed offences punishable under Section 120 B read with Sections 420 , 468 and 471 I.P.,C. and Sec. 13 (2) read with Sec. 13 (1) (d) of the P.C. Act.
3. Originally the case was taken on file as C.C. 14 of 1998 by the Special Judge SPE/CBI, I where C.C. Nos. 9, 10 and 11 of 1993 in which A1 was a common accused was pending. After the disposal of C.C. Nos. 9, 10 and 11 of 1993 by the Special Judge, SPE/CBI-I , the present case namely C.C. 14 of 1998 was transferred by this Court to the Court of the Special Judge SPE/CBI-II where it was re-numbered as C.C. 34 of 1998. Since A2 was absconding, A1 (the appellant herein) alone faced trial in C.C. 34 of 1998.
Crl.Appeal No. 614 of 2003 -:5:-
4. On the appellant (A1) pleading not guilty to the charge framed against him by the court below for the aforementioned offences the prosecution was permitted to adduce evidence in support of its case. The prosecution altogether examined 15 witnesses as P.Ws 1 to 15 and got marked 41 documents as Exts. P1 to P41 .
5. After the close of the prosecution evidence, the appellant was questioned under Sec. 313 (1)(b) Cr.P.C. with regard to the incriminating circumstance appearing against him in the evidence for the prosecution. He denied those circumstances and maintained his innocence. He had the following to submit before the trial court:-
Duties such as inspecting the units of the borrower and supplier, preparing the confidential report of the borrower and the guarantor, preparation of the agreement of guarantee for term loans and cash credit, preparation of the limit proposal for the term loan and cash credit etc. were all the delegated pre-sanction duties of the loans officer who at the relevant time was P.W. 6 (Ayyappan) . He never had any occasion to doubt the integrity or honesty of P.W.6 while he was working Crl.Appeal No. 614 of 2003 -:6:- under him. P.W.6 had 2 = years of experience in the loan Section of the Trivandrum Branch of PNB before he joined the Quilon Branch. The post sanction inspection also was the duty of the loans officer as per the office orders issued by the Bank. When he joined the Quilon Branch it was only a Scale - II Manager's Branch. As a result of his work , the Quilon Branch which was only a Scale - II Manager's Bank was first upgraded as a Scale -III Manager's Branch and soon a Scale - IV Manager's Branch. During his tenure in that branch a loan of Rs. 28 crores which was sanctioned by the head office to the Kerala Cashew Development Corporation was to be released through the Quilon Branch and as per the orders of the head office he was to personally inspect all the 36 factories of the KSCDC every fifteen days . KSIDC used to submit foreign bills for ` 40 lakhs and if anything went wrong in the verification of the bills , he would be held responsible by the Bank as he had signed all the bills for the Bank. The Bank was given a target of more than three crores of rupees in the priority sector loans to be achieved by him before the end of March 1990. When he had such a heavy workload in the Quilon Branch, it was not possible for him to achieve the heavy target of priority sector loans without the help of the loans officer in whom he reposed complete confidence. But he personally ensured that all the loans were covered by collateral security worth more than the loan amounts . When P.W.6 the loans officer conducted the pre-sanction inspection, studied the audited Crl.Appeal No. 614 of 2003 -:7:- balance sheet of the borrower and found out that the party had sufficient means and had recommended the loan for his sanction, he had done so in good faith. The application for the cash credit and term loan was submitted to the loans officer one month before the sanction of the loan. Thereafter the bank had taken the valuation report and legal opinion from the concerned authorities. The loans officer had filled up the date in the blank loan application on behalf of the borrower at the time of preparing the loan documents. He had put the same date for the sanction of the loan also. This does not mean that the loan was sanctioned on the same day on which the loan application was submitted. The project report was submitted along with the loan application by the party to the loans officer. It was the duty of the loans officer to verify whether the project report was signed by the borrower. The Manager cannot verify each and every document in such a big branch. The value of the land and building offered as collateral security belonging to Muhammed Kunju and Fathima Kunju exceeded more than Rs. 8 lakhs . The same property was offered as security for Shangrilla Paints Products which was a sister concern of barrels and metals. The term loan amount given to Shangrilla Paints Products was only ` 1.50,000/-. The Bank usually allows offering the same collateral security for two loans in the value of the security covers both the loans. It was the loans officer who had filled up the loans papers by verifying the documents including the Crl.Appeal No. 614 of 2003 -:8:- quotation and project report submitted by the borrower. He had never asked P.W.6 (Ayyappan) to fill up the documents and recommend the loan . If he had forced P.W.6 to prepare the documents and recommend the loan, P.W.6 could have recorded the same in the Deviation Register and informed the Regional Office. P.W.6 did not do so . He had not mentioned about it in the statement given by him to P.W.2 Prasad who conducted the inspection. P.W. 10 (Navas) who is the endorsee of Ext.P34 Demand Draft has stated that he does not know who the payee Muhammed Ismail was . So P.W.10 was taking a draft from a person without knowing who that person was. He would further say that there was a signature on the draft when it came to his possession and that he does not know whose signature it was or the person who had signed on the reverse of the Demand Draft. He was presenting the Demand Draft for payment through the Lakshmivilas Bank which had a duty under the negotiable Instruments Act to verify and find out the genuineness of the payee as well as endorsee thereunder. The CBI never questioned Shahabhuddin (A2) about the genuineness of the certificate and they were completely relying on P.W.10 who had encashed the D.D. without knowing the payee or the endorsee . If according to P.W.10, there was no person as Muhammed Ismayil known to him, then how could he take a D.D. payable to Muhammed Ismayil and get it encashed through a bank with the help of Bakya Finance. He had taken Crl.Appeal No. 614 of 2003 -:9:- collateral security of landed property covering more than the loan amount and had issued the draft. Thereafter it was the duty of the loans officer to get the draft crossed and to send it along with a covering letter by registered post to the supplier. If such a thing had not happened , then it was P.W.6 Ayyappan and not the Manager who was responsible for the lapse. In fact, sending the Demand Draft by Registered Post is a clerical duty which had to be supervised and checked by the loans officer. The Manger had only over all responsibility and he in his capacity as the Manager had protected the Bank's interest by taking collateral security . He has been prosecuted without any just ground.
6. The accused examined the Manager of the Kollam Branch of PNB working since 29-05-2000 and got marked Exts. D7 and D7 (a) term loan Register and the relevant entry in the said Register to prove that the term loan advanced in this case was closed by the borrower M/s. Barrels and Metals by remitting Rs. 1,88,689.10. The appellant also got marked Ext.D8 certified copy of general instructions regarding advances. Crl.Appeal No. 614 of 2003 -:10:-
7. The learned Special Judge after trial, found the appellant guilty of offences punishable under Sections 120 B and 420 I.P.C. and Sec. 13 (2) read with Sec. 13 (1)(d) of the P.C. Act. Accordingly, for his conviction under Sec. 13 (2) read with Sec. 13 (1) (d) of the P.C. Act, he was sentenced to rigorous imprisonment for one year and to pay a fine of Rs. 5,000/- and on default to pay the fine to suffer simple imprisonment for three months . For the conviction under Sec. 420 I.P.C. the appellant was sentenced to rigorous imprisonment for one year. The substantive sentences were directed to run concurrently. It is the said judgment which is assailed in this Appeal.
8. The only point which arises for consideration in this appeal is as to whether the conviction entered and the sentence passed against the appellant (A1) are sustainable or not ?
THE POINT:
Crl.Appeal No. 614 of 2003 -:11:-
9. I heard Advocate Sri. B. Raman Pillai, the learned counsel appearing for the appellant and Advocate Sri. N. Chandrasekhara Pillai, the learned Standing Counsel for the C.B.I. PROSECUTION WITNESSES
10. P.W. 1 (B.R. Kher) was the Zonal Manager at Chennai of PNB. It was his complaint sent as Ext.P1 which resulted in the registration of the F.I.R.
P.W.2 (S.K. Prasad) was the Chief Manager in charge of advances at the zonal office of PNB Madurai..
P.W.3 (T.S.S. Krishnan) is the Manager of P.N.B, Kollam. He succeeded the appellant in December, 1989. He produced certain documents relating to the advances given to M/s. Barrels and Metals as per Ext.P2 letter. However, most of the documents produced in the case were not the originals but were certified copies. Exts. P3 to P38 are the documents proved through him. Crl.Appeal No. 614 of 2003 -:12:-
(P.W.4 C.T. Sreekumar ) was the Administrative Officer of the National Insurance Company, Kollam Divisional Office. He was a witness who was present at the time search by the CBI on 4-3- 1991 of Ponnamma Amma Bhavan at Pallithottam, Quilon. He is an attestor to Ext.P28 search list. P.W.5 (K. Asokan) is a Civil Engineer and approved valuer of Land and Buildings. Eventhough he had valued the properties mortgaged in favour of the PNB, the prosecution did not mark through him his valuation report which was however marked through P.W.3 as Ext. P38.
P.W.6 (Ayyappan) was the Assistant General Manager of PNB, Quilon. He was originally A2 in the FIR but was deleted from the array of accused at the time of filing the final report. Exts. P29 to P31 and Exts. D3 and D4 were marked through him.
P.W.7 (Nageswaran) was working as an officer of the Madurai Branch of PNB during 1989 -1990. Ext. P31 series were marked through him.
P.W. 8 (R.M. Kumarappan) was the Manager of the Madurai Crl.Appeal No. 614 of 2003 -:13:- Branch of Lekshmi Vilas Bank. He had purchased Ext.P31 D.D. from Pakya Finance who presented the D.D. along with other instruments for a total amount of Rs. 2,45,053/-. Ext.P31 D.D. issued in favour of Muhammed Ismayil was seen endorsed to one Navas (P.W.10) who in turn endorsed to Pakya Finance which had discounted the D.D. through Lekshmi Vilas Bank.
P.W. 9 (Subrahmania Iyer) who is a retired Engineer proved Ext.P23 Valuation Certificate regarding the immovable property mortgaged to the PNB.
P.W. 10 (Navas) is a person who had endorsed Ext.P31 D.D. to Pakya Finance .
P.W.11 (P.K. Gupta) proved Ext.P35 sanction to prosecute A1. P.W.12 (J.J. Shainsha) was the postman of Madurai Head Post Office who returned undelivered to the sender Ext.P36 registered cover received by him on 13-04-1991 from the CBI, Kochi. His endorsement was that since the address of the addressee namely, Muhammed Ismayil, Chinnakkada Street, South Gate, Madurai, Crl.Appeal No. 614 of 2003 -:14:- was insufficient and not known.
P.W.13 (Anantharaman) who was a Senior Manager in the Zonal office of the PNB had deputed P.W.1 to enquire into the loans and advances given from the Kollam Branch . Ext.P37 is a portion (pages 27 to 33) of his inspection report pertaining to M/s. Barrels and Metals.
P.W. 14 (T.V. Lekshmanan) was the Inspector C.B, I. Kochi who registered Ext.P39 F.I.R. on the basis of Ext. P1 complaint submitted by P.W.1. He conducted the investigation up to 25-5- 1992. He had endorsed the search warrant issued from the Court to the Inspector, Balakrishnan, who conducted the search and the residence of Shahabudheen (A2) on 4-3-1991 as evidenced by Ext.P 28 search list. On 26-2-1991 he conducted search of the residential flat of A1 at Bangalore as evidenced by Ext.P40 search list . He had received various documents pursuant to letters sent by him to the PNB and other institutions.
Crl.Appeal No. 614 of 2003 -:15:-
P.W. 15 (Ramesh Kumar) was the Inspector of C.B.I. who conducted the investigation from 24-6-1992 and filed the final report on 30-6-1995 after deleting the name of Ayyappan (P.W.6) from the array of accused.
DEFENCE EVIDENCE D.W. 1 (Sasidhara Panicker) was the Senior Manager , PNB. He proved Ext.D7 certified extract of the ledger regarding the term loans in the Quilon Branch of PNB. Ext.D7 (a) is the relevant entry pertaining to the C.C. account of M/s.. Barrels and Metals to show that the loan was fully cleared on 29-09-1998 by paying Rs. 1,88,689.10 while closing the accounts. He also proved Ext.D8 certified copy of the General Instructions relating to advances of the PNB. Ext.D1 is the copy of the Circular dated 2- 09-1989 of the head office of PNB. Ext.D2 is the marked portion of the deposition of P.W.13 (Anantharaman) when he was Crl.Appeal No. 614 of 2003 -:16:- examined as P.W.10 in three earlier cases (C.C. No. 9, 10 and 11) of 1993) in which the appellant herein was the common first accused . Ext.D3 is the statement dated 16-3-1990 givenbyP.W.6 (Ayyappan) to P.W.2 at the time of the enquiry conducted by P.W.2 . Ext.D4 is the certified copy of the office order dated 9-08-1989 showing the delegation of duties assigned to the officers including Ayyappan (P.W.6) of the Kollam Branch of the PNB. Ext.D5 is the marked portion in the deposition of P.W.6 (Ayyappan ) who was examined as P.W.23 before the court below in C. C. Nos. 9, 10 and 11 of 1993. Ext.D5
(a) is another marked portion of Ayyappan in the very same deposition. Ext.D6 is the marked portion of the deposition of P.W.15 (Ramesh Kumar) who was examined as P.W. 26 in C.C. Nos 9, 10 and 11 of 1993.
ARGUMENT ON BEHALF OF THE CBI Crl.Appeal No. 614 of 2003 -:17:-
11. Adv. Sri. Chandrasekhara Pillai, the learned counsel for the C.B.I. made the following submissions in support of his fervent plea for dismissal of the appeal:-
Ext.P3 is the loan application dated 21-10-1989 submitted by A2 (Shahabudeen) to the PNB seeking a term loan of ` 75,000/- for his proprietary concern by name Barrels and Metals, Quilon for the purpose of re-conditioning of barrels. Along with Ext.P3 A2 had submitted Ext.P4 bogus quotation purportedly issued by one M/s. Muhammed Ismayil of Chinnakkada Street, Madurai. It was knowing fully well that M/s. Muhammed Ismayil was a bogus firm that A1 sanctioned the loan for ` 75,000/- and allowed a cash credit facility of ` 3,00,000/- to the loanee. Margin money is to be supplied by the loanee . Instead, A1 deducted the margin money of ` 25,000/- from the cash credit facility which was to be utilised only for purchasing raw materials . A1 had thus sanctioned a sum of Rs. 1,06,947.50 including margin money . Ext.P31 Demand Draft in favour of Crl.Appeal No. 614 of 2003 -:18:- Muhammed Ismayil & Company (the supplier) was not sent by registered post to the supplier . The said D.D. was handed over by A1 to A2 (the loanee) instead of the supplier. Going by the testimony of P.W.10 Ext.P31 Demand Draft was credited in the account of A2 in the PNB, Quilon by Lekshmi Vilasom Bank, Madurai, after it was endorsed by P.W.10 towards Subrahmanyam, Manager of Pakyam Finance, Madurai. P.W.10 further proves that it was A2 who handed over Ext.P31 Demand Draft to P.W.10 requesting him to encash the same and credit the money to the account of A2. If A2 had obtained custody of Ext.P31 Demand Draft, it could be presumed that he got it either from A1 or from the Bank. Instead of going into the hands of the supplier, the D.D. had gone into the hands of A2, the loanee and it was not crossed. This amounted to culpable deviation of the banking procedure . It has also been shown that Muhammed Ismayil & Company alleged to be the supplier is a non-existing firm . P.W.12 who was working as a postman in Madurai for the Crl.Appeal No. 614 of 2003 -:19:- past 36 years could not find any such firm when he attempted to deliver Ext.P36 registered letter sent by the C.B.I. The said evidence of P.W.12 is corroborated by the testimony of P.W.10 who has also deposed that there is no such firm by name Muhammed Ismayil & Company at Chinnakkada Street, Madurai. P.W.6 (Ayyappan) was made a scapegoat by the defence Ext. D3 previous statement of Ayyappan given to P.W.2 Prasad and Ext.D4 Office Order showing the delegation to duties are to be understood in the light of the testimony of P.W.6 that it was on the strength of oral direction of A1 that he recommended the loan. Moreover, in Ext.D3 the duties which are to be performed by A1 have not been delegated . Merely because the loanee has subsequently closed the loan by remitting the amounts as evidenced by Ext.D7 (a) it will not wipe off the offence. Such subsequent remittance can be taken into account only for mitigating the punishment. Vide Central Bureau of Investigation v. A. Ravishankar Prasad & Others - 2009 Crl. LJ 3437, Crl.Appeal No. 614 of 2003 -:20:- Bechaarbhai S. Prajapati v. State of Gujrat - (2008) 11 SCC 163, Smt. Rumi Dhar v. State of West Bengal & Anr. - 2009 AIR SCW 2890. A1 was thus misusing his official position by sanctioning the loan without adhearing to the established banking procedure and norms. A2 was dishonestly encashing the D.D. through P.W.10 and money belonging to the PNB was thus siphoned off by A1 and A2 without any public interest . The conviction entered and the sentence passed by the Special Court do not call for any interference.
JUDICIAL EVALUATION
12. I am afraid that I find myself unable to agree with the above submissions made on behalf of the C.B.I. P.W.1 who was the Zonal Manager of PNB at Chennai had no direct knowledge about the disbursal of the loan in question. He preferred Ext.P1 complaint before the CBI on 24-1-1991 on the basis of the enquiry reports of P.W2 (Prasad) and P.W.13 (Annatharaman) . The Crl.Appeal No. 614 of 2003 -:21:- enquiry report of P.W.2 was neither produced nor marked in the case presumably with the intention of suppressing the statement of Ayyappan given to P.W.2 on 16-3-1990 in which he had admitted that he was the officer in-charge of the loans section and everything relating to the processing of loan application and finally recommending the same was done by him. It must be borne in mind that in Ext.P1 complaint submitted by P.W.1 the accused were not only the appellant herein (A1) but also the borrowers including A2 and the loans officer Ayyappan (P.W.6) . The examination of P.W.2 without his statement under Sec. 161 Cr.P.C. was objected to by the defence but the said objection was overruled. P.W.2 confessed that Ayyappan had given him a voluntary statement without any pressure or influence exerted on him. He further confessed that he did not question the appellant who was the manager of the Quilon Branch of PNB eventhough the reason given by him was that by that time the appellant was transferred from the Quilon Branch.
Crl.Appeal No. 614 of 2003 -:22:-
13. P.W.3 (Krishnan) who succeeded the appellant would claim to have visited the premises of Barrels & Metals to state that he found old hydraulic machines and damaged barrels . The location of the unit was mentioned as Pattathanam . Subsequently through a dealing question he was made to say that it was not Pattathanam but Pallithottam. The visit -cum-Inspection Card or Register which would reflect all inspections made by the Manager was not produced or marked to corroborate the statement of P.W.3. The business carried on by A2 was reconditioning of barrels and there is no case for the prosecution that no such business was carried on by A2. P.W.3 has further proved that apart from the title deeds of the factory, land and building of the borrower having been deposited as collateral security, immovable property belonging to one Fathima Beevi and Shanavas Musaliyar of Kollam valued at ` 8,10,000/- was also mortgaged in favour of the bank.
14. P.W.4 who allegedly witnessed the search conducted by Crl.Appeal No. 614 of 2003 -:23:- the CBI Officer in the residential flat of A2 admitted that no body search of the CBI officials and others was done before entering the flat. Inspector Balakrishnan who allegedly conducted the search also was not examined. The items which were allegedly seized under Ext.P28 search list were not marked also.
15. Ext.P38 valuation report prepared by P.W.5 a Civil Engineer and Approved Valuer was never put to P.W.5 nor marked through him. It was the defence who got the same marked through P.W.3.
16. P.W.6 (Ayyappan) who was initially A2 in Ext.P39 F.I.R. was deleted from the array of accused while the charge-sheet was filed and was examined as a prosecution witness. He was the loans officer to whom the pre-sanction inspection and all other formalities prior to the sanctioning of the loan had been delegated as per Ext.D4 office order dated 9-08-1989 . Ext.P3 is the loan application dated 21-10-1989 submitted by A2 . Ext.P4 is the quotation dated 3-10-1989 from Muhammed Ismayil Crl.Appeal No. 614 of 2003 -:24:- & Company , South Gate, Chinnakkada Street, Madurai-1 for ` 97,225/- excluding expensed for packing and forwarding, sales tax and insurance . Ext.P5 is the certified copy of the agreement of guarantee for the term loan of ` 75,0000/- and cash credit facility of ` 3,00,000/- by the guarantors Fathima Beevi and Shanavas Musaliar. It is none other than Ayyappan (P.W.6) who has filled up this document and he and one K.A. Thampi, the Assistant Manager of the Bank have signed as witnesses in Ext.P5. Ext.P6 is the limit proposals for the term loan and C.C. facility dated 21-09-1989 prepared by Ayyappan in his own hand. It is specifically written by Ayyappan in Ext.P6 that the partners of M/s. Barrels and Metals are well experienced in the line of business with good reputation and that the raw materials are abundantly available in Tamil Nadu, Karnataka etc. After certifying the correctness of the contents of the loan application Ayyappan had recommended the loan as follows: "Since the party is having good means, recommended for term loan of ` 75,000/- and C.C. for ` Crl.Appeal No. 614 of 2003 -:25:- 3,00,000". Beneath the above recommendation, Ayyappan has affixed his signature. Ext.P7 hypothecation agreement executed by the borrower is also prepared by Ayyappan. Likewise, Ext. P8 certificate of the borrower to the effect that there is no encumbrance of the immovable property forming the subject matter of equitable mortgage, Ext.P9 letter of the borrower authorising the bank to initiate R.R. proceedings or any other mode of recovery in the even of default, Ext.P10 letter of authority given by the borrower undertaking to pay to the Bank ` 3,00,000/- (C.C. facility) even without the promissory note for the said amount being presented to the Bank, Ext. P11 undertaking by the borrower to the effect that he shall not withdraw any mount beyond ` 3,00,000/- from the cash credit account No. 90, Ext.P12 undertaking by the borrower that he shall have banking transaction exclusively with the PNB and Ext.P13 undertaking by the borrower to comply with any condition which might be imposing future regarding stamp duty, are all filled up in the Crl.Appeal No. 614 of 2003 -:26:- handwriting of Ayyappan. Again Ext.P15 account opening form is filled up by Ayyappan and the signatures of the partners of M/s. Barrels and Metals are attested by Ayyappan. It was Ayyappan who permitted the opening of the account and Ext.P15 is not even seen by the Manger (the appellant). Likewise, it was Ayyappan who filled up Ext.P16 letter given by the borrower requesting the bank to issue D.D. to the supplier firm. Ayyappan has written on Ext.P16 to issue D.D. for the amount of ` 75,000/- being the term loan sanctioned and an amount of ` 22,225/- and the requisite tax deposited by the borrower. Ext.P17 is the project report submitted by M/s. Barrels & Metals showing that the said firm was established on 18-4-1986 and its S.S.I. Registration No. is Q.09-08-04725/PMT-SSI dated 10-7-1986 and that its activity is re-conditioning of empty barrels . Ext.P18 is the certified copy of the hypothecation agreement executed by the borrower for the term loan filled up by Ayyappan and signed by the parties. Ext.P19 is the certified copy of the statement of cash credit Crl.Appeal No. 614 of 2003 -:27:- account of M/s. Barrels & Metals . Ext.P20 is the certified copy of the statement of account of the term loan account of M/s. Barrels and Metals. Exts. P21 and P22 are the legal opinions on the title deeds pertaining to the equitable mortgages given to the bank by the borrower . Ext.P22 dated 16-10-1989 relates to the property of Shahabudheen, the Managing Partner of M/s. Barrels & Metals and Ext.P21 dated 19-6-1989 pertains to the property of the guarantors. Ext.P23 is the valuation report dated 18-10- 1990 prepared by Subrahmania Iyer assessing the value of the building at ` 1,28,750/- after deducting the depreciation as against the sanctioned term loan of ` 75,000/-. Ext.P24 is the vouncher dated 23-10-1989 prepared by Ayyappan for debiting ` 31,947.50 from the cash credit account towards the margin money inclusive of the tax . Ext.P25 is the debit voucher dated 23-10-1989 prepared by Ayyappan for debiting ` 75,000/- from the term loan account number 551/30517. Ext. P26 is the transfer voucher dated 23-10-1989 prepared by Ayyappan for Crl.Appeal No. 614 of 2003 -:28:- issuing draft for the amount covered by Exts. P24 and P25 ( ` 31947.50 + 75,000 = 106947.50) to the borrower in Madurai drawn on the Madurai Branch of PNB. Ext.P27 is the voucher prepared by Ayyappan for debiting the commission of ` 214/- for issuing the above D.D. This is not seen signed by A1 the Manager. Ext.P38 got marked by the defence is the valuation report given by Engineer Asokan after valuing the properties. When this Asokan was examined as P.W.5 the prosecution did not put Ext.P38 to him. The necessity for the defence to get Ext.P38 marked arose when P.W.3 was made to say that there was no collateral security for the term loan given to M/s. Barrels & Metals.
17. In the light of Ext.D3 statement given by Ayyappan to P.W.2 during the enquiry conducted by P.W.2 and Ext.D4 office order dated 9-8-1989 delegating duties to Ayyappan and other officers of the Bank , it is not open to the prosecution to contend for the position that the loan was sanctioned by A1 in flagrant violation of the established banking procedure. Crl.Appeal No. 614 of 2003 -:29:-
18. Ext.P31 D.D. dated 23-10-1989 for ` 106947.50 was issued from the Quilon branch of PNB in favour of Muhammed Ismayil. This D.D. was drawn on the Madurai Branch of PNB. In a busy bank like the Quilon Branch A1 the Manager cannot be found fault with if he had sanctioned the loan acting in good faith on the recommendations of Ayyappan (P.W.6) a Senior Scale
- II Officer. Deviating from his earlier version (Ext. D5) given while deposing before Court in C.C. Nos. 9, 10 and 11 of 1993 , Ayyappan when examined in the present case as P.W.6 would come out with a case that the pre-sanction inspection and all other duties carried out by him culminating in recommending the loan were as orally directed by A1. But P.W. 6 had to frankly confess that he had not recorded any of the deviations in the procedure in the Deviation Register maintained by the bank .
18. There is nothing on record to show that after sanctioning the loan it was A1 himself who handed over Crl.Appeal No. 614 of 2003 -:30:- Ext.P31 D.D. to A2 or anybody else . Normally it is no part of the Manager to carry out the follow-up measures. Nobody has a case also that it was A1 who gave Ext.P31 DD to A2 or anybody else. It is the duty of the loan section which was under the control of Ayyappan to prepare the D.D. and despatch it to the payee/ supplier by post. Ext.P31 D.D. issued from the Quilon Branch of PNB in the name of M/s. Muhammed Ismayil was received in the Madurai Branch of PNB of which P.W7 was an officer . It was drawn on the Madurai Branch of PNB and received in that Branch through the clearing. P.W. 10 (Navas ) claims to be the first endorsee of Ext.P31 D.D. and he in turn claims to have endorse the same to Pakya Finance , Madurai . The version of P.W. 10 that he does not know Muhammed Ismayil who is his endorser and that Ext.P31 D.D. was given to him by A2 is too good to be believed. Pakyam Finance is a firm engaged in purchase of D.Ds and getting the same discounted through Lekshmi Vilas Bank. P.W. 8, the Manager of the Madurai Main Branch of Lekshmi vilas Crl.Appeal No. 614 of 2003 -:31:- Bank had purchased from Pakyam Finance 19 instruments including Ext.P31 D.D. for a total value of ` 2,45,053/- as evidenced by Ext. P32 pay-in-slip and Ext.P33 list of instruments. According to P.W. 8 one Janasekharan was the officer at the relevant time who got the instruments cleared through the Madurai Branch of P.N.B. It was the duty of Lekshmi Vilas Bank which was a collecting bank to verify and find out the genuineness of the payee as well as endorsees under Ext.P31 D.D. In the normal course the presumption would be that the collecting bank had verified and got satisfied about the genuineness of the payee as well as the endorsees. That is why P.W. 8 has deposed that Ext.P 31 D.D. was endorsed to one Navas (P.W.10) by Muhamamed Ismayil (the payee) and Navas in turn endorsed it to Pakyam Finanace.
19. The only material relied on by the prosecution to show that M/s. Muhammed Ismayil and Company is a fictitious and non-existing firm is the testimony of P.W.10 (whose evidence Crl.Appeal No. 614 of 2003 -:32:- does not inspire any confidence) and the testimony of P.W. 12 the postman of Madurai Head Post Office. Admittedly, the address shown on Ext.P36 registered cover sent by the CBI and addressed to Muhammed Ismayil was insufficient . Hence, returning of the said cover by P.W. 12 undelivered to the sender with the endorsement that the addressee is not known due to insufficient address cannot necessarily mean that Muhammed Ismayil & Company is a non-existing firm .
20. The investigation conducted by P.W. 14 is far from satisfactory. He confessed that he questioned Ayyappan only with reference to his service particulars and that he did not record the statement of Ayyappan during investigation. Likewise P.W.14 did not question any of the officers of the Quilon Branch of PNB such as Thampi, Netto etc. P.W. 3 is only an officer who succeeded A1. P.W.14 did not seize or produce the entirety of the loan file . Eventhough P.W.6 Ayyappan had admitted in Ext.D3 previous statement that he had prepared the confidential Crl.Appeal No. 614 of 2003 -:33:- report ("CR " for short) pertaining to the loan, the CR was suppressed. P.W. 15 who laid the charge after completing the investigation also did not record the statement of Ayyappan in this case. No explanation has been offered as to why Ayyappan was deleted from the array of accused. P.W. 14 did not question P.W.1. Likewise, P.Ws 2 and 13 who had conducted an enquiry in the matter were also not questioned. P.W. 14 was blissfully ignorant of Exts. D3 and D4 without questioning any of the bank employees during the relevant period it was not possible for P.W.14 to conclude that the banking procedure had been deviated from . P.W. 14 was so ignorant that he went to the extent of saying that it was the Manager who was dealing with the loan section . P.W.6 Ayyappan giving a completely tutored version calculated to cover the infirmities which he committed during his cross-examination in C.C. Nos. 9, 10 & 11 of 1993. Although in his chief examination he attempted to put the blame on the appellant A1 during cross-examination the truth came out Crl.Appeal No. 614 of 2003 -:34:- of his mouth unwittingly . At page 42 of his deposition he confessed that it was for him to recommend all loans above ` 25,000/- and he would recommend only if it was not improper to do so. In this case also he recommended the loan on the basis of the CR as per which the borrower was found eligible to avail the loan . Again at page 43 of his deposition P.W. 6 further admitted that it was on the basis of the recommendation as per the CR that A1 sanctioned the loan . At page 41 he stated that valuation report and legal opinion had been obtained before sanctioning the loan. Prior to his service in the Quilon Branch of PNB he was working as the loans officer in the Thiruvananthapuram Branch of PNB where he worked for 2 = years. He had worked in the Officer Cadre for 8 years before taking charge in the Quilon Branch. (See page 21). At page 23 he admitted that the Quilon Branch had a Loan Section and he was the officer-in-charge of the said Section. At page 39 of his deposition he stated that he will not carry out any unlawful Crl.Appeal No. 614 of 2003 -:35:- direction given by his superior and he has not done so in this case also. He further stated that the first accused had not asked him to carry out any unlawful duty and that there is a system in vogue for reporting any deviation in the procedure to the superiors and no such deviation report had been given in this case. Considering the testimony of P.W.6, if A1 had sanctioned the loan acting on the recommendation of P.W. 6, no exception could be taken to the same . Absolutely no explanation is forthcoming from the CBI that as to why P.W.6 Ayyappan who was arrayed as the 2nd accused throughout the course of the investigation of this case was deleted from the array of accused in the final report filed by P.W. 15.
21. P.W. 11 the officer who accorded Ext.P35 sanction to prosecute the appellant would claim to have perused the enquiry reports of P.W. 2 Prasad and P.W. 13 Anantharaman. But strangely enough, the CBI had not seized the above enquiry reports which were not among the documents produced by the Crl.Appeal No. 614 of 2003 -:36:- CBI along with the final report. If so, it is not known as to how the sanctioning authority had perused the said enquiry reports. Those enquiry reports which ultimately turned out to be unfounded must have definitely influenced the mind of P.W. 11 while according the sanction to prosecute the appellant.
22. As per Common Judgment dated .............2-2011 in Crl. Appeal Nos. 295 of 2000 and connected Appeals this Court had acquitted the appellant of all the charges in three other loans given from the same branch during the very same period. Apart from the fact that the evidence in this case is not sufficient to enter a conviction against the appellant for any of the offences alleged against him, the findings recorded in the aforesaid Common Judgment will also operate as issue estoppal barring a conviction once again against him.
Crl.Appeal No. 614 of 2003 -:37:-
V. RAMKUMAR, JUDGE.
ani/