Karnataka High Court
B P Kishore S/O Mr. Shankar Shetty vs Union Of India Cbi on 24 June, 2013
Equivalent citations: 2013 (4) AKR 257
Author: Anand Byrareddy
Bench: Anand Byrareddy
1
®
IN THE HIGH COURT OF KARNATAKA AT
BANGALORE
DATED THIS THE 24TH DAY OF JUNE, 2013
BEFORE
THE HON'BLE MR. JUSTICE ANAND BYRAREDDY
CRIMINAL APPEAL No.1171 OF 2004
CONNECTED WITH
CRIMINAL APPEAL No.1092 OF 2004
IN CRL.A.No.1171 OF 2004
BETWEEN:
Mr. B.P. Kishore,
Son of Mr. Shankar Shetty,
Aged about years,
Residing at No.474,
8th Main, 1st E Cross,
Basaveshwaranagara,
Bangalore - 560 079. ...APPELLANT
(By Shri. Ravi B. Naik, Senior Advocate for Shri. K. Shashi
Kiran Shetty, Advocate)
AND:
Union of India,
Central Beauro of Investigation
(CBI),
2
Represented by its Director. ...RESPONDENT
(By Shri. C.H. Jadhav, Senior advocate )
*****
This Criminal Appeal filed under Section 374 of the code
of Criminal Procedure, 1973, by the advocate for the
appellant/accused against the judgment dated 21.6.2004 passed
by the XXI Additional City Civil and Sessions Judge and
Special Judge for CBI Cases, Bangalore in Spl.C.C.No.139 of
1998 - convicting the appellant/accused for the offences
punishable under Section 120B read with Sections 420, 468,
471 and 477A of Indian Penal Code, 1860 and Sections 13(2)
read with Section 13(1)(d) of the Prevention of Corruption Act,
1988 and etc;
IN CRL.A.No.1092 of 2004
BETWEEN:
Kamalakar Itgampally,
Aged 55 years,
Excise Contractor,
No.323, 14th Cross,
II Block, R.T.Nagar,
Bangalore - 560 032. ...APPELLANT
(By Shri. S.J. Chouta, Advocate, Advocate)
AND:
State by C.B.I. / SPE - Bangalore,
Represented by the
State Public Prosecutor,
High Court Building,
Bangalore. ...RESPONDENT
3
(By Shri. C.H. Jadhav, Senior Advocate)
*****
This Criminal Appeal filed under Section 374(2) of the
code of Criminal Procedure, 1973, by the advocate for the
appellant against the judgment dated 21.6.2004 passed by the
XXI Additional City Civil and Sessions Judge and Special
Judge for CBI Cases, Bangalore in Spl.C.C.No.139 of 1998 -
convicting the appellant/accused No.2 for the offences
punishable under Section 120B, 420, 468, 471 and 477A of
Indian Penal Code, 1860 and etc;
These appeals having been heard and reserved on
13.06.2013 and coming on for pronouncement of Judgment
this day, the Court delivered the following:-
JUDGMENT
These appeals are heard and disposed of by this common judgment as they are filed by the accused in the same case.
2. The appellant in the first of these appeals was arraigned as accused no.1 (Hereinafter referred to as 'A.1', for brevity) and the appellant in the second of these appeals is arraigned as accused no.2 (Hereinafter referred to as 'A.2', for 4 brevity). A.1 was employed as the Branch Manager, Vijaya Bank, Chickpet Branch, Bangalore during the period 1989 to 1993. A.2 was an excise contractor, who had an account with the said branch of Vijaya Bank. It is the case of the prosecution that A.1 and A.2 had entered into a criminal conspiracy and had committed forgery by fabricating bogus bank guarantees, purportedly furnished by Vijaya Bank, Chickpet Branch favouring the Deputy Commissioner of Excise, Gulbarga, on behalf of A.2. On the basis of such bank guarantees, it is alleged that A.2 had been enabled to participate in the excise auctions for general vending of arrack at Jewargi Taluk, Gulbarga District and thereby earned huge monetary benefit, which was allegedly shared with A.1 and caused corresponding loss to the bank.
3. It was the further case of the prosecution that in furtherance of the conspiracy, A.1, by abusing his official position, did not record the particulars of the bank guarantees so 5 furnished on behalf of A.2, namely, Bank Guarantee Nos.3/1989 dated 5.7.1989 for a sum of Rs.5,60,000/-, 2/1991 dated 15.7.1991 for a sum of Rs.23,31,200/-, 4/1992 dated 20.7.1992 for Rs.18,16,000/-, and 5/1992 dated 20.7.1992 for a sum of Rs.90,800/-, which were required to be entered in the Bank Guarantee Register maintained at the bank. It was further alleged that A.1 obtained the loan application for the bank guarantees from A.2 and processed it himself and forwarded it to the Zonal Office of Vijaya Bank for sanction. But before the same was sanctioned, the bank guarantees had been issued to A.2 and there was no record maintained in the bank as to the collection of commission, from A.2, towards the issuance of such bank guarantees. It was also alleged that A.2 had collected the aforesaid four bank guarantees on two occasions from the Excise Department, Gulbarga, on the pretext that the same would be returned to the Vijaya Bank and had managed to destroy the same. It was also alleged that A.1 collected the commission for the issuance of the bank guarantees and did not 6 credit it into the bank's account and A.1 had deliberately destroyed the official correspondence carried on by the excise authorities with the bank relating to the issue of bank guarantees. It is on the basis of the preliminary inquiry conducted, that a case was registered against the accused for offences punishable under Sections 120-B read with 420, 468, 471, 477A and 201 of the Indian Penal Code, 1860 (Hereinafter referred to as the 'IPC', for brevity) and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1998 (Hereinafter referred to as the 'PC Act', for brevity) and further proceedings had been taken through the court. A search was carried out of the residential premises of A.1 and certain documents were seized and after further proceedings, a charge sheet was filed against A.1 and A.2. Thereafter, charges having been framed, the prosecution had examined 14 witnesses and marked 54 documents. The statement of the accused under Section 313 of the Code of Criminal Procedure, 1973 (Hereinafter referred to as the 7 'Cr.PC', for brevity) was recorded and the parties were heard. The court below has framed the following points for consideration :-
"1. Does prosecution prove that A.1 while functioning as Public Servant in the capacity of Branch Manager, Vijaya Bank, Chickpet Branch, Bangalore, during the period from 1989 to 1993, by corrupt or illegal means, abused his official position and committed criminal misconduct and entered into criminal conspiracy with A.2 and agreed to do illegal acts by illegal means and committed forgery and fabricated bogus bank guarantees in favour of Dy. Commissioner of Excise, Gulbarga and the bogus bank guarantees in the name of A.2 were furnished before the Excise Authorities at Gulbarga as genuine bank guarantees and A.2 participated in the Excise Auction for general vending of arrack at Jewargi taluk in Gulbarga District and that the above acts were done in pursuance of the said criminal conspiracy with a view to making unlawful gain for themselves and correspondent wrongful loss to 8 the Vijaya Bank, Chickpet branch and thereby A.1 and A.2 have committed an offence punishable under Section 120B of the Indian Penal Code?
2. Does prosecution further prove that A.1 during the said period referred to above, in furtherance of the conspiracy with A.2, dishonestly committed forgery and fabricated four bogus bank guarantees viz., B.G.No.3/89 dated 5/7/1989 for Rs.5,60,000/-, B.G.No.2/91 dated 15/7/1991 for Rs.23,31,200/-, B.G.No.4/1992 dated 20/7/1992 for Rs.18,16,000/-, B.G.No.5/92 dated 20/7/1992 for Rs.90,800/- in favour of Dy. Commissioner of Excise, Gulbarga in the name of A.2 and A.1 issued the four bank guarantees without recording the particulars in the bank guarantee register maintained in the branch and A.2 furnished the said bank guarantees before the excise authorities as stated above and thereby A.1 and A.2 have cheated the bank and committed an offence under Section 420 of the Indian Penal Code?
3. Does prosecution further prove that during the said period referred to above, A.1, while 9 functioning in the said capacity, dishonestly issued bogus bank guarantees all favouring Deputy Commissioner of Excise, Gulbarga in the name of A.2 without obtaining prior sanction from Regional Office and without recording the particulars of these bank guarantees in the bank guarantee register maintained in the branch and A.2 in turn furnished the bank guarantees before the Excise authorities at Gulbarga as stated above with an intention to use the bank guarantees for the purpose of cheating and thereby A.2 has committed an offence punishable under Section 468 of the Indian Penal Code?
4. Does prosecution further prove that in furtherance of the said conspiracy with A.2, during the said period referred to above, A.1 issued four bogus bank guarantees mentioned above all favouring Deputy Commissioner of Excise, Gulbarga and that both of them knowing fully well that the above documents are forged ones, produced them as Genuine Bank Guarantees to enable A.2 to participate in the excise auction and both A.1 and A.2 have caused monetary benefit for 10 themselves and wrongful loss to the bank and thereby committed an office under Section 471 of the Indian Penal Code?
5. Does prosecution further prove that A.1, while functioning as public servant, during the relevant period mentioned above, forged and issued four bank guarantees to A.2 favouring the Deputy Commissioner of Excise, Gulbarga and misguided the Regional Office through letter dated 18/7/1992 that the bank guarantee for Rs.23,31,200/- may be read as BG.6/90 for Rs.17,32,125/- and that the BG.No.3/89 purported to have been issued by Vijaya Bank, Chickpet Branch on 15/7/1989 for Rs.5,60,000/- favouring Deputy Commissioner of Excise, Gulbarga, but the bank guarantee register of Vijaya Bank, Chickpet branch shows that BG.No.3/89 issued on 15/7/1989 for Rs.7,30,100/- favouring the Governor of Karnataka on the application of one Sri. Babu and that A.1 wilfully destroyed many of the official correspondence made by the Excise Department, Gulbarga regarding the invocation of the above bogus bank guarantees and that A.1 11 collected through A.2 the bank guarantees from the Deputy Commissioner's office at Gulbarga and that A.1 willfully and with intent to defraud, destroyed the four bank guarantees and other correspondence to conceal the fact of issuance of bank guarantees and thereby committed an offence punishable under Section 477A of the Indian Penal Code?
6. Does prosecution further prove that during the relevant period referred to above, in furtherance of the conspiracy, A.2 produced before the Deputy Commissioner of Excise, Gulbarga the four bogus bank guarantees as genuine and participated in the Excise Auction for general vending of arrack at Jewargi taluka in Gulbarga District and remitted all the dues raised by the Excise Department against the Bank Guarantees and that the Deputy Commissioner of Excise, Gulbarga released the four bank guarantees to Vijaya Bank, Chickpet Branch under letter dated 4/7/1995 and 25/8/1995 and that A.2 has collected the above letters and the bank guarantees from the office of the Deputy Commissioner and handed 12 over them to A.1, which A.1 destroyed and thereby A.2 has committed an offence punishable under Section 201 of the Indian Penal Code?
7. Does prosecution further prove that A.1, while functioning as such public servant, during the relevant period mentioned above, being a public servant, in the capacity mentioned above, in the said bank, by corrupt or illegal means abused his official position and entered into criminal conspiracy with A.2 and dishonestly committed forgery and fabricated and issued bogus bank guarantees in favour of Deputy Commissioner of Excise, Gulbarga without obtaining sanction from the Regional Office/Head Office, without recording the particulars in Bank Guarantee Register maintained with the branch and without collecting the necessary commission and that A.2 in turn produced before the Deputy Commissioner of Excise, Gulbarga the bank guarantees as genuine and participated in the general vending of arrack at Jewargi Taluka of Gulbarga District and thereby caused huge pecuniary advantage for himself and A.2 and further caused corresponding 13 wrongful loss to the Vijaya Bank, Chickpet branch, Bangalore and thereby A.1 has committed the offence of criminal misconduct as a public servant, under Section 13(1)(d) of the Prevention of Corruption Act, 1988, which is punishable under Section 13(2) of the said Act?
8. Whether the Sanction Order is valid?"
The court below held points 1 to 8 in the affirmative and convicted A.1 and A.2 to undergo rigorous imprisonment for three years and to pay a fine of Rs.5,000/- each for the offence punishable under Section 120-B of the IPC; to undergo rigorous imprisonment for three years and to pay a fine of Rs.5,000/- each for the offence punishable under Section 420 of the IPC; to undergo rigorous imprisonment for three years and to pay a fine of Rs.5,000/- each for the offence punishable under Section 468 of the IPC; to undergo rigorous imprisonment for three years and to pay a fine of Rs.5,000/- each for the offence punishable under Section 471 of the IPC and to undergo 14 rigorous imprisonment for three years and to pay a fine of Rs.5,000/- each for the offence punishable under Section 477A of the IPC. A.1 was further sentenced to undergo rigorous imprisonment for three years and to pay a fine of Rs.5,000/- for the offence punishable under Section 13(2) and 13(1)(d) of the PC Act. The sentences of imprisonment were to run concurrently. It is this which is under challenge in the present appeal.
4. The learned Senior Advocate Shri Ravi B Naik, appearing for the counsel for the appellant in the first of these appeals, contends that the court below has glossed over the fact that there was no legal sanction accorded to prosecute A.1. It is pointed out that the prosecution had submitted a circular dated 7.9.2002 to establish that appropriate sanction was accorded by the sanctioning authority. However, the witness PW.1 on behalf of the prosecution, namely, the Deputy General Manager, Vijaya Bank, had in his cross-examination, 15 agreed that till his termination from service in March 2001, A.1 was continued as being appointed by the Chairman of the bank and it was such appointing authority alone who accords sanction for the prosecution of his subordinates and such power could not be delegated. It is further pointed out that on this aspect, the said witness was treated as a hostile witness and had been cross-examined by the prosecution. The court below having glossed over the same, though such an objection had been raised at the earliest point of time and the matter having been allowed to proceed further, to consider the objection as to the sanction, after the entire evidence of the prosecution had been tendered and the court below having placed reliance on certain circulars issued by the bank, whereby the power to grant sanction for prosecution, having been delegated and while also noticing the legal position that a circular could not take the place of a rule or a regulation, has proceeded to hold that it was for A.1 to have challenged the circular before an appropriate forum and therefore, it was not 16 an issue that could be considered by the court below and has held that the sanction could not be invalidated on account of the objection that the sanction was invalid. Therefore, the learned Senior Advocate would submit that the entire proceedings stand vitiated and the appeal would have to be allowed on that sole ground and the appellant be acquitted.
Without prejudice to the same, the learned Senior Advocate would also contend that even on merits, the judgment of the court below cannot be sustained for the following reasons:
The prosecution had failed to establish the charges with reference to the documentary evidence. It is not in dispute that the respondents had produced only photo copies of the so-called documentary evidence. The court below has overlooked the same when it was a crucial aspect as the prosecution case centered around the originals of Exhibits P.4, P.5 and P.8. This was further significant in the background that though there were allegations in respect of four alleged bank guarantees -17
3/1989, 2/1991, 4/1992 and 5/1992, being fabricated bank guarantees, the prosecution thought it fit to produce only the photo copies of three bank guarantees, not including the bank guarantee No.3/1989. This lacuna was fatal to the case of the prosecution. The allegation that the originals had been destroyed by A.1 in connivance with A.2 and A.1 having been transferred from the Chickpet branch of Vijaya Bank to the Staff Training College, Gandhinagar, Bangalore during May 1993, there would have been no occasion for the appellant to lay his hands on the said bank guarantees or any other correspondence and especially, in the light of the fact that the appellant was discharged on the charge of destruction of documents and property.
As regards failure to register the alleged bank guarantees in the concerned register, was not a duty cast on the Branch Manager, but was a clerical chore routinely carried out by the lower level staff and if there was a lapse in this regard, it 18 could not be attributed to the appellant, who was a Senior Branch Manager.
It is further pointed out that though the Investigating Authority, in its search report, has categorically stated of having recovered the photo copies of two bank guarantees, it is inexplicable that the prosecution had produced the photo copies of three bank guarantees bearing initials of independent witnesses and marked as Exhibits 38, 39 and 40 and there is no explanation forthcoming as to the source, from which the photo copy of the third bank guarantee was procured, when it was not indicated in the search report. And even more strangely, Exhibits.P.4, P.5 and P.8 have been produced by the prosecution, which did not bear any initials of independent witnesses. This would throw a strong doubt and suspicion as to the legality of the investigation carried out by the prosecution.
It is also pointed out that there was no indication of any loss that had occasioned to the bank on account of the alleged 19 conspiracy and the irregularities said to have been committed by A.1 and A.2.
The learned Senior Advocate would take this court extensively through the record, to demonstrate that the interest of the bank was never jeopardized in the issuance of the bank guarantees on behalf of A.2. He was a long standing customer of the bank with adequate funds to his credit and there was no risk, to which the bank was exposed at any point of time. The two bank guarantees bearing nos.4/1992 and 5/1992 had been regularly issued on behalf of A.2 and were not invoked during their turn. The commission payable to the bank had been collected, which is a matter of record, except that, the same are not entered in the Bank Guarantee Register maintained by the bank. It was pointed out that insofar as other two bank guarantees are concerned, in view of the inconsistency in the investigating authority having, in its search report, referred to only two bank guarantees, it is highly doubtful as to the manner in which the prosecution has sought to foist the 20 additional bank guarantees, on the basis of which, wild allegations have been made. The fact that no loss had occasioned to the bank, is endorsed by PW.4 and therefore, the learned Senior Advocate would seek that the appellant be acquitted.
5. The learned Counsel for A.2, in turn, would contend that the case of the prosecution alleging that there was an agreement between A.2 and A.1, in furtherance of which, certain bank guarantees were fabricated, is an allegation without the essential ingredients of Section 120-B being satisfied.
It was also necessary for the prosecution to establish that even if there were any such allegedly forged bank guarantees, it was necessary to further establish that the accused had benefitted thereby. On the other hand, the witnesses for the prosecution had themselves stated that there were no dues by way of rentals payable by A.2 to the excise department, to 21 secure the due payment of which, the bank guarantees had been issued. Therefore, the essential ingredients of Section 420 of the IPC was found lacking and this aspect of the matter has been completely glossed over by the trial court.
It is also contended that the allegation of forgery was required to be established by tendering cogent evidence and there was no evidence whatsoever to establish that A.2 had a role in forging the bank guarantees. It is not the case of the prosecution that A.2 did not have sufficient funds in his account or that he was not a man of means to provide security, against which, the bank guarantees could have been issued. The prosecution had also failed to plead and establish that there was any official favour shown by A.1 towards A.2, especially when A.2 had sufficient security in the bank and the interest of the bank was never jeopardized and there is sufficient evidence of the prosecution, in support of the fact that A.2 was a trust- worthy customer of the bank with adequate funds. The said bank guarantees were never invoked by the party to which it 22 had been furnished, indicating thereby that there was no fault committed by A.2 at any point of time and the amounts covered under the bank guarantees were all settled by A.2 and therefore, the falsity of the case of the prosecution is glaring.
In support of the above contentions, the learned Counsel for A.2 would particularly draw attention to the evidence tendered on behalf of the prosecution. As for instance, he would draw attention to the testimony of the following witnesses on the aspect that the bank had not suffered any pecuniary loss:
PW.2 - Jawahar L Rawell, an Officer, has, in his deposition, at para -8 on Page 44, has admitted that A.2 had approached him in the year 1995 and requested for original documents of his properties submitted to the bank as security for the bank guarantee. Further, that as there was no liability of A.2 to the bank, the said witness had returned those documents. That A.2 was a regular customer of the Chickpet branch of the bank since 1988 and that when the loan 23 documents were returned to A.2 in 1995, A.2 had huge amounts in deposit at the Chickpet branch. Further, that if any party, who had obtained a loan from the bank and due to the bank without discharge, the bank had a right to adjust the amounts of that party in the deposits towards any due to the bank.
PW.3 - V.K.Gangadharaiah, Senior Manager, has, at Para 14 at Page 50, admitted that as on the date of investigation of the matter, insofar as Chickpet Branch was concerned, there was no actual pecuniary loss to Vijaya Bank, but there was a demand made by the excise department for compliance of the bank guarantees.
PW.4 - H.Subhashchandra Shetty, Senior Branch Manager, has, at Para 18 at Page 57, stated that Vijaya Bank, Chickpet Branch had not sustained any financial loss in connection with the issue of bank guarantee on behalf of A.2.24
PW.8 - N.Eshwaran, an Officer at Vijaya Bank had , at para 5 page 84, has admitted that in Exhibit P.2, at Column No.13, it was mentioned that all previous liabilities of the bank guarantee were cleared. That in Exhibit P.2, it was mentioned that the bank guarantee cleared was for an amount of Rs.23.31 lakh. And that A.2 was an old customer of the Chickpet branch.
It is hence contended that the above statements of the bank officials would indicate that the bank has not suffered any loss, on account of the bank guarantees issued.
The relationship and creditworthiness of A.2 with the bank is also stated by the several witnesses thus:-
PW.2 Jawahar L Rawell, an Officer, has, at Para 8 on Page 44, admitted that A.2 approached him in the year 1995 and requested for original documents of his properties submitted to the bank as security for the bank guarantee. That there was no liability of A.2 to the bank and PW.2 had returned 25 those documents of the properties of A.2. That A.2 was a regular customer of the Chickpet branch of the bank. The witness has further stated that when he returned the loan documents to A.2 in 1995, he had substantial amounts in deposit at Chickpet branch.
PW.4 H.Subhashchandra Shetty, Senior Branch Manager, has at Paras 16,17,18,19 at Pages 56 and 57, has admitted that during the year 1987, A.2 had taken a bank guarantee for Rs.4 lakh from the Chickpet branch in favour of the excise department, Gulbarga and he had subsequently paid that bank guarantee amount and the same was released. Even in the year 1988, A.2 had taken a bank guarantee for Rs.10,85,000/- in favour of the excise department and the said amount of bank guarantee was released as per the entry in Exhibit P.3 - Register.
PW.4, at Para-17, has admitted that in Exhibit D.2, he had mentioned that Mr.Kamalakar Itamgampalli, on whose 26 behalf the bank guaratenee was issued, was one of the good customers of the Chickpet Branch, having huge deposits with the bank and as on that date, there was a deposit of Rs.5,50,000/- in the name of A.2 and his family members in V.CC-52/88 and 57/88.
At Para 18, PW.4 has stated that, to his memory, A.2 had deposited the title deeds of his property as security for the bank guarantee obtained for Rs.10,85,000/- earlier. The witness did not knew whether the deposit of those title deeds were taken into account for the issue of subsequent bank guarantees by the Chickpet Branch. He has admitted that Vijaya Bank, Chickpet Branch, had not sustained any financial loss in connection with the issue of bank guarantee on behalf of A.2.
At para 19, it was admitted that it was true that as per the entry in Exhibit P.3, the Chickpet Branch had issued a bank guarantee for Rs.17, 32,125/- on behalf of A.2 and that the said 27 amount involved had been paid by A.2 in the month of May 1991.
PW.8 - N.Eshwaran, at Para 5 on Page 84, has admitted that in Exhibit P.2 at Column No.14, it was mentioned that all the previous liabilities of the Bank Guarantee was cleared. That in Exhibit P.2, it was mentioned that the bank guarantee cleared was for an amount of Rs.23.31 lakh. That A.2 was an old customer of the Chickpet Branch.
It is contended that the primary allegation that the fact of the bank guarantees having been concocted, without the same being shown in the records of the bank, by reference to the circumstance that there was no evidence of the commission payable on the bank guarantees having been paid to the bank. This is negated by the statements of the witnesses for the prosecution, namely , PW.8 and PW.13, thus:
PW.8 - N.Eshwaran, has, in Paras 5 and 6 on Pages 84 and 85, admitted that in Exhibit.P.2 at Column No.14, it was 28 mentioned that all previous liabilities of the bank guarantee were cleared. In Exhibit P.2, it was mentioned that the bank guarantee cleared was for an amount of Rs.23.31 lakh. Further, the witness has deposed that A.2 was an old customer of the Chickpet branch and that he had remitted Rs.38,336/- to the bank as commission for the bank guarantee issued.
PW.13 - Vittal Rao has admitted at para 4 on page 104, that subsequently, A.2 had paid the commission pertaining to bank guarantee nos.4/92 and 5/92.
The fact that A.2 had sufficient cash margin and security by way of immoveable property, during the year 1988 to 1995, is evidenced by the statements of the witnesses to the following effect:
PW.2 Jawahar L Rawell, has, at para 8 on page 44 admitted that A.2 had approached him in the year 1995 and requested for original documents of his properties submitted to the bank as security for the bank guarantee. That as there was 29 no liability of A.2 to the bank, he returned those documents. That A.2 was a regular customer of the Chickpet branch since 1988. That PW.2 returned the loan documents to A.2 in 1995.
PW.4 has admitted at Para 18 of his evidence, that according to his memory, A.2 had deposited the title deeds of his property as security for the bank guarantee obtained for Rs.10,85,000/- earlier. The witness did not knew whether the deposit of those title deeds were taken into account for the issue of subsequent bank guarantees by the Chickpet Branch. That Vijaya Bank, Chickpet Branch, had not sustained any financial loss in connection with the issue of bank guarantee on behalf of A.2.
To substantiate that there was no loss occasioned to the excise department, the following statements of the prosecution witnesses are sufficient:-
PW.4 has, in Paras 14 and 15 at pages 55 and 56, admitted that he had received a letter from the office of the Deputy Commissioner of Excise, Gulbarga, to the effect that 30 they had no claims against the bank guarantees pertaining to the claim made in Exhibit P.6.
Further in para 15, he had admitted that the carbon copy of the letter dated 8.7.1995 was marked at Exhibit D.1. That in Exhibit D.1, he had informed the Deputy General Manager, Bangalore Zone, that the Deputy Commissioner of Excise, Gulbarga, under his letter dated 4.7.1995, informed the bank that they had no claim against the bank. It was true that he had requested the Deputy General Manager, Bangalore Zone, to treat the matter as closed.
PW.6 Suryakanth Sungar, has, in para 8 on page 72, admitted that he had made a note after receiving the application from A.2 that all the dues which were due to the department were paid by A.2, and as such, he had made an endorsement to the effect that the bank guarantee may be returned. That the rental due under the Bank guarantee Nos.3/89, 2/91, 4/92 and 5/92 had been cleared by A.2 by July 1992 and as the party also did not ask for the return of the Bank guarantees, as such 31 till 1995, he did not return them and kept them in the department.
It is also contended that there is grave suspicion of the genuineness of the seizure mahazar in relation to the copies of the bank guarantees said to have been recovered from the home of A.2. It is pointed out that on 6.1.1998 at about 7.45 a.m., which is three years after the date on which the original bank guarantees are said to have been returned, as stated by PW.6 at page 68 of the paper book, namely on 25.8.1995, the seizure having been conducted by the Police Inspector, Suresh Kumar along with two witnesses, namely, S.Nagaraj and Vittal Rao, the seizure mahazar at page-35 discloses that the photo copy of the bank guarantee no.5/2 dated 20.7.1992 and 2/1991 dated nil were seized. The Police Officer - Suresh Kumar was not examined as a witness for the prosecution. PW.11 S.Nagaraj, who was a panch witness, however, has stated that four documents were seized from the house of A.2, as shown in the search list. The other panch witnesses, Vittal Rao PW.12, 32 in turn, has identified Exhibits P.38, 39 and 40, as being the bank guarantees, that were seized from the house of A.2. Therefore, there is no consistency as to the number of documents that were actually seized, as the seizure mahazar indicates only two documents, whereas PW.11 speaks of four documents and PW.12 speaks of three documents. Hence, no reliance could be placed on the seizure mahazar.
As regards the alleged fabrication of bank guarantees having been proved beyond reasonable doubt is also not tenable. In that, as regards Exhibits P.4,5 and 8 are concerned, PW.3 and PW.5 had claimed that in their investigation, as per Exhibit P.11 and P.9, respectively, they were unable to obtain either the original or the photo copies of the bank guarantees. PW.5 has categorically stated so at para-8 of his deposition in the following words:
"It is true that PW.3 V.K.Gangadharaiah could not probe the allegation in the absence of the bank guarantees and the copies thereof and accordingly reported. During my investigation, 33 the bank guarantees and the copies thereof could not be traced in the office of the Deputy Commissioner, Excise, Gulbarga or in our Chickpet Branch, but I secured the correspondences".
Notwithstanding the same, the prosecution had, with impunity, produced and marked Exhibits P.4, P.5 and P.8 through the above witnesses. There is no explanation in the entire evidence of the prosecution as to the manner in which the said documents had been obtained. The trial court has completely glossed over this serious lacuna in proceeding to hold that the prosecution hda established its case beyond all reasonable doubt. Therefore, the learned counsel would submit that in the above light of the matter, the accused ought to be acquitted.
6. On the other hand, Shri C.H.Jadhav, while seeking to justify the judgment of the trial court, would emphasize that, as regards the preliminary contention, on behalf of A.1, to the 34 effect that the entire proceedings are vitiated in view of the sanction for the prosecution of the appellant being invalid. In this regard, he would place reliance on several authorities and would draw attention to the relevant observations and views expressed by the apex court. He would submit that the view expressed by the Supreme Court has consistently remained the same, in that, in CBI vs. V.K.Sehgal, 1999 SCC(Crl)1494, the apex court, has, with reference to Section 465 of the Cr.PC, which provision spells out the circumstance when a finding or a sentence is reversible by reason of error, omission or irregularity, as regards a sanction for prosecution has held thus:-
"10. A court of appeal or revision is debarred from reversing a finding (or even an order of conviction and sentence) on account of any or irregularity in the sanction for the prosecution, unless failure of justice had been occasioned on account of such error or irregularity. For determining whether want of valid sanction had 35 in fact occasioned failure of justice the aforesaid sub-section (2) enjoins on the court a duty to consider whether the accused had raised any objection on that score at the trial stage. Even if he had raised any such objection at the early stage it is hardly sufficient to conclude that there was failure of justice. It has to be determined on the facts of each case. But an accused who did not raise it at the trial stage cannot possibly sustain such a plea made for the first time in the appellate court. In Kalpnath Rai v. State (through CBI) this Court has observed in para 29 thus:
"29. Sub-section (2) of Section 465 of the Code is not a carte blanche for rendering all trials vitiated on the ground of the irregularity of sanction if objection thereto was raised at the first instance itself. The sub-section only says that 'the court shall have regard to the fact' that objection has been raised at the earlier stage in the proceedings. It is only one of the considerations to be weighed but it does not mean that if objection was raised at the earlier stage, for that very reason the irregularity in the 36 sanction would spoil the prosecution and transmute the proceedings into a void trial."
Nextly, he would draw attention to a decision of the apex court in Paul Varghese vs. State of Kerala, (2009) 1 SCC(CRI) 953. In the said case, the trial court had impleaded two persons as accused nos.2 and 3. Accused no.3 had expired. While impleading the persons as accused nos.2 and 3, the trial court had directed that sanction to be obtained from the competent authority to prosecute. However, a stand was taken that no sanction was necessary and the sanctioning authority had recommended prosecution of A.1 alone. The names of accused nos.2 and 3 were deleted. During the trial, material came to light showing the alleged involvement of accused nos.2 and 3. In view of that situation, Section 319 of the Cr.PC was resorted to. The broader question whether sanction was at all necessary was not gone in to. In addressing the same, the apex court has held thus:
37"7. In State v. T. Venkatesh Murthy it was observed as follows: (SCC pp. 767-68, para 14) "14. In the instant case neither the trial court nor the High Court appear to have kept in view the requirements of sub-section (3) relating to question regarding 'failure of justice'. Merely because there is any omission, error or irregularity in the matter of according sanction, that does not affect the validity of the proceeding unless the court records the satisfaction that such error, omission or irregularity has resulted in failure of justice. The same logic also applies to the appellate or revisional court. The requirement of sub-section (4) about raising the issue at the earliest stage has not been also considered. Unfortunately, the High Court by a practically non-reasoned order, confirmed the order passed by the learned trial Judge. The orders are, therefore, indefensible. We set aside the said orders. It would be appropriate to require the trial court to record findings in terms of clause (b) of sub-section (3) and sub-section (4) of Section 19."
8. The effect of sub-sections (3) and (4) of Section 19 of the Act is of considerable significance as noted in Parkash Singh Badal v. State of Punjab. 38
In sub-section (3) the stress is on "failure of justice"
and that too "in the opinion of the court". In sub- section (4), the stress is on raising the plea at the appropriate time. Significantly, the "failure of justice" is relatable to error, omission or irregularity in the sanction. Therefore, mere error, omission or irregularity in sanction is (sic not) considered fatal unless it has resulted in failure of justice or (sic failure of justice) has been occasioned thereby. Section 19(1) is a matter of procedure and does not go to the root of jurisdiction. Sub-section (3)(c) of Section 19 reduces the rigour of prohibition. In Section 6(2) of the Prevention of Corruption Act, 1947 (hereinafter referred to as "the old Act") corresponding to Section 19(2) of the Act, question relates to doubt about authority to grant sanction and not whether sanction is necessary."
Reliance is also placed on State vs. T.Venkatesh Murthy, (2004) 7 SCC 763, wherein the scope and ambit of Section 19 of the Prevention of Corruption Act, 1988 was considered, as the High Court had upheld the order of discharge passed by the 39 trial court, whereby the accused was discharged in a criminal trial and expressed the following opinion:
"8. Clause (b) of sub-section (3) is also relevant. It shows that no court shall stay the proceedings under the Act on the ground of any error, omission or irregularity in the sanction granted by the authority, unless it is satisfied that such error, omission or irregularity has resulted in a failure of justice.
9. Sub-section (4)postulates that in determining under sub-section (3) whether the absence of, or any error, omission or irregularity in the sanction has occasioned or resulted in a failure of justice, the court shall have regard to the fact whether the objection could and should have been raised at any earlier stage in the proceedings.
10. Explanation appended to the section is also of significance. It provides, that for the purpose of Section 19, error includes competency of the authority to grant sanction.40
11. The expression "failure of justice" is too pliable or facile an expression, which could be fitted in any situation of a case. The expression "failure of justice" would appear, sometimes, as an etymological chameleon (the simile is borrowed from Lord Diplock in Town Investments Ltd. V. Deptt. Of Environment). The criminal court, particularly the superior court, should make a close examination to ascertain whether there was really a failure of justice or it is only a camouflage. (See Shamnsaheb M. Multtani v. State of Karnataka).
xxx
14. In the instant case neither the trial court nor the High Court appear to have kept in view the requirements of sub-section (3) relating to question regarding "failure of justice". Merely because there is any omission, error or irregularity in the matter of according sanction, that does not affect the validity of the proceeding unless the court records the satisfaction that such error, omission or irregularity has resulted in failure of justice. The same logic also applies to the appellate or revisional court. The requirement of sub-41
section (4) about raising the issue at the earliest stage has not been also considered.
Unfortunately, the High Court by a practically non-reasoned order, confirmed the order passed by the learned trial Judge. The orders are, therefore, indefensible. We set aside the said orders. It would be appropriate to require the trial court to record findings in terms of clause (b) of sub-section (3) and sub-section (4) of Section 19."
Reliance is also placed on Subramanian Swamy vs. Manmohan Singh, (2012) 3 SCC 64, on the aspect of sanction for the prosecution and the nature and scope of consideration by the sanctioning authority and has expressed thus:-
"74. Keeping those principles in mind, as we must, if we look at Section 19 of the PC Act which bars a court form taking cognizance of cases of corruption against a public servant under Sections 7, 10, 11, 13 and 15 of the Act, unless the Central or the State Government, as the case may be, has accorded sanction, virtually imposes fetters on private citizens and also on 42 prosecutors from approaching court against corrupt public servants. These protections are not available to other citizens. Public servants are treated as a special class of persons enjoying the said protection so that they can perform their duties without fear and favour and without threats of malicious prosecution. However, the said protection against malicious prosecution which was extended in public interest cannot become a shield to protect corrupt officials. These provisions being exceptions to the equality provision of Article 14 are analogous to the provisions of protective discrimination and these protections must be construed very narrowly. These procedural provisions relating to sanction must be construed in such a manner as to advance the causes of honesty and justice and good governance as opposed to escalation of corruption."
Therefore, while contending that the consistent view of the apex court is to the effect that the interpretation of Section 19 of the PC Act would indicate that an error, omission or an irregularity, in the obtaining of sanction, by itself, would not 43 vitiate the proceedings, unless there was a failure of justice, has gone on to expound on the expression of 'failure of justice', and has placed reliance on the following observation of the apex court in Rattiram vs. State of Madhya Pradesh, (2012) 4 SCC 516, thus:-
"45. Having dealt with regard to the concept of "fair trial" and its significant facets, it is apt to state that once prejudice is caused to the accused during trial, it occasions in "failure of justice".
"Failure of justice" has its own connotation in various jurisprudences. As far as criminal jurisprudence is concerned, we may refer with profit to certain authorities.
46. Be it noted that in Bhooraji this Court has referred to Shamnsaheb M. Multtani v. State of Karnataka where init has been observed as follows: (SCC p. 585, para 23) "23. We often hear about 'failure of justice' and quite often the submission in a criminal court is accentuated with the said expression. Perhaps it 44 is too pliable or facile an expression which could be fitted in any situation of a case. The expression 'failure of justice' would appear, sometimes, as an etymological chameleon (the simile is borrowed from Lord Diplock in Town Investments Ltd. V. Deptt. Of the Environment). The criminal court, particularly the superior court should make a close examination to ascertain whether there was really a failure of justice or whether it is only a camouflage."
(emphasis supplied)
47. In State v. T. Venkatesh Murthy the High Court of Karnataka had upheld an order of discharge passed by the trial court on the ground that the sanction granted to prosecute the accused was not in order. The two-Judge Bench referred to Sections 462 and 465 of the Code and ultimately held thus: (SCC pp. 767-768, paras 13-14) "13. In State of M.P. v. Bhooraji the true essence of the expression 'failure of justice' was highlighted. Section 465 of the Code in fact deals with 'finding or sentences when reversible by reason of error, omission or irregularity', in sanction.
45
14. In the instant case neither the trial court nor the High Court appear to have kept in view the requirements of sub-section (3) relating to question regarding 'failure of justice'. Merely because there is any omission, error or irregularity in the matter of according sanction, that does not affect the validity of the proceeding unless the court records the satisfaction that such error, omission or irregularity has resulted in failure of justice. The same logic also applies to the appellate or Revisional Court. The requirement of sub-section (4) about raising the issue at the earliest stage has not been also considered. Unfortunately, the High Court by a practically non-reasoned order, confirmed the order passed by the learned trial Judge. The orders are, therefore, indefensible. We set aside the said orders. It would be appropriate to require the trial court to record findings in terms of clause (b) of sub-section (3) and sub-section (4) of Section 19."
We have referred to the said authority only for the purpose of a failure of justice and the discernible factum that it had concurred with the view taken in bhooraji. That apart, the matter was 46 remitted to adjudge the issue whether there had been failure of justice, and it was so directed as the controversy pertained to the discharge of the accused.
48. In CBI v. V.K. Sehgal it was observed: (SCC p.505, para10) "10. A court of appeal or revision is debarred from reversing a finding (or even an order of conviction and sentence) on account of any error of irregularity in the sanction for the prosecution, unless failure of justice had been occasioned on account of such error or irregularity. For determining whether want of valid sanction had in fact occasioned failure of justice the aforesaid sub- section (2) enjoins on the court a duty to consider whether the accused had raised any objection on that score at the trial stage. Even if he had raised any such objection at the early stage it is hardly sufficient to conclude that there was failure of justice. It has to be determined on the facts of each case. But an accused who did not raise it at the trial stage cannot possibly sustain such a plea made for the first time in the appellate court." 47 The concept of failure of justice was further elaborated as follows: (V.K. Sehgal SCC p. 505, para11) "11. In a case where the accused failed to raise the question of valid sanction the trial would normally proceed to its logical end by making a judicial scrutiny of the entire materials. If that case ends in conviction there is no question of failure of justice on the mere premise that no valid sanction was accorded for prosecuting the public servant because the very purpose of providing such a filtering check is to safeguard public servants from frivolous or mala fide or vindictive prosecution on the allegation that they have committed offence in the discharge of their official duties. But once the judicial filtering process is over on completion of the trial the purpose of providing for the initial sanction would bog down to a surplausage. This could be the reason for providing a bridle upon the appellate and revisional forums as envisaged in Section 465 of the Code of Criminal Procedure.
49. Adverting to the factum of irregular investigation and eventual conviction, the 48 Constitution Bench in M.C. Sulkunte v. State of Mysore opined thus: (SCC p. 517, para 15) "15, ... It has been emphasised in a number of decisions of this Court that to set aside a conviction it must be shown that there has been miscarriage of justice as a result of an irregular investigation." And hence, the learned Senior Advocate would contend that the preliminary objection as regards the invalidity of sanction cannot be an issue at all.
He would further contend that on findings of fact, the trial court having assigned sound reasons, in support of the same, there is no warrant for interference and seeks dismissal of the appeals.
7. By way of reply, the learned Senior Advocate Shri Ravi B Naik, would draw attention to the decision of the apex court in State of Uttar Pradesh vs. Paras Nath Singh, (2009)6 SCC 372 and the following opinion expressed therein. 49
"10. xxx xxxxx So far as public servants are concerned, the cognizance of any offence, by any court, is barred by Section 197 of the Code unless sanction is obtained from the appropriate authority, if the offence, alleged to have been committed, was in discharge of the official duty. The Section not only specifies the persons to whom the protection is afforded but it also specifies the conditions and circumstances in which it shall be available and the effect in law if the conditions are satisfied. The mandatory character of the protection afforded to a public servant is brought out by the expression, 'no court shall take cognizance of such offence except with the previous sanction'. Use of the words, 'no' and 'shall' makes it abundantly clear that the bar on the exercise of power of the court to take cognizance of any offence is absolute and complete. The very cognizance is barred. That is, the complaint cannot be taken notice of. According to Black's law Dictionary the word 'cognizance' means 'Jurisdiction' or 'the exercise of jurisdiction' or 'power to try and determine causes'. In common parlance, it means taking notice of. A court, therefore, is precluded from entertaining a complaint or taking notice of it or exercising jurisdiction if it is in respect of a public servant who is 50 accused of an offence alleged to have been committed during discharge of his official duty."
He would then point out that error, omission or irregularity of sanction not being material, is generally a proposition, in the light of section 19 of the PC Act, to be pressed into service, when no objection has been raised at the earliest stage of the proceedings and to save the findings arrived at by the trial court after a full-fledged trial and the judicial filtering process is over. In the instant case on hand, however, it is on record that A.1 had raised a preliminary objection as regards want of sanction and had continued to press the same through out. As already pointed out, PW.1 had, in so many words, conceded that he was not the appointing authority of A.1, but had been delegated the power to grant sanction for the prosecution under a Circular. The prosecution had, in fact, treated him as a hostile witness on this aspect, 51 thereby conceding that there was an admission of such want of authority.
He would further contend that on the second limb as to whether there is occasion of failure of justice on account of such an invalid sanction is concerned, the glaring lacuna that have been urged in these appeals, as to how the findings could not be sustained, would indicate that if the sanction for prosecution had been sought before the competent authority, the very prosecution may not have been sanctioned and therefore, the appellants having been visited with a judgment of conviction on the ill-advised prosecution, it can certainly be said that a failure of justice has occasioned to the appellants.
8. In the light of these rival contentions, without having to address the question whether the validity or otherwise of the sanction being the deciding factor in these appeals, the several infirmities that are highlighted in respect of the charges against the accused and the findings arrived at by the trial court, in the 52 face of the same are certainly significant infirmities, which are not explained by the court below. Or are completely overlooked.
It is certainly a unenviable task of the learned Senior Advocate for the respondent to justify the impugned judgment.
It is unnecessary to reiterate the several lacunae that are apparent in the findings arrived at on the basis of the evidence on record. As there are innumerable unexplained and unsupported assumptions as canvassed by the learned counsel for the appellants - the appeals are allowed.
The impugned judgment is set aside insofar as the appellants are concerned. The accused are acquitted. The fine amount, if any, paid by the appellants shall be refunded.
Sd/-
JUDGE nv