Delhi District Court
Cbi vs . 1) Ashok Katoch on 30 September, 2015
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IN THE COURT OF SH. BRIJESH KUMAR GARG:
SPECIAL JUDGE: CBI01, CENTRAL DISTRICT, DELHI
Case ID No.02401R0000541994
CC No.263/07 RC : 05(A)/1990
PS : CBI/ACB/New Delhi
U/s : 120B r/w Sec. 420/511 IPC
13(1)(d) punishable u/s 13(2)
of the Prevention of
Corruption Act, 1988
CBI Vs. 1) Ashok Katoch
S/o Late Sh. Kashmir Chand,
r/o Behtan Bhawan, Cemetry Road,
Sanjauli, Shimla.
presently residing at :
VPO Thakurdwara, Tehsil Palampur,
District Kangra (H.P.).
2) D.K.Gupta
S/o Late Sh. Baburam Gupta,
r/o Dr. Bali's Building,
Sanjauli, Shimla.
CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 1 of 155 Special Judge, CBI01, Central, Delhi
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3) V.K.Sharma
S/o Sh. Krishan Dutt Sharma,
r/o 33/35, Middle Bazar, Shimla.
presently residing at :
Jyoti Niwas, Madhan House Building,
Sanjauli, Shimla(H.P.).
4) Shailesh Dhir
S/o Col. M.P.Dhir,
r/o A1/18, Safdarjang Enclave, New Delhi.
presently residing at :
2, Osho Drive, Gadaipur,
New Delhi110030.
5) M/s. Twenty First Century Credit Pvt. Ltd.
Registered Office, 110, Meghdoot,
94, Nehru Place, New Delhi.
(Through its Director Sh. Rajiv Khanna)
6) Ravinder Verma
S/o Sh. Basant Lal Verma,
r/o AG1/30D, Vikas Puri,
New Delhi.
presently residing at :
Block No. 21, House No. 77, Lodhi Colony,
New Delhi110003.
CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 2 of 155 Special Judge, CBI01, Central, Delhi
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7) M/s. Bliss Overseas Pvt. Ltd. (A7),
Registered Office AG1/30D, Vikas Puri,
New Delhi.
(Through its Director Sh. Ravinder Verma)
8) Shanta Lal Chopra
S/o Sh. M.L.Chopra,
r/o Tunnel View,
Sanjauli, Shimla.
9) Rajiv Khanna
S/o Sh. R.P.Khanna,
r/o S31, Greater Kailash, Part1,
New Delhi110048.
Date of Institution : 23.11.1992
Judgment Reserved on : 22.09.2015
Judgment Delivered on : 30.09.2015
J U D G M E N T
1. The present case has been registered on 19.04.1990, on the basis of some source information. It was alleged that during the period, w.e.f., 1989 to 1990, the accused persons entered into a CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 3 of 155 Special Judge, CBI01, Central, Delhi 4 criminal conspiracy to cheat the Oriental Bank of Commerce, Shimla by corrupt or illegal means or by abusing their official duties.
2. It is alleged in the charge sheet that accused Shanta Lal Chopra (A8) was client of Oriental Bank of Commerce, Shimla (hereinafter referred to, in short, as "O.B.C."). He knew PW26 Hemant Kaushik (approver), who was working in OBC as LDC. Accused Shanta Lal Chopra (A8) had obtained certain loans from the OBC for the construction of Combermere Complex at Shimla. He could not complete the construction with the money obtained through these loans. In order to raise more finances for his project, accused Shanta Lal Chopra (A8) took the help of accused Ravinder Verma (A6) and both of them floated a fictitious firm M/s. Meghna Builders Pvt. Ltd. (hereinafter referred as 'Meghna Builders'). A current account was opened with the Bank of India, Shimla, in the name of this firm on 28.11.1988. Accused Shailesh Dhir (A4) and accused Rajiv Khanna (A9) CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 4 of 155 Special Judge, CBI01, Central, Delhi 5 were the directors of M/s. Twenty First Century Credit Pvt. Ltd. (A5). The main business of this company was to undertake the business of leasing and to finance the leasing operations of all kinds, besides drawing, making, accepting, discounting, executing and issuing bills of exchange. In January, 1989, accused Ravinder Verma (A6), accused Shanta Lal Chopra (A8) and Hemant Kaushik (Approver) came to Delhi and discussed their requirements with accused Shailesh Dhir (A4), director of M/s. Twenty First Century Credit Pvt. Ltd. (A5). In consequence of these discussions, M/s. Twenty First Century Credit Pvt. Ltd., th issued a letter on 4 February, 1989 to M/s. Bliss Overseas Pvt. Ltd. (A7), in which it was mentioned that a bill of exchange will be drawn by M/s. Twenty First Century Credit Pvt. Ltd. (A5), which was to be accepted by M/s. Bliss Overseas Pvt. Ltd. and co accepted by their bank. Bill of exchange will be based on debit memo/invoice which will provide details of items. M/s. Bliss Overseas Pvt. Ltd. (A7), vide their letter dated 04.02.1989, addressed to M/s. Twenty First Century Credit Pvt. Ltd. (A5), CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 5 of 155 Special Judge, CBI01, Central, Delhi 6 requested them to draw a bill of exchange and remit the proceeds by demand draft favouring M/s. Bliss Overseas Pvt. Ltd. (A7).
3. It is further alleged in the chargesheet that M/s. Twenty First Century Credit Pvt. Ltd. (A5) drew a false invoice bearing No. TCC/M4/1316, towards the cost of acquisition of computer hardware and peripherals and a bill of exchange No. TCC/M4/1316, dated 07.02.1989, on M/s. Bliss Overseas Pvt. Ltd. (A7). This bill of exchange was drawn for value received against bill No. TCC/M4/1316. Accused Rajiv Khanna (A9), another director of M/s. Twenty First Century Credit Pvt. Ltd. (A5) was present in the office when this bill of exchange was executed.
4. It is further alleged in the charge sheet that this bill of exchange was taken to Shimla by accused Ravinder Verma (A6), Shanta Lal Chopra (A8) and Hemant Kaushik (approver). Accused Ravinder Verma opened an account in the name of M/s. Bliss Overseas Pvt. Ltd. (A7) in O.B.C., Shimla. The account was CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 6 of 155 Special Judge, CBI01, Central, Delhi 7 introduced by accused Ravinder Verma himself. On the same day, accused Ravinder Verma gave a letter under his signatures to the Manager, OBC, Shimla, requesting him to issue an FDR against a cheque, issued from his account for Rs.20 Lacs, drawn on Bank of India, Chandigarh. In the same letter, accused Ravinder Verma had requested the manager, OBC, Shimla to co accept the bill of exchange No. TCC/M4/1316 dated 07.02.1989. This bill of exchange was coaccepted in O.B.C, Shimla by accused D.K. Gupta (A2) and accused Ashok Katoch (A1), on its' behalf. Accused V.K. Sharma (A3), Branch Manager and the other two officers mentioned above, did not make entries in the coacceptance of bill register. They did not accord any controlling number on the bill of exchange. They did not recover co acceptance commission from M/s. Bliss Overseas Pvt. Ltd. (A7). They did not pass necessary contraentries in the bank records. They did not get sanctioned coacceptance limit for M/s. Bliss Overseas Pvt. Ltd. (A7) from the head office of OBC. They did not take any collateral security.
CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 7 of 155 Special Judge, CBI01, Central, Delhi 8
5. It is further alleged in the charge sheet that after the co acceptance, accused Ravinder Verma (A6) delivered the bill of exchange to accused Shailesh Dhir (A4) for discounting by Standard Chartered Bank, Parliament Street, New Delhi. Standard Chartered Bank discounted the bill of exchange after charging a sum of Rs.3,45,170/ as interest from M/s. Twenty First Century Credit Pvt. Ltd. (A5) on 10.02.1989. This amount was subsequently transferred into the current account of M/s. Twenty First Century Credit Pvt. Ltd. (A5) in Bank of India, East of Kailash, New Delhi. On the same day, i.e., on 10.02.89, as per the written instructions of accused Shailesh Dhir (A4), the Manager of Bank of India, issued a demand draft for Rs. 46,05,040/ favouring M/s. Bliss Overseas Pvt. Ltd. (A7), payable at Shimla. Out of total discounted proceeds, M/s. Twenty First Century Credit Pvt. Ltd. (A5) retained Rs.1962/ in their account in Standard Chartered Bank , Parliament Street and Rs.36,228/ in their account in Bank of India, East of Kailash Branch. A CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 8 of 155 Special Judge, CBI01, Central, Delhi 9 demand draft for Rs.46,05,940/ was deposited by accused Ravinder Verma (A6), in the current account of M/s. Bliss Overseas Pvt. Ltd. (A7) at OBC, Shimla, which was duly credited on 11.02.89. On the same day, accused Ravinder Verma (A6) transferred an amount of Rs. 25 Lacs, vide account payee cheque, in favour of M/s. Meghna Builders.
6. It is further alleged in the charge sheet that from the account of M/s. Meghna Builders at Bank of India, Shimla, accused Ravinder Verma issued a cheque dated 15.02.89 for Rs.23 Lacs favouring Shanta Lal Chopra (A8). This cheque was deposited by accused Shanta Lal Chopra (A8) in his CC Account at OBC, Shimla. On the same day, another cheque was issued by accused Ravinder Verma, from the account of M/s. Bliss Overseas Pvt. Ltd. for Rs. 51,000/ in favour of accused Shanta Lal Chopra (A8). With this total amount of Rs.23,51,000/, accused Shanta Lal Chopra settled his loan account with OBC, Shimla and he got released his property, which was earlier mortgaged with OBC, Shimla. CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 9 of 155 Special Judge, CBI01, Central, Delhi 10
7. It is further alleged in the chargesheet that the bill of exchange No. TCC/M4/1 was drawn for payment after 180 days and due date for payment of this bill was 05.08.89. M/s. Bliss Overseas Pvt. Ltd. (A7) did not have sufficient money to effect payment of this bill. Ravinder Verma (A6) again went to Delhi along with Hemant Kaushik and approached Shailesh Dhir (A4) at the office of M/s. Twenty First Century Credit Pvt. Ltd. (A5). Shailesh Dhir and Ravinder Verma (A6) again conspired to raise more finances and another invoice No. TCC/M4/1416, dated 02.08.1989 was drawn on M/s. Bliss Overseas Pvt. Ltd. (A7), for acquisition of computer hardware, components and peripherals amounting to Rs. 55 Lacs. This was signed by Shailesh Dhir (A4) himself. On the basis of this invoice, another bill of exchange No. TCC/M4/2, dated 04.08.1989 was drawn on M/s. Bliss Overseas (A7) for Rs. 55 Lacs. Payment of this bill of exchange was to be made after 90 days i.e., on 01.11.1989. This bill of exchange was signed by Shailesh Dhir (A4) on behalf of M/s. Twenty First CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 10 of 155 Special Judge, CBI01, Central, Delhi 11 Century Credit Pvt. Ltd. (A5) and was accepted for payment by Ravinder Verma (A6) on behalf of M/s. Bliss Overseas Pvt. Ltd. (A7). Shailesh Dhir (A4) also issued a letter dated 04.08.1989, addressed to M/s. Bliss Overseas Pvt. Ltd. (A7) confirming having received the payment under the earlier bill of exchange for Rs.49,88,400/ drawn on 07.02.1989. This receipt letter along with signed bill of exchange was taken by Ravinder Verma (A6) and handed over to Hemant Kaushik for getting it coaccepted by O.B.C., Shimla.
8. It is further alleged in the chargesheet that Hemant Kaushik approached D.K. Gupta (A2) and Ashok Katoch (A1) and got the bill of exchange coaccepted. Again, accused Ashok Katoch (A1) and D.K.Gupta (A2) did not make the relevant entries in the guarantee issuing register of the bank, no coacceptance commission was charged; no controlling number was accorded to the bill of exchange and no contravouchers were passed, for having coaccepted the second bill of exchange worth Rs. 55 CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 11 of 155 Special Judge, CBI01, Central, Delhi 12 Lacs.
9. It is further alleged in the chargesheet that ultimately, the second bill of exchange dated 04.08.1989 along with a letter of undertaking given by O.B.C. Shimla, was brought by Ravinder Verma (A6), and he gave it to Shailesh Dhir (A4) for getting it discounted through his banker, Standard Chartered Bank. Standard Chartered Bank, before discounting the second bill of exchange for Rs. 55 Lacs, sought confirmation regarding the signatures of the coaccepting bank officers from the head office th of O.B.C. Head Office of O.B.C., vide letter dated 10 August, 1989, informed Standard Chartered Bank that the officers co accepting the bill of exchange for Rs. 55 Lacs were not authorized to do so. Standard Chartered bank then returned the bill of exchange worth Rs. 55 Lacs along with the undertaking to M/s. Twenty First Century Credit Pvt. Ltd. (A5), which were recovered from the house of accused Shailesh Dhir (A4). CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 12 of 155 Special Judge, CBI01, Central, Delhi 13
10. During the investigations, the IO seized various documents and recorded the statements of the witnesses and sent various exhibits to the CFSL, Hyderabad, for expert opinion and also obtained the sanction for prosecution of accused Ashok Katoch (A1), D.K. Gupta (A2) and V.K. Sharma (A3), being 'public servants', from the competent authorities and after completion of the investigations, the charge sheet was filed in the court and the accused were sent up for trial.
11. On 01.03.1997, the 'order on charge' was passed by the Court of Sh. Dinesh Dayal, Special Judge, CBI, Delhi, and in pursuance to the said orders, the charges were framed against all the accused persons on 31.03.1998. Charges for the offences punishable under Section 120B r/w Sec. 420, 511 IPC and Section 13 (1)(d), punishable u/s 13 (2) of the Prevention of Corruption Act, 1988, were framed against all the accused persons. Additional charges for the substantive offences, punishable under Section 420/511 IPC and Section 13 (1)(d) CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 13 of 155 Special Judge, CBI01, Central, Delhi 14 punishable u/s 13 (2) of the Prevention of Corruption Act, 1988, were also framed against accused Ashok Katoch (A1); D.K.Gupta (A2) and V.K.Sharma (A3). Additional charge for the offence, punishable under Section 420 IPC was also framed against accused M/s. Twenty First Century Credit Pvt. Ltd. (A5); accused M/s. Bliss Overseas Pvt. Ltd. (A7) and accused Shanta Lal Chopra (A8). All the accused persons pleaded not guilty to the charges and claimed trial.
PROSECUTION EVIDENCE
12. During the course of trial, the prosecution has examined the following witnesses.
i) PW1 Sh. D.G.Saxena, who was working as Chief Manager in the year 1986 at Oriental Bank of Commerce, Head Office at New Delhi. He has deposed about the banking procedure for acceptance, coacceptance and discounting of a 'bill of exchange' / Hundi. He has also proved the various circulars issued by the head office O.B.C., and the general guidelines of the R.B.I., CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 14 of 155 Special Judge, CBI01, Central, Delhi 15 regarding the discretionary powers and guidelines for loans and advances and acceptance, coacceptance and discounting of bills of exchange etc. This witness has visited O.B.C., Shimla, for verification of the bill of exchange / Hundi Ex.PW.7/A (D12). He checked the record of O.B.C., Shimla and reported the matter to the senior officers.
ii) PW2 Ms. Anupa Abrol, who was posted as Manager at Saket Branch of O.B.C., from July, 1988 to July, 1989. She had verified the signatures of accused Ashok Katoch and D.K.Gupta, on the Hundi Ex.PW.8/D1. She has also deposed that none of the branch officers of O.B.C., were empowered to coaccept a bill of exchange or Hundi.
iii) PW3 Sh. N.L.Sahil, who was posted as Senior Manager, Shimla Branch of Oriental Bank of Commerce, in the year 1989.
He proved the Bill Collection Register as Ex.PW.3/A.
iv) PW4 Sh. Mahinder Gularia, who was posted at Shimla Branch of O.B.C., from January, 1989 to 1992. He has proved the ledger sheet pertaining to the account of accused M/s. Bliss CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 15 of 155 Special Judge, CBI01, Central, Delhi 16 Overseas Pvt. Ltd., as Ex.PW.4/A.
v) PW5 Sh. Baldev Singh Sethi, who was posted as an Officer at Safdarjung Enclave Branch of Oriental Bank of Commerce, from September, 1988 to 1992.
vi) PW6 Sh. Harinder Mohan, who was posted in Current Account Section of Standard Chartered Bank, New Delhi, in the year 1989. He prepared the cheque Ex.PW.6/D, worth Rs. 46,41,268/, dated 10.02.1989 in favour of Bank of India. He also prepared the relevant vouchers Ex.PW.6/A, Ex.PW.6/B and Ex.PW.6/C. The debit voucher Ex.PW.6/A pertains to debit of account of accused M/s. Twenty First Century Credit Pvt. Ltd., for issuance of R.B.I., cheque in favour of Bank of India. The voucher Ex.PW.6/B was prepared for bank charges of Rs.100/. The voucher Ex.PW.6/C shows the credit of Rs.46,41,268/, in the account of Reserve Bank of India.
vii) PW7 Sh. T.M.Bhasin, who was posted as Manager in Executive Director Secretariat at the Head Office of Oriental Bank of Commerce, in the year 1989. He alongwith PW1 Sh. CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 16 of 155 Special Judge, CBI01, Central, Delhi 17 D.G.Saxena went to OBC Shimla, for confirmation of co acceptance of Hundi Ex.PW.7/A, where they found that no record was available at OBC, Shimla, pertaining to coacceptance of Hundi Ex.PW7/A.
viii) PW8 Sh. B.P.Rastogi, who was posted as Manager at New Bank of India, East of Kailash Branch, during the period, w.e.f., 1988 to 1992. He has proved the account opening form of M/s. Twenty First Century Credit Pvt. Ltd., as Ex.PW.8/A. He also proved the credit voucher Ex.PW.8/B, vide which the cheque on R.B.I., was deposited and a credit was given in the account of M/s. Twenty First Century Credit Pvt. Ltd., for Rs.46,41,268/. He also proved the debit voucher for Rs.46,06,070/, debiting the current account of M/s. Twenty First Century Credit Pvt. Ltd., as Ex.PW.8/C. He further proved the letter, duly signed by Shailesh Dhir as authorized signatory, on behalf of M/s. Twenty First Century Credit Pvt. Ltd., as Ex.PW.8/D. Vide this letter, accused Shailesh Dhir requested for issuance of a demand draft, from the account of M/s. Twenty First Century Credit Pvt. Ltd., in favour of CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 17 of 155 Special Judge, CBI01, Central, Delhi 18 M/s Bliss Overseas Pvt. Ltd., for Rs.46,05,040/, payable at Shimla.
ix) PW9 Sh. D.P.Thukral, who was posted in Bills Department at Sansad Marg Branch of Standard Chartered Bank, in the year 1988. He used to process the bills for discounting. He has proved the authorization sheet, as Ex.PW.9/A, the credit voucher as Ex.PW.9/B and the voucher regarding interest and commission as Ex.PW.9/C. He has deposed that vide these vouchers, the amount was credited to the account of M/s. Twenty First Century Credit Pvt. Ltd.
x) PW10 Smt. Indra Thakur, who was posted as Clerk in Shimla Branch of Oriental Bank of Commerce, in the year 198889. She has identified the signatures of accused Ashok Katoch and D.K. Gupta on the ledger sheet of account of M/s Bliss Overseas Pvt. Ltd.
xi) PW11 Sh. Anil Mehta, who was posted as Manager in Oriental Bank of Commerce, Shimla Branch, in the year 1990. He has proved the seizure memos, Ex.PW.11/A. & Ex.PW.11/B, CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 18 of 155 Special Judge, CBI01, Central, Delhi 19 vide which he handed over various documents to D.S.P. S.K. Chaudhary.
xii) PW12 Sh. R.K.Hajrati, who was posted as Manager in New Bank of India, Head Office at Rajender Nagar, New Delhi. On 14.05.1991, he joined the CBI team, during the search of the premises of accused Shailesh Dhir and has proved the search list, as Ex.PW.12/A. The specimen signatures of accused Shailesh Dhir were also taken, in his presence, vide sheets Ex.PW12/B1 to Ex.PW12/B16.
xiii) PW13 Sh. Baldev Singh, who was working as Customer Support Engineer, with M/s. Bliss Overseas Pvt. Ltd.
xiv) PW14 Shri D.R.Rao, who was posted as Manager in Bank of India, Shimla Branch, during the period, w.e.f., 1988 to 1992. He has proved the draft No. 6021, dated 10.02.1989 for Rs. 46,05,040/, drawn by Bank of India, East of Kailash Branch, on Bank of India, Shimla Branch, in favour of M/s. Bliss Overseas Pvt. Ltd., as Ex.PW.14/A. He has also proved the cheque No. 056860, dated 13.02.1989 for Rs.23 Lacs, signed by Ravinder CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 19 of 155 Special Judge, CBI01, Central, Delhi 20 Verma (A6), on behalf of M/s. Meghna Builders (P) Ltd., as Ex.PW.14/B and certified copy of ledger sheet of account of M/s. Meghna Builders, as Ex.PW.14/C. He also deposed that the specimen signatures of Ashok Katoch, Ex.PW.14/D to Ex.PW. 14/H, were taken in his presence.
xv) PW15 Sh. B.B. Malhotra, who was posted as Deputy Chief Manager in Vigilance Department of Oriental Bank of Commerce, New Delhi, in the year 1990. He has deposed that the documents mentioned in seizure memos, Ex.PW.15/A, Ex.PW.15/B and Ex.PW.15/C, were seized by Inspector S. Dagar, from him. xvi) PW16 Sh. S.R. Soorma, who was posted as Officer, Oriental Bank of Commerce, Safdarjung Enclave, New Delhi, on 07.06.1991. He has deposed that vide seizure memo, Ex.PW16/A, certain documents were seized from him, by Inspector S. Dagar of CBI.
xvii) PW17 Sh. Sudershan Lal, who was working in the office of banking Operation & Development, till 1992. He has deposed about the circulars of RBI, regarding coacceptance of bills, by the CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 20 of 155 Special Judge, CBI01, Central, Delhi 21 Banks. He has also conducted the inquiry regarding co acceptance of the two Hundies worth Rs.49.88 Lacs & Rs.55 Lacs. He has also stated that the Hundi of more than Rs.49 Lacs was discounted by the Standard Chartered Bank, without taking confirmation from the head office, in violation of the RBI guidelines.
xviii) PW18 Sh. G.D.Seth, who was posted as Inspecting Officer, UCO Bank, Zonal Office, Parliament Street, New Delhi, in the year 1991. On 14.5.91, he joined the search team of CBI and proved the search list, as Ex.PW.18/A. xix) PW19 Sh. Amarnath Anand, who was posted as Team Leader, Standard Chartered Bank, Sansad Marg, New Delhi. He has deposed that the record, prior to June, 1996, has been destroyed, as per the 'Preservation' of Records Rules, 1985. xx) PW20 Sh. C.M.Gupta, who was working as Convened Officer in Standard Chartered Bank, Sansad Marg, New Delhi, in September, 1988, who had approved the discounting of bill of exchange, Ex.PW9/D1. He has deposed that M/s. Twenty First CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 21 of 155 Special Judge, CBI01, Central, Delhi 22 Century Credit Pvt. Ltd., was having no discounting limit. xxi) PW21 Sh. C.L.Patil, who was Posted as Inspector, Income Tax Department at Mandi, Himachal Pradesh, on 14.05.1991. He has deposed that the specimen handwritings of accused V.K. Sharma, on S83 to S97, Ex.PW21/A1 to Ex.PW.21/A5, was taken in his presence. He has proved the initial endorsements as Ex.PW.21/B1 to Ex.PW.21/B15.
xxii) PW22 Sh. Kuldeep Singh, who was posted as Field Publicity Assistant, Government of India, Ministry of Information & Broadcasting at Shimla, on 14.05.1991. He has deposed that the specimen signatures of D.K.Gupta, on sheets Ex.PW.22/A1 to Ex.PW.22/A9, were taken in his presence.
xxiii) PW23 Sh. Rakesh Nagpal, who was posted as Sales Tax Officer in Ward No. 36, Vikas Bhawan, New Delhi, in the year 1991. He has deposed that in the year 1991, M/s. Twenty First Century Credit Pvt. Ltd., was not registered in his ward. xxiv) PW24 Sh. J.P.Chopra, who was posted as Bill Manager, Standard Chartered Bank, Sansad Marg, New Delhi, from 1987 to CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 22 of 155 Special Judge, CBI01, Central, Delhi 23 February, 1989. He has proved the hundi of Rs.55 Lacs, as Ex.PW24/A; connected invoice as Ex.PW.24/B and the co acceptance letter as Ex.PW.24/C. He has also deposed that vide letter Ex.PW1/4, a query was raised, whether the officials of O.B.C., Shimla, who had coaccepted the Hundi, were authorized or not. He has further deposed that vide reply, Ex.PW1/5, it was informed that Dinesh Kumar Gupta and Ashok Katoch, were not authorized to coaccept the bill of exchange, worth Rs.55 Lacs. xxv) PW25 Sh. R.C.Kapoor, who was working as Executive Director, Oriental Bank of Commerce, Head Office, Connaught Place, New Delhi, in the year 1992. He had granted sanction for prosecution of accused V.K.Sharma, Ashok Katoch and D.K.Gupta, under Section 19 of the Prevention of Corruption Act, vide sanction order Ex.PW.25/A. xxvi) PW26 Sh. Hemant Kumar Kaushik, who was working as Clerk in Oriental Bank of Commerce, Shimla Branch, at the relevant time. Initially, he was also an accused and during investigations, he turned approver for the CBI and was granted CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 23 of 155 Special Judge, CBI01, Central, Delhi 24 pardon, by the court of the then Ld. A.C.M.M., Delhi, as per the provisions of Section 306 Cr.P.C.
xxvii) PW27 Sh. Kapil Kumar Jhingran, who was working as an Officer in Standard Chartered Bank, Parliament Street, New Delhi, in the year 199091. He has proved the statement of account of M/s. Twenty First Century Credit Pvt. Ltd., for the period, w.e.f., 04.08.1987 to 31.01.1991, as Ex.PW.27/A. He has also proved the specimen card of account No. 014/1324732, in respect of M/s. Twenty First Century Credit Pvt. Ltd., as Ex.PW. 27/B. xxviii) PW28 Sh. R.K.Mehta, who was posted as Senior Manager in Oriental Bank of Commerce, Patiala, Punjab. This witness was dropped / givenup by Shri V.N.Ojha, Ld. Special PP for the CBI.
xxix) PW29 Sh. K.L.Bansal, who was working as DSP, in SIU X, CBI, New Delhi, in May 1991. He has deposed that in compliance of the orders of the Ld. CMM, Delhi, he executed the search warrant and he seized one Hundi No. TCC/M4/2, dated CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 24 of 155 Special Judge, CBI01, Central, Delhi 25 04.08.1989 of Rs.55 Lacs, from the residential premises of Shailesh Dhir at Safdarjang Enclave, New Delhi. xxx) PW30 Sh. Satish Dagar, who was the Investigating Officer of this case.
xxxi) PW31 Sh. Arun Aggarwal, Company Secretary, who was working as Advisor / Consultant to M/s. Twenty First Century Credit Pvt. Ltd. He has deposed that the cash book, Ex.PW31/A & the ledger Ex.PW31/B, were being maintained under his supervision. He has deposed that an amount of Rs.46,05,040/, was paid by M/s. Twenty First Century Credit Pvt. Ltd. to M/s Bliss Overseas Pvt. Ltd.
xxxii) PW32 Sh. Ramesh Gupta, who was working as an Officer in Oriental Bank of commerce, Shimla Branch, in the year 198889. He has proved the file of OBC, Shimla, pertaining to the loan account of accused Shanta Lal Chopra, worth Rs.39 Lacs, as Ex.PW32/A. He has also identified the signatures of accused Shanta Lal Chopra and accused V.K. Sharma, on various documents of this file. He has also identified the signatures of CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 25 of 155 Special Judge, CBI01, Central, Delhi 26 accused V.K. Sharma, Ashok Katoch and D.K. Gupta on the letter Ex.PW32/B. He has further proved the voucher dated 13.02.1989 of Rs.23 Lacs in favour of accused Shanta Lal Chopra, as Ex.PW32/C. He has also proved the transfer credit voucher dated 13.02.1989 for Rs.51,000/, in favour of accused Shanta Lal Chopra, as Ex.PW32/D. xxxiii) PW33 Sh. A.K. Narula, who was dropped / givenup by the prosecution / CBI.
xxxiv) PW34 Sh. Mohinder Singh, who was the Government Examiner of Questioned Documents, Hyderabad. He has deposed that he compared the questioned handwriting/ signatures with the specimen handwriting/signatures of the accused persons and gave his opinion, as Ex.PW34/B1 and reasons for opinion as Ex.PW34/B2.
xxxv) PW35 Sh. Ashok Pasrija, who was the Manager at Oriental Bank of Commerce, Connaught Place, New Delhi in the year 1989. He has deposed that he signed the letter, dated 07.02.89, Ex.PW.2/A and put the stamp of Chief Manager, OBC, CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 26 of 155 Special Judge, CBI01, Central, Delhi 27 while verifying the signatures of the accused Ashok Katoch and D.K. Gupta.
(xxxvi) PW36 Sh. Narendra Singh, who was the Value Added Tax Officer from Ward No. 101. He has deposed that the registration of M/s Bliss Overseas Pvt. Ltd., has been cancelled for the Sales Tax / VAT purposes, w.e.f., 01.03.1995. (xxxvii) PW37 Sh. Sudhir Sharma, who was posted as senior manager, Corporate Banking Division at Standard Chartered Bank, Sansad Marg, New Delhi, during the period, w.e.f., the year 1997 to 1990. He has deposed that the discounting of bills was done by bills department, under his supervision and during his period, his discretionary powers were upto a pecuniary limit of Rs. 50 Lacs.
STATEMENTS OF ACCUSED PERSONS, UNDER SECTION 313 Cr.P.C.
13. After completion of the prosecution evidence, the statements of the accused persons were recorded, u/s 313 Cr.P.C, wherein, they have denied all the incriminating evidence against them. CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 27 of 155 Special Judge, CBI01, Central, Delhi 28 The accused persons were also permitted to file their written statements, as per the provisions of Section 313 (5) Cr.P.C.
i) In his written statement Ex.WS/A1, accused Ashok Katoch (A1) has stated that the CBI has deliberately not seized the relevant documents from the Bank and has also failed to seize the revenue record from the concerned Tehsildar. He has further stated that the amount of Rs.49,88,400/ had already been recovered by the OBC, Shimla in September, 1989 itself and no pecuniary loss was caused to OBC, Shimla. He has further stated that he was duly authorized, vide power of attorney No. 2085, Ex.PW1/DC, to accept the hundis, for & on behalf of the Bank. He has further stated that the hundi Ex.PW8/D1, was duly secured by way of mortgaging the immovable properties of Shanta Lal Chopra and an additional charge was also created against his properties, for securing the hundi, as Sh. Shanta Lal Chopra had stood guarantor for repayment of the hundi. He has further stated that the necessary relevant entries were made in all CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 28 of 155 Special Judge, CBI01, Central, Delhi 29 the bank records and registers and even in the inquiry conducted by PWs D.G. Saxena and T.M. Bhasin, they had not found any irregularity committed by the bank officials and they found that every record maintained with OBC, Shimla, was in order.
ii) In his written statement Ex.WS/A2, accused D.K.Gupta (A2) has also stated the similar facts. He has also stated that he was also duly empowered / authorized by way of power of attorney No. 2657, Ex.PW1/DB to coaccept the hundis, for & on behalf of the Bank.
iii) In his written statement Ex.WS/A3, accused V.K.Sharma (A3) has also stated the similar facts. He has also stated that he was also duly empowered / authorized by way of power of attorney No. 1053, Ex.PW1/DX to coaccept the hundis, for & on behalf of the Bank.
iv) In his written statement Ex.WS/A4, accused Shailesh Dhir CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 29 of 155 Special Judge, CBI01, Central, Delhi 30 (A4) has stated that he along with coaccused Rajiv Khanna (A9) were the directors of M/s. Twenty First Century Credit Pvt. Ltd. (A5) and his company was not dealing in sale of any sort of goods. He has further stated that for the services of providing finance for the agreed purpose, Twenty First Century Credit Pvt. Ltd., raised an invoice in favour of M/s Bliss Overseas Pvt. Ltd., on the basis of which, a bill of exchange / hundi was prepared and was accepted by M/s Bliss Overseas Pvt. Ltd., and coaccepted by their banker. It is further stated that whenever the other party gets its hundi / bill of exchange coaccepted by their bankers, a letter of credit would be opened by their banker to guarantee the payment on due date. He has further stated that his banker, Standard Chartered Bank accepted the invoices, drawn by his company, in normal course of business and for the last several years, Standard Chartered Bank had discounted 127 bills of exchange, during the period w.e.f. 26.02.1988 to 31.08.1989, worth Rs.47.17 crores approximately. It is further stated that he had no contact with any other accused or the officials of Oriental CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 30 of 155 Special Judge, CBI01, Central, Delhi 31 Bank of Commerce, Shimla, at any point of time. He has further stated that on receipt of the coaccepted Hundi, along with the undertaking, from Ravinder Verma, the same was presented to the Standard Chartered Bank, through a letter of request for discounting and simultaneously, M/s. Twenty First Century Credit Pvt. Ltd. endorsed the said bill of exchange in favour of Standard Chartered Bank and thereafter, the officials of Standard Chartered Bank took him to OBC, Saket Branch, New Delhi, where Ms. Anupa Abrol, an official of OBC, Saket Branch, New Delhi, verified the genuineness of the coacceptance and signatures of the bank officials, from Oriental Bank of Commerce, Shimla, telephonically and thereafter, the bill was discounted by Standard Chartered Bank, after due approval of the concerned officers of the bank. He has further stated that letter, dated 04.08.1989 was given in the form of a prereceipt, on the request of M/s Bliss Overseas Pvt. Ltd., and on their assurance that the payment will be made to Standard Chartered Bank. It is further stated that the second bill of exchange or Rs.55 Lacs was never presented to CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 31 of 155 Special Judge, CBI01, Central, Delhi 32 Standard Chartered Bank, nor it was discounted, as the payment of the first Hundi was not made. It is further stated that he was having no knowledge about the utilization of funds by M/s Bliss Overseas Pvt. Ltd. It is further stated that on 27.12.1995, Oriental Bank of commerce, had withdrawn all the allegations against Twenty First Century Credit Pvt. Ltd./ its directors, before the Debt Recovery Tribunal, in Suit No. 1130/90.
v) In its' written statement Ex.WS/A7, accused M/s. Twenty First Century Credit Pvt. Ltd. (A5), through its Director Rajiv Khanna (A9), has stated that the company was engaged in a legitimate business, with a large number of banks, for providing short term finances, upon negotiation of bills of exchange, which the banks used to do, to generate higher rate of interest as far as the commercial business and mercantile operations of the banks were concerned.
vi) In their written statement Ex.WS/A6, accused Ravinder CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 32 of 155 Special Judge, CBI01, Central, Delhi 33 Verma (A6) has stated that he was running a computer hardware business and he approached Twenty First Century Credit Pvt. Ltd., for facilitation of finances and he interacted with Shailesh Dhir, Director, Rajiv Khanna, Director, and Mr. Behnan Thomas, Manager of Twenty First Century Credit Pvt. Ltd., for arranging finances, by discounting the bills of exchange, duly coaccepted by his bank, Oriental Bank of Commerce, Shimla. He has further stated that he got the bills of exchange / Hundi, coaccepted through his banker, Oriental Bank of Commerce, Shimla, as a normal banking transaction, for which, suitable deposit security was given to them. It is further stated that Twenty First Century Credit Pvt. Ltd., issued a prereceipt to him in lieu of discharged bill of exchange, to enable his banker Oriental Bank of Commerce, Shimla, to release the payment of coaccepted bills of exchange, after due date. But, the said prereceipt was canceled on a later date, as the payment was not made on time due to unavoidable circumstances. It is further stated that the payment of this bill of exchange / hundi was settled in due course and CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 33 of 155 Special Judge, CBI01, Central, Delhi 34 Oriental Bank of Commerce, Shimla discharged M/s Bliss Overseas Pvt. Ltd., from the liability of the said bill of exchange / hundi and released the security of Shanta Lal Chopra.
vii) On behalf of accused M/s Bliss Overseas Pvt. Ltd. (A7), it was submitted that its Director Ravinder Verma (A6) had already filed its written statement on record as Ex.WS/A6. It was prayed that the averments of Ravinder Verma (A6), as stated in written statement Ex.WS/A6, be read in defence of M/s Bliss Overseas Pvt. Ltd. (A7), also.
viii) In his written statement Ex.WS/A8, accused Shanta Lal Chopra (A8) has stated that the CBI has conducted a biased investigation and several material facts have been concealed by it. It is further stated that his family commands a great respect in Shimla and he owned several ancestral and self acquired properties in Shimla, worth several crores. It is further stated that in order to develop his properties, he formed a company in the CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 34 of 155 Special Judge, CBI01, Central, Delhi 35 name of Meghna Builders Private Limited, in which coaccused Ravinder Verma agreed to invest. It is further stated by him that the amount alleged to be received in his account was towards the advance of the property and was part of a legitimate transaction. He has further stated that after the encashment of cheque of Rs. 23 Lacs from Meghna Builders Private Limited, in his account, he immediately assured the bankers and stood guarantor to the said hundi and even paid a total sum of Rs. 30 Lacs, in September, 1989, despite the said amount not being due from him. He has further stated that the said amount of Rs. 23 Lacs was received by him in his account, under a bonafide belief that the same was received from a legitimate source. He has further stated that in order to maintain his dignity and respect, the hundi was secured by him by creating registered charge over his property, despite having no connection whatsoever, with M/s Bliss Overseas Pvt. Ltd.
ix) Accused Rajiv Khanna (A9) has filed his written statement CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 35 of 155 Special Judge, CBI01, Central, Delhi 36 Ex.WS/A7, wherein, he has stated that he was never involved with the accused persons, in any discussions. PWHemant Kaushik, along with coaccused Ravinder Verma and Shanta Lal Chopra, visited the office of Twenty First Century Credit Pvt. Ltd., and had talks for generating finances. He has also stated that he refused to provide any services for raising of finances for real estate. He has further stated that no document was ever signed or executed by him. He has further stated that not even a single document is available on record to suggest that any act, omission or commission was attributable to him, for the purposes of negotiations, facilitation, disbursal etc., of these finances. He has further stated that he had absolutely no role to play in the present transaction.
EVIDENCE IN DEFENCE
14. The accused persons have also examined the following six witnesses, in their defence.
i) DW1 Sh. Pratap Thakur (on behalf of accused Ashok Katoch, CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 36 of 155 Special Judge, CBI01, Central, Delhi 37 D.K.Gupta and V.K.Sharma), has deposed that he was posted as Patwari of Station Ward, Bada Shimla (Himachal Pradesh), since March 2014. He has deposed that as per order, dated 17.08.1989 of Manager, Oriental Bank of Commerce, Shimla, the property comprised in Khasra No. 352/A/1, measuring 842 sq. yards, situated near Combermere Post Office, known as ABlock Combermere Estate (Meghna Commercial Complex), The Mall, Shimla, was mortgaged for an amount of Rs.49,88,400/, on 22.08.1989. He has proved the khasra Paimaish Register for the year 1907, containing the endorsement as Ex.DW.1/A. He has further proved the letter, dated 22.11.1997, which was received in their office. The said letter was entered into the revenue records and the same was pasted in the register and a photocopy of the same has been proved as Ex.DW.1/B and the notings on the back of the said letter, duly made by the revenue officials have been proved on record, as Ex.DW.1/C. He has also proved the register containing note number 301, duly entered by the concerned Patwari, on 15.12.1997, as Ex.DW.1/D. CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 37 of 155 Special Judge, CBI01, Central, Delhi 38
ii) DW2 Sh. Dharamvir Singh, Chief Manager, Oriental Bank of Commerce, Shimla, (on behalf of accused Ashok Katoch, D.K.Gupta and V.K.Sharma), has deposed that the property Combermere Hotel Building, Shimla, was mortgaged in favour of Oriental Bank of Commerce, to the extent of Rs.39 Lacs, on 30.11.1988. He has proved the equitable mortgage register in this regard, as Ex.DW.2/A. He has also proved the letter, which was submitted by Shanta Lal Chopra to the Bank for deposition of the title deeds for securing the amount of the Hundi, as Ex.DW2/B. He has further proved the agreement, dated 20.11.1997 executed between Shanta Lal Chopra and the Bank, for releasing of the property by the bank, as Ex.DW.2/C.
iii) DW3 Sh. V.S.Bhandari, Chief Manager, Oriental Bank of Commerce, Thanesar, Kurukshetra, (on behalf of accused Ashok Katoch & D.K.Gupta) has deposed that the agreement Ex.DW2/C was executed by him with Shanta Lal Chopra, on 20.11.1997.
iv) DW4 Sh. Atma Sah, Assistant Registrar of Companies, NCT of Delhi & Haryana, (On behalf of accused Shailesh Dhir and CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 38 of 155 Special Judge, CBI01, Central, Delhi 39 Twenty First Century Credit Pvt. Ltd.), has proved the attested copy of the basic company date as Ex.DW.4/A and attested copy of the master company data as Ex.DW.4/B. He has also proved the certificate, u/s 65 B of the Indian Evidence Act, as Ex.DW.4/C.
v) DW5 Sh. C.M. Kachroo, Officer, Indian Bank, Gurgaon, (on behalf of accused Ravinder Verma and M/s Bliss Overseas Pvt. Ltd.), has deposed that Inspector CBI, S.Dagar seized various documents in his presence, vide different seizure memos.
vi) DW6 Sh. Harsh Wij, who was examined on behalf of accused Ravinder Verma (A9), has deposed that in the year 1989, he was working as Manager of M/s Bliss Overseas Pvt. Ltd., and he was involved in the process of purchase of computers, peripherals and accessories of computers, from various companies. But, this witness was having no information about the transactions, regarding financing of M/s Bliss Overseas Pvt. Ltd., by M/s. Twenty First Century Credit Pvt. Ltd., for purchase of computer peripherals and accessories. CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 39 of 155 Special Judge, CBI01, Central, Delhi 40 FINAL ARGUMENTS
15. After completion of trial, final arguments were addressed by Shri Praneet Sharma, Ld. PP for the CBI; Sh. Kanwal Chaudhary, Advocate, for accused Ashok Katoch (A1) and D.K. Gupta (A2); Sh. V.K. Sharma, Advocate, for accused V.K. Sharma (A3); Sh. Tanvir Ahmed, Advocate, for accused Shailesh Dhir (A4), M/s. Twenty First Century Credit Pvt. Ltd. (A5) and Rajiv Khanna (A9); Sh. Aditya Sharma, Advocate, for accused Ravinder Verma (A6) and M/s. Bliss Overseas (A7) and by Sh. Dharmender Priyani, Advocate for accused Shanta Lal Chopra (A8). ARGUMENTS BY THE LD. PP FOR THE CBI .
16. It has been argued by the Ld. PP for the CBI that the prosecution has successfully proved its case against all the accused persons. He has argued that PW26 Hemant Kaushik, an employee of Oriental Bank of Commerce, Shimla, has disclosed the facts of entire conspiracy as PW26 Hemant Kaushik was himself involved in the conspiracy as a co CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 40 of 155 Special Judge, CBI01, Central, Delhi 41 conspirator. He had, later on, turned approver, during the investigations of the CBI and his deposition in the court has proved the prosecution case, beyond a shadow of doubt. He has further argued that accused Shanta Lal Chopra (A8), is the kingpin of the entire conspiracy as he had taken a loan of Rs.39 Lacs from Oriental Bank of Commerce, Shimla, for construction of his property i.e. Combermere Complex at Shimla and his loan file has been proved on record as Ex.PW.32/A. He has further argued that accused Shanta Lal Chopra was not having enough money and resources to repay the said loan to Oriental Bank of Commerce, Shimla, and therefore, he approached accused Ravinder Verma (A6), director of M/s Bliss Overseas Pvt. Ltd., (A7) and both of them approached Shailesh Dhir and Rajiv Khanna, directors of M/s Twenty First Century Credit Pvt. Ltd., for financing. During talks, accused Shailesh Dhir agreed to provide finances to M/s Bliss Overseas Pvt. Ltd., and it was suggested by him that an invoice and a hundi shall be prepared by M/s. Twenty First Century Credit Pvt. Ltd., which was to be accepted by M/s CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 41 of 155 Special Judge, CBI01, Central, Delhi 42 Bliss Overseas Pvt. Ltd., and was to be coaccepted by its bankers i.e. Oriental Bank of Commerce, Shimla and thereafter, the documents were to be presented to the banker of M/s Twenty First Century Credit Pvt. Ltd., i.e. Standard Chartered Bank, New Delhi, and thereafter the amount, so realized, was to be paid by M/s.Twenty First Century Credit Pvt. Ltd. to M/s Bliss Overseas Pvt. Ltd., and thereafter, M/s Bliss Overseas Pvt. Ltd., was to pay the amount to accused Shanta Lal Chopra and thereafter, accused Shanta Lal Chopra was required to repay his loan amount to Oriental Bank of Commerce, Shimla, so that he may get his mortgaged properties released from Oriental Bank of Commerce, Shimla and thereafter, he may get a fresh loan from Oriental Bank of Commerce, Shimla, for the construction purposes.
17. It is further argued by the Ld. PP for the CBI that invoice Ex.PW2/D1 and a bill of exchange / hundi Ex.PW8/D1 for Rs. 49,88,400/ was prepared, on behalf of M/s. Twenty First Century CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 42 of 155 Special Judge, CBI01, Central, Delhi 43 Credit Pvt. Ltd., and the same was accepted by M/s Bliss Overseas Pvt. Ltd. This hundi and invoice were taken by accused Ravinder Verma to Oriental Bank of Commerce, Shimla, where the bill of exchange / hundi was coaccepted by accused Ashok Katoch (A1) and D.K Gupta (A2), in violation of the rules and procedure of the bank and without any authority. Accused Ashok Katoch (A1) and D.K Gupta (A2), issued letter Ex.PW26/E, for coacceptance of the hundi and thereafter, they issued the confirmation letter Ex.PW2/A, wherein, it was mentioned that both of them were authorized to coaccept the hundi. All these documents were taken to Delhi by accused Ravinder Verma (A6) and were handed over to Shailesh Dhir (A4), who deposited these documents with his banker, i.e. Standard Chartered Bank at New Delhi, for discounting. Accused Shailesh Dhir also issued a letter on behalf of M/s Twenty First Century Credit Pvt. Ltd., to his banker Standard Chartered Bank, requesting for discounting the hundi and thereafter, on receipt of all the documents, his banker Standard Chartered Bank, discounted the hundi, after deducting CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 43 of 155 Special Judge, CBI01, Central, Delhi 44 an advance interest of Rs.3,45,170/. The remaining amount of Rs.46,05,040/, was accordingly credited to the bank account of M/s Twenty First Century Credit Pvt. Ltd. Thereafter, accused Shailesh Dhir transferred the said amount from his account at Standard Chartered Bank, New Delhi to his another bank account at Bank of India, G.KI, New Delhi and by means of a demand draft, Ex.PW14/A, in favour of M/s Bliss Overseas Pvt. Ltd., an amount of Rs.46,050,040/, was paid to M/s Bliss Overseas Pvt. Ltd. Thereafter, accused Rvinder Verma, deposited the said demand draft in his account at Oriental Bank of Commerce, Shimla and thereafter, issued a cheque Ex.PW26/G worth Rs.25 Lacs, on 11.02.1989, in favour of Meghna Builders, a company floated by accused Shanta Lal Chopra and Ravinder Verma. Thereafter, accused Ravinder Verma issued cheque Ex.PW14/B worth Rs.23 Lacs, from the account of M/s. Meghna Builders Pvt. Ltd. and cheque Ex.PW34/A333 (D29) worth Rs.51,000/, from the account of M/s Bliss Overseas Pvt. Ltd., in favour of Shanta Lal Chopra.
CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 44 of 155 Special Judge, CBI01, Central, Delhi 45
18. The Ld. PP for the CBI for has further argued that after receiving the amount of Rs.23,51,000/, from accused Ravinder Verma, accused Shanta Lal Chopra repaid his loan with Oriental Bank of Commerce, Shimla and got his mortgaged properties released from them.
19. The Ld. PP for the CBI has also argued that the relevant documents of bank transaction, as well as the demand draft and the chques have been duly proved on record and even in his statement u/s 313 Cr.P.C. and the written statement, Ex.WS/A8, accused Shanta Lal Chopra has admitted that he received the amounts of Rs.23 Lacs & Rs.51,000/ from accused Ravinder Verma.
20. Ld. PP for the CBI has further argued that the hundi/ bill of exchange, Ex.PW8/D1, was due after 180 days. But, the payment of the same could not be made by M/s Bliss Overseas CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 45 of 155 Special Judge, CBI01, Central, Delhi 46 Pvt. Ltd., to Oriental Bank of Commerce, Shimla and therefore, all the accused persons again adopted a similar modus operandi for the second time, to repay the amount of the said hundi to Oriental Bank of Commerce, Shimla. For that purpose another invoice, Ex.PW24/B (Ex.PW2/D2), and Hundi, Ex.PW7/A (D12), worth Rs.55 Lacs were prepared on behalf of M/s. Twenty First Century Credit Pvt. Ltd. and the bill of exchange / hundi was again accepted by M/s Bliss Overseas Pvt. Ltd., and was again coaccepted by accused Ashok Katoch (A1) and D.K Gupta (A2), on behalf of Oriental Bank of Commerce, Shimla. The undertaking letter, Ex.PW24/C, was again issued by Ashok Katoch (A1) and D.K Gupta (A2), on beahlf of Oriental Bank of Commerce, Shimla. Again, all these documents were handed over to accused Shailesh Dhir at New Delhi and the same were again presented to Standard Chartered Bank at New Delhi for discounting. But, on this occasion, letter dated 05.08.89 was written by Standard Chartered Bank, New Delhi, to Oriental Bank of Commerce, Headquarter, at Connaught Place, New Delhi, vide CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 46 of 155 Special Judge, CBI01, Central, Delhi 47 letter Ex.PW1/4 (D94), whereby, they asked the HQ, OBC to confirm about the authorization and powers of accused Ashok Katoch (A1) and D.K Gupta (A2), to coaccept the hundis / bill of exchange, on behalf of Oriental Bank of Commerce, Shimla. Reply to this letter was submitted by HQ of OBC at Connaught Place vide reply, Ex.PW1/5, dated 10.08.89, whereby it was intimated to Standard Chartered Bank, New Delhi that accused Ashok Katoch (A1) and D.K Gupta (A2) were not authorized to coaccept the hundi.
21. The Ld. PP for the CBI has further argued that after receiving the reply, Ex.PW1/5, the matter was intimated to the senior officers of Oriental Bank of Commerce and PW1 D.G. Saxena & PW7 P.K. Bhasin were directed to visit the Oriental Bank of Commerce, at Shimla and to conduct the investigations, regarding these two bills of exchange / hundis and they submitted their report to the senior officers.
CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 47 of 155 Special Judge, CBI01, Central, Delhi 48
22. The Ld. PP for the CBI has further argued that the documentary evidence, on record and the oral depositions of the prosecution witnesses have proved the prosecution case, against all the accused persons, beyond a shadow of doubt. He has further argued that the various documents, executed by the accused persons, were also sent to CFSL for expert opinion and the CFSL reports have also corroborated the prosecution case. Therefore, all the accused be held guilty for the offences charged against them and be convicted, accordingly.
ARGUMENTS ON BEHALF OF ACCUSED ASHOK KATOCH (A1) & D.K.GUPTA (A2).
23. Shri Kanwal Chaudhary, Ld. Counsel for accused Ashok Katoch (A1) & D.K.Gupta (A2) has argued that as per the FIR, the place of commission of offence has been mentioned as Himachal Pradesh and Delhi and as per the Provisions of Section 5 & 6 of the Delhi Special Police Establishment Act, the CBI was having no power to investigate the matter in the State of Himachal Pradesh. He has relied upon the Judgment of the Hon'ble High CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 48 of 155 Special Judge, CBI01, Central, Delhi 49 Court of Delhi, in case titled as, "Surinder Singh Ahluwalia Vs. Delhi Special Police, reported as "1991 Cr.L.J. 2583", in support of his above contention.
24. The Ld. Defence counsel has further argued that accused Ashok Katoch (A1) & D.K.Gupta (A2) are not the public servants, as they are not covered under the Provisions of Section 2 (c) of The Prevention of Corruption Act, 1988, and therefore, they cannot be tried for the offences punishable u/s 120 B IPC, r/w Sec. 13 (1)(d) & 13 (2) of The Prevention of Corruption Act, 1988, as well as for the substantive offences, punishable u/s 13 (1) (d) read with Section 13 (2) of The Prevention of Corruption Act, 1988. He has relied upon the following judgments, in support of his above contentions :
i) Manohar Lal Sharma vs. Principal Secretary, reported as AIR 2014 SC 666;
ii) Raghunath Rai vs. B.N.Khanna & Ors., reported as 1983(5) DRJ, 77;
iii) New India Assurance Co. Ltd. vs. Smt. Krishna Sharma & Ors., reported as 72 (1998) DLT 668.
CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 49 of 155 Special Judge, CBI01, Central, Delhi 50
25. The Ld. Defence counsel has further argued that accused Ashok Katoch (A1) & D.K.Gupta (A2) have coaccepted the Hundi on 07.02.1989, as per the instructions of coaccused V.K.Sharma (A3), as both of them were duly empowered by their bank, in this regard. He has argued that the power of attorney Ex.PW1/DB in favour of accused Ashok Katoch (A1) and power of attorney Ex.PW.1/DC, in favour of accused D.K.Gupta (A2), has clearly mentioned that these two officers were duly authorized by the bank to coaccept the Hundi / Bill of Exchange, on behalf of Oriental Bank of Commerce and accordingly, these two officers have duly mentioned the numbers of their power of attorneys in the letter Ex.PW.2/A.
26. The Ld. Defence counsel has also argued that various guidelines of the Reserve Bank of India and various rules of procedure were duly followed by both the accused persons and they had also secured the Hundi / Bill of Exchange, by securing CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 50 of 155 Special Judge, CBI01, Central, Delhi 51 the collateral security from the coaccused Shanta Lal Chopra (A8), on 07.02.1989 itself.
27. The Ld. Defence counsel has further argued that the Investigating Officer of this case has conducted a biased investigation and has not seized the equitable mortgage register, the coacceptance register and the action confirmation register / file, to show that all the rules of procedure were duly followed by these two accused persons, while coaccepting the Hundi / Bill of Exchange. He has further argued that even PW7 Shri T.M.Bhasin has categorically admitted this fact that all the registers were being maintained by the Oriental Bank of Commerce at Shimla.
28. The Ld. Defence counsel has further argued that the Hundi / Bill of Exchange was a nonfund based contingent liability and therefore, no commission was recovered by the bank for co acceptance of the Hundi / Bill of Exchange, as the liability of the CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 51 of 155 Special Judge, CBI01, Central, Delhi 52 bank had to arise after the lapse of a period of 180 days from the date of its coacceptance, that too, when the payment of this Hundi / Bill of Exchange was not made by the coaccused M/s. Bliss Overseas (A7).
29. The Ld. Defence counsel has further argued that the Hundi / Bill of Exchange Ex.PW8/D1, was duly secured by creating additional charge on the properties of coaccused Shanta Lal Chopra (A8) and the action of the Head Office of Oriental Bank of Commerce at Delhi in the sanctioning of a fresh loan, in favour of accused Shanta Lal Chopra (A8), worth Rs.44 Lacs, has ratified the actions of accused Ashok Katoch (A1), D.K.Gupta (A2) and V.K.Sharma (A3) and has ratified the fact that no rule of procedure was flouted by these officers.
30. The Ld. Defence counsel has further argued that the circulars of the Oriental Bank of Commerce and the guidelines issued by the Reserve Bank of India were not mandatory in nature and CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 52 of 155 Special Judge, CBI01, Central, Delhi 53 these guidelines have been issued by the Oriental Bank of Commerce and the Reserve Bank of India, only as a rule of prudence and therefore, violation of these guidelines cannot confer any criminal liability on the accused persons.
31. The Ld. Defence counsel has further argued that the entire transaction was done in the routine course of business and was purely in the nature of a civil transaction and no criminality can be attached to these transactions. The Ld. Defence counsel has relied upon the following judgments, in support of his above contentions :
i) Basu House Pvt. Ltd. vs. Indian Overseas Bank, reported as 2014(1) CHN (CAL) 619, MANU/WB/0965/2013;
ii) R.P.Gulati vs. State & another, reported as 107 (2003) DLT
247.
ARGUMENTS ON BEHALF OF ACCUSED V.K. SHARMA (A3).
32. Sh. V.K. Sharma, Advocate, for accused V.K. Sharma (A3), has argued that the CBI was having no jurisdiction to investigate CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 53 of 155 Special Judge, CBI01, Central, Delhi 54 the present case as the CBI was not competent to register the FIR, of its own.
33. The Ld. Defence counsel has also argued that coaccused Ashok Katoch (A1) and D.K Gupta (A2) were duly authorized to coaccept the hundis / bill of exchange, on behalf of the OBC, Shimla, as power of attorneys had already been issued by the OBC in their favour in this regard and this fact was duly authenticated by accused V.K Sharma as he was the senior manager of OBC at Shimla branch.
34. He has further argued that the Oriental Bank of Commerce, Shimla, Shimla was maintaining all the relevant records and registers, regarding the coacceptance of bills of exchange / hundies and therefore, no criminality can be attached to the actions of accused V.K. Sharma. He has further argued that the accused V.K. Sharma has not abused or misused his official position and therefore, he cannot be held guilty for the offences CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 54 of 155 Special Judge, CBI01, Central, Delhi 55 under Section 13(1) (d) read with Section 13(2) of the P.C. Act, 1988.
35. He has further argued that the accused V.K. Sharma has not done any illegal act and has not induced or misrepresented OBC, Shimla, and has not caused any loss to the OBC, Shimla and therefore, no criminality can be attached to his actions and no offence u/s 420 IPC or u/s 420 /511 IPC is made out against him.
36. The Ld. Defence counsel has relied upon the following judgments, in support of his above contentions:
(i) M. Balakrishna Reddy vs. Director CBI, reported as (2008) 4 SCC 409.
(ii) Pramode Malhotra ors. vs. Union of India & ors, reported as (2004) 3 SCC 415 ARGUMENTS ON BEHALF OF ACCUSED SHAILESH DHIR (A4), M/S TWENTY FIRST CENTURY CREDIT PVT. LTD. (A
5) & RAJIV KHANNA (A9).
37. Sh. Tanvir Ahmed, Advocate, the Ld. Defence counsel for CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 55 of 155 Special Judge, CBI01, Central, Delhi 56 accused Shailesh Dhir (A4), Twenty First Century Credit Pvt. Ltd. (A5) and accused Rajiv Khanna (A9), has argued that M/s Twenty First Century Credit Pvt. Ltd. (A5) was engaged in the business of providing "services" for arranging the finances to its clients and as per the provisions of the consumer protection Act, "financing" is itself a "service". He has further argued that accused Twenty First Century Credit Pvt. Ltd. (A5) was never engaged in any kind of direct financing to its clients and was never engaged in selling or purchasing of consumer goods of any kind.
38. The Ld. Defence counsel has further argued that accused Twenty First Century Credit Pvt. Ltd. (A5) has provided services for financing M/s Bliss Overseas Pvt. Ltd. (A7), for enabling it to purchase the computer hardware, accessories and peripherals and accordingly a scheme was proposed by accused Shailesh Dhir (A4), on behalf of Twenty First Century Credit Pvt. Ltd. (A5), vide letter Ex.PW26/A, wherein, it was clearly mentioned CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 56 of 155 Special Judge, CBI01, Central, Delhi 57 that accused Twenty First Century Credit Pvt. Ltd., shall charge an amount @ 15.5% per annum, for discounting the invoice amount, as its service charges, from M/s Bliss Overseas Pvt. Ltd. He has further argued that the invoice Ex.PW2/D1 (Ex.PW34/A321), dated 06.02.1989 and invoice Ex.PW2/D2 (Ex.PW24/B), issued on behalf of accused M/s Twenty First Century Credit Pvt. Ltd., have clearly mentioned that the same were being issued towards the costs of acquisition of computer hardware, peripherals and components.
39. The Ld. Defence counsel has further argued that these invoices and the corresponding hundis, which were accepted by M/s Bliss Overseas Pvt. Ltd., were prepared in a normal course of routine business transactions and the same were coaccepted by the banker of M/s Bliss Overseas Pvt. Ltd., i.e., OBC, Shimla, in a normal course and therefore, it cannot be said that the accused Shailesh Dhir (A4) or M/s Twenty First Century Credit Pvt. Ltd. (A5) or Rajiv Khanna (A9), have caused any deception to cheat CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 57 of 155 Special Judge, CBI01, Central, Delhi 58 the Oriental Bank of Commerce, Shimla.
40. The Ld. Defence counsel has further argued that none of the prosecution witnesses have deposed anything about the roles of accused Shailesh Dhir (A4), M/s Twenty First Century Credit Pvt. Ltd. (A5) & Rajiv Khanna (A9), in causing any loss to the OBC, Shimla or for causing any loss to Standard Chartered Bank, New Delhi by issuing the Invoices & Hundies or by their actions. He has further argued that the entire transactions were done in the normal course of business transactions.
41. The Ld. Defence counsel has further argued that the accused Shailesh Dhir (A4), M/s Twenty First Century Credit Pvt. Ltd. (A5) & Rajiv Khanna (A9), were not previously known to co accused Shanta Lal Chopra (A8) or accused Ravinder Khanna (A6) and they have prepared the invoices and the hundi / bill of exchange as per their own business and as per their scheme of rendering services, to finance M/s Bliss Overseas Pvt. Ltd., vide CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 58 of 155 Special Judge, CBI01, Central, Delhi 59 letter Ex.PW26/A and they had remitted the balance amount of the hundi / bill of exchange, after deduction of their charges and the interest amount by their banker Standard Chartered Bank, to M/s Bliss Overseas Pvt. Ltd., and they were having no control over M/s Bliss Overseas Pvt. Ltd., regarding the end use of the said amount and therefore, they cannot be held responsible for the acts of other accused persons, in misusing the amount of hundi, for their construction business.
42. The Ld. Defence counsel has further argued that there is no evidence on record to connect accused Rajiv Khanna (A9), even with the preparation of any documents and there is no evidence on record to prove that accused Shailesh Dhir (A4) or M/s Twenty First Century Credit Pvt. Ltd. (A5) or Rajiv Khanna (A9) had conspired with other accused persons, to cheat the Oriental Bank of Commerce, Shimla. He has further argued that no prosecution witness has proved any link of Twenty First Century Credit Pvt. Ltd. or its directors with the other accused persons and CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 59 of 155 Special Judge, CBI01, Central, Delhi 60 no evidence has come on record that M/s Twenty First Century Credit Pvt. Ltd., has cheated, either the Oriental Bank of Commerce, Shimla or its own banker Standard Chartered Bank, New Delhi and therefore, all three of them be acquitted of the offences, charged against them.
ARGUMENTS ON BEHALF OF ACCUSED RAVINDER VERMA (A6) & M/S BLISS OVERSEAS PVT. LTD., (A
7)
43. Sh. Aditya Sharma, Advocate, for accused Ravinder Verma (A6) and M/s Bliss Overseas Pvt. Ltd. (A7), has argued that there is no evidence on record to prove that accused Ravinder Verma or M/s Bliss Overseas Pvt. Ltd., have misused the amount of the hundi / bill of exchange for construction purposes. He has further argued that the amount of the bill / hundi was used by M/s Bliss Overseas Pvt. Ltd., for purchasing the computer hardwares and peripherals, the purpose for which the invoices and hundi / bill of exchange were prepared by coaccused Twenty First Century Credit Pvt. Ltd.
CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 60 of 155 Special Judge, CBI01, Central, Delhi 61
44. He has further argued that the entire payment of the bill of exchange had already been made to Oriental Bank of Commerce, Shimla, on 22.09.1989, by coaccused Shanta Lal Chopra (A8), much prior to the registration of FIR on 26.04.1990 and therefore, no loss was caused to Oriental Bank of Commerce, Shimla, by accused M/s Bliss Overseas Pvt. Ltd., or by its director, accused Ravinder Verma.
45. The Ld. Defence counsel has further argued that coaccused Shanta Lal Chopra has stood as guarantor for M/s Bliss Overseas Pvt. Ltd., and on 07.02.1989, when the bill of exchange / hundi was coaccepted, a fresh charge was created by Oriental Bank of Commerce, Shimla on his properties. The said charge was also recorded in the revenue records and after receiving payment of the hundi / bill of exchange from Twenty First Century Credit Pvt. Ltd., an amount of Rs.25 Lacs was deposited in the account of M/s Meghna Builders (in which accused Ravinder Verma and Shanta Lal Chopra were the directors), on 11.02.89, vide cheque CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 61 of 155 Special Judge, CBI01, Central, Delhi 62 Ex.PW26/G and thereafter, a sum of Rs.23 Lacs was paid to accused Shanta Lal Chopra, vide cheque Ex.PW14/B, by accused Ravinder Verma, from the account of M/s Meghna Builders. A further amount of Rs.51,000 was paid to Shanta Lal Chopra by Ravinder Verma from the account of M/s Bliss Overseas Pvt. Ltd., and thereafter, accused Shanta Lal Chopra repaid his entire outstanding loan with the Oriental Bank of Commerce, Shimla and therefore, it cannot be said that accused Ravinder Verma or M/s Bliss Overseas Pvt. Ltd., have misused the amount of the hundi. He has further argued that the amount received from Oriental Bank of Commerce, Shimla, by way of the hundi / bill of exchange stands paid to Oriental Bank of Commerce, Shimla, by coaccused Shanta Lal Chopra and therefore, no loss was caused to Oriental Bank of Commerce, Shimla.
46. The Ld. Defence counsel has further argued that no complaint was ever lodged either by Oriental Bank of Commerce, Shimla or CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 62 of 155 Special Judge, CBI01, Central, Delhi 63 by the Standard Chartered Bank, New Delhi, as Oriental Bank of Commerce, Shimla, had already received its entire amount from Shanta Lal Chopra and the Standard Chartered Bank, New Delhi, had also received back the entire amount in the year 1997, when the matter was settled between the parties. Therefore, it cannot be said that the accused Ravinder Verma (A6) or M/s Bliss Overseas Pvt. Ltd. (A7), have caused any loss to Oriental Bank of Commerce, Shimla or to Standard Chartered Bank, New Delhi or have cheated them and therefore, no offence, even under Section 420 IPC is made out against them.
ARGUMENTS ON BEHALF OF ACCUSED SHANTA LAL CHOPRA (A8)
47. Sh. Dharmender Priyani, Advocate, for accused Shanta Lal Chopra has argued that accused Shanta Lal Chopra has repaid his loan amount to Oriental Bank of Commerce, Shimla, after receiving the money from M/s Meghna Builders and the amount received from M/s Meghna Builders Pvt. Ltd., was not utilized by him for any construction purposes. He has further argued that CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 63 of 155 Special Judge, CBI01, Central, Delhi 64 accused Shanta Lal Chopra repaid his loan amount to Oriental Bank of Commerce, Shimla, despite of the fact that no demand was ever raised by Oriental Bank of Commerce, Shimla, for repayment of his loan. He has further argued that no notice was issued by Oriental Bank of Commerce, Shimla, to him in this regard. He has further argued that accused Shanta Lal Chopra was a respectable citizen of Shimla and was having a large number of properties there, worth several crores, and he had already deposited the title documents of his properties with Oriental Bank of Commerce, Shimla, as collateral security and the said documents were not released by Oriental Bank of Commerce, Shimla, to him till the entire settlement in the year 1997.
48. He has further argued that accused Shanta Lal Chopra was sanctioned a loan of Rs.39 Lacs by Oriental Bank of Commerce, Shimla, prior to the issuance of the first hundi / bill of exchange Ex.PW8/D1 and the second loan worth Rs.44 Lacs was CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 64 of 155 Special Judge, CBI01, Central, Delhi 65 sanctioned by the head office of Oriental Bank of Commerce, at New Delhi on 26.08.89 and the sanctioning of the second loan in his favour by the head office of the Oriental Bank of Commerce, has indicated that no illegality was committed by accused Shanta Lal Chopra at any point of time. He has further argued that the second bill of exchange / hundi Ex.PW7/A had already been co accepted by Oriental Bank of Commerce, Shimla, on 04.08.89, when the second loan of Rs.44 Lacs was sanctioned by the head of the OBC, at New Delhi on 26.08.89.
49. The Ld. Defence counsel has further argued that the Oriental Bank of Commerce, Shimla had already paid the amount of the hundi / bill of exchange to the Standard Chartered Bank, New Delhi and the amount of the hundi stands already paid to Oriental Bank of Commerce, Shimla, by accused Shanta Lal Chopra and therefore, no loss has been caused, either to Oriental Bank of Commerce, Shimla or to Standard Chartered Bank, New Delhi and therefore, no offences are made out against the accused CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 65 of 155 Special Judge, CBI01, Central, Delhi 66 Shanta Lal Chopra.
50. The Ld. Defence counsel has further argued that the accused Shanta Lal Chopra was not the beneficiary of any of the transactions and on the contrary, he had paid a sum of more than Rs.62 Lacs to the Oriental Bank of Commerce, Shimla and the title documents of his properties were released to him only in the year 1997, after the settlement between Oriental Bank of Commerce, Shimla and Standard Chartered Bank, New Delhi and therefore, there was no occasion for the accused to hatch any conspiracy for suffering huge financial losses.
ARGUMENTS BY THE LD. PP FOR THE CBI, IN REBUTTAL, TO THE ARGUMENTS OF THE LD. DEFENCE COUNSELS.
51. The Ld. PP for the CBI has argued, in rebuttal, that the bank officials are also the public servants and the issue has been settled by the judgment of Hon'ble Supreme Court, in case titled as, "Union of India & another vs. Ashok Kumar Mitra", reported as "1995 Crl. L.J. 3633".
CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 66 of 155 Special Judge, CBI01, Central, Delhi 67
52. The Ld. PP for the CBI has further argued that vide circular / th notification dated 24 August 1990, the CBI was having the powers to conduct investigations in the State of Himachal Pradesh also.
53. The Ld. PP for the CBI has further argued that the accused Ashok Katoch (A1), D.K. Gupta (A2) & V.K. Sharma (A3), were having no powers to coaccept the hundi / bill of exchange, at all, as is clear from the letter Ex.PW1/5, dated 10.08.1989 issued the head office of the Oriental Bank of Commerce at New Delhi, in reply to the letter of Standard Chartered Bank, dated 05.08.1989, Ex.PW1/4.
54. The Ld. PP for the CBI has further argued that as per the circulars of the Oriental Bank of Commerce, dated 19.01.1984 and 04.04.1985 and the circular, dated 26.11.1983, issued by The Reserve Bank of India, accused Ashok Katoch and D.K.Gupta CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 67 of 155 Special Judge, CBI01, Central, Delhi 68 were not authorized to coaccept the hundis and only the genuine trade bills were required to be coaccepted by the banks and in the present case, the hundi / bill of exchange was admittedly accompanied with a nontrade bill and therefore, the same could not have been coaccepted by accused Ashok Katoch (A1) and D.K. Gupta (A2).
55. The Ld. PP for the CBI has also argued that accused Ashok Katoch (A1), D.K. Gupta (A2) & V.K. Sharma (A3), have not discharged their duties as per the circulars of the Oriental Bank of Commerce and the guidelines of the RBI were also not followed by them. He has further argued that the accused Ashok Katoch (A1), D.K. Gupta (A2) & V.K. Sharma (A3), were required to get the coacceptance of the hundi / bill of exchange approved from the head office of Oriental Bank of Commerce at New Delhi but they have deliberately not forwarded the same to the head office, only with the intention to conceal their illegal acts and to cheat the bank. He has further argued that even the amount of the hundi / CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 68 of 155 Special Judge, CBI01, Central, Delhi 69 bill of exchange was misutilized by the accused persons and was not used for purchasing any computer hardware or accessories, by M/s Bliss Overseas Pvt. Ltd. The said amount was utilized for discharging the loan liabilities of coaccused Shanta Lal Chopra, with an objective that accused Shanta Lal Chopra may get another loan sanctioned from the Oriental Bank of Commerce, Shimla.
56. He has further argued that the circumstances of the present case and the documentary evidence on record has clearly established that all the accused persons have connived together to cheat Oriental Bank of Commerce, Shimla, as Oriental Bank of Commerce, Shimla, had to make the payment of the hundi / bill of exchange to Standard Chartered Bank. He has further argued that the accused Ashok Katoch (A1), D.K. Gupta (A2) & V.K. Sharma (A3), have also misused their powers as such government servants, to facilitate the accused persons to achieve their illegal objectives of the entire conspiracy. CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 69 of 155 Special Judge, CBI01, Central, Delhi 70
57. I have carefully perused the case file and I havev also given my considered thoughts to the arguments addressed by the Ld. PP for the CBI and the Ld. defence counsels. I have also gone through the various judgments, cited by them, in support of their contentions.
ADMITTED FACTS
58. From the evidence on record and the arguments of the Ld. PP for the CBI and the Ld. Defence counsels, the following admitted facts have emerged :
(i) That accused Shanta Lal Chopra (A8) was the owner of Combermere Complex at Shimla and was previously sanctioned a loan of Rs. 39 Lacs by Oriental Bank of Commerce, Shimla. The repayment of the said loan was still due against him, till February, 1989;
CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 70 of 155 Special Judge, CBI01, Central, Delhi 71
(ii) That accused Ravinder Verma (A6) and accused Shanta Lal Chopra (A8) were having friendly relations and they approached Twenty First Century Credit Pvt. Ltd. (A5) for financing the needs of accused Shanta Lal Chopra (A8);
(iii) That accused Twenty First Century Credit Pvt. Ltd., through its director, coaccused Shailesh Dhir (A4), advised a scheme to them, vide letter, dated 04.02.1989, Ex.PW.26/A, to finance computer hardware etc., to M/s Bliss Overseas Pvt. Ltd. (A7);
(iv) That accused Twenty First Century Credit Pvt. Ltd. (A5), through its director coaccused accused Shailesh Dhir (A4), prepared invoice, dated 06.02.1989 and Hundi / Bill of Exchange, dated 07.02.1989 for a sum of Rs.49,88,400/, which was accepted by M/s Bliss Overseas Pvt. Ltd. (A7), which was to be repaid within a period of 180 days from 07.02.1989;
(v) That accused Ashok Katoch (A1) & D.K.Gupta (A2), as per CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 71 of 155 Special Judge, CBI01, Central, Delhi 72 the directions of coaccused V.K.Sharma (A3) coaccepted the Hundi / Bill of Exchange, dated 07.02.1989, Ex.PW.8/D1 and thereafter, issued a confirmation letter, dated 07.02.1989 Ex.PW2/A, wherein it was mentioned that accused Ashok Katoch (A1) & D.K.Gupta (A2) had coaccepted the bill, dated 07.02.1989 for Rs.49,88,400/, on behalf of Oriental Bank of Commerce, and they were authorized to do so. Vide this letter, Oriental Bank of Commerce, Shimla had undertaken to repay the amount of Rs.49,88,400/ on the due date i.e. 05.08.1989;
(vi) That the invoice Ex.PW.2/D1 alongwith the bill of exchange Ex.PW.8/D1, after its coacceptance by the officers of Oriental Bank of Commerce, Shimla was taken to Delhi, along with the confirmation letter Ex.PW.2/A and was deposited at the bank account of coaccused Twenty First Century Credit Pvt. Ltd (A5) at Bank of India, New Delhi and a credit of Rs.46,06,070/ was duly given in its account after deduction of service charges by M/s. Twenty First Century Credit Pvt. Ltd. and internal amount by CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 72 of 155 Special Judge, CBI01, Central, Delhi 73 Standard Chartered Bank ;
(vii) That a bank draft favouring M/s Bliss Overseas Pvt. Ltd., payable at Shimla, for Rs.46,05,040/ was issued from the account of accused M/s. Twenty First Century Credit Pvt. Ltd., and the same was duly credited in the account of M/s Bliss Overseas Pvt. Ltd., at Oriental Bank of Commerce, Shimla on 11.02.1989;
(viii) That on 11.02.1989, accused Ravinder Verma (A6) issued an account payee cheque for Rs.25 Lacs, in favour of Meghna Builders Pvt. Ltd., and the said amount was duly transferred from the account of M/s Bliss Overseas Pvt. Ltd., to the account of M/s. Meghna Builders Pvt. Ltd. Accused Ravinder Verma (A6) and accused Shanta Lal Chopra (A8) were the two directors of M/s. Meghna Builders Pvt. Ltd. ;
(ix) That on 15.02.1989, accused Ravinder Verma (A6) issued CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 73 of 155 Special Judge, CBI01, Central, Delhi 74 cheques for Rs.23 Lacs and Rs. 51,000/ from the account of M/s. Meghna Builders Pvt. Ltd. & M/s Bliss Overseas Pvt. Ltd., respectively, in favour of coaccused Shanta Lal Chopra (A8) and the same were also credited in the CC account of accused Shanta Lal Chopra (A8);
(x) That by means of aforesaid amount of Rs.23,51,000/, co accused Shanta Lal Chopra (A8) repaid his previous loan and settled his loan account with the Oriental Bank of Commerce, Shimla and the title deeds of his properties were got released from Oriental Bank of Commerce, Shimla ;
(xi) That the Hundi Ex.PW.8/D1 was due for payment after 180 days, i.e., on 05.08.1989, but M/s Bliss Overseas Pvt. Ltd., was not having sufficient funds to make the payment to the Standard Chartered Bank at New Delhi ;
(xii) That accused Ravinder Verma (A6) again approached the CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 74 of 155 Special Judge, CBI01, Central, Delhi 75 coaccused Twenty First Century Credit Pvt. Ltd., through its director, accused Shailesh Dhir (A4), for further finances and again a fresh bill of exchange, worth Rs.55 Lacs was prepared, along with a fresh invoice, dated 02.08.1989, worth Rs.55 Lacs, on behalf of Twenty First Century Credit Pvt. Ltd., towards the cost of the acquisition of the computer hardware and peripherals, by M/s Bliss Overseas Pvt. Ltd. (A7);
(xiii) That this fresh Hundi Ex.PW7/A was again taken to Oriental Bank of Commerce, Shimla and was again coaccepted by accused Ashok Katoch (A1) & D.K.Gupta (A2), on the directions of accused V.K.Sharma (A3) ;
(xiv) That another confirmation letter / certificate Ex.PW.1/1 (Ex.PW24/C) was issued by accused Ashok Katoch (A1) & D.K.Gupta (A2), on behalf of Oriental Bank of Commerce, Shimla;
CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 75 of 155 Special Judge, CBI01, Central, Delhi 76
(xv) That the second invoice, dated 02.08.1989, Ex.PW.2/D2, along with the Hundi Ex.PW.7/A and the confirmation letter Ex.PW.1/1, were again handed over to accused Shailesh Dhir (A4) by accused Ravinder Verma (A6), for discounting, through his banker Standard Chartered Bank, at New Delhi; (xvi) That accused Shailesh Dhir (A4) approached his banker Standard Chartered Bank at Saket, New Delhi, for discounting of the second bill worth Rs.55 Lacs and his banker Standard Chartered Bank, Sansad Marg, New Delhi, sought the confirmation regarding the signatures of accused Ashok Katoch (A1) & D.K.Gupta (A2) from the Head Office of Oriental Bank of Commerce at New Delhi and also sought the confirmation about their authorities to coaccept the Hundi / Bill of Exchange; (xvii) That vide letter, dated 05.08.1989, Standard Chartered Bank, Sansad Marg, New Delhi, sought the confirmation from the head office of Oriental Bank of Commerce, HBlock, Connaught CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 76 of 155 Special Judge, CBI01, Central, Delhi 77 Circus, New Delhi, regarding the signatures and authority of accused Ashok Katoch (A1) & D.K.Gupta (A2) to coaccept the Hundi / Bill of Exchange;
(xviii) That vide reply Ex.PW.1/5, dated 10.08.1989, the officials of the head office, Oriental Bank of Commerce, New Delhi informed the Bills Manager of Standard Chartered Bank, Saket Branch, New Delhi that accused Ashok Katoch (A1) & D.K.Gupta (A2) were not authorized to coaccept the Hundi / Bill of Exchange ;
(xix) That PW1 Sh. D.G.Saxena, along with PW7 Sh. T.M.Bhasin visited the Oriental Bank of Commerce, Shimla and checked the various records maintained at Oriental Bank of Commerce, Shimla, regarding the coacceptance of the Hundi / Bill of Exchange ;
(xx) That on 26.04.1990 at 16:30 hours, case FIR No. 5(A)/1990 CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 77 of 155 Special Judge, CBI01, Central, Delhi 78 Ex.PW.30/A was registered by the CBI, on the basis of source information ;
(xxi) That accused Shanta Lal Chopra was sanctioned a fresh loan of Rs.44 Lacs by the Head Office of Oriental Bank of Commerce, in August / September, 1989.
OBSERVATIONS / FINDINGS
59. During the course of arguments, the main contention of the Ld. Defence counsels has remained that there is no material evidence on record to prove any conspiracy between the accused persons. In order to prove the entire conspiracy between the accused persons and to prove their respective roles, the prosecution has examined Sh. Hemant Kumar Kaushik, an official from Oriental Bank of Commerce, Shimla Branch, as PW26.
60. It is pertinent to mention here that the name of this witness has been mentioned in column No.2 of the chargesheet and CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 78 of 155 Special Judge, CBI01, Central, Delhi 79 during the investigations, he was arrested as an accused and his statement, u/s 164 Cr.P.C., was also got recorded from the court of Shri Bhola Dutt, the then Ld. MM, Delhi, on 11.05.1992. Thereafter, on 17.08.1992, an application was moved, on behalf of the CBI, before the court of Shri V.B.Gupta, the then Ld. ACMM, Delhi, for grant of pardon to him, as this accused had turned approver for the CBI and vide orders, dated 26.09.1992, this accused was granted pardon by the said court, u/s 306 Cr.P.C., on the condition that he would make the full and true disclosure of whole of the circumstances, within his knowledge, relating to the role of every other person involved / concerned, whether as a principal or an abater, including the role played by him in the commission of the offence, in the present case.
61. The statement of this accused / approver was recorded before the court, as PW6 on 28.08.2008 and his crossexamination was concluded on 26.05.2015. In his deposition, he has stated that he joined Oriental Bank of Commerce, Shimla Branch, in the year CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 79 of 155 Special Judge, CBI01, Central, Delhi 80 1979 as a clerk and he knew accused Ravinder Verma (A6), through accountant Mr. Grover, as accused Ravinder Verma (A6) used to visit the bank regularly, in the year 1986 and he developed intimacy and friendship with him. He has further stated that his brother Vipin was having diploma in computer science and accused Ravinder Verma (A6) and his brother opened a firm, namely, BLSND Computer Pvt. Ltd., and his residential address was given as the address of the said company.
62. PW26 Hemant Kaushik has further stated that in January, 1989, he was staying at Delhi at the residence of accused Ravinder Verma (A6) and accused Shanta Lal Chopra (A8), another client of Oriental Bank of Commerce, Shimla , who was a friend of accused Ravinder Verma (A6), visited him and thereafter, accused Ravinder Verma (A6) introduced accused Shanta Lal Chopra (A8) to him. Accused Shanta Lal Chopra (A8) had taken a loan of Rs.39 Lacs from Oriental Bank of Commerce, Shimla, for construction of his Combermere Complex. CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 80 of 155 Special Judge, CBI01, Central, Delhi 81 This witness has further deposed that due to intimacy between accused Shanta Lal Chopra (A8) and accused Rajiv Khanna (A9), they both floated a company, namely, Meghna Builders Pvt. Ltd. and accused Shanta Lal Chopra (A8) was trying to get more loan from the bank, for the construction of Combermere Complex.
63. PW26 Sh. Hemant Kumar Kaushik has further deposed that accused Shanta Lal Chopra (A8) informed him and to accused Ravinder Verma (A6) about the accused Twenty First Century Credit Pvt. Ltd., and told them about getting finances from it. Thereafter, all three of them went to the office of accused Twenty First Century Credit Pvt. Ltd., at Nehru Place, New Delhi and met accused Rajiv Khanna (A9) and asked him to finance Meghna Builders Pvt. Ltd., on which, accused Rajiv Khanna (A9) denied the finance as they were not dealing in real estate. Thereafter, coaccused Shailesh Dhir (A4) joined the conversation and during the conversation, accused Shailesh Dhir (A4) told them to CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 81 of 155 Special Judge, CBI01, Central, Delhi 82 raise an invoice, on the basis of which, a Hundi shall be raised and the same has to be accepted by accused Ravinder Verma (A6) and coaccepted by his bank. Thereafter, accused Ravinder Verma (A6) floated another company in the name of M/s Bliss Overseas Pvt. Ltd., having his residential address.
64. PW26 Sh. Hemant Kumar Kaushik has further deposed that accused Shailesh Dhir (A4) issued a letter, dated 04.02.1989 Ex.PW.26/A, signed by his employer Behnan Thomas (P.O.), in favour of M/s Bliss Overseas Pvt. Ltd., mentioning therein the terms and conditions of financing. This letter was replied by accused Ravinder Verma (A6), vide letter Ex.PW.26/B. He has further deposed that accused Ravinder Verma (A6) showed him the Hundi Ex.PW8/D1, along with the connected invoice Ex.PW. 2/D1, both worth Rs. 49,88,400/, signed by accused Shailesh Dhir (A4), on behalf of Twenty First Century Credit Pvt. Ltd., and accepted by accused Ravinder Verma (A6).
CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 82 of 155 Special Judge, CBI01, Central, Delhi 83
65. PW26 Sh. Hemant Kumar Kaushik has further deposed that after receiving the Hundi and the invoice, he along with accused Ravinder Verma (A6), went to Shimla and gave a letter to accused V.K.Sharma (A3) at Oriental Bank of Commerce, Shimla to coaccept the Hundi and accused Ravinder Verma (A6) also opened an account with the Oriental Bank of Commerce, Shimla in the name of M/s Bliss Overseas Pvt. Ltd., and also handed over a cheque of Rs.21 Lacs to accused V.K.Sharma (A3). Thereafter, accused V.K.Sharma (A3) asked coaccused Ashok Katoch (A1) & D.K.Gupta (A2) to coaccept the Hundi. Thereafter, on the directions of accused Ravinder Verma (A6), he typed the confirmation letter of Oriental Bank of Commerce, Shimla, Ex.PW.2/A and thereafter, accused Ravinder Verma (A6) took away the Hundi, invoice and the confirmation letter to Delhi and after 45 days, he returned back to Shimla and brought a demand draft of Rs. 46 Lacs with him. The said demand draft was deposited by accused Ravinder Verma (A6) in the account No. 652 of M/s Bliss Overseas Pvt. Ltd. Thereafter, accused CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 83 of 155 Special Judge, CBI01, Central, Delhi 84 Ravinder Verma (A6) issued a cheque of Rs.25 Lacs Ex.PW. 26/G, in favour of Meghna Builders Pvt. Ltd., and from the account of Meghna Builders Pvt. Ltd., a sum of Rs.23 Lacs was given to accused Shanta Lal Chopra (A8).
66. PW26 Sh. Hemant Kumar Kaushik has further deposed that he was looking after the business of M/s Bliss Overseas Pvt. Ltd., when he was staying at Delhi with accused Ravinder Verma (A6) and in the month of August, 1989, accused Ravinder Verma (A6) gave him another Hundi Ex.PW.24/A (Ex.PW.7/A) of Rs. 55 Lacs, which was issued by accused Shailesh Dhir (A4) on behalf of accused Twenty First Century Credit Pvt. Ltd., and was accepted by accused Ravinder Verma (A6). He has further deposed that the Hundi Ex.PW.24/A (Ex.PW.7/A) (D11) was again co accepted by accused Ashok Katoch (A1) & D.K.Gupta (A2). He has further deposed that the Hundi was also accompanied with the connected invoice Ex.PW.24/B (D11). This invoice was again issued by accused Shailesh Dhir (A4), on behalf of CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 84 of 155 Special Judge, CBI01, Central, Delhi 85 accused Twenty First Century Credit Pvt. Ltd. This Hundi and the invoice was also accompanied with the receipt, Ex.PW1/3, issued by accused Twenty First Century Credit Pvt. Ltd., in acknowledgment of the receipt of the amount of Rs.49,88,400/.
67. PW26 Sh. Hemant Kumar Kaushik has further deposed that the second Hundi Ex.PW.24/A (Ex.PW7/A), invoice Ex.PW.24/B and the receipt Ex.PW.1/3 were all taken by him to Shimla and were presented to accused Ashok Katoch (A1) and after telephonic conversation with accused V.K.Sharma (A3), accused Ashok Katoch (A1) & D.K.Gupta (A2) again coaccepted the said Hundi and thereafter, he typed the confirmation letter Ex.PW. 24/C. This confirmation letter was attested by accused Ashok Katoch (A1). He has further deposed that he gave all these documents to accused Ravinder Verma (A6), but this Hundi worth Rs.55 Lacs was not encashed.
68. Perusal of the record shows that the entire conspiracy had CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 85 of 155 Special Judge, CBI01, Central, Delhi 86 unfolded when the second Hundi Ex.PW24/A (Ex.PW7/A), was handed over to accused Shailesh Dhir for presentation to his banker i.e. Standard Chartered Bank at Sansad Marg, New Delhi, for discounting. It has come on record, during the cross examinations of PW1 Sh. D.G. Saxena & PW2 Ms. Anupa Abrol, that after receiving the original documents, consisting of the Hundi Ex.PW7/A (D12), invoice Ex.PW24/B (Ex.PW2/D2) (D11) and the confirmation letter of Oriental Bank of Commerce, Shimla, Ex.PW24/C (Ex.PW1/A1), accused Shailesh Dhir (A4) went to his banker and asked the concerned officials of his bank to verify the signatures of the officials of Oriental Bank of Commerce, Shimla, i.e. accused Ashok Katoch (A1) and D.K. Gupta (A2), who had coaccepted the Hundi. He also sought verification of the fact, whether these two officials were having the power to co accept the Hundi. On his request for verification, letter Ex.PW1/4, was written by Standard Chartered Bank, New Delhi to the head office of Oriental Bank of Commerce at HBlock, Connaught Circus, New Delhi, whereby, the head office of OBC was CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 86 of 155 Special Judge, CBI01, Central, Delhi 87 requested to confirm, whether the accused Ashok Katoch (A1) and D.K. Gupta (A2), i.e., the authorized signatories, who had coaccepted the Hundi / bill of exchange for Rs.55 Lacs, were having the authority to coaccept the same, on behalf of the Oriental Bank of Commerce. This letter was replied by the head office of OBC, vide letter dated 10.08.1989, Ex.PW1/5 and it was informed to the Standard Chartered Bank, New Delhi, that the signatories of the Hundi / bill Ex.PW24/A (Ex.PW7/A), were not authorized to coaccept the bills. It was further advised that the officials, who have countersigned the said bill were having no authority to do so.
69. Perusal of the record further shows that the hundi worth Rs.55 Lac, Ex.PW7/A, invoice Ex.PW24/B (Ex.PW2/D2) and the confirmation letter of Oriental Bank of Commerce, Shimla, Ex.PW24/C (Ex.PW1/A1) were never actually presented to Standard Chartered Bank, New Delhi, by accused Shailesh Dhir, as these documents were actually recovered by the CBI team, CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 87 of 155 Special Judge, CBI01, Central, Delhi 88 from his residence, during the investigations. However, it is possible that a photocopy of the hundi, Ex.PW7/A, might have been handed over by accused Shailesh Dhir (A4) to the officials of Standard Chartered Bank, when he sought verification of the hundi, Ex.PW7/A (as is mentioned in letter Ex.PW1/4). Furthermore, the hundi Ex.PW7/A, invoice Ex.PW24/B and the confirmation letter of Oriental Bank of Commerce, Shimla, Ex.PW24/C, does not bear the acknowledgment stamps of Standard Chartered Bank, New Delhi, in acknowledgment of having received these documents, as in the case of earlier hundi, and the documents, which bear the acknowledgment stamps of Standard Chartered Bank, New Delhi.
70. PW7 T.M. Bhasin, who was working as manager in Executive Director's Secretariat, at the head office of Oriental Bank of Commerce at New Delhi has deposed that hundi Ex.PW7/A, came to his office through a messanger fro confirmation that it has been coaccepted by the Shimla Branch and thereafter, he CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 88 of 155 Special Judge, CBI01, Central, Delhi 89 took the hundi to the Executive Director and D.G. Saxena, who was Deputy Chief Manager, Loans, at the Oriental Bank of Commerce, Headquarter, New Delhi, in the year 1989. He has further deposed that Executive Director Sh. S.K Soni asked him and D.G. Saxena to visit Shimla for making enquiry in respect of this hundi and thereafter, he along with D.G. Saxena went to Shimla Branch of Oriental Bank of Commerce and found that no record was available there, regarding coacceptance of this hundi.
71. PW1 Sh. D.G.Saxena, who was working as Chief Manager of Oriental Bank of Commerce at its Head Office at New Delhi has deposed that at the relevant time, he was required to appraise and examine the loan proposals and raise queries, if any, and thereafter, to recommend the same to the concerned authority, for sanction. He was also associated with the credit policy of the bank. He has deposed that normally, a Hundi is not to be accepted by the bank. But, if the seller insists to be assured of the payment, the buyer can arrange for such like facility from the CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 89 of 155 Special Judge, CBI01, Central, Delhi 90 bank. The bank after examining the whole proposal may sanction the limit to the party. The acceptor and the coacceptor of the Hundi is liable to make the payment. He has further deposed that a Hundi is a bill of exchange and is an instrument containing unconditional undertaking to pay a certain amount of money to the person named therein. The Hundi is drawn by the seller of the goods, which are known as drawer, to be accepted by the drawee, i.e. the purchaser. He has further deposed that after examining the loan proposal, necessary sanction is obtained from the competent authority and thereafter, the official sanction is conveyed to the branch. At the branch, the branch incumbent or the concerned officials are required to obtain the documents, as per the sanction and to make necessary entries in the books of accounts. When the necessary sanction is accorded by the competent authority for coacceptance of the Hundi, the branch would obtain the necessary documents and would make the entires in the books of accounts. He has categorically stated that the branch and the Regional Office were not empowered to CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 90 of 155 Special Judge, CBI01, Central, Delhi 91 sanction such kind of limit and as such, all kinds of such proposals were required to be sent to the Head Office.
72. PW1 D.G. Saxena has further deposed that the bank has been issuing instructions to the branches from time to time, for adhering to certain safeguards in such facility. He has further deposed that the bank had issued the circulars, regarding co acceptance of the bills on 04.04.1985. He has further stated that the Head Office of Oriental Bank of Commerce had also issued circulars on "discretionary powers and guidelines" pertaining to loan and advances, to operate w.e.f. 01.10.1987 to 08.03.1989.
73. PW1 Sh. D.G.Saxena has further deposed that after sanction of the limit by the appropriate authority, the branch manager is required to obtain the documents from the borrower and record the entries in the books of accounts. If the sanction stipulates obtaining of certain collateral security, needful should be done for valid mortgage of security, before release of the limit. The branch CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 91 of 155 Special Judge, CBI01, Central, Delhi 92 would enter the transaction in "coacceptance bill register" accord serial number, recover the charges, pass the vouchers and thereafter may proceed further to coaccept the bills. He has further deposed that the Oriental Bank of Commerce had not sanctioned any such limit in favour of M/s Bliss Overseas Pvt. Ltd., nor it ever approached his bank, for giving the limit facility.
74. PW1 Sh. D.G.Saxena has further deposed that someone from M/s. Twenty First Century Credit Pvt. Ltd., approached his Head Office, along with the Hundi for Rs.55 Lacs, for verification of the signatures of the two officers of Oriental Bank of Commerce, Shimla branch and thereafter, Shimla Branch was contacted to establish the genuineness of the said transaction, pertaining to the said Hundi, on which, he was informed that no such Hundi was ever issued. He has further deposed that he had inquired about the sanction and the terms and conditions, on which the Hundi was issued by the Shimla Branch. He has categorically stated that the Hundi Ex.PW.24/A (Ex.PW.7/A) was not co CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 92 of 155 Special Judge, CBI01, Central, Delhi 93 accepted by his bank, in the absence of necessary sanction from the competent authority and compliance with the other systems at the branch. He has categorically stated that the Shimla Branch of Oriental Bank of Commerce was not authorized to coaccept the Hundi. He has further stated that accused Ashok Katoch (A1) & D.K.Gupta (A2), the officers of the Oriental Bank of Commerce, Shimla, were not authorized to coaccept the Hundi, on behalf of the bank.
75. PW1 Sh. D.G.Saxena has further deposed that on coming to know that accused Ashok Katoch (A1) & D.K.Gupta (A2) had co accepted the Hundi, he informed the senior officers of the Head Office at Oriental Bank of Commerce, New Delhi and thereafter, he along with PW7 Shri T.M.Bhasin went to Shimla Branch to find out the whole matter. He has further stated that at Shimla Branch, they found that the Hundi was coaccepted by accused Ashok Katoch (A1) & D.K.Gupta (A2), without proper sanction and authority and without any documentation and without CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 93 of 155 Special Judge, CBI01, Central, Delhi 94 recording the coacceptance in the books of accounts and therefore, he reported the matter to the higher authorities at the Head Office. He has categorically stated that whenever any bill is coaccepted, that coacceptance is required to be entered in the books of account of the branch, which had coaccepted the same.
76. PW1 Sh. D.G.Saxena has further deposed that during his visit to Shimla branch, he had checked the guarantee register Ex.PW1/2 to find out the entry, regarding coacceptance of the Hundi. He had further deposed that the branches were required to maintain a separate register, for making entries of co acceptance of bills by a particular branch. He has categorically stated that during his visit to Shimla branch, 'coacceptance of bills register', was not found available.
77. PW1 Sh. D.G.Saxena was crossexamined by the Ld. Defence counsels, at length. During his crossexamination by Shri S.K.Saxena, Advocate, Ld. Counsel for accused Shailesh CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 94 of 155 Special Judge, CBI01, Central, Delhi 95 Dhir (A4), he has deposed that the invoices are required to be attached with the Hundi / Bill of Exchange, when it is presented for encashment or for its coacceptance. He has admitted that the coacceptance of a Hundi by a bank is a kind of bank guarantee. He has further admitted that on coacceptance of the Hundi, the bank becomes liable to pay the amount covered under the Hundi, in case of its non payment by the party concerned, i.e. the purchaser. He has also admitted that when a Hundi is in respect of some transaction or sale of goods, then the Hundi has to be accompanied by some documents, showing the actual proof of despatch of goods by the seller to the purchaser, like railway receipt, delivery challan etc. He has further admitted that the invoice accompanying the Hundi must show a transaction of sale of goods. But, it is not necessary that the invoice must show the payment of salestax. He has further admitted that the "accommodation bills" are not based on any trade transactions. He has clarified that the accommodation bill is a document, which is drawn by a drawer on the drawee and it contains an CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 95 of 155 Special Judge, CBI01, Central, Delhi 96 undertaking to pay the specified amount, at a future date and the same is not accompanied by any document. He has further admitted that the accommodation bill does not involve any movement of the goods. He has further admitted that the "accommodation bills" or the "trade bills" are not legally defined anywhere, but the bank officials would come to know on seeing a particular document, whether it is a "trade bill" or an "accommodation bill". He has categorically stated that a trade bill must necessarily accompany the evidence of supply of goods.
78. During his crossexamination by Shri V.K.Sharma, Advocate, Ld. Defence Counsel for accused V.K.Sharma (A3), PW1 Shri D.G.Saxena has also admitted that the bank gives a power of attorney to different bank officials for doing certain acts, like co acceptance of Hundi and various instruments, which require acceptance, on behalf of the bank. He has further stated that the power of attorneys are issued on authorization by the Board of Directors of the bank. In his crossexamination, on behalf of CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 96 of 155 Special Judge, CBI01, Central, Delhi 97 accused Shailesh Dhir (A4), it was further admitted by this witness that whenever a power of attorney was issued by the bank in favour of any officer, a number was allotted to that power of attorney and the specimen signatures along with the number of the power of attorney of the officer, to whom the power of attorney had been issued, are available in all the branches of the bank, where the operational activities are carried out. He has further admitted that the power of attorney Ex.PW.1/DC and the power of attorney Ex.PW.1/DC were issued by the bank, in favour of accused Ashok Katoch (A1) & D.K.Gupta (A2), respectively. He has further admitted that under the terms of these two power of attorneys, accused Ashok Katoch (A1) & D.K.Gupta (A2) were empowered to discount the Hundi and to accept the same and other bill of exchange etc., apart from performing other functions, as mentioned therein.
79. During his crossexamination by Shri Kanwal Chaudhary, Advocate, Ld. Counsel for accused Ashok Katoch (A1) and CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 97 of 155 Special Judge, CBI01, Central, Delhi 98 D.K.Gupta (A2), PW1 Shri D.G.Saxena has further admitted that whenever the Hundi is to be coaccepted by the bank, necessary entry is to be made in the bank coacceptance register and necessary contra vouchers are also to be passed. He has further admitted that the guarantee issue register has nothing to do with the coacceptance bill register. He has further deposed that during his visit to Oriental Bank of Commerce, Shimla, he had not seized the short recital register, the coacceptance bill register or any contra vouchers. During his crossexamination, he had further admitted that the coacceptance and discounting of Hundi are the incidents of banking operations, involving advancing the loans. He has further admitted that in normal routine course, if any branch incumbent purchases or discounts any cheque / demand draft, beyond (sic 'within'), his powers, the said act can be ratified by the head office.
80. PW2 Ms. Anupa Abrol, who was Manager at Saket Branch of the Oriental Bank of Commerce, during the relevant time, has CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 98 of 155 Special Judge, CBI01, Central, Delhi 99 also deposed that none of the branch officers of Oriental Bank of Commerce, were empowered to coaccept a bill of exchange or Hundi of any party and only the head office of Oriental Bank of Commerce was having such powers. She was also cross examined by the Ld. Defence counsels, at length and in her crossexamination, she has deposed that a trade bill relates to the sale or trading of certain goods and the trade bill will not be accepted by the bank, unless it is showing sale of goods and is accompanied by delivery challan or lorry challan or railway receipt or air cargo. She has further stated that the trade bills are required to be accompanied by the insurance documents and should also show the sales tax, in order to determine, who is going to pay the sales tax, mentioned therein. During her cross examination, the invoice Ex.PW.2/D1 and Ex.PW.2/D2 were also put to her by the Ld. Defence counsels and on their questioning, she has deposed that these two invoices were actually the 'quotations' and were not the trade bills. She has further stated that the amount of sales tax is not mentioned in these two CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 99 of 155 Special Judge, CBI01, Central, Delhi 100 invoices and these invoices are also not accompanied by any insurance cover, delivery challan etc. During her cross examination, she has also admitted that the acceptance of the Hundi is a normal banking transaction, but the same is within the powers of the Head Office, Sanction Department. She has further stated that on a fair looking of the documents Ex.PW.2/D1 and Ex.PW.2/D2, no bank officials would take it to be the trade bills. She has further deposed in her crossexamination that in routine banking practice, a Hundi cannot be encashed without proper verification about its genuineness.
81. Perusal of the record further shows that after coming to know that Hundi Ex.PW.24/A (Ex.PW.7/A) (D12) was wrongly co accepted by the officials of Oriental Bank of Commerce, Shimla, i.e. by accused Ashok Katoch (A1) & D.K.Gupta (A2), the matter was reported by PW1 Sh. D.G.Saxena to his higher authorities and thereafter, he along with PW7 Shri T.M.Bhasin was directed to visit Shimla Branch. PW7 Shri T.M.Bhasin has also deposed CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 100 of 155 Special Judge, CBI01, Central, Delhi 101 that the bank officials i.e. accused Ashok Katoch (A1) & D.K.Gupta (A2), who had coaccepted the Hundi, were not empowered to coaccept the same. During his crossexamination, he had categorically stated that no property had been mortgaged against the Hundi and no mortgage was entered in the bank records of the branch. However, he had admitted that the bank was maintaining the short recital register, mortgage register, co acceptance bill register and the contra vouchers, generally in its banking transactions, at Shimla branch.
82. Perusal of the record further shows that during the cross examination of PW8 Shri B.P.Rastogi, who was posted as Manager in New Bank of India, East of Kailash, New Delhi, during the relevant period, the Hundi Ex.PW.8/D1, worth Rs.49,88,400/ was also put to him, for his opinion and after seeing the Hundi Ex.PW.8/D1, he had categorically stated that the Hundi, which is duly accepted and coaccepted and promised to pay the amount mentioned therein, on due date, cannot be constituted in itself, as CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 101 of 155 Special Judge, CBI01, Central, Delhi 102 a trade bill. But, it is an instrument of settlement of the promised amount. He had also deposed that from the Hundi Ex.PW.8/D1, it is not clear that it is for any consideration for the despatch of goods, but it is only against the value received, for which the payment has been accepted and coaccepted by the party and their bank.
83. To appreciate the depositions of PW1 Shri D.G.Saxena; PW2 Ms. Anupa Abrol; PW7 Shri T.M.Bhasin; and PW8 Shri B.P.Rastogi and their crossexaminations, it would be appropriate if the relevant circulars of Oriental Bank of Commerce, issued from time to time and the general guidelines of the Reserve Bank of India, regarding the coacceptance of Hundi / Bill of Exchange, are examined first.
84. The circular issued by Oriental Bank of Commerce, bearing circular No. ADV/37/85/118, dated 04.04.1985 is placed on record, as D58 and the same is reproduced below, as under :
CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 102 of 155 Special Judge, CBI01, Central, Delhi 103 ORIENTAL BANK OF COMMERCE (A GOVT. OF INDIA UNDERTAKING) HEAD OFFICE : NEW DELHI.
4th April, 1985.
Circular No. ADV / 37 / 85 /118 To All Branches / Area Offices / Regional Offices / Deptts. At Head Office / S.T.C. COACCEPTANCE OF BILLS BY BANKS Attention of the Regional Heads /Branch Incumbents is invited to our circular ACR/2/84/29 dated the 19th January 1984 in terms of which we had advised certain precautionary measures to be taken while extending the facilities of co acceptance of bills, opening of letters of credit and issuance of guarantee etc to the borrowers. Notwithstanding the instructions issued by the Reserve Bank of India in December 1983 and conveyed to the branches vide the said circular, R.B. I. has come across, in the recent past, certain instances whereby the banks' officials had shown laxity in complying with necessary precautions resulting in serious irregularities and losses to the banks. Vide its circular No. DBOD No. GC. SIC.BC.15/C.739(A1)85 dated the 12th February 1985 (copy attached), R.B.I has once again forewarned banks to ensure strict compliance of its instructions and failure of which would make the concerned officials liable for stern action. Hence, for the guidance of all concerned, we advise that the following procedures for co acceptance / discounting of trade bills coaccepted by other banks should be followed in addition to the existing instruction in force.
CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 103 of 155 Special Judge, CBI01, Central, Delhi 104
1. In case of giving coacceptance of any 'bills' the incumbent Incumbent Incharge must ensure that the bills drawn represent a genuine trade transaction. The value of bills should be verified from the invoice, Rrs/TRs or receipted challans, etc. Under no circumstances, coacceptance will be made if there is no regular limit sanctioned in favour of the party on whose behalf coacceptance is to be given.
2. While discounting bills of the value of Rs.25,000/ or more for single party coaccepted by other banks, branch should obtain written confirmation from Regional /Zonal office of the accepting bank . In case the value of total bills is more than Rs.10.00 Lacs for single party / group of borrower then prior approval of the Head Office of the co accepting bank should be obtained. The Incumbent Incharge must clearly note at proper records of such approval obtained from the Regional / Head office of the co accepting bank is maintained at the branch.
3. In order to ensure that the instructions issued are followed in true spirit. We advise the branches that an additional column in the half yearly statement of Bills purchased / discounted (STM47) to be sent to the respective Regional offices be provided. The additional column will be 'Name of the coaccepting bank' along with date of confirmation. Letter of its Regional office. Necessary particulars should be stated under this column in respect of those bills discounted by the branch which had been co accepted by other banks. The instructions as above shall be applicable from the period ending 30th June 1985. The Regional Offices will ensure that the aforesaid information is invariably incorporated by the branches in this statement.
The statement will also be scrutinized by them with particular, reference to the bills discounted by the branches CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 104 of 155 Special Judge, CBI01, Central, Delhi 105 on the strength of other banks' coacceptance and necessary followup will be made with the branches to ensure that procedure prescribed as above for coaccepted bills is strictly followed.
4. It is clarified that as per the present Discretionary powers in respect of loans and advances in force, no power is vested with our Regional Heads /Branch Incumbents to sanction co acceptance of trade bills limit. The proposals, if any, will be forwarded to Head Office. It may be noted that the above instructions pertains to the trade bills and not to the bills covered under IDBI /ICICI schemes.
The violation of these instructions in this regard will be viewed seriously and the erring official will expose himself to personal accountability.
Sd/ GENERAL MANAGER (OPERATIONS)
85. The circular issued by Oriental Bank of Commerce, bearing circular No. ADV/2/84/29, dated 19.01.1984 is placed on record, as D59 and the same is reproduced below, as under :
ORIENTAL BANK OF COMMERCE (A GOVT. OF INDIA UNDERTAKING) HEAD OFFICE : HARSHA BHAWAN EBLOCK : CONNAUGHT PLACE NEW DELHI110 001.
January 19, 1984 Circular No. ADV / 2 / 84 /29 CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 105 of 155 Special Judge, CBI01, Central, Delhi 106 To All Branches / Area Offices / Regional Offices / Area Offices / STC / Departmental Heads at the Head Office.
OPENING OF LETTER OF CREDIT, ISSUE OF GUARANTEES AND COACCEPTANCE OF BILLS BY BANKS - PRECAUTION TO BE EXERCISED.
Several instances have come to the notice of the Reserve Bank of India whereby banks did not exercise due care while placing the above facilities at the disposal of their customers and subsequently landed them into trouble. In most of the cases banks had allowed the facility without making necessary enquiries from their previous bankers and no attention was given for ensuring the enduse of bank's funds. The Reserve Bank of India have vide their circular DBOD No. GC.SIC.BC.97/C.408 (A)83 dated the 26th November 1983 (copy attached), advised to the banks various safeguards to be taken while considering borrowers' request for the aforesaid lines of credit.
In brief, the following safeguards are of utmost importance and should never be allowed to escape the attention of the Incumbent - Incharge / while considering request of the dead borrower for relevant lines of credit :
1. ...............
2. ...............
3. Coacceptance of Bills This facility should not be allowed in isolation.
The Incumbent Incharge should ensure that bills co accepted are genuine tradebills and not for the sake of mere accommodation. In any case banks should not extend their coacceptance to house bills /accommodation bills drawn by group concerns. In order to verify the genuinty of bills it CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 106 of 155 Special Judge, CBI01, Central, Delhi 107 should be seen that goods covered by coaccepted bills are actually entered in the stocks of the customer and their valuation should be verified from the invoices.
We also draw your attention to the para 4 of the Reserve Bank of India enclosed circular whereby it has been advised exercise utmost caution while granting advances against self cheques of the customers of purchasing cheques issued by parties / firms belonging to the same group. In this connection please also refer to the circular I&C/55/83/479 12.12.83. All the branch - incumbents are therefore, advised to make a thorough study of the Reserve Bank of India enclosed circular and exercise due caution while opening Letters of Credit / executing guarantees on behalf of various constituents or extending guarantees / co acceptance of bills facility to them.
Sd/ Dy. General Manager (Credit)
86. The guidelines of Reserve Bank of India, regarding the opening of letter of credit, issue of guarantee and coacceptance of bills by the banks, dated November 26, 1983, were attached with the circular of Oriental Bank of Commerce, dated 19.01.1984, for perusal and compliance by the officers of Oriental Bank of Commerce and the relevant portion of the guidelines, issued by the Reserve Bank of India, regarding "coacceptance of bills" are CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 107 of 155 Special Judge, CBI01, Central, Delhi 108 reproduced below, as under :
TELEGRAMS: RESERVE BANK OF INDIA POST BOX NO.
BANK CHALLAN, CENTRAL OFFICE 6089
BOMBAY DEPARTMENT OF BANKING
OPERATIONS AND DEVELOPMENT
"THE ARCADE" WORLD TRADE CENTRE,
CUFFE PARADE, COLABA, BOMBAY400 005
Ref. DBOD. No. G.C. SIC.BC. 97/C.408(A)83
November 26, 1983
Agrahayana 5, 1905 (Saka)
SECRET
Chief Executives of all
Commercial Banks (Other than
Regional Rural Banks)
Dear Sir,
Opening of Letters of Credit :
Issue of Guarantees and Coacceptance of bills by banks
1. ..................
2. ..................
3. Coacceptance of bills
(a) Recently some cases have also come to light where banks have coaccepted bills of their customers and also have discounted bills coaccepted by other banks in a casual manner. These bills have turned out to be accommodation bills drawn by a group of sister concerns on each other where no genuine trade transaction has taken place. Banks, while discounting such bills, appear to have ignored this important aspect presumably because of the co CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 108 of 155 Special Judge, CBI01, Central, Delhi 109 acceptance given by other banks. The bills on maturity were not honoured by the drawees and the banks payment of these bills and are finding it difficult to recover the amount from the drawers / drawees of bills. The banks have also discounted bills for sizeable amounts which were co accepted by certain Urban Cooperative Banks. On maturity, the bills have not been honoured and the cooperative Bank, which has coaccepted the bills, is also finding it difficult to make the payment. The financial position and capacity of the coaccepting bank to honour the bills, in the event of need, was not gone into.
(b) Cases also have come to light where the particulars regarding coacceptance of bills were not recorded in the bank's books with the result the extent thereof could not be verified during inspections and the Head office became aware of the coacceptance only when a claim was received from the discounting bank.
(c) The banks are, therefore, advised to keep in view the following safeguards :
i) While sanctioning coacceptance limits to their customers, the need therefore should be ascertained and such limits should be extended only to their customers enjoying other limits with the bank.
ii) Only genuine trade bills should be co accepted and the banks should ensure that the goods covered by bills coaccepted are actually received in the stock accounts of the borrowers.
iii) The valuation of the goods as mentioned in the accompanying invoices should also be verified to see that there is no over valuation of stocks.
iv) The banks should not exetend their co acceptance to house bills / accommodation bills drawn by CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 109 of 155 Special Judge, CBI01, Central, Delhi 110 groups concerns on one another.
v) The powers to coaccept bills, beyond a stipulated limit, must be exercised by two authorized officials jointly.
vi) The banks discounting such bills - co accepted by other banks should also ensure that the bills are not accommodation bills and that the coaccepting bills has the capacity to redeem the obligation in case of need.
vii) Parawise limits should be fixed, taking into consideration the size of the banks, for discounting bills co accepted by other banks and the relative powers of the officials of the other bank should be got registered with the discounting bank.
viii) Care should be taken to see that the co acceptance liability of any bank is not disproportionate to its known resources position.
ix) The system of obtaining periodical confirmation of the liability of coaccepting banks in regard to the outstanding bills should be introduced.
x) Proper records of the bills coaccepted for each customer should be maintained so that the commitments for each customer and the total commitments at a branch can be readily ascertained and these should be scrutinized by Internal Inspectors and commented upon in their reports.
xi) It is also desirable for the discounting bank to advise the Head Office / Controlling Office of the bank which has coaccepted the bills, whenever such transactions appear disproportionate or large.
xii) Proper periodical returns may be prescribed so that the branch managers' report such coacceptance, commitments entered into by them to the controlling offices. CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 110 of 155 Special Judge, CBI01, Central, Delhi 111 Such returns should also reveal the position of bills that have become overdue and which the bank had to meet for the co acceptance obligation. This will enable the controlling offices to monitor such coacceptance furnished by the branches and take suitable action in time, in different cases.
4. Purchase of cheques The banks should also exercise utmost caution while granting advances against self cheques of the parties or while purchasing cheques particularly those issued by parties / firms belonging to the same group so as to ensure that the facilities are not misused.
5. We would appreciate if suitable action is initiated immediately by your bank and a copy of the circulars / instructions issued by your bank in this connection is forwarded to us for our information.
Please acknowledge receipt.
Yours faithfully, Sd/ (S. Raghavan ) Joint Chief Officer
87. Perusal of these circulars issued by the Head Office, Oriental Bank of Commerce and the guidelines issued by the Reserve Bank of India, regarding the coacceptance of bill, clearly indicate that no power was vested with the Regional Head / Branch incumbents of Oriental Bank of Commerce, to sanction co acceptance of the trade bills limit. The proposals in this regard, if CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 111 of 155 Special Judge, CBI01, Central, Delhi 112 any, were required to be forwarded to the head office. Furthermore, only the 'genuine trade bills' could be coaccepted by the duly authorized officials of the banks. The bank officials were not authorized to coaccept any other kind of bills. The banks were further required to ensure in case of 'genuine trade bills' that the goods covered by the bills coaccepted, were actually received in the stock account of the borrower.
88. From the depositions of PW2 Ms. Arupa Abrol and PW8 Sh.
B.P.Rastogi, it is clear that neither the Hundi Ex.PW8/D1, worth Rs.49,48,400/, nor the second Hundi Ex.PW24/A (Ex.PW.7/A), worth Rs.55 Lacs was a trade bill. Furthermore, even the accompanying invoice Ex.PW.2/D1 and Ex.PW.2/D2 were not the invoices of any actual sale or purchase and were only the "quotations" in nature. Furthermore, the bank officials were barred to extend their coacceptance to house bills / accommodation bills, drawn by the group concerned and they were required to ensure that the goods covered by these Hundies CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 112 of 155 Special Judge, CBI01, Central, Delhi 113 and invoices were actually entered in the stocks of the customers, i.e. M/s Bliss Overseas Pvt. Ltd., and therefore, valuation were required to be verified from the invoices. Furthermore, even the valuation of the goods mentioned in the invoices (quotations herein), were to be verified by the bank officials to ensure that there was no over valuation of the stocks. The bank officials were required to ascertain that such limits were extended only to their customers, who were enjoying other limits with the bank.
89. Perusal of the above referred circulars of Oriental Bank of Commerce and the guidelines of the Reserve Bank of India has also put the responsibility on the discounting bank (Standard Chartered Bank, New Delhi, in the present case) and has instructed the discounting bank to advise the head office / controlling office of the bank, which has coaccepted the bills, whenever such transactions appear disproportionate or large. These guidelines, though not mandatory in nature, were required to be followed by all the banks and the respective branches of the CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 113 of 155 Special Judge, CBI01, Central, Delhi 114 Oriental Bank of Commerce, as a rule of prudence. But, in the present case, accused Ashok Katoch (A1), D.K.Gupta (A2) and accused V.K.Sharma (A3), have not followed these guidelines. The depositions of the prosecution witnesses and the documentary evidence on record, clearly indicate that these directions and guidelines were flouted by them, willfully, deliberately and to control their illegal acts, with an intention to cheat the bank. Accused Ashok Katoch (A1), D.K.Gupta (A2) & accused V.K.Sharma (A3) have deliberately failed to enter or make entries in the relevant coacceptance bills register, regarding the coacceptance of both the Hundies. Furthermore, these Hundies / Bills of Exchange were coaccepted by these bank officials, despite of the fact that these bills were not accompanied with the genuine trade bills. Furthermore, these hundies and documents were never forwarded, by them, to the head office of Oriental Bank of Commerce at New Delhi, for approval, despite strict directions, in this regard.
CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 114 of 155 Special Judge, CBI01, Central, Delhi 115
90. During the course of arguments, the second main contention of the Ld. Defence counsels has remained that accused Ashok Katoch (A1), D.K.Gupta (A2) & accused V.K.Sharma (A3), were duly empowered by the Oriental Bank of Commerce, by means of power of attorneys Ex.PW.2/DB and Ex.PW.2/DC, to coaccept the Hundies and therefore, they have not committed any illegal act, by coaccepting the hundies. But, I do not find any merit in this arguments also. When the contents of these two power of attorneys are perused, it is clear that a power has been given to accused Ashok Katoch (A1) & D.K.Gupta (A2), to coaccept the bills or the Hundies. But, they were required to exercise these powers by following the other instructions also, as issued by the Head Office, Oriental Bank of Commerce, from time to time, vide various circulars and were also required to follow the guidelines of the Reserve Bank of India. They were supposed to make the entries in the coacceptance bills register, regarding the co acceptance of these bills and were thereafter required to forward the complete file to the Head Office at New Delhi, through their CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 115 of 155 Special Judge, CBI01, Central, Delhi 116 respective regional offices, for approval. But, these bills along with the invoices and documents were never forwarded by them to their Head Office, for approval, deliberately. They were also required to take the collateral security from M/s Bliss Overseas Pvt. Ltd., at the time of coacceptance of the bills / Hundies, itself and were also required to deduct the prescribed bank charges, for coacceptance of the Hundies. But these necessary formalities were not completed by accused Ashok Katoch (A1), D.K.Gupta (A2) and accused V.K.Sharma (A3), deliberately and intentionally. If the file of coacceptance of Hundies was forwarded by them to the Head Office, at New Delhi, their illegal activities could have been detected, then and there, by the Head Office. On the other hand, in order to facilitate the cheating, accused Ashok Katoch (A1), D.K.Gupta (A2) and accused V.K.Sharma (A3) handed over the Hundies, invoices and confirmation letters, by Hand, so that the Hundies may be discounted immediately. Furthermore, the contention of the Ld. Defence counsels that the hundi was secured by creating CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 116 of 155 Special Judge, CBI01, Central, Delhi 117 additional charge on the properties of accused Shanta Lal Chopra is also not sustainable, as their own witness, DW1 Pratap Thakur, Patwari of Station Ward, Bada Shimla (H.P.), has categorically stated that the property comprised in Khasra No. 352/A/1, measuring 842 sq. yards, situated near Combermere Post Office, known as ABlock, Combermere Estate, The Mall, Shimla, was mortgaged for an amount of Rs.49,88,400/, on 22.08.1989. The Hundi, Ex.PW8/D1, was coaccepted on 07.02.1989.
91. The legal position on 'conspiracy' has been settled by the Hon'ble Supreme Court, in case titled as "K.R.Purushothaman Vs. State of Kerala", reported as (2005) 12 Supreme Court Cases 631, wherein, it has been held as under :
11. Section 120A IPC defines "criminal conspiracy".
According to this Section when two or more persons agree to do, or cause to be done (i) an illegal act, or (ii) an act which is not illegal by illegal means, such an agreement is designated a criminal conspiracy. In Major E.G.Barsay V. State of Bombay Subba Rao J., speaking for the Court has said :(SCR p.228) CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 117 of 155 Special Judge, CBI01, Central, Delhi 118 "The gist of the offence is an agreement to break the law. The parties to such an agreement will be guilty of criminal conspiracy, though the illegal act agreed to be done has not been done. So too, it is not an ingredient of the offence that all the parties should agree to do a single illegal act. It may comprise the commission of a number of acts."
12. In State V. Nalini it was observed by S.S.M. Quadri, J. at JT para 677: (SCC pp.56869, para 662) "In reaching the stage of meeting of minds, two or more persons share information about doing an illegal act or a legal act by illegal means. This is the first stage where each is said to have knowledge of a plan for committing an illegal act or a legal act by illegal means. Among those sharing the information some or all may form an intention to do an illegal act or a legal act by illegal means. Those who do form the requisite intention would be parties to the agreement and would be conspirators but those who drop out cannot be roped in as collaborators on the basis of mere knowledge unless they commit acts or omissions from which a guilty common intention can be inferred. It is not necessary that all the conspirators should participate from the inception to the end of the conspiracy; some may join the conspiracy after the time when such intention was first entertained by any one of them and some others may quit from the conspiracy. All of them CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 118 of 155 Special Judge, CBI01, Central, Delhi 119 cannot but be treated as conspirators. Where in pursuance of the agreement the conspirators commit offences individually or adopt illegal means to do a legal act which has a nexus with the object of conspiracy, all of them will be liable for such offences even if some of them have not actively participated in the commission of those offences."
13. To constitute a conspiracy, meeting of minds of two or more persons for doing an illegal act or an act by illegal means is the first and primary condition and it is not necessary that all the conspirators must know each and every detail of the conspiracy. Neither is it necessary that every one of the conspirators take active part in the commission of each and every conspiratorial acts. The agreement amongst the conspirators can be inferred by necessary implication. In most of the cases, the conspiracies are proved by the circumstantial evidence, as the conspiracy is seldom an open affair. The existence of conspiracy and its objects are usually deduced from the circumstances of the case and the conduct of the accused involved in the conspiracy. While appreciating the evidence of the conspiracy, it is incumbent on the court to keep in mind the wellknown rule governing circumstantial evidence viz. each and every incriminating circumstance must be clearly established by reliable evidence and the circumstances proved must form a chain of events from which the only irresistible conclusion about the guilt of the accused can be safely drawn, and no other hypothesis against the guilt CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 119 of 155 Special Judge, CBI01, Central, Delhi 120 is possible. Criminal conspiracy is an independent offence in the Penal Code. The unlawful agreement is sine qua non for constituting offence under the Penal Code and not an accomplishment. Conspiracy consists of the scheme or adjustment between two or more persons which may be express or implied or partly express and partly implied. Mere knowledge, even discussion, of the plan would not per se constitute conspiracy. The offence of conspiracy shall continue till the termination of agreement.
14. Suspicion cannot take the place of legal proof and prosecution would be required to prove each and every circumstance in the chain of circumstances so as to complete the chain. It is true that in most of the cases, it is not possible to prove the agreement between the conspirators by direct evidence but the same can be inferred from the circumstances giving rise to conclusive or irresistible inference of an agreement between two or more persons to commit an offence. It is held in Noor Mohd. Mohd. Yusuf Momin V. State of Maharashtra, that:
(SCC pp.699700, para 7) "[I]n most cases proof of conspiracy is largely inferential though the inference must be founded on solid facts. Surrounding circumstances and antecedent and subsequent conduct, among other factors, constitute relevant material."
15. It is cumulative effect of the proved circumstances which should be taken into account in determining the guilt of the accused. Of course, each CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 120 of 155 Special Judge, CBI01, Central, Delhi 121 one of the circumstances should be proved beyond reasonable doubt. The acts or conduct of the parties must be conscious and clear enough to infer their concurrence as to the common design and its execution. While speaking for the Bench it is held by P. Venkatarama Reddi, J. in State (NCT of Delhi) V. Navjot Sandhu (p.63) as follows: (SCC pp.69192, para 103) "103. We do not think that the theory of agency can be extended thus far, that is to say, to find all the conspirators guilty of the actual offences committed in execution of the common design even if such offences were ultimately committed by some of them, without the participation of others.
We are of the view that those who committed the offences pursuant to the conspiracy by indulging in various overt acts will be individually liable for those offences in addition to being liable for criminal conspiracy; but, the nonparticipant conspirators cannot be found guilty of the offence or offences committed by the other conspirators. There is hardly any scope for the application of the principle of agency in order to find the conspirators guilty of a substantive offence not committed by them.
Criminal offences and punishments therefor are governed by the statute. The offender will be liable only if he comes within the CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 121 of 155 Special Judge, CBI01, Central, Delhi 122 plain terms of the penal statute. Criminal liability for an offence cannot be fastened by way of analogy or by extension of a common law principle.
(emphasis supplied by me)
92. In the present case, accused Shanta Lal Chopra (A8) and accused Ravinder Verma (A6) are the two master mind of the entire conspiracy and they had conspired together with accused Ashok Katoch (A1), D.K.Gupta (A2) and accused V.K.Sharma (A3), to cheat O.B.C., Shimla, for a sum of Rs.49,88,040/. Accused Shanta Lal Chopra (A8) & accused Ravinder Verma (A6) had hatched the entire conspiracy with the sole purpose that accused Shanta Lal Chopra (A8) may return back the arrears of his previous loan with the OBC, Shimla and may get his mortgaged properties released from OBC, Shimla and thereafter, he may get a fresh loan from OBC, Shimla, on the basis of the same properties. Accused Shanta Lal Chopra (A8) had conspired with coaccused Ravinder Verma (A6) and to achieve the common object of the conspiracy, both of them induced CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 122 of 155 Special Judge, CBI01, Central, Delhi 123 accused Ashok Katoch (A1), D.K.Gupta (A2) and accused V.K.Sharma (A3) to do the illegal acts, by abusing and misusing their official positions. Accused Ashok Katoch (A1), D.K.Gupta (A2) and accused V.K.Sharma (A3) have played their parts in commission of various offences by facilitating the execution of the entire conspiracy. It has also come on record that accused Shanta Lal Chopra (A8) was well acquainted with accused Ashok Katoch (A1), D.K.Gupta (A2) and accused V.K.Sharma (A3) for the last several years, as these accused were the officers at Oriental Bank of Commerce, Shimla, from where accused Shanta Lal Chopra has taken a loan of Rs.39 Lacs, for construction of his properties.
93. Perusal of the record further shows that accused Shanta Lal Chopra (A8) and accused Ravinder Verma (A6) had used M/s. Twenty First Century Credit Pvt. Ltd. (A5), and its directors, accused Shailesh Dhir (A4) and Rajiv Khanna (A9), as a tool, to execute their illegal acts and to achieve their illegal objectives. CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 123 of 155 Special Judge, CBI01, Central, Delhi 124 There is nothing on record to show that M/s. Twenty First Century Credit Pvt. Ltd., or its directors, accused Shailesh Dhir (A4) and accused Rajiv Khanna (A9) were previously known to accused Shanta Lal Chopra (A8) or to accused Ravinder Verma (A6). But, for the insistence of accused Shailesh Dhir (A4), to get the Hundi verified from the Head Office of O.B.C., at New Delhi, the entire conspiracy could have never been unfolded. This fact is clear from the depositions of PW1 Sh. D.G.Saxena and PW2 Smt. Anupa Abrol. It has been categorically stated by PW1 Sh. D.G.Saxena, during his crossexamination by Shri S.K.Saxena, Advocate for accused Shailesh Dhir (A4) on 24.02.2004 that he had asked the officials of M/s. Twenty First Century Credit Pvt. Ltd., as to why he was seeking the verification of coacceptance of the Hundi from him, when the same had already been verified by Mr. R.K.Mason. Mr. R.K.Mason was the senior manager of the Connaught Place Branch of Oriental Bank of Commerce. This witness has further stated that the said official of M/s. Twenty First Century Credit Pvt. Ltd., had still requested him to get the co CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 124 of 155 Special Judge, CBI01, Central, Delhi 125 acceptance of the Hundi certified again as he was not satisfied with the earlier verification. This witness has categorically deposed that the officer was from M/s. Twenty First Century Credit Pvt. Ltd. and on the insistence of that officer, M/s. Twenty First Century Credit Pvt. Ltd., he telephoned the Shimla Branch of the bank, for verification. He had also categorically stated that he came to know the fact that accused Ashok Katoch (A1) & D.K.Gupta (A2) were not the competent officers for coaccepting the Hundi, only when he telephoned the Shimla branch of the Oriental Bank of Commerce, in this regard, when the second Hundi was presented to him along with the covering letter Ex.PW1/1, by the representative of M/s. Twenty First Century Credit Pvt. Ltd. and prior to that day, he was not aware of that fact. He had clarified that when he says that he was not aware of this fact prior to that day, means the Head Office of Oriental Bank of Commerce, was not aware of this fact, prior to that day.
94. PW2 Ms. Anupa Abrol had also deposed that the letter CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 125 of 155 Special Judge, CBI01, Central, Delhi 126 Ex.PW.2/A, addressed to M/s. Twenty First Century Credit Pvt. Ltd. came to her for verification of the signatures of accused Ashok Katoch (A1) & D.K.Gupta (A2) from Standard Chartered Bank, New Delhi and she simply verified the signatures of the two officers of Oriental Bank of Commerce, Shimla branch. During her crossexamination by Shri S.K.Saxena, Advocate for accused Shailesh Dhir (A4), the director of M/s. Twenty First Century Credit Pvt. Ltd., this witness has admitted that on 09.02.1989, accused Shailesh Dhir (A4) had accompanied the officials from Standard Chartered Bank, who had come to her with the letter Ex.PW2/A, for verification of the signatures of the officers, appearing thereon, on behalf of Oriental Bank of Commerce, Shimla branch. She has further admitted that accused Shailesh Dhir (A4) had asked her to verify the correctness of the co acceptance of the bills, as well as about the genuineness of the signatures of the concerned bank officials, who had signed the same and accused Shailesh Dhir (A4) had told her that M/s Bliss Overseas Pvt. Ltd., was not known to him and that even the bank CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 126 of 155 Special Judge, CBI01, Central, Delhi 127 officials were not known to him. She has further deposed that she told accused Shailesh Dhir (A4) that she can only verify the signatures of the bank officers and she cannot say whether those signatures were genuine or forged. This witness has further deposed that thereafter, she made a telephone call to Shimla Branch of OBC, to confirm about the genuineness of the signatures of the bank officials and telephonically, it was confirmed to her by the branch manager that the bill in question was signed by the bank officials and coacceptance had been issued from there. She had categorically stated that she made the telephone call to Shimla branch of O.B.C., on the pursuation of accused Shailesh Dhir (A4).
95. The testimonies of PW1 Sh. D.G.Saxena and PW2 Ms. Anupa Abrol have clearly established on record that neither the head office of Oriental Bank of Commerce at Connaught Place, New Delhi, nor the officials of Standard Chartered Bank, New Delhi, were aware about the coacceptance of the Hundi by the CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 127 of 155 Special Judge, CBI01, Central, Delhi 128 bank officers of Oriental Bank of Commerce, Shimla, i.e. accused Ashok Katoch (A1) & D.K.Gupta (A2), herein, till the time accused Shailesh Dhir (A4) and his officials approached the head office of Oriental Bank of Commerce at Connaught Place, New Delhi. There is no evidence on record to show that M/s. Twenty First Century Credit Pvt. Ltd. or its directors were required to get the coacceptance of bills of exchange / Hundi, reverified from the head office of any of the bank, under any rule or procedure. If the accused M/s. Twenty First Century Credit Pvt. Ltd. and its directors accused Shailesh Dhir (A4) and accused Rajiv Khanna (A9) had connived together with the remaining other accused persons, in the present conspiracy to cheat the Oriental Bank of Commerce, Shimla, then why should have they insisted on the verification of the coacceptance of the Hundis by the officials of the Oriental Bank of Commerce, Shimla, from their head office, at New Delhi. It was very easy for them to let the bank officials, i.e., his banker Standard Chartered Bank, as well as the head office of OBC at New Delhi, to clear the hundis, CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 128 of 155 Special Judge, CBI01, Central, Delhi 129 without any verification from the head office of the OBC at New Delhi. On the contrary, it was for the Standard Chartered Bank, as per the guidelines of the RBI, to verify the signatures and authorization of the concerned bank officials before discounting the bills of exchange / hundis.
96. Perusal of the record further shows that PW26 Hemant Kumar Kaushik had also deposed that in January, 1989, accused Shanta Lal Chopra (A8) came to Delhi to meet him and accused Ravinder Verma (A6) and he informed them about the firm M/s. Twenty First Century Credit Pvt. Ltd. Nehru Place, New Delhi and also informed them to get finance from the said company. Thereafter, they went to the office of M/s. Twenty First Century Credit Pvt. Ltd. at Nehru Place, where coaccused Rajiv Khanna (A9) met them. But, during talks accused Rajiv Khanna (A9) denied them to finance as they were not dealing in finance for real estate purposes. No other role has been attributed to accused Rajiv Khanna (A9) and after the initial talks, accused Shailesh CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 129 of 155 Special Judge, CBI01, Central, Delhi 130 Dhir (A4) had joined them and he allegedly told PW26 Hemant Kumar, accused Ravinder Verma (A6) and Shanta Lal Chopra (A8), his scheme about financing M/s Bliss Overseas Pvt. Ltd., for acquisition of computer hardwares peripherals and accessories and accordingly, the invoice Ex.PW2/A and hundi, Ex.PW8/D1, wroth Rs.49,88,040/, were prepared, on behalf of M/s. Twenty First Century Credit Pvt. Ltd., by accused Behnan Thomas (P.O.).
97. The evidence on record has clearly established, beyond a shadow of doubt, that accused Shanta Lal Chopra (A8) and accused Ravinder Verma (A6) were the master mind of the entire conspiracy. Their conduct in misusing the amount of the hundi for their own use for construction business, has also indicated that accused Ravinder Verma and M/s Bliss Overseas Pvt. Ltd., had got the hundi and the invoice, Ex.PW8/A & Ex.PW2/D1, respectively, prepared from accused M/s. Twenty First Century Credit Pvt. Ltd., for using the said money in their construction CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 130 of 155 Special Judge, CBI01, Central, Delhi 131 business and they never intended to use the said money for purchasing the computer hardware, peripherals or accessories. After receiving the amount of the Hundi Ex.PW8/D1, in the account of M/s Bliss Overseas Pvt. Ltd., from M/s Twenty First Century Credit Pvt. Ltd., accused Ravinder Verma (A6) transferred an amount of Rs.25 Lacs, vide cheque Ex.PW26/G (D36), to M/s. Meghna Builders, in which accused Ravinder Verma and Shanta Lal Chopra were the two directors. Thereafter, accused Ravinder Verma, as director of M/s. Meghna Builders, issued cheque Ex.PW14/B (D65), for Rs.23 Lacs in favour of coaccused Shanta Lal Chopra. The said cheque was duly credited in the account of coaccused Shtana Lal Chopra. Thereafter, accused Ravinder Verma (A6) issued another cheque worth Rs.51,000/, Ex.PW34/A333 (D29), from his company M/s Bliss Overseas Pvt. Ltd., in favour of accused Shanta Lal Chopra, The said amount of Rs.51,000/ was also duly credited in the account of accused Shanta Lal Chopra. From this total amount of Rs.23,51,000/, accused Shanta Lal Chopra, CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 131 of 155 Special Judge, CBI01, Central, Delhi 132 paid the arrears of his previous loan of Rs.39 Lacs, which he had taken from Oriental Bank of Commerce, Shimla. In the said loan account, the properties of accused Shanta Lal Chopra were mortgaged with Oriental Bank of Commerce, Shimla. The entire case file of the previous loan of accused Shanta Lal Chopra has come on record as Ex.PW32/A. All these circumstances have established that the entire conspiracy was hatched with the intention to benefit Shanta Lal Chopra and to enable him to get his properties released from mortgage from Oriental Bank of Commerce, Shimla and to get another loan worth Rs.44 Lacs from Oriental Bank of Commerce, Shimla, for his use in his real estate business.
98. Perusal of the record further shows that the written statements, filed on record, by accused Ravinder Verma (A6), Ex.WS/A6, and accused Shanta Lal Chopra (A8), Ex.WS/A8, during their examination, u/s 313 Cr.P.C., contained material contradictions from each other and from the documentary CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 132 of 155 Special Judge, CBI01, Central, Delhi 133 evidence on record. It has been stated by accused Shanta Lal Chopra (A8) that in order to develop his properties at Shimla, he formed a company in the name of M/s Meghna Builders, in which coaccused Ravinder Verma (A6), has agreed to invest and he received the amount from M/s Meghna Builders, as advance for development of his properties and the same was part of a legitimate transaction. He has further stated that after encashment of cheque of Rs.23 Lacs, he immediately assured the bankers and stood guarantor in the said hundi and even paid a total amount of Rs.30 Lacs in September, 1989. This fact does not find mention in the written statement, Ex.WS/A6, filed by accused Ravinder Verma (A6). Furthermore, these averments clearly indicate that accused Shanta Lal Chopra (A8) has stood guarantor in the hundi and paid the amount in the month of September, 1989 only and not on 07.02.1989, when the hundi Ex.PW8/D1, was coaccepted by the bank officials of Oriental Bank of Commerce, Shimla.
CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 133 of 155 Special Judge, CBI01, Central, Delhi 134
99. Another contention of the Ld. Defence counsels for accused Ashok Katoch (A1), D.K.Gupta (A2) and accused V.K.Sharma (A3), had remained that these accused were not the 'public servants' and therefore, they cannot be tried for any offence under The Prevention of Corruption Act, 1988. But, I do not find any merit in this argument also, as it has been held by the Hon'ble Supreme Court of India, in case titled as "Union of India & another vs. Ashok Kumar Mitra", reported as "1995 Crl. L.J. 3633", as under:
7. The controversy, whether a nationalised bank is only a body corporate or is a corporation is no longer resintegra. On account of the nationalisation, the nationalised banks are not only established by a Central Act but are also owned and controlled by the Central Government.
8. A Constitution Bench of this Court in Ashoka Marketing Ltd. v. Punjab National Bank, (1990) 4 SCC 406 : (AIR 1991 SC 855), specifically considered the question whether a nationalised bank is a 'corporation' or a 'body corporate' and held :
"Keeping in view the provisions of the Banks Nationalisation Act we are of the opinion that the CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 134 of 155 Special Judge, CBI01, Central, Delhi 135 nationalisation of bank is a corporation established by a Central Act and it is owned and controlled by the Central Government."
(Emphasis ours) The Constitution Bench expressly overruled the judgment of the Delhi High Court in the Oriental Bank of Commerce case, (1982 Cri LJ 2230), (supra) and held that the distinction drawn in that judgment between a 'body corporate' and 'corporation' in relation a nationalised bank is erroneous and that the view that a nationalised bank is not a corporation could not be sustained. Thus, it now rests settled that a nationalised bank is a corporation which is established by a Central Act and is owned and controlled by the Central Government. Are the employees of Corporations which are owned and controlled by the Central Government and are established by a Central Act, 'public servant's' ?
9. In State through CBI v. O.P.Dogra, AIR 1986 SC 312, while setting aside the judgment of the High Court of J & K, which had held that the employees of an Insurance Company were not 'public servants' within the meaning of section 21 RPC (corresponding to Section 21 IPC), this Court opined : (Para 4) "So far as the Life Insurance Corporation is concerned, there can be no second view that the employees of the Corporation come within the CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 135 of 155 Special Judge, CBI01, Central, Delhi 136 definition of the term 'public servant' as given under Section 21 of RPC. So far as the other respondents are concerned, admittedly Jupiter Insurance C., has been merged with the Oriental Fire and General Insurance Co., after nationalisation and the latter is now a part of the Corporation, namely General Insurance Corporation of India. By such process, the respondents Dogra and his associates are in the same position as Anand. Mr. Kapil Sibal, learned counsel appearing for Dogra and his associates has stated before us that the finding of the High Court on this score is not tenable and the respondents must be held to be public servants." Section 21 IPC provides :
"21. "Public Servant" The words "public servant" denote a person falling under any of the descriptions hereinafter following, namely :
............................................................................... ...............................................................................
Twelfth - Every person
(a) in the service or pay of the Government or remunerated by fees or commission for the performance of any public duty by the Government;
(b) in the service or pay of a local authority, a corporation established by or under a Central Provincial or State Act or a Government company as defined in Section 617 of the Companies Act, CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 136 of 155 Special Judge, CBI01, Central, Delhi 137 1956.
10. On a plain reading of the above provision, it follows that the view of the Calcutta High Court in the impugned judgment holding that the Branch Manager of Bank of India is not a 'public servant' under Section 21 of IPC is erroneous and cannot be sustained.
(emphasis supplied by me)
100. Another argument, on behalf of the accused persons has been addressed regarding the powers of the CBI, to investigate the present case in the State of Himachal Pradesh. It has been argued by the Ld. Counsel for accused Ashok Katoch (A1) & D.K.Gupta (A2) that in view of the Judgment of the Hon'ble High Court of Delhi, in case titled as "Surinder Singh Ahluwalia vs. Delhi Special Police Establishment Act, 1946, (Supra), and the Judgments of the Hon'ble Supreme Court in case titled as "Manohar Lal Sharma vs. Principal Secretary & Ors., (Supra) & 'M. Bala Krishna Reddy vs. Director, CBI' (Supra), it was necessary for the CBI to take prior approval and sanction from the CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 137 of 155 Special Judge, CBI01, Central, Delhi 138 Government of the State of Himachal Pradesh to conduct the investigations of the present case in the State of Himachal Pradesh. But, I do not find any merit even in this argument, as vide orders dated 24.08.1990, bearing No. 228/40/88AVD.II (III), dated 24.08.1990, issued by the Ministry of Personnel, P.G. & Pension, (Department of Personnel & Training), Government of India, the CBI has been conferred the powers under Section 5(1) read with Section 6 of the Delhi Special Police Establishment Act, 1946, to the whole of the State of Himachal Pradesh, for investigation of the offences under the Prevention of Corruption Act, 1988 (Act No. 49/88). The order, dated 24.08.90, is reproduced below, for ready reference :
No. 228/40/88AVD.II (III) Government of India Ministry of Personnel, P.G. & Pensions (Department of Personnel & Training) ..............................
New Delhi, the 24 August, 1990 O R D E R S.O....................... In supersession to Department of Personnel and Training order No. 228/40/88AVD.II dt. 23.8.89 and in exercise on the powers conferred by sub section (1) of the sec. 5 read with sec. 6 of the Delhi Special CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 138 of 155 Special Judge, CBI01, Central, Delhi 139 Police Establishment Act 1946 (Act No. 25 of 1946) the Central Government with the consent of the State Government of Himachal Pradesh (vide. Consent order No. Vigilance dept. No. Per (Vig.) A3 (2)/88, dt. 2.8.89) hereby extends the powers and jurisdiction of the members of the Delhi Special Police Establishment to the whole of the state of Himachal Pradesh for investigation of offences as mentioned hereunder against the officials / officers of the Central Govt. department and other Central Institutions, located in the territory of Himachal Pradesh.
(a) Offences under Prevention of Corruption Act, 1988 (Act No. 49/88)
(b) Attempts, abetments and conspiracies in relation to or in connection with one or more of the offences mentioned above, and any other offence or offences committed in the course of the same transaction arising out of the same facts.
Sd/ ( G. Sitaraman ) Under Secretary to the Govt. of India No. 228/40/88AVD.II (III) New Delhi, the 24 August, 1990 To,
1. The Chief Secretary, Govt. of Himachal Pradesh w.r.t. the State Govt. order mentioned above.
2. Director, CBI, New Delhi.
3. DIG of Police, CBI, Simla (Himachal Pradesh).
4. Ministry of Law (Official Language Wing) New Delhi.
5. CBI (Legal Division) New Delhi.
6. AVD. II for Guard File.
7. 5 spare copies.
CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 139 of 155 Special Judge, CBI01, Central, Delhi 140 Sd/ ( G. Sitaraman ) Under Secretary to the Govt. of India
101. The last contention of the Ld. Defence counsels has remained that the entire amount of the Hundi Ex.PW.8/D1 stands already paid to Oriental Bank of Commerce, Shimla in September, 1989, itself, and the liability of Standard Chartered Bank, New Delhi was also discharged by Oriental Bank of Commerce, Shimla, during the litigations between the banks and the accused. It was stressed that the entire amount stands paid by the Oriental Bank of Commerce, Shimla to Standard Chartered Bank, in the year 1997 and therefore, there was no loss, either to the Oriental Bank of Commerce, Shimla or to the Standard Chartered Bank, New Delhi and therefore, no offence of cheating is made out against any of the accused persons. But, I do not find any merit even in this contention of the Ld. Defence counsels, as it is a settled legal position that once the commission of criminal offences has been completed by the acts of the accused CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 140 of 155 Special Judge, CBI01, Central, Delhi 141 persons, the repayment of the cheated or misappropriated amount by them, afterwards, shall not absolve them of their criminal liabilities. Furthermore, the offences committed by the accused persons, in the present case, are not compoundable in nature.
102. It has been held by the Hon'ble Supreme Court, in case titled as, 'State vs. R. Vasanthi Stanley', reported as, '2015 SCC OnLine SC 815', as under :
6. It is submitted by Mr. Subramonium Prasad, learned senior counsel for the State that regard being had to the facts and circumstances of the case, it was absolutely inapposite on the part of the High Court to quash the criminal proceedings as the allegation by the prosecution pertain to availing of loan by depositing documents which were forged. It is urged by him that the plea taken by the respondentaccused that she was unaware of any transaction does not remotely appeal to the common sense and, in any case, such a plea cannot be entertained for the purpose of quashing criminal cases. It is further urged that even if there are settlements and dues have been cleared, in such CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 141 of 155 Special Judge, CBI01, Central, Delhi 142 type of cases the accused cannot be absolved from the criminal culpability without the trial taking place.
7. Resisting the aforesaid submissions it is canvassed by Mr. Tankha, learned senior counsel for the first respondent 9 that when the High Court, considering the controversy from all the requisite angles has quashed the proceedings, this Court should not interfere with the impugned order in exercise of its jurisdiction under Article 136 of the Constitution. Learned senior counsel would contend that when the respondent has already paid the amount due to the Bank from her own savings and settled the matter with grieved financial institutions, continuance of the criminal proceeding is not desirable as it is unlikely to serve any fruitful purpose. That apart, submits Mr. Tankha, continuation of the proceeding would unnecessarily load the criminal justice dispensation system as there is likelihood of an order of acquittal at the end of the trial.
8. To appreciate the submissions advanced at the bar, we may straightaway refer to the authority in State of Maharashtra through CBI v. Vikram Anantrai Doshi and others. In the said case, the accused was charged for the offences punishable under Sections 120B, 406, 420, 467, 468 and 471 IPC. The allegation in the CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 142 of 155 Special Judge, CBI01, Central, Delhi 143 said case was that the accused no. 1 had obtained Letters of Credit from the State Bank of India and Dena Bank in favour of fictitious companies formed by the accused and used the said Letters of Credit to siphon off the funds from the banks. During the pendency of the case, the accused settled the dispute with the Bank by paying the amount and the Bank in turn had issued no due certificate. The Court referred to case in CBI v. A. Ravishankar Prasad and others, wherein the pronouncements in CBI v.
Duncans Agro Industries Ltd. and Nikhil Merchant (supra) were distinguished. It is necessary to note that the Court in Ravi Shankar Prasad's case referred to Inder Mohan Goswami v. State of Uttaranchal and stated thus:
38. Let us consider the facts of this case and apply the ratio of Goswami case where facts are as follows:
(I) The allegations are that the accused have committed serious offences such as forgery, fabrication of documents and used those documents as genuine.
(II) The allegations are that the respondent accused herein A. Ravishankar Prasad and A. Manohar Prasad have entered into a conspiracy with the Chairman and Managing Director and other officials of Indian Bank, Chennai with the object of cheating Indian Bank in the matter of CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 143 of 155 Special Judge, CBI01, Central, Delhi 144 recommending, sanctioning, disbursing huge credit facilities running over hundreds of crores.
(III) Trial of all four cases are at an advanced stage in which 92 witnesses have already been examined. While applying the ratio of Goswami case, how can any court in its legitimate exercise of power under Section 482 CrPC quash the proceedings against accused A. Ravishankar Prasad and A. Manohar Prasad in the face of the aforesaid allegations? In the instant case, wrong application of the ratio of the said judgment has led to grave miscarriage of justice.
39. Careful analysis of all these judgments clearly reveals that the exercise of inherent powers would entirely depend on the facts and circumstances of each case. The object of incorporating inherent powers in the Code is to prevent abuse of the process of the court or to secure ends of justice.
40. Both English and the Indian courts have consistently taken the view that the inherent powers can be exercised in those exceptional cases where the allegations made in the first information report or the complaint, even if are taken on their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused. When we apply the settled legal position to the facts of this case it is not CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 144 of 155 Special Judge, CBI01, Central, Delhi 145 possible to conclude that the complaint and the chargesheet prima facie do not constitute any offence against the respondents."
Being of this view, the Court in A. Ravishankar Prasad (supra) allowed the appeal preferred by the CBI.
9. Apart from above, in Vikram Anantrai Doshi & Ors. (supra) the Court referred to Gian Singh v. State of Punjab and Another, with regard to the power of the High Court as regards the quashing of the criminal proceedings on the basis of a compromise.
This Court also referred to Narinder Singh & Ors. v. State of Punjab & Anr., Dimpy Gujral v. Union Territory through Administrator and State of Rajasthan v.
Sambhu Kevat and thereafter dwelt upon the ratio in CBI, ACB, Mumbai v. Narendra Lal Jain & Ors., wherein the charges were framed under Section 120B read with Section 420 IPC. A passage from the said judgment was reproduced which is to the following effect: "The offences are certainly more serious; they are not private in nature. The charge of conspiracy is to commit offences under the Prevention of Corruption Act. The accused has also been charged for commission of the substantive offence Under CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 145 of 155 Special Judge, CBI01, Central, Delhi 146 Section 471 Indian Penal Code. Though the amount due have been paid the same is under a private settlement between the parties unlike in Nikhil Merchant (supra) and Narendra Lal Jain (supra) where the compromise was a part of the decree of the Court. There is no acknowledgment on the part of the bank of the exoneration of the criminal liability of the accusedAppellant unlike the terms of compromise decree in the aforesaid two cases. In the totality of the facts stated above, if the High Court has taken the view that the exclusion spelt out in Gian Singh (supra) (para 61) applies to the present case and on that basis had come to the conclusion that the power Under Section 482 Code of Criminal Procedure should not be exercised to quash the criminal case against the accused, we cannot find any justification to interfere with the said decision."
10. After distinguishing many a decision, the Court relied Central Bureau of Investigation v. Jagjit Singh wherein the court being moved by the CBI had overturned the order of the High Court quashing the criminal proceeding and in that backdrop had taken note of the fact that accused persons had dishonestly induced delivery of the CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 146 of 155 Special Judge, CBI01, Central, Delhi 147 property of the bank and had used forged documents as genuine. Thereafter, the Court proceeded to state that: "23......availing of money from a nationalized bank in the manner, as alleged by the investigating agency, vividly exposits fiscal impurity and, in a way, financial fraud. The modus operandi as narrated in the chargesheet cannot be put in the compartment of an individual or personal wrong. It is a social wrong and it has immense societal impact. It is an accepted principle of handling of finance that whenever there is manipulation and cleverly conceived contrivance to avail of these kind of benefits it cannot be regarded as a case having overwhelmingly and predominantingly of civil character. The ultimate victim is the collective. It creates a hazard in the financial interest of the society. The gravity of the offence creates a dent in the economic spine of the nation. The cleverness which has been skillfully contrived, if the allegations are true, has a serious consequence. A crime of this nature, in our view, would definitely fall in the category of offences which travel far ahead of personal or private wrong. It has CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 147 of 155 Special Judge, CBI01, Central, Delhi 148 the potentiality to usher in economic crisis. Its implications have its own seriousness, for it creates a concavity in the solemnity that is expected in financial transactions. It is not such a case where one can pay the amount and obtain a "no due certificate"
and enjoy the benefit of quashing of the criminal proceeding on the hypostasis that nothing more remains to be done. The collective interest of which the Court is the guardian cannot be a silent or a mute spectator to allow the proceedings to be withdrawn, or for that matter yield to the ingenuous dexterity of the accused persons to invoke the jurisdiction Under Article 226 of the Constitution or Under Section 482 of the Code and quash the proceeding. It is not legally permissible.
The Court is expected to be on guard to these kinds of adroit moves. The High Court, we humbly remind, should have dealt with the matter keeping in mind that in these kind of litigations the accused when perceives a tiny gleam of success, readily invokes the inherent jurisdiction for quashing of the criminal proceeding. The court's principal duty, at that juncture, should be to scan the entire facts to find out the thrust of allegations and the crux CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 148 of 155 Special Judge, CBI01, Central, Delhi 149 of the settlement. It is the experience of the Judge comes to his aid and the said experience should be used with care, caution, circumspection and courageous prudence."
11. Recently, in CBI v. Maninder Singh, the allegation against the accused was that bill of lading presented by the proprietors of the accused firms were found forged and cases were registered under Section 120B IPC read with Section 420 IPC and Section 5(2) read with Section 5(1) (d) of Prevention of Corruption Act, 1947 and further substantive offences under Sections 420, 467, 468 and 471 IPC. The accused person arrived at a settlement with the Bank and thereafter moved the High Court under Section 482 Cr.P.C. for quashing of the FIR. The High Court placed reliance on the decision in Nikhil Merchant (supra) and allowed the petition and directed for quashing of the criminal proceedings. This Court placed reliance on Vikram Anantrai Doshi and others (supra) and came to hold as follows: "10. The allegation against the respondent is 'forgery' for the purpose of cheating and use of forged documents as genuine in order to embezzle the public money. After facing such serious charges CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 149 of 155 Special Judge, CBI01, Central, Delhi 150 of forgery, the Respondent wants the proceedings to be quashed on account of settlement with the bank. The development in means of communication, science & technology etc. have led to an enormous increase in economic crimes viz. phishing, ATM frauds etc. which are being committed by intelligent but devious individuals involving huge sums of public or government money. These are actually public wrongs or crimes committed against society and the gravity and magnitude attached to these offences is concentrated at public at large.
11. The inherent power of the High Court Under Section 482 Code of Criminal Procedure should be sparingly used. Only when the Court comes to the conclusion that there would be manifest injustice or there would be abuse of the process of the Court if such power is not exercised, Court would quash the proceedings. In economic offences Court must not only keep in view that money has been paid to the bank which has been defrauded but also the society at large. It is not a case of simple assault or a theft of a trivial amount; but the offence with which we are concerned is a well planned and CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 150 of 155 Special Judge, CBI01, Central, Delhi 151 was committed with a deliberate design with an eye of personal profit regardless of consequence to the society at large. To quash the proceeding merely on the ground that the accused has settled the amount with the bank would be a misplaced sympathy."
(emphasis supplied by me)
103. Therefore, the repayment of the amount of the hundi Ex.PW8/D1, to Oriental Bank of Commerce, Shimla, by accused Shanta Lal Chopra (A8), in September, 1989, shall not absolve the accused persons, of their criminal liabilities. RESULT
104. In view of the above discussions, I am of the considered opinion that the prosecution has successfully proved its case, beyond a shadow of doubt, for the offences, under Section 120B, read with Section 420 IPC & Section 13 (1)(d) of The Prevention of Corruption Act, 1988, against accused Ashok Katoch (A1); D.K.Gupta (A2); V.K.Sharma (A3); Ravinder Verma (A6); M/s Bliss Overseas Pvt. Ltd. (A7) & Shanta Lal Chopra (A8). The CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 151 of 155 Special Judge, CBI01, Central, Delhi 152 prosecution has also successfully proved the additional charges for the substantive offence, under Section 13 (1) (d) The Prevention of Corruption Act, 1988, punishable under Section 13 (2) of the said Act, against accused Ashok Katoch (A1), D.K.Gupta (A2) & V.K.Sharma (A3). The prosecution has also succeeded in proving its case, beyond a shadow of doubt, for the substantive offence under Section 420 IPC, against accused M/s Bliss Overseas Pvt. Ltd. (A7) and Shanta Lal Chopra (A8).
105. Accordingly, accused Ashok Katoch (A1); D.K.Gupta (A2);
V.K.Sharma (A3); Ravinder Verma (A6); M/s Bliss Overseas Pvt. Ltd. (A7), & Shanta Lal Chopra (A8) are hereby held guilty and convicted for the offences punishable under Section 120B IPC read with Section 420 IPC & Section 13 (1) (d) of The Prevention of Corruption Act, 1988.
106. Accused Ashok Katoch (A1), D.K.Gupta (A2) & V.K.Sharma (A3) are further held guilty for the substantive offence under CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 152 of 155 Special Judge, CBI01, Central, Delhi 153 Section 13(1) (d) punishable under Section 13 (2) of The Prevention of Corruption Act, 1988 and are convicted accordingly.
107. Accused M/s Bliss Overseas Pvt. Ltd. (A7) & Shanta Lal Chopra (A8) are further held guilty for the substantive offence punishable under Section 420 IPC and are convicted accordingly.
108. But, the prosecution has failed to prove the charge for the offence, punishable under Section 120B read with Section 420/511 IPC and substantive offence under Section 420/511 IPC, against any of the accused persons and therefore, all the accused persons are hereby acquitted for the said offences.
109. The prosecution has also failed to prove any case against accused M/s. Twenty First Century Credit Pvt. Ltd. (A5) and its two directors, accused Shailesh Dhir (A4) and accused Rajiv Khanna (A9) and therefore, accused Twenty First Century Credit Pvt. Ltd. (A5); Shailesh Dhir (A4) and Rajiv Khanna (A9) are CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 153 of 155 Special Judge, CBI01, Central, Delhi 154 hereby acquitted for the offences punishable under Section 120B IPC read with Section 420 IPC & Section 13(1) (d) of The Prevention of Corruption Act, 1988. Accused M/s. Twenty First Century Credit Pvt. Ltd. (A5), through its director, accused Rajiv Khanna (A9), is also acquitted of the substantive offence punishable under Section 420 IPC.
110. The accused Sailesh Dhir (A4); M/s. Twenty First Century Credit Pvt. Ltd. (A5) and accused Rajiv Khanna (A9) had already furnished their fresh bail bonds, under Section 437A Cr.P.C., on 16.09.2015 and therefore, their previous bail bonds are cancelled and previous sureties are discharged. These three accused are directed to appear before the Appellate Court, as and when directed by the Appellate Court, in any Appeal or Revision, if preferred by the prosecution / CBI, against their acquittals by this court, today. Their bail bonds, under Section 437A Cr.P.C., shall remain in force for a period of six months from today.
CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 154 of 155 Special Judge, CBI01, Central, Delhi 155
111. The convicts accused Ashok Katoch (A1); D.K.Gupta (A2);
V.K.Sharma (A3); Ravinder Verma (A6); and Shanta Lal Chopra (A8) be taken into custody and sent to J.C., till the next date of hearing.
112. Let the convicts be heard on the 'point of sentence' on the next date of hearing.
It is ordered accordingly.
Announced in open Court on 30 day of September, 2015 BRIJESH KUMAR GARG th Special Judge:CBI01 Central District. Delhi CBI Vs. Ashok Katoch etc. (CC No. 263/07) pg 155 of 155 Special Judge, CBI01, Central, Delhi