Delhi District Court
Cbi vs 1. Om Prakash Sharma on 24 August, 2013
Om Prakash Sharma etc. Judgment dt. 24.8.2013
IN THE COURT OF SPECIAL JUDGEII
(P. C. ACT, CBI), ROHINI, DELHI
CC No. 48/2010
CBI Vs 1. Om Prakash Sharma
S/o Late Sh. Chander Mani
R/o C154, Mahavir Enclave PartIII,
New Delhi45.
2. Ravi Sethi
S/o Sh Roshan Lal Sethi
R/o 270, Double Storey, New Rajendra Nagar,
New Delhi.
Date of completion of arguments : 12.8.2013
Date of judgment : 24.8.2013
JUDGMENT
1. As per prosecution case M/s Kramvir Steel Pvt. Ltd was incorporated on 22.10.2002 vide certificate of incorporation no. U27109DL2002 PTC117430 of 20022003 with authorizes capital of Rs.1 lakh only. Om Prakash Sharma (A1) and Smt. Shanti Devi w/o Om Prakash Sharma both resident of 50A, Bharat Vihar, Rajapuri, Uttam Nagar, New Delhi were its promoter directors. The main object of the company was to carry on business of ferrous and non ferrous metals.
2. M/s Kramvir Steels Pvt. Ltd. opened a current account no.
CC No. 48/2010 Page 1 / 76Om Prakash Sharma etc. Judgment dt. 24.8.2013 3094 on 12.11.2002 with Canara Bank, Malviya Nagar Branch, New Delhi. Om Prakash Sharma was authorized to operate the bank account of the company. The company under the signature of Om Prakash Sharma and Smt. Shanti Devi applied for sanction of CC limit of Rs.60 lac to the bank. The said request was also signed by Ombir Singh their son as guarantor. Along with the application, financial documents such as provisional balance sheet as on 20.12.2002, provisional Trading, profit and loss account for the period ending 20.12.2002, 21.3.2003 and 31.3.2004 were also submitted under the signature of both the directors. Provisional balance sheet and Balance sheet, provisional Trading, profit and loss account of the period ending 20.12.2002 were prepared by Navin Chander, CA. The said limit was to be secured by primary security of stock in trade and book debts and collateral security of property in the name of one Satish Sharma situated at B2/93 Second Floor, Janak Puri, New Delhi having market value 42.75 lacs. Proposal for sanction of OCC limit of Rs.60 lacs was processed at Malviya Nagar branch and OCC limit of Rs.40 lacs to M/s Kramvir Steels Pvt. Limited was sanctioned. However, the same was not released as the Circle Office, upon consideration of exposer to group ordered that the company CC No. 48/2010 Page 2 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 should apply through Uttam Nagar Branch, New Delhi.
3. Investigation further revealed that in compliance of direction of Circle office the proposal for sanction of credit limit was processed at Uttam Nagar Branch by Mahesh Prakash and Satish Sikri, officers of the Branch and they recommended circle office for sanction of OCC of Rs.40 lacs to M/s Kramvir Steels Pvt. Limited. The limit was calculated as per turnover method. As per order of DGM, N. D. Sharma, Sr. Manager, Circle office along with Satish Sikri Branch Manager, Uttam Nagar Branch, New Delhi conducted inspection of godown and office of group concern of M/s Kramvir Steels Pvt. Ltd. on 3.2.2003 and submitted report vide letter dated 13.2.2003 to DGM Akshay Kumar. The credit report was processed at Circle Office vide office note no. 95/03 dated 15.2.2003 by N. D. Sharma, who recommended for sanction of OD limit of Rs.40 lacs against Primary Security of Stock and collateral security in the name of Satish Sharma and personal guarantee of Om Bir Singh, Smt. Shanti Devi and Om Prakash, A. K. Nayyar, Divisional Manager also recommended the same and put up the same before DGM Akshay Kumar, who sanctioned the same.
4. Om Prkash Sharma and Smt. Shanti Devi both directors and Ombir Singh (Guarantor) executed loan documents and the CC No. 48/2010 Page 3 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 credit facility was released on 20.2.2003. A/c of M/s Kramvir Steels Pvt. Ltd. maintained with Canara Bank, Malviya Nagar Branch, New Delhi was closed. ODCC /Ac No. 377 was opened on 20.2.2003 with Uttam nagar Branch and the below mentioned cheques were issued from the said amount sanctioned.
Sl. Cheques issued in favour of Amount Date of Debit No.
1. CA7465 in the name of M/s Kramvir 2145000 21.2.2003 Steels Pvt. Ltd.
2. Karan Steel 515934 24.2.2003
3. Karan Steel 152495 24.2.2003
4. Karan Steel 390265 24.2.2003
5. Sangam Ispat 425000 25.2.2003
6. Sangam Ispat 420000 25.2.2003 Total 4048694
5. Investigation also revealed that current account no. 7465 in the name of M/s Kramvir Steels Pvt. Ltd. was opened in Canara Bank, Uttam Nagar Branch, New Delhi on 13.2.2003. Om Prakash Sharma and Smt. Shamti Devi were the authorized signatory of the said account. The amount of Rs.2145000/ transferred from OCC A/c No. 377 in the name of Kramvir CC No. 48/2010 Page 4 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 Steels Pvt. Ltd. to the current A/c 7465 in the name of Kramvir Steels Pvt. Ltd. was further transferred through following cheques : Sl. Cheques issued Cheque Amount Date of Cheque presented No. in favour of No. Debit through
1. Sangam Ispat 79609 590275 21.2.2003 Andhra Bank, Sector31, Gurgaon
2. Sangam Ispat 79606 162314 21.2.2003 Andhra Bank, Sector31, Gurgaon
3. Karan Steels 79603 398424 21.2.2003 Standard Charted Bank
4. Karan Steels 79604 422615 21.2.2003 Standard Charted Bank
5. Sangam Ispat 79607 158210 21.2.2003 Andhra Bank, Sector31, Gurgaon
6. Investigation revealed that account no. 257 in the name of Sangam Ispat was opened with Andhra Bank, Sector31 Branch, Gurgaon on 18.2.2003 by Dharam Dev as prop. Of the said firm. This account was introduced by Ombir Singh having account no. Ca 146 with the bank. This account was closed on 22.12.2004. Investigation further revealed that amount credited in the A/c from M/s Kramvir Steels Pvt. Ltd. was later on transferred to the account of Kumbh Steels Pvt. Ltd. on the following dates.
CC No. 48/2010 Page 5 / 76
Om Prakash Sharma etc. Judgment dt. 24.8.2013
Sl. No. Date of Debit Cheque No. Amount
1. 25.2.2003 869856 402084
2. 25.2.2003 869855 426489
3. 26.2.2003 869851 279450
4. 26.2.2003 869853 258792
5. 26.2.2003 869852 242450
6. 26.2.2003 869854 284928
Total 1894193
7. Investigation revealed that the amount transferred from the A/c of M/s Kramvir Steels Pvt. Ltd. finally credited in the A/c of M/s Kumbh Steels Pvt. Ltd. through aforesaid account of M/s Sangam Ispat with Andhra Bank. Investigation revealed that Dharam Dev was working in the companies of Ombir Singh as field representative and that at his instance, he opened account of M/s Sangam Ispat and gave blank signed cheque books to him who used the same as per his connivance. Investigation further revealed that actually there was no business/trading in M/s Sangam Ispat.
8. Investigation further revealed that a current account no.
54405007054 in the name of M/s Karan Steels was opened with Standard Chartered Bank, New Friends Colony Branch, CC No. 48/2010 Page 6 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 New Delhi. Sugam Sharma was the prop. of the said firm. An amount of Rs. 1879733/ details of which is as follows was credited in the account of M/s Karan Steels from the account of M/s Kramvir Steels, which was withdrawn in cash : Sl. No. Cheque No. Amount Date of credit in the account of M/s Karan Steels
1. 79603 398424 20.2.2003
2. 79604 422615 20.2.2003
3. 7700023 515934 22.2.2003
4. 770004 152495 22.2.2003
5. 770002 390265 22.2.2003 1879733
9. Investigation revealed that Sugam Sharma is the brother in law of Mahesh Kumar and Ombir Singh was the brother of Mahesh Kumar. Sugam Sharma opened the said account in the name of M/s Karan Steels on the instance of Om Bir Singh, who obtained signature of Sugam Sharma on the blank cheque books and used the same as per the connivance. Investigation revealed that actually there was no business dealing in Karan Steels. During investigation Standard Chartered Bank informed that the account opening form of M/s Karan Steel is not CC No. 48/2010 Page 7 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 traceable.
10. Investigation revealed that credit facilities were due on 20.2.2004 for renewal. Smt. Shanti Devi and Om Prakash Sharma directors of M/s Kramvir Steels Pvt. Ltd. vide NF414 requested for renewal of limit and enhancement of the limit to Rs.100 lacs. However since there was lot of discrepancies in the account, the then Branch Manager Sh. L. Raju only renewed the limit for one year and did not enhanced the same as requested.
11. Investigation further revealed that Smt. Shanti Devi resigned from the Directorship of M/s Kramvir Steels Pvt. Ltd. on 28.10.2004 and Ombir Singh was appointed as Director on 30.10.2004 in her place.
12. Investigation further revealed that Om Prakash Sharma vide letter dated nil requested the Chief Manager, Uttam Nagar branch, Delhi to substitute the property of Sh. Satish Sharma i.e. B293, Second Floor, Janakpuri, New Delhi with commercial property at Bahadurgarh, Kewat no. 90, Khata No. 153, Kila No. 31/1031/11, 32/6/132/15/2 Hasan pur MIE, Delhi Rohtak Road, Bahadurgarh in the name of Om Bir Singh. Ravi Sethi the then Chief Manager granted the permission. As such, uptill Smt. Shanti Devi was Director, limit was duly secured by genuine collateral security of property at Janak CC No. 48/2010 Page 8 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 Puri/Bahadurgarh.
13. Investigation further revealed that Sh. Om Prakash Sharma vide application dated nil applied to Uttam Nagar Branch for enhancement the OD limit to Rs.2000 lacs from Rs. 40 lacs. Along with the application he enclosed different financial documents and resolution bearing his signature and that of Ombir Singh both Directors of M/s Kramvir Steels Pvt. Ltd. The sales achievement as per Audited Balance Sheet (ABS) dated 27.7.2004, Rs.432.38 lacs approximately against the originally projected sale of Rs.315 lacs. For the year 2005, the party's projected sales of Rs.1,200 lac. The branch in the process note mentioned that the party had achieved the sale of Rs.502.50 lacs upto Oct. 2004 and expected that the company would be able to achieve a sale of Rs.861.42 lacs for the entire year. Branch accepted the projected sale of 1000 lacs against projected sale of Rs.1200 lacs and that the same would require additional working capital limit. Vide letter dated 9.11.2004 Ravi Sethi, the then Chief Manager forwarded the proposal to Circle Office for sanction of CC limit of Rs.200 lacs in view of sales projection accepted by the bank.
14. Investigation further revealed that the proposal was submitted to Circle Office vide office note no. 449/04. In CC No. 48/2010 Page 9 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 advance Section 4, Circle Office, Delhi proposal was processed vide office note 949/04 dated 3.12.2004, Sh. S. K. Gupta recommended for enhancement in the working capital limits form Rs.40 lacs to Rs.200 lacs with certain terms and conditions. However branch was advised to explore the possibility of obtaining additional collateral security. Sh. S. K. Gupta also mentioned that account belongs to M/s Golden Rathi group and bank has lost the account of Golden Rathi. He further mentioned that collateral is low compared to exposure, however dealings were satisfactory and the account has recommendation of Sh. Anoop Garg, Director of the bank. The same was put up before Sh. S. S. Bhat, AGM wherein he mentioned that in view of the group connection, party improved sale performance and satisfactory financial parameters, we may permit the proposal as recommended. Branch to strictly comply with the conditions stipulated with the note. Sh. S. S. Bhat put up the same to DGM Sh. D. R. P. Sundaram, who permitted the limit as recommended. Sh. Sundaran also mentioned in the note collateral security is low. Matter discussed with GM. Investigation further revealed that sanction was placed before GM on 11.12.2004 under the signature of Sh. K. V. Prabhakar Rao for review. Sanction was conveyed to the branch vide CC No. 48/2010 Page 10 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 sanction memorandum dated 8.12.2004.
15. Investigation further revealed that Ravi Sethi, Branch Manager in connivance with accused Om Bir Singh and Om Prakash Sharma had released the enhanced limit well before receiving the proper sanction from Circle Office by allowing TOD in the account. Om Prakash Sharma and Smt. Shanti Devi and Ombir Singh executed loan documents on 22.12.2004. The cheques detailed below were issued from the said account well before additional CC limit was sanctioned : Sl. Cheques issued in Cheque Amount Date of Cheque Cheque No. favour of No. Debit in presented signed the account through by
1. Golden Rathi Star 795824 2000000 31.11.2004 SBI, Najafgarh Om Industries Ltd. Road Branch, Prakash New Delhi Sharma
2. Golden Rathi Star 795826 4000000 1.12.2004 SBI, Najafgarh Om Industries Ltd. Road Branch, Prakash New Delhi Sharma
3. Karan Steel 795829 2600000 1.12.2004 Canara Bank, Om Uttam Nagar Prakash branch, ND Sharma
4. Surya Steel 795830 900000 1.12.2004 Canara Bank, Om Traders Uttam Nagar Prakash branch, ND Sharma
5. Golden Rathi Star 795827 5000000 2.12.2004 SBI, Najafgarh Om Industries Ltd. Road Branch, Prakash New Delhi Sharma CC No. 48/2010 Page 11 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 Sl. Cheques issued in Cheque Amount Date of Cheque Cheque No. favour of No. Debit in presented signed the account through by
6. Maharaja Ispat 795835 1700000 6.12.2004 Canara Bank, Om Pvt. Ltd. Uttam Nagar Prakash branch, ND Sharma
7. Golden Rathi Star 795834 5000000 7.12.2004 SBI, Najafgarh Om Industries Ltd. Road Branch, Prakash New Delhi Sharma Total 21200000
16. Investigation revealed that on 30.11.2004, the debit balance of the A/c of M/s Kramvir Steels Pvt. Ltd. was of Rs. 3401663.32 and thereafter the above mentioned amount was transferred from its account to the above mentioned accounts. During the period the following amount from the other account was credited in the account and on 7.12.2004, there was a debit balance of Rs.19994814.32 in the account.
Sl. Amount received from the Account Amount Date of No. firm/company no. cheque
1. Moskos Steel Pvt. Ltd. OD 360 225000 2.12.2004
2. Maharaja Ispat Pvt. Ltd. OD 325 400000 2.12.2004
3. Karan Steel CA 7704 2670000 2.12.2004
4. Moskos Steel Pvt. Ltd. OD 360 1500000 7.12.2004 CC No. 48/2010 Page 12 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013
17. Investigation revealed that the additional OD of Rs.160 lacs sanctioned on 7.12.2004 in the account was utilized through cheques issued in the hand of Om Prakash Sharkma. During 30.11.2004 to 7.12.2004 out of total debit of Rs.2.12 crores, Rs.1.6 crores was paid to golden Rathi Star Industries. Investigation further revealed that the sanction amount was credited to the account of M/s Golden Rathi Star Industries Ltd. which was operated by Om Bir Singh. Golden Rathi Star Industries Ltd. was manufacturing unit steel. It is not possible to conclude as to what was the total dealing of the group concern including M/s Kramvir Steels Pvt. Ltd. with M/s Golden Rathi Star Industries Ltd.
18. Investigation revealed that there were no laid down guidelines of the bank regarding extent of collateral security in working capitals loans. The same depended upon the discretion of sanctioning authority. In the working capitals loans, the primary security is stock in trade and book debts. Investigation further revealed that as per bank guidelines, working capital limit was sanctioned/granted to the parties to increase their business. As per guidelines, working capital can be granted by the following 3 methods as per Manual of Instruction for Working Capital Finance of the bank.
CC No. 48/2010 Page 13 / 76Om Prakash Sharma etc. Judgment dt. 24.8.2013
1. Turnover method
2. MPBF system
3. Cash Budget system
19. In turnover method, limit of Rs.2 crores can be sanctioned/granted to trader units. The same is calculated on the basis of accepted sales i.e. 20% of the accepted sale is the maximum permissible finance under this method as per circular no. 126/2002 ans 266/2004 dated 19.10.2004. In the instant case, limit was enhanced on the basis of this method by accepting sales of Rs.10 crores against projection of Rs.12 crores.
20. Investigation further revealed that as per circular no.
126/2002 dated 4.6.2002 and no. 266/2004 dated 19.10.2004 overdrawing beyond the limit can be permitted at branch level to the extent of 25% of delegated powers (known as emergency power) of the official permitting over drawings of sanctioned limit which ever is lower. As per circular, DM/CM can sanction OCC limit upto Rs.75 lacs and SM can sanction OCC limit upto Rs.30 lacs. As per circular, emergency powers can be exercised for a period of 30 days for secured advance and 12 times in a year.
21. Investigation further revealed that as per circular no.
CC No. 48/2010 Page 14 / 76Om Prakash Sharma etc. Judgment dt. 24.8.2013 126/2002 and 266/2004 dated 19.10.2004, Chief Manager can purchase cheques drawn on customer upto Rs.20 lacs and Senior Manager can purchase cheques drawn on customer upto Rs.3 lacs.
22. Investigation further revealed that Ravi Sethi the then Chief Manager in conspiracy with Om Bir Singh and other accused persons allowed frequent Temporary Over Drawings (TOD) in the account of M/s Kramvir Steels Pvt. Ltd. by exceeding his delegated powers by misusing his official position and showed undue favour to the accused director of M/s Kramvir Steels Pvt. Ltd.
23. Investigation further revealed that Ravi Sethi the then Chief Manager in conspiracy with Om Bir Singh and other accused persons purchased cheques on the request of M/s Kramvir Steels Pvt. Ltd. by exceeding his delegated powers by misusing his official position and showed undue favour to the accused director of M/s Kramvir Steels Pvt. Ltd.
24. Investigation further revealed that M/s Kramvir Steels Pvt.
Ltd. has submitted the balance sheets audited by Navin Chandra, Chartered Accountant. Investigation disclosed that following sale tax returns were filed by M/s Kramvir Steels Pvt. Ltd. during 200405 with VAT, Department.
CC No. 48/2010 Page 15 / 76Om Prakash Sharma etc. Judgment dt. 24.8.2013 Sl. No. Sale at Delhi Sale at Bahadurgarh Total Sale
1. 16461213 88546025 105007238
25. Investigation revealed that following sales were shown by M/s Kramvir Steels Pvt. Ltd. for quarters mentioned against each at Bahadurgarh.
Sl. No. For the period Sale in Rs.
1. 1.4.2004 to 30.6.2004 5509390
2. 1.7.2004 to 30.9.2004 25733050
3. 1.10.2004 to 31.12.2004 2547000
4. 1.1.2005 to 31.3.2005 54756306
Total 88545746
26. Investigation further revealed that Sales Tax assessment of the M/s Kramvir Steels Pvt. Ltd. has been framed i.e. carried out upto 31.3.2005 by creating an additional demand of Rs.95497 and Rs.3099050 for the financial years 200304 respectively. The addition demand is unpaid.
27. Investigation further revealed that M/s Kramvir Steels Pvt.
Ltd. has filed sales return with ward no. 92, Delhi and projected their sale as Rs.16461231/.
28. Investigation further revealed that Om Bir Singh vide CC No. 48/2010 Page 16 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 letter dated 3.3.2005 requested the Canara Bank, Uttam Nagar Branch, New Delhi for sanction of ad hoc limit of Rs.50 lcas for 3 moths. Branch recommended the same to the Circle Office while projecting that the company had sufficient orders in hand and that to comply with the orders, the company need more funds. Investigation further revealed that adhoc limit of Rs.50 lacs for three months was granted to M/s Kramvir Steels Pvt. Ltd. telephonically by Sh. DRP Sundaram on 7.3.2005. Subsequent branch vide letter 13.9.2005 sought confirmation of the telephonic permission. Sh. S. K. Gupta, Sr. Managaer put up the same to DGM through Sh. S. S. Bhat, AGM for confirmation of telephonic permission given by DGM. Sh. S. K. Gupta mentioned that the limit was made available on 7.3.2005 and recommended to confirm the telephonic permission of adhoc limit upto 7.6.2005. The same was confirmed by DGM Sh. DRP Sundaram. He also sought information about regularization of account from the branch. The views of DGM was conveyed to the branch vide letter dated 15.9.2005 under the signatures of Sh. S. K. Gupta.
29. Investigation further revealed that there was a debit balance of Rs.2.06 crores in the account, when a cheque no. 795853 for Rs.42 lacs under the signature of Om Bir Singh was CC No. 48/2010 Page 17 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 issued in favour of M/s Surya Steels Traders by way of utilization of said adhoc limit. This cheque was debited in the account on 7.3.2005 and the funds were transferred to the account of M/s Golden Rathi Star Industries Ltd.
30. Investigation further revealed that the proposal of M/s Kramvir Steels Pvt. Ltd. was never declined for enhancement of credit facilities due to non matching/insufficient collateral security. During investigation bank officials did not produced any document in this regards.
31. Investigation further revealed that OCC A/c No. 377 of M/s Kramvir Steel Pvt. Ltd. was declared NPA on 31.12.2005 with debit balance of Rs.236.61 lacs and bank suffered a loss of Rs.236.61 lacs as per complaint. However bank has sold the mortgaged property at Bahadurgarh for Rs.45.25 lacs.
32. Investigation also revealed that Umesh Mahabal Bangera along with Sh. Sandeep Gupta, Chartered Accountant conducted the inspection of Stock on the address given by Ombir Singh at Plot No.1, next to BPCL Petrol Pump, Bhim Nagar, Vijay Nagar, Ghaziabad. During inspection nil stock was found. It established that M/s Kramvir Steels Pvt. Ltd. had dishonestly and fraudulently disposed off the stock hypothecated to bank, without the knowledge of the bank and did not deposit proceed CC No. 48/2010 Page 18 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 of the same with the bank and cheated the bank.
33. Ld. Public Prosecutor submits that from the above, it is clear that funds were misutilized by the directors of M/s Kramvir Steels Pvt. Ltd. namely Om Prakash Sharma and Om Bir Singh by issuing the cheques from the loan account of M/s Kramvir Steels Pvt. Ltd. and did not ensure that the stocks available or it proceeds is deposited with the bank. Thus they in pursuance of criminal conspiracy utilized the funds sanctioned and disbursed by the bank for purposes other than those for which the same was sanctioned. Ravi Sethi in connivance with Om Bir Singh and Om Prakash Sharma and allowed over drawings beyond his delegated powers in the account even before enhancement of OCC limit and facilitated the accused persons. He also purchased of cheque beyond his discretionary power.
34. On the above stated facts, the charge sheet was filed and cognizance was taken by Sh. Amar Nath, Ld. Special Judge, on 03.09.2011 vide which all the accused persons were summoned to face the trial.
35. After complying with the requirements u/s 207 CrPC, arguments on point of charge were heard. Formal charge u/s 120B IPC r/w Section 420 IPC r/w Section 13(2) r/w 13(1)(d) CC No. 48/2010 Page 19 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 of PC Act, 1988 was framed against both the accused persons. A separate charge u/s 420 IPC was framed against accused Om Prakash Sharma. A separate charge u/s 420 IPC was framed against accused Om Prakash Sharma and a separate charge u/s 13(2) r/w 13(1)(d) of PC Act, 1988 was framed against accused Ravi Sethi.
36. PROSECUTION EVIDENCE PW1 Sh. Gopal Khatwani was posted as Sr. Manager in ARM Branch of Canara Bank at Karol Bagh wef 2006 to June, 2010. He handed over a letter dt. 15.02.2010 D81 issued under the signatures of Sh. R. Ravi Kumar, the then Chief Manager, which he handed over to Insp. Satender Singh, CBI. The said letter contained the details of property in village Hasanpur, Bahadurgarh in the name of Late Sh. Ombir Singh which was mortgaged with Canara Bank, Uttam Nagar Branch, for the credit facilities availed by M/s Karamvir Steels.
PW2 Mohd. Imran was a Senior Officer in Standard Chartered Bank. He proved the statement of account for the period 01.01.2003 to 31.03.2003 for an account no. 54405007054 as Ext.PW2/B. PW3 Sh. Lingaiah Raju was Chief Manager in the Uttam Nagar CC No. 48/2010 Page 20 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 Branch of Canara Bank wef 10.09.2003 to 21.08.2004. He testified that during his tenure in the said bank, he had handled the account of M/s Kramvir Steels Pvt. Ltd. who was enjoying credit facility of Rs. 40 lacs from Uttam Nagar Branch of Canara Bank and the said limit was due for renewal in February, 2004. He testified that Directors of the company were Mr. Om Prakash Sharma and Smt. Shanti Devi. Vide the application form Ext.PW3/A, the Directors of the company applied for enhancement of OD Limit from Rs. 40 lacs to Rs. 100 lacs. On the basis of this application, a note was processed in the bank by Sh. Mahesh Prakash, an officer of the bank. On the basis of note Ext.PW3/B, the limit was not enhanced. However, it was renewed for one year vide letter dt. 06.07.2004 Ext.PW3/C. In cross examination he stated that accused Ravi Sethi had joined the services of the bank after his tenure with Uttam Nagar Branch. He admitted that he had not discontinued the credit facility given to the party since the group company was enjoying the credit facility of Rs. 10 crores and therefore the bank did not want to lose the party. He also testified that once the loan is approved by the higher authority of the bank, the branch cannot refuse a party.
In cross examination by accused Om Prakash, he testified that Mr. Ombir Singh, Managing Director of Rathi Group of Companies used to operate this bank account and that he had seen Mr. Om CC No. 48/2010 Page 21 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 Prakash and Smt. Shanti Devi as they have come for signing the documents in the bank. He testified that they had come alongwith Mr. Ombir Singh. He testified that the application for enhancement of limit from Rs. 40 lacs to Rs. 1 Crore was brought by Mr. Ombir Singh which he handed over to him. He testified that Mr. Om Prakash and Smt. Shanti Devi had not signed the application in his presence.
PW4 Sh. Devesh Kumar Prasad was an officer in Canara Bank, Malwiya Nagar Branch, New Delhi. He had handed over the documents to CBI vide seizure memo dt. 18.02.2010. He had proved the account opening form (D53) of M/s Karamvir Steels Pvt. Ltd. opened by Sh. Om Prakash Sharma and Smt. Shanti Devi as Ext.PW4/B. He also proved the statement of account pertaining to account no. 3094 (D54) of M/s Karamvir Steels Pvt. Ltd. dt. 12.11.2002 to 20.02.2003 which is Ext.PW4/C. PW5 Smt. Saroj Sachdeva was posted as an officer in the Circle office of Canara Bank since 2001. She proved the office note dt. 24.01.2003 regarding grant of facility of Rs. 40 lacs as OCC limit (Trader's Scheme) to M/s Karamvir Steels Pvt. Ltd. She testified that the said process note was put up before the AGM Sh. R.K. Arora who had recommended for shifting this account to Uttam Nagar Branch.
She also proved the office note dt. 15.02.2003 regarding grant CC No. 48/2010 Page 22 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 of facility of Rs. 40 lacs as OCC limit (Trader's Scheme) to M/s Karamvir Steels Pvt. Ltd. as Ext.PW5/B. She testified that Sh.N.D. Sharma had conveyed the sanction vide sanction memorandum dt. 19.02.2003 which is Ext.PW5/C. She further proved the office process note dt. 03.12.2004 of M/s Karamvir Steels Pvt. Ltd. Ext.PW5/D. PW6 Sh. K. Gopal Rao was a Branch Manager, Andhra Bank, Sector31, Gurgaon, Haryana as Dy. Manager in the year 2007 and remained their till 31.10.2010. He handed over six cheques (D78) (1) to (6) pertaining to M/s Sangam Ispat issued in the name of Kumbh Steels Pvt. Ltd.
PW7 Sh. Sandeep Gupta chartered accountant testified that in the year 2006, his firm was deputed for conducting stock audit of M/s Karamvir Steels Pvt. Ltd. by the Circle Office of Canara Bank, New Delhi. He further testified that during their visit they did not find any stock in the premises. He proved the stock audit report as Ext.PW7/A. PW8 Sh. Satish Sikri was a Branch Manager in Canara Bank, Uttam Nagar Branch, New Delhi as a branch Manager wef 2002 to September, 2003. He had dealt with the account of M/s Kramvir Steels Pvt. Ltd. during his tenure He testified that the branch office of Malviya Nagar Canara Bank had sent a letter dt. 09.01.2002 to the CC No. 48/2010 Page 23 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 Advancee SectionIII, Circle office, Nehru Place, New Delhi. He proved the appraisal note placed in file D19 & D20 prepared by Sh. Mahesh Prakash, Loan Officer as Ext.PW8/A. The said appraisal note was sent to Circle Office, Nehru Place for grant of OCC limit of Rs. 40 lacs to M/s Kramvir Steels Pvt. Ltd. He testified that the said OCC limit was sanctioned against the personal guarantee of Directors namely Mr. Om Prakash Sharma, Mrs. Shanti Devi, Mr. Satish Sharma and Mr. Ombir Singh besides collateral security of property bearing B2/93, Janak Puri, New Delhi in the name of Sh. Satish Sharma having market value of Rs. 41.57 lacs.
He also conducted the inspection of stocks of M/s Kramvir Steels Pvt. Ltd. after the sanction of OCC limit whereas Malviya Nagar branch had conducted the presanction stock inspection. He also proved the stock inspection report dt. 16.04.2003 as Ext.PW8/B and other stock inspection reports as Ext.PW8/C, Ext.PW8/D and Ext.PW8/E. In cross examination by Sh. Sunil Ahuja, Ld. Defence Counsel for accused Ravi Sethi, he admitted that this was one of the of the group accounts and conduct of the accounts was satisfactory and even its track record was also good.
In cross examination, he also admitted that he has been made an accused by CBI in case of this group accounts which are still CC No. 48/2010 Page 24 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 pending. He admitted that this group account was a preferred account which had an approval of the circle office.
PW9 Ms. Roopa Bhatia was an officer in Canara Bank, Uttam Nagar, New Delhi branch wef September 2002 to November 2004. As an officer, her duty was to pass the cheques presented in clearing as well as transfer. She testified that cheque no. 770012 dt. 20.05.2003 for an amount of Rs. 1,90,000/ was issued in favour of M/s Golden Rathi Industries Ltd. by M/s Kramvir Steels Pvt. Ltd. under the signatures of Om Prakash Sharma. She further testified that the cheque no. 770010 dt. 12.05.2003 for an amount of Rs. 5 lacs was issued in favour of M/s Golden Rathi Industries Ltd. by M/s Kramvir Steels Pvt. Ltd. under the signatures of M/s Kramvir Steels Pvt. Ltd. under the signatures of Sh. Om Prakash Sharma. She further testified that cheque no. 770083 dt. 28.07.2004 for an amount of Rs. 10 lacs was issued in favour of Surya Steel Traders by M/s Kramvir Steels Pvt. Ltd. She further testified that the cheque no.s 770006, 770005 dt. 22.02.2003 for an amount of Rs. 4,25,000/ and Rs. 4,20,000/ were issued in favour of Sangam Ispat by M/s Kramvir Steels Pvt. Ltd.
She also testified that the cheque no.s 795811 dt. 27.10.2004 for an amount of Rs. 9 lacs was issued in favour of Karan Steels by CC No. 48/2010 Page 25 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 M/s Kramvir Steels Pvt. Ltd. on behalf of M/s Kramvir Steels Pvt. Ltd.;
cheque no. 770034 dt. 07.11.2003 for an amount of Rs. 20 lacs issued in favour of Golden Rathi Star Industries Ltd. issued by M/s Kramvir Steels Pvt. Ltd. on behalf of M/s Kramvir Steels Pvt. Ltd.; the cheque no. 770035 dt. 17.11.2003 for an amount of Rs. 3,90,000/ issued in favour of Golden Rathi Star Industries Ltd. issued by M/s Kramvir Steels Pvt. Ltd. on behalf of M/s Kramvir Steels Pvt. Ltd.; the cheque no. 944457 dt. 20.12.2003 for an amount of Rs. 12 lacs issued in favour of Golden Rathi Star Industries Ltd. issued by M/s Kramvir Steels Pvt. Ltd. on behalf of M/s Kramvir Steels Pvt. Ltd.; cheque no.
770045 dt. 01.1.2004 (D64 (XVI)) for an amount of Rs. 5,50,000/ issued in favour of Golden Rathi Star Industries Ltd. issued by M/s Kramvir Steels Pvt. Ltd.; cheque no. 944470 dt. 14.1.2004 (D64 (XVII)) for an amount of Rs. 1 lac issued in favour of Golden Rathi Star Industries Ltd. issued by M/s Kramvir Steels Pvt. Ltd. on behalf of M/s Kramvir Steels Pvt. Ltd.; cheque no. 944477 dt. 22.2.2004 (D64 CC No. 48/2010 Page 26 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 (XIX)) for an amount of Rs. 12 lacs issued in favour of Golden Rathi Star Industries Ltd. issued by M/s Kramvir Steels Pvt. Ltd. on behalf of M/s Kramvir Steels Pvt. Ltd. All these cheques were issued under the signatures of Sh. Om Prakash Sharma In cross examination, she admitted that only three cheques pertained to the period when Ravi Sethi was Incharge of the bank and these cheques were passed in normal course at the counter itself.
PW10 Sh. Vinay Kumar Sehgal was an officer in Canara Bank, Uttam Nagar, New Delhi branch wef November 2004 to January, 2006 as an Officer. He testified that the cheque no. 795882 dt. 30.03.2005 for an amount of Rs. 6,68,377/ issued in favour of M/s Jwalaji Enterprises by M/s Kramvir Steels Pvt. Ltd.; cheque no. 795879 dt. 30.03.2005 for an amount of Rs. 33,32,128/ issued in favour of M/s Jwalaji Enterprises by M/s Kramvir Steels Pvt. Ltd.; cheque no. 795881 dt. 30.03.2005 for an amount of Rs. 22,84,077/ issued in favour of M/s Jwalaji Enterprises by M/s Kramvir Steels Pvt. Ltd.; cheque no. 795884 dt. 31.03.2005 for an amount of Rs. 85 lacs issued in favour of M/s Golden Rathi Star Industries Ltd. by M/s Kramvir Steels Pvt. Ltd.; cheque no. 795876 dt. 31.03.2005 for an CC No. 48/2010 Page 27 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 amount of Rs. 11,10,908/, cheque no. 795864 dt. 24.03.2005 amounting to Rs. 53,85,189/; cheque no. 820705 dt. 31.05.2005 amounting to Rs. 54 lacs; cheque no. 820726 dt. 28.07.2005 amounting to Rs. 25,000/; cheque no. 795871 dt. 29.3.2005 amounting to Rs. 36,78,184/ issued in favour of M/s Maharaja Ispat Pvt. Ltd. by M/s Kramvir Steels Pvt. Ltd.; cheque no.'s 795849, dt. 17.2.2005for an amount of Rs.5 lacs, cheque no.795853 dated 7.3.2005 in favour of M/s Surya Steels Traders; cheques no. 795865 dt. 24.3.2005 for an amount of Rs.27 lacs, 795863 dt. 24.3.2005 for an amount of Rs.55 lacs, 795869 dt. 28.3.2005 for an amount of Rs. 37 lacs, 795868 dt. 28.3.2005 for an amount of Rs.47 lacs, 795867 dt. 28.3.2005 for an amount of Rs51 lacs, 795866 dt. 28.03.2005 for an amount of Rs. 44,50,000/, 795870 dt. 29.03.2005 Rs. 78,59,654/, 795874 dt. 29.03.2005 Rs. 35,50,000/, 795872 dt. 29.03.2005 Rs. 35 lacs and 795873 dt. 29.03.2005 for an amount of Rs. 42 lacs issued in favour of M/s Kumbh Steels Pvt. Ltd. by M/s Kramvir Steels Pvt. Ltd. All these cheques Ext.PW10/A & Ext.PW10/A1 to Ext.PW10A20 were passed after verifying the signatures of the authorized signatory. He further testified that the credit vouchers dt. 20.11.2004, 25.11.2004, 29.11.2004, 02.12.2004, 07.12.2004, 13.01.2005, 24.01.2005, 04.02.2005, 24.03.2005, 31.03.2005, 31.03.2005, 31.03.2005, 31.03.2005 and 01.06.2005 CC No. 48/2010 Page 28 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 {D72 (I to XIV)} Ext.PW10/A21 were passed by him.
PW11 Sh. Rajendra Kumar Arora was working as Asstt. General Manager in the Circle Office of Canara Bank, Nehru Place, New Delhi as an wef August, 2001 to February, 2004. He testified that during his tenure as AGM in the Circle Office, Canara Bank, he had dealt with the file pertaining to M/s Karamvir Steels Pvt. Ltd. He proved the proposal of this company which was received from Malviya Nagar Branch to seek our concurrence for the sake of group exposure as the other connected parties were reported to have been enjoying limits with Uttam Nagar Branch.
He testified that Malviya Nagar Branch had sanctioned the proposal to circle office for Rs.40 lacs for the sake of fund clearance on account of group exposure before release to the party vide letter dt. 09.01.2003 but the proposal was declined and the party was advised to route the proposal through Uttam Nagar Branch where other group concerns were reported to be enjoying limits.
PW12 Sh. Narain Dutt Sharma was Sr. Manager in the Circle Office, Canara Bank, Nehru Place, New Delhi. He testified that he had dealt with the file of M/s Kramvir Steels Pvt. Ltd. Vide office orders dt. 30.01.2003, he was instructed to visit and study the performance/working of the unit already financed. He testified that CC No. 48/2010 Page 29 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 he visited all godowns of group concerns and submitted his report to the DGM which is Ext.PW12/A. He testified that vide office note dt. 15.02.2003 (Ext.PW5/B), the proposal of the branch for sanction a loan of Rs. 40 lacs was sanctioned.
PW13 Sh. Rakesh Jindal was the Chief Manager in Najafgarh Branch of State Bank of India. He proved the account opening form pertaining to M/s Golden Rathi Star Industries Ltd. and also proved its statement of account. As per this copy of statement, cheque no. 820760 was deposited vide pay in slip dt. 08.10.2005 in his bank; cheque no. 820732 was deposited vide pay in slip dt. 22.08.2005 in his bank; cheque no. 820794 was deposited vide pay in slip dt. 30.03.2006 in his bank; cheque no. 820793 was deposited vide pay in slip dt. 29.03.2006 in his bank; cheque no. 795822 was deposited vide pay in slip dt.27.11.2004 in his bank; cheque no. 795827 was deposited vide pay in slip dt. 01.12.2004 in his bank; cheque no. 795824 was deposited vide pay in slip dt. 29.11.2004 in his bank; cheque no. 795834 was deposited vide pay in slip dt. 06.12.2004 in his bank; cheque no. 795807 was deposited vide pay in slip dt. 20.10.2004 in his bank; cheque no. 795804 was deposited vide pay in slip dt. 11.10.2004 in his bank; cheque no. 795803 was deposited vide pay in slip dt. 07.10.2004 in his bank. All these cheques bears the seal of the bank at points A Ext.PW13/E; Ext.PW13/E1 to CC No. 48/2010 Page 30 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 Ext.PW13/E10 which he identified.
PW14 Sh. Ramesh Kumar testified that he was an officer in Canara Bank Malviya Nagar Branch, New Delhi wef January, 2002 to 2006. He testified that an application form of M/s Karamvir Steels Pvt. Ltd. Ext.PW11/A was received in Malviya Nagar Branch by the then Manager Sh. V.S. Kubal. The loan of Rs. 40 lacs was sanctioned on 08.01.2003 and sanction was sent to Circle Office for obtaining permission for its disbursement, but, the same was not disbursed through Malviya Nagar Branch and the file of M/s Karamvir Steels was transferred to Uttam Nagar Branch of Canara Bank vide letter Ext.PW11/H. PW15 Sh. Raj Kumar is Dy. Manager in Andhra Bank, Sector31, Gurgaon since 2009. He had handed over the original account opening form of account no. 257 in the name of Sangam Ispat and certified copy of statement of account of the said concern for the period 18.02.2003 to 31.03.2003. He testified that cheques bearing no. 770006 Ext.PW9/B2, cheque no. 770005 Ext.PW9/B3, cheque no.'s 79605, 79609, 79606 and 79605 were credited in the aforesaid statement of account. The amount was further transferred to the account of Kumbh Steel from Sangam Ispat through various cheques.
PW16 Sh. Mukesh Goel was the Chief Manager, Uttam Nagar, CC No. 48/2010 Page 31 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 Delhi branch of Canara Bank. He testified that there are two types of securities one is called 'Prime Security' whereas other is called 'Collateral Security'. He testified that there are no specific guidelines for obtaining collateral security. However, the same is to be decided on the discretions of the sanctioning authority in the matter of working capital limit in general. He proved various circulars and testified that Chief Manager can purchase cheques drawn on customers upto 20 lacs and over drawing beyond the limit can be permitted at branch level to the extent of 25% of delegated powers. He testified that the Divisional Manager/Chief Manager can sanction OCC limit upto 75 lacs and Sr. Manager can sanction OCC limit upto 30 lacs. Emergency powers can be used only for a period of 30 days for secured advance and 12 times in a year. He proved the statement of account of A/c no. 377 pertaining to M/s Kramvir Steels Pvt. Ltd. (D5) for the period 20.02.2003 to 24.07.2006 as Ext.PW16/C. He testified that the chief manager was having a power to purchase a cheque to the tune of Rs.20 lacs at that time. However, there was an entry dt. 02.04.2005 placed in certified copy of statement of account Ext.PW16/C showing the purchase of a cheque of Rs. 35 lacs which is beyond the powers of Chief Manager. Similar entries dt. 18.05.2005 for an amount of Rs. 31 lacs, 31.05.2005 for an amount of Rs. 40 lacs, 06.06.2005 for an amount of Rs. 22 lacs, 07.06.2005 for an amount CC No. 48/2010 Page 32 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 of Rs. 30 lacs, 09.06.2005 for an amount of Rs. 48 lacs, 10.06.2005 for an amount of Rs. 28.50 lacs, 11.06.2005 for an amount of Rs. 35 lacs and 17.06.2005 for an amount of Rs. 26 lacs. He further testified that vide a letter dt. 13.09.2005 which was written under the signatures of Sh. Ravi Sethithe then Chief Manager who had sought confirmation regarding telephonic permissions earlier given by the Dy. General Manager for permitting adhoc limit of Rs. 50 lacs as the party was having urgent need for execution of the order of Rs. 200 lacs. The same was confirmed by the DGM on 14.09.2005. The letter was proved as Ext.PW16/D which bears the confirmation of DGM at point X. The aforesaid confirmation was conveyed to the branch vide letter dt. 15.09.2005.
In cross examination by Sh. Sunil Ahuja, Ld. Defence Counsel for accused Ravi Sethi, this witness stated that sometimes limit is permitted over phone and the same is ratified subsequently by way of letter. He also testified that the present liability of the party was Rs. 249 lacs which was confirmed vide letter Ext.PW16/D. He admitted that the cheques are discounted in urgent need of the party but it should remain within limit. He admitted that a telephonic permission is taken when the cheques are discounted beyond the delegated powers and subsequently ratification is sought.
PW17 Sh. Suresh Kumar was driver Ombir Singh. He testified CC No. 48/2010 Page 33 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 that Ombir Singh was running various firms. Sh. Ombir Singh was looking after the work of Gurgaon based firms whereas Sh. Mahesh Kumar was looking after the affairs of Delhi based firms. He testified that Sh. Om Prakash Sharma and Smt. Shanti Deviwife of Om Prakash Sharma were the Directors of M/s Kramvir Steels Pvt. Ltd. After sometime, Smt. Shanti Devi resigned from the Directorship of M/s Kramvir Steels and Ombir Singh was inducted as one of the Directors in M/s Kramvir Steels. The affairs of M/s Kramvir Steels Pvt. Ltd. were being looked after by Sh. Om Prakash Sharma and Ombir Singh. He got opened an account in the name of Surya Steel Traders in Central Bank of India, Safdarjung Enclave and later on in Canara Bank Uttam Nagar Branch. This account was being used by both of them for their own purpose i.e. for transfer of funds. Sh. Ombir Singh took the cheque book after getting signed from him (i.e. PW17) in his possession. He identified the signatures of Ombir Singh, Om Prakash Sharma and Smt. Shanti Devi on the account opening form (D15) pertaining to Account No. 377 opened in Canara Bank on 20.3.2003. He identified the signatures of Om Prakash Sharma on the cheque issued by him in the name of Surya Steel Traders. He identified the signatures of Om Prakash Sharmas on his letter regarding enhance of OD limit to Rs.100 lacs. He identified signatures of Om Prkash Sharma on memorandum and articles of association of M/s Kramvir Steels Pvt. Ltd. (placed in file D36 to D25).
PW18 Dharamvir was an employee of M/s Kumbh Steels, CC No. 48/2010 Page 34 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 Gurgaon. He testified that Onkar Singh was the Director of this firm. Ombir Singh opened a current account in the name of Sangam Ispat. He proved his signatures on account opening form Ex.PW15/B, which shows him as the Proprietor of Sangam Ispat. He testified that all the transactions of this firm were being done by Ombir Singh. He identified the signatures of Om Prakash Sharma on two cheques bearing no. 770005, 770006 Ex.PW9/D3 and Ex.PW9/D2. He also stated that a current account dated 21.8.2003 (D25) was opened in the name of Jwalaji Enterprises in Canara Bank, Uttam Nagar Branch. This witness was introduced by Ombir Singh. He also proved the cheques issued under the signatures of Ombir Singh on behalf of M/s Kramvir Steels Pvt. Ltd. in favour of Jwalaji Enterprises.
In cross examination, he testified that Ombir Singh had handed over one cheque book, which was got signed by him from Om Prakash Sharma. The said cheque book was got signed on the instructions of Ombir singh. He admitted that the business of M/s Kramvir Steels Pvt. Ltd. along with other companies was managed by Ombir Singh. He testified that he used to sign at the instance of Ombir Singh in good faith. He also testified that similarly accused Om Prakash Sharma, Raj Kumar Sharma, Sugam Sharma etc. used to sign at the instance of Ombir Singh.
PW19(1) Radhey Shyam Sharma was working as Value Added CC No. 48/2010 Page 35 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 Tax Officer in Department of Trade & Taxes. He produced a letter to Inspector CBI regarding the information pertaining to M/s Kramvir Steel Pvt. Ltd. and produced the photo copies of the returns filed in the office through letter dated 5.3.2010.
PW19 Tek Chand was the Manager, Uttam Nagar Branch, Canara Bank from 2001 to September 2006. He testified that during his tenure Mr. Jarwal and accused Ravi Sethi remained posted as Chief Manager in the said branch. One Mr. Sikri was also remained Incharge of the said branch. He testified that account no. 7332 of M/s Suray Steel Trade was opened by Suresh Kumar and was introduced by Ombir Singh. Account no. 7704 of M/s Kramvir Steels was opened by Raj Kumar. Account no. 7156 of M/s Golden Rathi Star Industries Ltd. was opened by Ombir Singh, Smt. Krishna Devi and Mahesh Kumar. Account no. 377 of M/s Kramvir Steel Pvt. Ltd. was opened by Om Prakash Sharma and Shanti Devi on 20.3.2003, later on Ombir Singh was also joined on 7.3.2005. Account no. 360 of M/s Moscos Steel Pvt. Ltd. was opened by Raj Kumar and Smt. Neel Kamal. Account no. 325 of M/s Kumbyh Steels Pvt. Ltd. was opened by Ombir Singh and Om Prakash Sharma.
In cross examination by Sh. Sunil Ahuja, adv. for accused Ravi Sethi, he admitted that all group accounts were opened in Uttam Nagar Branch during the period 2001 upto May 2004 and had been CC No. 48/2010 Page 36 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 permitted by different Managers/Officers of the bank.
In cross examination by Sh. Sandeep Kapoor, adv. for accused Om Prakash Sharma, he stated that Om Prakash Sharma and Ombir singh used to operate the said account and used to met him. He denied the suggestion that Om Prakash Sharma never met him.
PW20 Sugam Sharma is a relative of accused Om Prakash Sharma. He testified that Ombir Singh got opened an account in the name of M/s Karamvir Steel Pvt. Ltd. in Standard Chartered Bank and he gave a cheque book pertaining to the said account for signing the same. The witness testified that all these signatures were done by him at the instance of Ombir Singh.
In cross examination he admitted that he had been arrayed as an accused in M/s Moskos Steel Pvt. Ltd. by CBI pending in the court of Sh. R. P. Pandey, Ld. Special Judge, Delhi.
PW21 Umesh Bangera was the Chief Manager in the year 2006 and had conducted the stock audited of M/s Kram Steels Pvt. Ltd. along with the Chartered Accountant namely Sh. Sandeep Gupta. He also testified that no stock was found at the premises of M/s Kramvir Steels Pvt. Ltd.
Testimony of PW22 Sunit Prakash is important because he gives details of almost all the transactions pertaining to M/s Kramvir Steels Pvt. Ltd. I produce the same as under : CC No. 48/2010 Page 37 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 "I remained posted in Uttam NagarNew Delhi Branch of Canara Bank as Sr. Manager wef 25.07.2006 to 05.06.2010. During my tenure as Sr. Manager, I came across about the file of M/s Kramvir Steels Pvt. Ltd.
I have seen a sanction memorandum dt. 19.02.2003. M/s Kramvir Steels Pvt. Ltd. was sanctioned a limit of Rs. 40 lacs under the traders scheme against hypothecation of entire stocks of RM(Raw material), SFG(Semi Finished Goods) and FG (Finished Goods) including unpaid stocks and book debts. This limit was sanctioned by the circle office of Canara Bank which is now marked as Ext.PW22/A. I have seen the application form placed alongwith D6 which already stands exhibited as Ext.PW11/B. The application dt. 30.12.2002 was moved with the bank by accused Om Prakash Sharma and Shanti Devi on behalf of M/s Kramvir Steels Pvt. Ltd. In the said application, limit was proposed to be secured as under:
1. PrimeStock & Book Debt Hypothecation.
2. CollateralEMT of property at B2/93, Second Floor, Janak Puri, New Delhi in the name of Mr. Satish Sharma having market value of Rs. 42,57,875/.
3. Personal guarantee of Satish Sharma, Ombir Singh, Om Prakash Sharma and Shanti Devi.
M/s Kramvir Steels Pvt. Ltd. annexed a copy of provisional balance sheet as on 20.12.2002, projected balance sheet as on 31.03.2003, projected balance sheet as on 31.03.2004, income tax returns for the assessment year 20022003(financial year 01.04.2001 to 31.03.2002) of Om Prakash Sharma, ITR of Smt. Shanti Devi for the period 2000, 2001, 2002; ITR of Ombir Singh for the period 2000, 2001, 2002. All these documents placed at pages 30 to 61 are collectively marked as Ext.PW22/A1.
On the basis of the said application, Malviya NagarDelhi branch processed the said application on 07.01.2003. The process note is placed at pages 18 to 21. The same are collectively marked as Ext.PW22/A2.
The recommendations are placed at pages 13 to 17 which are collectively marked as Ext.PW22/A3.
The circle office declined the request of M/s Kramvir Steels initially and conveyed vide letter dt. 30.01.2003 to the Canara Bank, Malviya Nagar, New Delhi. The said letter already stands exhibited as Ext.PW11/X and same is placed in file D19, D20 on page 227. Later on, it was processed through Uttam Nagar Branch and sanctioned vide letter dt. 19.02.2003 (D6) by the circle office vide Ext.PW22/A. CC No. 48/2010 Page 38 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 I have seen copy of account opening form of M/s Kramvir Steels Pvt. Ltd. dt. 20.02.2003 which was opened by Om Prakash Sharma and Shanti Devi as Director of M/s Kramvir Steels Pvt. Ltd. The certified copy of account opening form along with other documents duly certified under my signatures running into 22 pages (D4) are collectively marked as Ext.PW22/A4. It bears my signatures at points A on each page thereof. This account opening form pertains to account no. 377. This account was introduced by Ombir SinghDirector M/s Kumbh Steels which was having OCC A/c no. 325 in the bank. The certified copy of the account opening form was provided to CBI after comparing the same with the original account opening form and other documents.
I have seen the statement of account pertaining to the period 22.02.2003 to 24.07.2006 of OCC A/c no. 377 of M/s Kramvir Steels Pvt. Ltd. duly certified under my signatures. It bears my signatures at points A on each page thereof. The said certified copy of statement of account already stands exhibited as Ext.PW16/C (D5). The statement of account reflects that amount of Rs. 5,15,934/, Rs. 1,52,495/, Rs. 3,90,265/ was debited on 24.02.2003 in favour of M/s Karan Steels vide cheques no. 770003, 770004 & 770002. Amount of Rs. 4,25,000/ and Rs. 4,20,000/ was debited on 25.02.2003 in favour of M/s Sangam Ispat against cheques no. 770006, 770005. An amount of Rs. 21,45,000/ was credited in the current account no. 7465 of M/s Kramvir Steels Pvt. Ltd. on 21.02.2003, as reflected against the entry dt. 21.02.2003 vide cheque no. 770001.
As per statement of account Ext.PW16/C, the total amount of Rs. 40 lacs sanctioned by the circle office was withdrawn within five days from 21.02.2003 to 25.02.2003. Cheque no.'s 770006 (D71(i)) already exhibited as Ext.PW9/B2, cheque no. 770005 (D71(ii)) already stands exhibited as Ext.PW9/B3. Both cheques were issued by Om Prakash Sharma in favour of M/s Sangam Ispat.
Cheque no.'s 770003, 770004 (D73 & D74) were issued in favour of Karan Steels Pvt. Ltd. by Om Prakash Sharma Director M/s Kramvir Steels Pvt. Ltd. Both cheques are now marked as Ext.PW22/A5 & Ext.PW22/A6.
I have seen a seizure memo (D72) dt. 12.02.2010 vide which I had handed over the documents mentioned therein to Insp. Satender Singh. Siezure memo dt. 12.02.2010 bears my signatures at points A on both pages which is now marked as Ext.PW22/A7.
I have seen a file D7. In the said file, a limit of Rs. 40 CC No. 48/2010 Page 39 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 lacs was renewed vide order dt. 18.02.2004. The office note dt. 16.02.2004 already stands exhibited as Ext.PW3/B. The limit was renewed for a period of one year till 16.02.2005. An application to this effect was moved by Om Prakash and Shanti Deviboth Directors of M/s Kramvir Steels Pvt. Ltd. including the documents. The said application already stands exhibited as Ext.PW3/A. I have seen an application for enhancement of limit from Rs. 40 lacs to Rs. 200 lacs made under the signatures of Om Prakash SharmaDirector, M/s Kramvir Steels Pvt. Ltd. The said application is placed at page 207 in D8 which is now marked as Ext.PW22/A8. On the basis of said application, a process note under the signatures of Sh. Ravi Sethi was prepared. The process note is placed at pages 348 to 351 in D8 bearing the signatures of Sh. Ravi Sethi at point A. The said note is marked as Ext.PW22/A9. On the basis of proposal of Sh. Ravi Sethi, circle office enhanced the limit from Rs. 40 lacs to Rs. 200 lacs vide sanction memorandum (D8) dt. 08.12.2004 which is now marked as Ext.PW22/A10. Sanction note of circle office dt. 03.12.2004 already stands exhibited as ExtPW5/D which is placed in file D20. The property bearing Khewat no. 90, Khatta No. 153, Quilla no. 31/1031/11, 32/15/2, Hasanpur, MIE, Delhi Rohtak Road, Bahadurgarh in the name of Sh. Ombir Singh for 120 sq. yards having marked value of Rs. 44.82 lacs, as per valuation report dt. 06.03.2004 was mortgaged with the bank at the time of enhancement of the limit.
The limit of a party is calculated as per turnover method under P.R. Nayak Committee recommendations at 20% of the projected turnover of the party.
I have seen statement of account D5 already stands exhibited as Ext.PW16/C. In the said statement of account, the liability towards M/s Kramvir Steels Pvt. Ltd. as on 03.12.2004 was Rs. 1,47,60,520.32/. The limit of the party was enhanced on 03.12.2004 from Rs. 40 lacs to Rs. 200 lacs.
I have seen cheque no. 795824 dt. 27.11.2004 (D64 (XXXXI)) for an amount of Rs. 20 lacs already exhibited as Ext.PW13/E6; cheque no. 795826 dt. 30.11.2004 (D64 (XXXIX)) for an amount of Rs. 40 lacs now exhibited as Ext.PW22/A11; cheque no. 795834 dt. 04.12.2004 (D64 (XXXXII)) for an amount of Rs. 50 lacs already exhibited as Ext.PW13/E7; cheque no. 795827 dt. 30.11.2004 (D64 XXXX)) for an amount of Rs. 50 lacs already exhibited as Ext.PW13/E5. All these cheques were issued in favour of Golden Rathi Star Industries Ltd. by Om Prakash SharmaDirector M/s Kramvir Steels Pvt. Ltd.
CC No. 48/2010 Page 40 / 76Om Prakash Sharma etc. Judgment dt. 24.8.2013 I have seen cheque no. 795829 dt. 01.12.2004 (D66 (III)) for an amount of Rs. 26 lacs is now exhibited as Ext.PW22/A12 in favour of Karan Steels Ltd. The cheque was issued by Om Prakash Sharma on behalf of M/s Kramvir Steels Ltd.
I have seen cheque no. 795830 dt. 01.12.2004 (D70 (XII)) for an amount of Rs. 9 lacs is now exhibited as Ext.PW22/A13 in favour of Surya Steel Traders. The cheque was issued by Om Prakash Sharma on behalf of M/s Kramvir Steels Ltd.
I have seen cheque no. 795835 dt. 06.12.2004 (D68 (II)) for an amount of Rs. 17 lacs is now exhibited as Ext.PW22/A14 in favour of Maharaja Ispat Pvt. Ltd. The cheque was issued by Om Prakash Sharma on behalf of M/s Kramvir Steels Ltd.
In all the aforesaid cheques bearing exhibits Ext.PW13/E6, Ext.PW22/A11, Ext.PW13/E7, Ext.PW13/E5, Ext.PW22/A12, Ext.PW22/A13 & Ext.PW22/A14 a Temporary overdraft (TOD) was allowed by accused Ravi Sethi.
I have seen a letter dt. 03.03.2005 placed at page 149 in file D19, D20. The party had requested for sanction of adhoc limit of 25% of the sanctioned amount. The letter is marked as Ext.PW22/A15. The sanctioned limit of the party was Rs. 200 lacs. The proposal to this effect was recommended by Sh. Ravi Sethi on 07.03.2005. The recommendation letter is placed at page 148 bearing the signatures of Sh. Ravi Sethi at point A. The same is now marked as Ext.PW22/A16. The circle office vide letter dt. 15.03.2005 raised a query about the basis for recommending adhoc limit of Rs. 50 lacs in addition to enhanced limit of Rs. 200 lacs. The said letter is available at page 146 in file D19, D20 which is now marked as Ext.PW22/A17.
Sh. Ravi Sethi in response to the aforesaid query written a letter dt. 18.05.2005. A copy of this letter is available at page 133 bearing the signatures of Ravi Sethi at point A which is now marked as Ext.PW22/A18.
I have seen a letter dt. 13.09.2005 placed at page 128 in file D19, D20 written under the signatures of Sh. Ravi Sethi, the then Chief Manager. The said letter already stands exhibited as Ext.PW16/D. The Circle Office confirmed the telephonic permission upto 07.06.2006 as recommended by Sr. Manager of Circle Office (Advance Section).
I have seen a cheque no. 795853 {D70(XXV)} dt. 07.03.2005 for an amount of Rs. 42 lacs issued in favour of Surya Steel Traders already exhibited as Ext.PW10/A10. The said cheque was issued under the signatures of Sh. Ombir Singh CC No. 48/2010 Page 41 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 Director M/s Kramvir Steels Pvt. Ltd. This cheque was allowed by Sh. Ravi Sethi.
I have seen the cheque no.'s 079603 for an amount of Rs. 3,98,424/ dt. 19.02.2003 (D46); 079604 for an amount of Rs. 4,22,615/ dt. 19.02.2003 (D47) both issued in favour of Karan Steels by Om Prakash SharmaDirector M/s Kramvir Steels Pvt. Ltd. Both are now marked as Ext.PW22/A19 & Ext.PW22/A20. I have seen another cheques no.'s 079606, 079607 & 079609 for an amount of Rs. 1,62,314/, Rs. 1,58,210/, Rs. 5,90,275/ all dt. 19.02.2003 (D48, D49 & D50) issued in favour of Sangam Ispat by Om Prakash SharmaDirector M/s Kramvir Steels Pvt. Ltd. which are now marked as Ext.PW22/A21, Ext.PW22/A22 & Ext.PW22/A23. I have seen cheque no. 079610 for an amount of Rs. 4,25,000/ dt. 20.02.2003 (D51) issued in favour of Kamal Steels by Om Prakash SharmaDirector M/s Kramvir Steels Pvt. Ltd. The same is now marked as Ext. PW22/A24. All these aforesaid cheques were given to Insp. Satender Singh vide seizure memo D45 by me. It bears my signatures at points A which is now marked as Ext.PW22/A25.
As per banking guidelines, the branch head is delegated with the powers of over drawings in an OD/OCC Account upto 20% of the sanctioned limit.
I have seen a letter dt. NIL (D80) which was submitted by Om Prakash SharmaDirector M/s Kramvir Steels Pvt. Ltd. to the Chief Manager for substitution of property bearing no. B2/93, Second Floor, Janak Puri, New Delhi against another collateral security. The said letter is marked as Ext.PW22/A26. On the basis of said letter, Sh. D.C. Narnaulia had written a letter to the circle office on 18.09.2004. I identify the signatures of Sh. D.C. Narnaulia at point A regarding substitution of the aforesaid property. The letter is marked as Ext.PW22/A27. The Sr. Manager Circle Office vide letter dt. 18.09.2004 advised the branch to consider the matter at their end. The said letter is marked as Ext.PW22/A28. After receiving the aforesaid letter, Sh. D.C. Narnaulia put up a note dt. 24.09.2004 before the Chief Manager. The signatures of Sh. D.C. Narnaulia appearing at point A and Sh. Ravi Sethithe then Chief Manager permitted the aforesaid property to be substituted on 24.09.2004. The signatures of Sh. Ravi Sethi are appearing at point B. The said note is marked as Ext.PW22/A29.
I have seen a seizure memo D11 dt. 21.07.2009 vide which I had handed over the documents mentioned therein to Insp. Satender Singh. The seizure memo bears my signatures at points A which is now marked as Ext.PW22/30.
CC No. 48/2010 Page 42 / 76Om Prakash Sharma etc. Judgment dt. 24.8.2013 I have seen account opening form of M/s Surya Steels Traders (D12) which already stands exhibited as Ext.PW17/A. The said account opening form was attested under my signatures which are available at points X. I have seen specimen signature card (D13) in respect of Karan Steels already stands exhibited as Ext.PW19/A. The same was duly attested under my signatures which are available at point A. The account opening form and permanent account no. were duly attested under my signatures which are available at points A. I have seen account opening form pertaining to M/s Golden Rathi Star Industries Ltd. (D14) already stands exhibited as Ext.PW19/B. It bears my signatures at points A as I had attested the aforesaid documents.
I have seen account opening form pertaining to M/s Kramvir Steels Pvt. Ltd. (D15) already stands exhibited as Ext.PW17/B. It bears my signatures at points X as I had attested the aforesaid documents.
I have seen account opening form pertaining to M/s MOSKOS Steels Pvt. Ltd. (D16) already stands exhibited as Ext.PW19/C. It bears my signatures at points X as I had attested the aforesaid documents.
I have seen account opening form pertaining to M/s Maharja Ispat Pvt. Ltd. (D17)now marked as Ext.PW22/A31. It bears my signatures at points X as I had attested the aforesaid documents.
I have seen account opening form pertaining to M/s Kumbh Steels Pvt. Ltd. (D18) already stands exhibited as Ext.PW19/D. It bears my signatures at points X as I had attested the aforesaid documents.
I have seen a seizure memo D21 dt. 18.03.2010 vide which I had handed over the documents mentioned therein to Insp. Satender Singh. It bears my signatures at points A. The same is now marked as Ext.PW22/A32.
I have seen a seizure memo D24 dt. 09.04.2010 running into two pages vide which I had handed over the documents mentioned therein to Insp. Satender Singh. It bears my signatures at points A. The same is now marked as Ext.PW22/A33.
I have seen certified copy of statement of account pertaining to M/s Jwala Ji Enterprises in respect of CA No. 7561 (D26). The said statement of account was certified under my signatures which are appearing at points A on each page thereof. The statement of account was issued as per Banker's Books of CC No. 48/2010 Page 43 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 Evidence Act. The certificate to this effect is marked as Ext.PW22/A34. It bears my signatures at point A and that of Sh. Mukesh Goelthe then Chief Manager at point B which I identify.
I have seen the stock statement of M/s Kramvir Steels Pvt. Ltd. (D79) for the period January, 2003 to December, 2004 signed by Om Prakash SharmaDirector M/s Kramvir Steels Pvt. Ltd. Stock statements for the year 2003 & 2004 are collectively marked as Ext.PW22/A35 and stock statements for the period 2005 & 2006 signed by Ombir SinghDirector M/s Kramvir Steels Pvt. Ltd. are collectively marked as Ext.PW22/A36. The aforesaid stock statements were reviewed by Sh. Satish Sikri, D.C. Narnaulia and Ravi Sethi.
I have seen certified copy of statement of account pertaining to Karan Steels in respect of CA No. 7704 (D27). The said statement of account was certified under my signatures which are appearing at points A on each page thereof. The statement of account was issued as per Banker's Books of Evidence Act. The certificate to this effect stands marked as Ext.PW22/A37. The statement of account is marked as Ext.PW22/A38 (Colly). It bears my signatures at point A and that of Sh. Mukesh Goelthe then Chief Manager at point B which I identify.
I have seen certified copy of statement of account pertaining to Surya Steel Traders in respect of CA No. 7332 (D28). The said statement of account was certified under my signatures which are appearing at points A on each page thereof. The statement of account was issued as per Banker's Books of Evidence Act. The certificate to this effect is marked as Ext.PW22/A39. The statement of account is marked as Ext.PW22/A40 (Colly). It bears my signatures at point A and that of Sh. Mukesh Goelthe then Chief Manager at point B which I identify.
I have seen certified copy of statement of account pertaining to Maharaja Ispat Pvt. Ltd. in respect of OD A/c No. 324 (D29). The said statement of account was certified under my signatures which are appearing at points A on each page thereof. The statement of account was issued as per Banker's Books of Evidence Act. The certificate to this effect is marked as Ext.PW22/A41. The statement of account is marked as Ext.PW22/A42 (colly). It bears my signatures at point A and that of Sh. Mukesh Goelthe then Chief Manager at point B which I identify.
I have seen certified copy of statement of account pertaining to Kumbh Steels in respect of OD A/c No. 325 (D30).
CC No. 48/2010 Page 44 / 76Om Prakash Sharma etc. Judgment dt. 24.8.2013 The said statement of account was certified under my signatures which are appearing at points A on each page thereof. The statement of account was issued as per Banker's Books of Evidence Act. The certificate to this effect is marked as Ext.PW22/A43. The statement of account is marked as Ext.PW22/A44 (colly). It bears my signatures at point A and that of Sh. Mukesh Goelthe then Chief Manager at point B which I identify.
I have seen certified copy of statement of account pertaining to MOSKOS Steels Pvt. Ltd. in respect of OD A/c No. 360 (D31). The said statement of account was certified under my signatures which are appearing at points A on each page thereof. The statement of account was issued as per Banker's Books of Evidence Act. The certificate to this effect is marked as Ext.PW22/A45. The statement of account is marked as Ext.PW22/A46 (Colly). It bears my signatures at point A and that of Sh. Mukesh Goelthe then Chief Manager at point B which I identify.
I have seen certified copy of statement of account pertaining to Surya Steel Traders in respect of OD A/c No. 463 (D32). The said statement of account was certified under my signatures which are appearing at points A on each page thereof. The statement of account was issued as per Banker's Books of Evidence Act. The certificate to this effect is marked as Ext.PW22/A47. The statement of account is marked as Ext.PW22/A48 (Colly). It bears my signatures at point A and that of Sh. Mukesh Goelthe then Chief Manager at point B which I identify.
I have seen certified copy of statement of account pertaining to Golden Rathi Star Industries Ltd. in respect of OD A/c No. 382 (D33). The said statement of account was certified under my signatures which are appearing at points A on each page thereof. The statement of account was issued as per Banker's Books of Evidence Act. The certificate to this effect is marked as Ext.PW22/A49. The statement of account is marked as Ext.PW22/A50 (colly). It bears my signatures at point A and that of Sh. Mukesh Goelthe then Chief Manager at point B which I identify.
I have seen certified copy of statement of account pertaining to Surya Steel Traders in respect of CA No. 7332 (D36). The said statement of account was certified under my signatures which are appearing at points A on each page thereof. The statement of account was issued as per Banker's Books of Evidence Act. The certificate to this effect is marked as Ext.PW22/A51. The statement of account is marked as CC No. 48/2010 Page 45 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 Ext.PW22/A52(Colly). It bears my signatures at point A and that of Sh. Mukesh Goelthe then Chief Manager at point B which I identify.
I have seen certified copy of statement of account pertaining to MOSKOS Steels Pvt. Ltd. in respect of CA No. 7221 (D37). The said statement of account was certified under my signatures which are appearing at points A on each page thereof. The statement of account was issued as per Banker's Books of Evidence Act. The certificate to this effect is marked as Ext.PW22/A53. The statement of account is marked as Ext.PW22/A54(Colly). It bears my signatures at point A and that of Sh. Mukesh Goelthe then Chief Manager at point B which I identify.
I have seen certified copy of statement of account pertaining to Golden Rathi Star Industries in respect of CA No. 7156 (D38). The said statement of account was certified under my signatures which are appearing at points A on each page thereof. The statement of account was issued as per Banker's Books of Evidence Act. The certificate to this effect is marked as Ext.PW22/A55. The statement of account is marked as Ext.PW22/A56 (Colly). It bears my signatures at point A and that of Sh. Mukesh Goelthe then Chief Manager at point B which I identify.
I have seen certified copy of statement of account pertaining to Kramvir Steels in respect of CA No. 7465 (D35). The said statement of account was certified under my signatures which are appearing at points A. The statement of account was issued as per Banker's Books of Evidence Act. The statement of account is marked as Ext.PW22/A57 (Colly). It bears my signatures at point A and that of Sh. Mukesh Goelthe then Chief Manager at point B which I identify.
I have seen account opening form pertaining to M/s Kramvir Steels Pvt. Ltd. (D34) now marked as Ext.PW22/A58 (colly). It bears my signatures at points X as I had attested the account opening form along with other documents.
I have seen the documents contained in D10 from pages 1 to 82. Each page is attested by me and it bears my signatures along with seal at points A on each page thereof. These are the documents which were executed in the bank by the Directors of M/s Kramvir Steels Pvt. Ltd. i.e. Om Prakash Sharma, Shanti Devi and Ombir Singh for grant of credit facilities, as per banking norms and procedure. All these documents are collectively marked as Ext.PW22/A59.
It is the responsibility of the Manager (Advances) to carry out the inspection and allot the duty for godown checking CC No. 48/2010 Page 46 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 to the branch officers. The overall responsibility for godown reviewing of checking lies with Branch Head.
I have seen the attested photocopy of Branch Advice Requisition Issued Register for the period 05.01.2002 to 31.03.2005 containing pages 183 (D56). This register was attested under my signatures and it bears my signatures at points A on each sheet thereof which is collectively marked as Ext.PW22/A60.
I have seen the attested photocopy of CDB (Cheque Discounting Bills) Register for the period 02.04.2005 to 31.03.2006 containing pages 2101 (D57). This register was attested under my signatures and it bears my signatures at points A on each sheet thereof which is collectively marked as Ext.PW22/A61.
I have seen the attested photocopy of TOD Register for the period 29.10.2004 to 06.04.2005 containing pages 289 (D58). This register was attested under my signatures and it bears my signatures at points A on each sheet thereof which is collectively marked as Ext.PW22/A62.
I have seen the attested photocopy of TOD Register for the period 06.04.2005 to 23.08.2005 containing pages 1101 (D59). This register was attested under my signatures and it bears my signatures at points A on each sheet thereof which is collectively marked as Ext.PW22/A63.
I have seen the attested photocopy of TOD Register for the period 07.06.2004 to 27.10.2004 (D60) containing pages 1101. This register was attested under my signatures and it bears my signatures at points A on each sheet thereof which is collectively marked as Ext.PW22/A64.
XXX By Sh. Sandeep Kapoor, Ld. Defence Counsel for accused Om Prakash.
During my tenure, the bank accounts mentioned in my statement transferred to LPD (Loan Passed Due) as the accounts became NPA (Non Performing Asset). The stock statements, as stated in my statement were not submitted during my tenure. I have no personal knowledge about the transaction of the accounts. However, recovery process was started in my tenure. XXX By Sh. Sunil Ahuja, Ld. Defence Counsel for accused Ravi Sethi.
The credit proposal in the said account were within the sanctioning power of the circle office. The circle office will satisfy itself to the availability of appropriate security and only then it would sanction the limit.
I have seen the enhancement proposal dt. 09.11.2004 Ext.PW22/A9. It bears the initials of two officials. One of the CC No. 48/2010 Page 47 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 officials is Mr. D.C. NarnauliaCredit Manager and I identify his signatures since he has worked with me. The other signatures are of one other officer who is also an officer of the Advance Section and thereafter it is signed by the Chief Manager. The credit proposal dt. 09.11.2004 for enhancement of limit was collaterally secured with property at Khewat No. 90, Khata No. 153, Kila No. 31/1031/11, 32/6/132/15/2, Hasanpur, MIE, DelhiRohtak Road, Bahadurgarh in the name of Sh. Ombir Singh measuring 120 sq. yards with the value of Rs. 44,42,000/. This was the property which was auctioned by the bank under SERFASI ACT, but, I do not remember the total amount for which it was auctioned. As a general procedure, the circle office can call for any document found deficient in the proposal and in this regard there is communication between the branch and the circle office.
Now I have seen the form NF 622 which is a credit appraisal format, which is placed at page no. 16 to 19 in file D8 and which is now exhibited as Ext.PW22/DA. As per page no. 2 of NF622, in the column of 'position of account' as on 03.12.2004 as against the limit of Rs. 40 lacs, liability is mentioned Rs. 1,47,60,520/ as against the value of security of Rs. 344.65 lacs. It is correct that by NF622 the branch informs the circle office of the outstanding liability of the party before sanction.
I have seen the sanction note and no objection was raised by the circle office even after receipt of the NF622 and sent the sanction. I have also seen the column no. 12 of NF622 in which the branch had confirmed having inspected the godown in November, 2004. This format is signed by the Officer (Advances) and the Credit Manager of Advances Section Mr. Narnaulia. It is correct that the circle office informs the branch of the sanction of the limit telephonically before receiving the hard copy of the sanction order.
Granting of TOD to the party is a banking practice and the account of the party is quite old and it had been enjoying the TOD facilities. This account was regularized number of times. TOD granted to the parties number of times and subsequently again and again as and when the earlier TOD granted was regularized. Uttam Nagar Branch is a very large branch (VLB) of Canara Bank. In such a branch, a credit department/advances department is separately being headed by a credit manager and a credit officer and clerical staff. The credit proposal is being prepared by the credit officer and credit manager and submitted for sanction and recommendations. The account were monitored by credit manager for day to day functioning. The drawing power for ODCC account are being calculated by officer (Advances) and checked by the Credit Manager. It is correct that CC No. 48/2010 Page 48 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 Uttam Nagar branch of Canara Bank is a very large branch and concurrent audit is being done every month. It is correct that the concurrent auditors conduct the stock inspection every month and the conduct of the account as well. CDB (Cheque Discounting Bills) is a profitable business to the bank as bank earns the interest for four days at a clean rate of interest which is around 50% higher than the normal rate of interest on loans & advances.
Q If the overdrawings are beyond the delegated powers and not ratify, they are reported to higher authorities by concurrent auditors during their audit. Is it correct?
A It is correct.
Q Whether these observations made by the concurrent
auditors are followed /monitored by circle office till final closure of the inspection report?
A It is correct.
Q I put it to you that the Circle office had not declined the
request of the party for grant of loan from the Malviya Nagar Branch of Canara Bank and had in fact asked the party to route it through the Uttam Nagar Branch. Is it correct? A Branch recommendation for clearance of the subject proposal from group exposure angle was declined and the subject proposal was to be routed through Uttam Nagar Branch.
I have seen cheque no. 795826 for an amount of Rs. 40 lacs dt. 01.12.2004 which is signed by D.C. Narnaulia. I have also seen cheque no. 795829 for an amount of Rs. 26 lacs dt. 01.12.2004 which is also signed by D.C. Narnaulia. I have also seen cheque no. 795830 for an amount of Rs. 9 lacs dt. 01.12.2004 which is also signed by D.C. Narnaulia. I have also seen cheque no. 795827 for an amount of Rs.50 lacs dt. 30.11.2004 which is signed by D.C. Narnaulia and Ravi Sethi. I have also seen cheque no. 795834 for an amount of Rs. 50 lacs dt. 04.12.2004 which is also signed by both D.C. Narnaulia and Ravi Sethi.
I have also seen cheque no. 795835 for an amount of Rs. 17 lacs dt. 06.12.2004 which is not signed by anybody.
The delegation of powers of overdrawings in an OD/OCC Account can be granted upto 25% of the sanctioned limit and not the 20% of the sanctioned limit, as testified by me in my examination in chief. I have never worked with Ravi Sethi. I had gone to the CBI office for the purposes of attesting the documents, the originals of which were lying with the branch.
PW23 T. Somashekharan was officer in Circle Office, Canara CC No. 48/2010 Page 49 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 Bank from 2008 to 2011. He handed over the circle file pertaining to M/s Kramvir Steels Pvt. Ltd. vide siezure memo D19, which is Ex.PW23/A. PW24 Satender Singh is the Investigating Officer. PW25 K. B. Jayaprakash is the complainant in this case.
37. STATEMENT OF ACCUSED u/s 313 CrPC OF ACCUSED OM PRAKASH SHARMA AND DEFENCE EVIDENCE LED BY HIM.
Accused Om Prakash Sharma in his statement u/s 313 CrPC denied having any knowledge of the transactions. In reply to Question no. 213, he stated that he is suffering from paralysis and is confined to bed and that he is illiterate and was working as a mason. Ombir Singh had taught him how to sign and that Ombir Singh also used to copy his signatures in his absence. He stated that he (i.e. Ombir Singh) obtained his signatures on blank papers. This accused further stated that Ombir Singh had initially obtained his and his wife's signatures on some blank forms and that he never visited any bank for any signatures or in connection with any business work of M/s Kramvir Steels Pvt. Ltd. He stated that he was not aware of the fact that he was the Director in any company and he has no knowledge about the allegations levelled against him.
CC No. 48/2010 Page 50 / 76Om Prakash Sharma etc. Judgment dt. 24.8.2013 Accused Om Prakash Sharma examined his son Sunil Sharma as a defence witness A1/DW1. A1/DW1 Sunil Sharma testified that his father Om Prakash Sharma was a mason and is uneducated. He did not know how to sign and write but Ombir Singh taught him to sign in Hindi. He testified that Om Prakash Sharma was not doing any work except work as mason. He testified that he had no idea if his father was a Director of any company. Ombir Singh was residing with his family in Gurgaon. He stated that he did not have good relations with Ombir Singh and therefore did not know his address. However, Ombir Singh was very clever and used to visit his father in 3 or 4 months. Ombir Singh got signatures of Om Prakash Sharma on some files and on some blank cheques on the pretext that since he is a senior citizen, some benefits of being senior citizen would accrue to him. This witness testified that not only Ombir Singh used to get the signatures of Om Prakash Sharma, he also used to forge his signatures. He testified that Ombir Singh used to have photographs of his father and used the same as and when required. He testified that he (i.e. A1/DW1 Sunil Sharma) used to maintain his parents but Ombir Singh never help in daytoday expenses of his parents. He also testified that Om Prakash Sharma is innocent and has not committed any offence.
CC No. 48/2010 Page 51 / 76Om Prakash Sharma etc. Judgment dt. 24.8.2013
38. STATEMENT U/S 313 CrPC OF ACCUSED RAVI SETHI Accused Ravi Sethi did not dispute the correctness of the records and proceedings. However, he gave explanations to the allegations made against him. He also filed a detailed written statement. However, he did not lead any evidence in defence.
It is necessary to mention here that this accused also filed an attested copy of the judgment dt. 05.09.2012 passed by Sh. Manoj Jain, Ld. Special Judge, Saket District Courts, New Delhi wherein he was acquitted on the similar facts.
39. RAVI SETHI Sh. Sunil Ahuja, Adv. Ld. Counsel for accused Ravi Sethi argued that the party had been enjoying the credit facilities with the branch from 2001. It was a credit account dealing with the bank since 1996 and was considered as a preferred account by the bank. It is argued that the credit proposals of the party were being processed by the different officers of the bank even before his joining. Ld. Counsel has submitted that accused has joined the Uttam Nagar branch of Canara Bank on 20.09.2004 and remained posted there till 22.07.2006. Ld. Defence Counsel submits that the dealing of the party had been recorded satisfactory by all his predecessors. From the ledger of the accounts, the dealings were apparently satisfactory when CC No. 48/2010 Page 52 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 he joined the branch and whenever irregularities were seen, the same were duly recorded in the credit proposals. Ld. Defence Counsel has drawn my attention to the testimony of PW19 who deposed that all group accounts had been opened in Canara Bank, Uttam Nagar during the period 2001 upto May, 2004and had been permitted by different officers/Managers of the bank. Ld. Defence Counsel has drawn my attention to the testimony of PW8, PW11 and PW22 who have deposed that the branch was having an 'Advances Section' with an office and a Credit Manager. The proposal for enhancement of crash credit limit from Rs. 40 lacs to Rs. 200 lacs was prepared by Sh. Mahesh Prakash, Officer and Sh. D.C. NarnauliaCredit Manager and that Circle Office was was the sanctioning authority. It is argued by Ld. Defence Counsel that proposal dt. 09.11.2004 was forwarded by accused Ravi Sethi to circle office on merits duly recording the negative features noticed in the account and that he had informed the conduct of the account in enhancement proposal dt. 09.11.2004 to the circle office. Ld. Defence Counsel has drawn my attention to the testimony of PW24the Investigating Officer of this case that Ravi Sethithe Branch Manager had pointed out the irregularities in the account in proposal for enhancement. Ld. Defence Counsel has drawn my attention to the testimony of PW8 and argues that MPBF (Maximum Permissible Bank Finance) is to be calculated on turnover CC No. 48/2010 Page 53 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 method i.e. 20 % of the projected sale. Ld. Defence Counsel has drawn my attention to the testimony of PW16, Pw24 & PW25 and submits that it is not necessary that collateral security has to be taken in every advance or loan. My attention has been drawn to the testimony of PW24 and it is argued that along with the application, the party submitted the financial documents i.e. audited trading, profit & loss account for the year ending 31.03.2004, sale/purchase of the company and sales tax returns etc. during the year 20042005 which were found in order and that the chartered accountants of the party had submitted audit and balance sheet before the bank at the time of grant of loan to the party and that he did not found any irregularity in the balance sheets submitted by the chartered accountants. Ld. Defence Counsel has drawn my attention to the testimony of PW16 and submits that the proposal was processed and scrutinized at circle office by Sh. S.K. GuptaSr. Manager (Advances Section) who recommended it for sanction on the office note no. 949/04 dt. 03.12.2004. Ld. Defence Counsel submits that Sh. S.S. BhattAGM Circle Office permitted it and placed it before Sh. DRP SundaramDGM Circle Officethe sanctioning authority. It is submitted that in the note it is written that "the account belongs to M/s Golden Rathi Group. We have already lost the account of M/s Golden Rathi Group. Collateral Security is too low compared to CC No. 48/2010 Page 54 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 exposure. However, dealings are satisfactory. The account has also recommendations of Sh. Anoop GargDirector of the bank." It is argued that since the sanction was under the powers of circle office, the party approached circle office as it urgently required funds. Ld. Defence Counsel argues that the telephonic instructions came from Sh. DRP Sundaram, the sanctioning authority for early release of the funds which is not uncommon in banking practice. It is further argued that early release was returned to circle office when the liability dt. 03.12.2004 was informed through NF622 (Credit Proposal Format). Since the early release was on their instructions, the circle office raised no objection and instead it accorded the sanction. Ld. Defence Counsel has drawn my attention to the testimony of PW16 who has deposed that sometimes limit is permitted over phone and and the same is ratified subsequently by way of letter. Ld. Defence counsel has drawn my attention to the testimony of PW22 who has stated that on NF622 (Credit Proposal Format placed in D8) in column of "Position of Account as on 03.12.2004", the liabilities mentioned as RS. 1,47,60,520/ as against the limit of Rs. 40 lacs. PW22 testified that by NF622, the branch informs the circle office about the outstanding liability of the party before sanctioning. However, no objection was raised by the circle office even after receipt of NF622 and the limit was sanctioned. My attention has been CC No. 48/2010 Page 55 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 drawn to the testimony of PW16 who has proved that vide letter dt. 13.09.2005, accused Ravi Sethi, the then Chief Manager had sought confirmation regarding the telephonic permission earlier given by the DGM for permitting adhoc limit of Rs. 50 lacs. This witness testified that this was confirmed by DGM on 14.09.2005.
Ld. Defence Counsel argues that Ravi Sethi was not the sanctioning authority. It is argued that proposal was processed by the credit officer/Manager of the branch and sanctioned by the circle office. It is further argued that at no point of time any information was concealed from the circle office. My attention has been drawn to the testimony of PW8 who has testified that Uttam Nagar Branch of Canara Bank was under concurrent audit which means that conduct of account was checked regularly every month and at the time of making the enhancement of limit, inspection of stock and documents is conducted by Inspector/Auditor. It is submitted that during this inspection, the conduct of the account is also verified and these observations were returned to the circle office for guidance.
Ld. Defence Counsel further argues that the routine transactions to the accounts are made at the counter under the supervision of Manager (Advances). My attention has been drawn to the testimony of PW10 who has deposed that as a matter of procedure, the cheques are sent to the Manager (Advances) for CC No. 48/2010 Page 56 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 TOD(Temporary Overdraft Facility) and TOD is granted in routine in banking sector and Sh. D.C. Narnaulia was Manager (Advances) at that time. Thus, it is argued that Ravi Sethi did not allow any TOD beyond his powers except early release on the instructions of sanctioning authority. My attention has been drawn by Ld. Defence Counsel to the testimony of PW22 who has deposed that granting of TOD to the party is a banking practice and account of party is quite old and it had been enjoying TOD facility and that this account was regularized number of times and again as and when the earlier TOD granted was regularized. Ld. Defence Counsel further argues that if some cheques have been discounted beyond the delegated powers, the same was done with the permission of DGM Circle Office, which is not uncommon in banking industry. In the present case, such ratifications were obtained and are available with the credit section in the bank. My attention has been drawn to the testimony of PW22 who admitted that if overdrawings are beyond the delegated powers and not ratified, they are returned to the higher authorities by concurrent auditors through audit. These observations are followed/monitored by the Circle office till final closure of the inspection report. It is argued by Ld. Defence Counsel that the entire process has been done by Ravi Sethi during the normal banking course and there is no evidence to show that he was in any manner in CC No. 48/2010 Page 57 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 complicity with the accused or had in any manner indulged in criminal misconduct, as defined in Section 13(1)(d) of the PC Act.
Sh. Amrit Pal Singh, Ld. Public Prosecutor for CBI has drawn my attention to the process note/proposal Ext.PW22/A9 (D8) prepared by accused Ravi Sethi vide which he recommended for enhancement of limit from Rs. 40 lacs to Rs. 200 lacs. Ld. Public Prosecutor has drawn my attention to page no. 2 of the proposal note, the heading "Details of Existing Credit Liabilities." Ld. Public Prosecutor submits that the entire column has been left blank by accused Ravi Sethi. He does not mention any liability nor he mentions any over due on this account. Similarly, columns of "Resume of Account" has been left blank. Moreover, the details of the allied concerned accounts namely Kumbh Steels, Maharaja Ispat and MOSKOS Steels do not show any liability or the overdrawings. Ld. Public Prosecutor argues that this shows that the accused had concealed material facts from the circle office. It is argued that this shows that accused was having malafide intention and was in league with the account holder. Ld. Public Prosecutor argues that had he shown the true picture of the condition of the allied accounts, the circle office would not have allowed enhancing the limit from Rs. 40 lacs to Rs. 200 lacs.
Sh. Amrit Pal Singh, Ld. Public Prosecutor for CBI has CC No. 48/2010 Page 58 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 drawn my attention to the proposal which was processed vide office note no. 949/04 dt. 03.12.2004. Ld. Public Prosecutor submits that Sh. S.K. Gupta recommended for enhancement in the working capital limit from Rs. 40 lacs to Rs. 200 lacs with certain terms and conditions. One of the conditions was that the bank would explore the possibility of obtaining additional collateral security. Ld. Public Prosecutor argues that it has to be seen in the light of the special mention in the note that bank had lost the account of M/s Golden Rathi Group. It was further mentioned in the note that the collateral security is too low compared to the exposure. Ld. Public Prosecutor argues that this note was put up before Sh. S.S. BhattAGM wherein he mentioned group connection, partly improved sale performance and satisfactory financial parameters, the proposal may be permitted but branch was directed to strictly comply with the conditions stipulated with the note. However, Ravi Sethithe Branch Manager did not explore the possibility of obtaining additional collateral security. It is argued that this fact should be seen in the light of the eagerness of Ravi Sethi to release the enhanced limit well before receiving the proper sanction from the circle office by allowing the TOD in the account which are as under:
CC No. 48/2010 Page 59 / 76Om Prakash Sharma etc. Judgment dt. 24.8.2013 Sl Cheques issued Cheque Amount Date of Cheque Cheque . in favour of No. Debit in Presente signed N the d by o. account through
1. Golden Rathi 795824 2000000 31.11.200 SBI, Om Star Industries 4 Najafgar Prakash Limited h Road Sharma Branch, New Delhi
2. Golden Rathi 795826 4000000 1.12.2004 SBI, Om Star Industries Najafgar Prakash Limited h Road Sharma Branch, New Delhi
3. Karan Steel 795829 2600000 1.12.2004 Canara Om Bank, Prakash Uttam Sharma Nagar Branch, ND
4. Surya Steel 795830 900000 1.12.2004 Canara Om Traders Bank, Prakash Uttam Sharma Nagar Branch, ND CC No. 48/2010 Page 60 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013
5. Golden Rathi 795827 5000000 2.12.2004 SBI, Om Star Industries Najafgar Prakash Limited h Road Sharma Branch, New Delhi
6. Maharaja Ispat 795835 1700000 6.12.2004 Canara Om Pvt Limited Bank, Prakash Uttam Sharma Nagar Branch, ND
7. Golden Rathi 795834 5000000 7.12.2004 SBI, Om Star Industries Najafgar Prakash Limited h Road Sharma Branch, New Delhi Total 21200000 I would like to point out here that submissions of Ld. PP in respect of the proposal letter dt. 09.11.2004 sent by accused Ravi Sethi (Ext.PW22/A9) were made when this court was in the process of dictating judgment and the fact of non mentioning of liabilities etc. of Kramvir Steels and its allied companies came to the notice of the court. The explanation was sought from the accused vide my order sheet dt. 22.08.2013. In view of this situation, Ld. PP had argued that this is a clear evidence that accused Ravi Sethi had concealed the CC No. 48/2010 Page 61 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 material facts from the branch office with a view fraudulently give benefit to accused Om Prakash Sharma. Thus, this court did not announce the judgment on the date fixed which was 22.08.2013. Accused Ravi Sethi sought time to give his explanation. On 23.08.2013, accused Ravi Sethi appeared with his counsel Sh. Sunil Ahuja, Adv. and moved an application that the prosecution had supplied the copy of the process note recommending enhancement dt. 09.11.2004 and in this copy all the columns of liabilities of Kramvir Steels Pvt. Ltd. and its allied companies has been mentioned. Ld. Counsel has filed an application placing on record the copy of the said document which was supplied by the prosecution. On perusal of the copy of the proposal dt. 09.11.2004 filed by accused Ravi Sethi, I find that the liabilities of Kramvir Steels Pvt. Ltd. and the allied companies have been duly shown.
Now the question is as to whether the document proved by the prosecution as Ext.PW22/A9 is the actual document sent by accused Ravi Sethi to branch office recommending enhancement of limit from Rs. 40 lacs to Rs. 200 lacs ? For this purpose, I have again minutely perused all the records and the evidence on judicial file.
PW22 Sh. Sunit Prakash was posted in Uttam Nagar Branch of Canara Bank as Senior Manager from 25.7.2006 to 5.6.2010. He testified that an application for enhancement of limit CC No. 48/2010 Page 62 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 from Rs.40 lacs to Rs.200 lacs was made under the signatures of Om Prakash Sharma and that this application is placed at page 207 in D8 and is marked as Ex.PW22/A8. PW22 Sh. Sunit Prakash further testified that on the basis of said application a process note under the signatures of Ravi Sethi was prepared, which is placed at pages 348 to 351 in D8 bearing signatures of Ravi Sethi at point A. This note was marked as Ex.PW22/A9. Now it is necessary to see as to from whom these documents were seized by the Investigating Officer. PW24 Inspector Satendra Singh, the Investigating Officer, testified that vide a seizure memo dated 25.6.2009 (D3), he had seized the documents from Sh. Sunit Prakash, Senior Manager, Uttam Nagar. The seizure memo was exhibited as Ex.PW24/A4. The perusal of this seizure memo would show that apart from the other documents and files, Investigating Officer had seized one file containing 159 pages consisting of loan application of M/s Kramvir Steels Pvt. Ltd. for enhancement of limit from Rs.40 lacs to 200 lacs, appraisal note of Canara Bank, Uttam Nagar, recommendation note and sanction from Circle Office, Canara Bank, New Delhi. Therefore, it is clear that the letter dated 9.11.2004, proved as Ex.PW22/A9, was seized from the record maintained in the branch office of Canara Bank.
I am of the opinion that since this enhancement was to be sanctioned by the Circle Office, the original letter should be available CC No. 48/2010 Page 63 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 in the records of the Circle Office of Canara Bank and not in the Branch Office. The only explanation of the presence of Ex.PW22/A9 in the file of Branch Office can be that it is only a office copy of the original letter.
Now, it is the duty of the court to search out as to what letter was received by the Circle Office, which had the power to sanction enhancement limits. For this purpose, I find that the Investigating Officer had seized a file pertaining to M/s Kramvir Steels Pvt. Ltd. from the Circle Office. The Investigating Officer (PW24) in his evidence has testified that vide seizure memo dated 27.7.2009 (D19), he had seized the documents from T. Somashekharan, the Officer, Canara Bank, Circle Office, Nehru Place, New Delhi. T. Somashekhran was examined by prosecution as PW23, who testified that he had handed over the circle office file pertaining to M/s Kramvir Steels Pvt. Ltd. to Investigating Officer vide seizure memo D19, which is Ex.PW23/A. He also proved the entire file as Ex.PW23/PX. A perusal of this file would show that at page 191 to page 197, there is a proposal dt. 09.11.2004 for enhancement of limit from Rs. 40 lacs to Rs. 200 lacs. In the second page, details of this company and details of Kumbh Steels Pvt. Ltd., Maharaja Ispat Pvt. Ltd. and MOSKOS Pvt. Ltd. have been given with their liabilities and overdrawings. This letter is signed by accused Ravi Sethi. The stamp CC No. 48/2010 Page 64 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 of the Circle Office, Canara Bank dt. 16.11.2004 is also affixed on it. This shows that the status of the account in Kramvir Steels Pvt. Ltd. and the allied companies were duly noted by accused Ravi Sethi and this letter was sent to the Circle Office. Although, this document has not been proved, however, for sake of technicality, this court would not leave this document unread. The soul of a judgment is the justice it delivers and not the technicalities it observes. For sake of identification, I now exhibit it as "Ext.J". On perusal of this document, it cannot be said that accused concealed the status of the accounts of Kramvir Steels Pvt. Ltd. and the status of the accounts of its allied companies.
It is important to note that the analysis of balance sheet has been done in detail by accused Ravi Sethi.
Ld. Public Prosecutor argues that malafide intention of this accused is seen from the fact that although he had seen the huge liabilities and overdrawings, why accused recommended for enhancement of the working capital and why he did not ask for additional collateral security? I am of the opinion that in order to prove the malafide intention of the accused, the prosecution should have proved something more. In a banking business, the role of the bank is to support the business and not to ruin it by sudden withdrawal of its support. In his recommendation, accused has CC No. 48/2010 Page 65 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 written that performance of the company is improving and the sale has improved. The current ratio is above the bench mark. NCW has improved, debtors and creditors are of a satisfactory period and the stock statement submitted in time. He has also mentioned that the company was exclusively dealing with them. I would have find substance in the defence argument that the prosecution was not able to prove that all these recommendations were contrary to the facts. Accused Ravi Sethi has mentioned in the recommendation that he had made this opinion after analysis of the balance sheets, long association of group concern and that collateral securities available. I have already discussed that the analysis of the balance sheet has been done by this accused in detail. Therefore, I find that material is not enough on record to show that there was any malafide on part of Ravi Sethi in recommending the enhancement of the limits. It is pertinent to note that it must be seen in the background that he was not a sanctioning authority. It was circle office which was competent to sanction the loan and despite the liabilities and the overdrawings of Kramvir Steels Pvt. Ltd. and their allied companies, the limit was enhanced to Rs. 200 lacs. This should also be seen in view of the fact that not only the account holders were having long association with this bank, but, it was a preferred account. The noting on page no. 8 of the sanction memorandum clearly mentions that dealings were CC No. 48/2010 Page 66 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 satisfactory and the account has recommendations of Sh. Anoop Garg, the Director of the bank. In the background of this situation, I do not find any malafide intentions of accused Ravi Sethi nor I find any evidence to show that he acted in conspiracy with accused Om Prakash Sharma or any other person.
Ld. Public Prosecutor has drawn my attention as to why he released such a huge amount in such a short time before receiving any formal sanction sanction. I am of the opinion that it has come in the evidence of PW16 Mukesh Goelthe Chief Manager Uttam Nagar, Delhi branch of Canara Bank that on 13.09.2005, accused Ravi Sethi had sought confirmation regarding telephonic permissions earlier given by Dy. General Manger for permitting adhoc limit of Rs. 50 lacs.
In cross examination, he admitted that sometimes limit is permitted over phone and the same is ratified by way of letter. Although, such a quick release that too before actual sanction, raises doubts but still in view of the evidence that it was a practice that telephonic instructions used to come and thereafter these were ratified later on and that the limit was finally increased to Rs. 200 lacs, it means that circle branch has ratified it. I may point out that PW16 has testified that sometimes limit is permitted over phone and same is ratified subsequently by way of letter. It is further important to note that PW22 has referred to the credit proposal format CC No. 48/2010 Page 67 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 Ext.PW22/DA, in the column of "Position of account as on 03.12.2004 against the limit of Rs. 40 lacs", the liabilities mentioned as Rs. 1,47,60,530/ and no objection was raised by circle office even after receipt of NF622 and sent the sanction. In other words, it can be said that although the money was released prior to the actual grant of sanction, but, its release was intimated on 03.12.2004 by Ravi Sethi of which appeared to be an evidence of his bonafides.
In respect of the overdrawings, I am of the opinion that accused Ravi Sethi was within his rights to do so. Regarding the stock inspection, nothing has been brought on record that when the enhancement was recommended, there was anything amiss in the stock inspection. As per the charge sheet and evidence on record, inspection of the premises of Kramvir Steels Pvt. Ltd. was conducted on 29.09.2004 and nothing was found. However, it was a subsequent situation. There is on record to show that Ravi Sethi had any reason to believe that there was no stock at the premises of the Kramvir Steels Pvt. Ltd. It is pertinent to note that copies of the inspection reports for the year 20032004 have not been brought on record by the prosecution. However, PW24 has confirmed that branch had inspected the godown as per guidelines. In these circumstances, I given benefit of doubt to accused Ravi Sethi and I acquit him. His bail bond and surety bond stands discharged.
CC No. 48/2010 Page 68 / 76Om Prakash Sharma etc. Judgment dt. 24.8.2013 OM PRAKASH The simple defence of accused Om Prakash is that he does not know anything about any of the transactions happened in respect of the account of M/s Kramvir Steels and that it was his son Ombir Singh who had not only used to get his signatures on blank papers and cheques but also Ombir Singh used to forge the signatures of his father Om Prakash Sharma. Ld. Defence Counsel argues that Om Prakash Sharma never opened any bank account. My attention has been drawn to the testimony of Sh. Sunil Sharma (A1/DW1), who testified that his father Om Prakash Sharma was only a Mason and was uneducated and that Ombir Singh used to take his signatures on blank papers and blank cheques on the pretext of his being a senior citizen. This witness testified that Ombir Singh also used to forged the signatures of Om Prkash Sharma. My attention has been drawn to the testimony of PW18 Dharamvir, who was an employee in M/s Kumbh Steels. This witness testified that Ombir Singh was a Director of this Firm. Ombir Singh opened the current account in the name of Sangam Ispat showing him (i.e. PW18) as the proprietor of Sangam Ispat. However all the transactions of this firm was being done by Ombir Singh. This witness testified that a current account dated 21.8.2003 (D25) was opened in the name of Jwala Enterprises in Canara Bank, Uttam Nagar Branch in which he was introduced by CC No. 48/2010 Page 69 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 Ombir Singh. This witness also testified that Ombir Singh had got one cheque book, which was got signed by him from Om Prakash Sharma. He also testified that accused Om Prakash Sharma, Raj Kumar Sharma and Sugam Sharma used to sign at the instance of Ombir Singh.
Ld. Defence Counsel has drawn my attention to the testimony of Sugam Sharma (PW22). He is a relative of Om Prakash Sharma. He testified that Ombir Singh had got an account opened in the name of M/s Karam Steels in Standard Chartered Bank, New Friends Colony, New Delhi and that he came to know that this account when a cheque book pertaining to the said account was giving to him for signing the same.
Ld. Defence Counsel has drawn my attention to the testimony of PW17the driver of Ombir Singh. Ombir Singh has also got an account opened in his name, but, actually it was Ombir Singh who used to operate this account. It is argued by Ld. Defence Counsel that the modus oprendi of Ombir Singh was to open the bank accounts in the name of his relative and he used to get the signatures of those relatives on the blank cheque books, which Ombir Singh used as per his own convenience. Ld. Defence Counsel argues that same is the situation of accused Om Prakash Sharma. It is submitted that Om Prakash Sharma has taken a specific defence in his statement under CC No. 48/2010 Page 70 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 Section 313 CrPC that he does not know anything about any of the transactions pertaining to M/s Kramvir Steels Pvt. Ltd. and that Ombir Singh had taken his signatures on some blank forms and that he had never visited any bank for any signatures or in connection of any business work of M/s Kramvir Steels Pvt. Ltd. It is argued that the said Ombir Singh has been murdered by his own brother namely Mukesh Kumar.
I have considered the submissions of Ld. Defence Counsel and I do not agree with him in any manner. PW17 & PW18 were only small employees in the company of Ombir Singh and therefore it appears that Ombir Singh could have taken their signatures on blank cheques. However, PW20 Sugam Sharma is a close relative of Om Prakash Sharma. As per his testimony, PW20 is doing a private job at Gurgaon in Estech Enterprises. It is highly doubtful that PW20 would have signed on blank cheques simply at the instance of Ombir Singh in a fake company M/s Karam Steels. In cross examination, he has admitted that he has been arrayed as an accused in M/s MOSKOS Steel Pvt. Ltd. pending in the Court of Sh. R. P. Pandey, Ld. Special Judge, Rohini. It appears to me that after the death of Ombir Singh, all his relatives, involved in criminal cases of various companies, are trying to shift burden of criminality upon Ombir Singh. I may, however, make it clear that this observation regarding Sugam Sharma CC No. 48/2010 Page 71 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 (PW20) has been made only in reference to the present case and must not be construed as a comment affecting his own case pertaining to M/s MOSKOS Steel Pvt. Ltd. pending in another court.
Now, I would like to deal with the statement under Section 313 CrPC of accused Om Prakash Sharma. In this statement, he has stated that he never visited any bank to open the account in the name of M/s Kramvir Steels Pvt. Ltd. In normal course of business, it is not possible that a person is able to get blank account opened without personally meeting the Bank Manager or the bank officials. PW3 Lingaya Raju was the Chief Manager in Canara Bank in Uttam Nagar Branch w.e.f. 10.9.2003 to 21.8.2004. In cross examination by Sh. Sandeep Kapoor, adv. for accused Om Prakash Sharma, he testified that Ombir Singh, Managing Director of Rathi Company used to operate bank account and that he had seen Om Prakash Sharma and Shanti Devi as they had come for signing the documents in the bank. He also testified that Ombir Singh had brought an application for enhancement of limit from Rs.40 lacs to Rs.2 Crore. Therefore the defence of Om Prkash Sharma that he never opened bank account and he did not visit any bank for any signatures in connection of any business work of M/s Kramvir Steels Pvt. Ltd. stands falsified. This false defence that he never visited any bank is indicative of the fact that in fact he himself was responsible CC No. 48/2010 Page 72 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 for opening of the account and consequently was also responsible for issuing the cheques. Sh. Sunil Sharma (A1/DW1) has given a fake staement that Ombir Singh used to get the signatures of Om Prkash Sharma because some benefits would be available to senior citizens. I do not understand why a person would sign blank cheques for getting any benefit of senior citizen. By issuing the cheques, one does not get money rather he spends money by signing these cheques. In this modern age, it is not acceptable to me that a person, even if he is a Mason would not understand the implications of signing a blank cheque. If a person takes assistance of his son or his own Director in company, the same does not mean that he has no responsibility towards the bank transaction being conducted under his signatures. It is true that PW3 Lingaya Raju has stated in his cross examination that the application for enhancement of limit from Rs.40 lacs to Rs2 Crores was brought by Ombir Singh but how Om Prakash Sharma can get rid of the cheques signed by him vide which he transferred the amount of about Rs.2 crore 12 lacs from M/s Kramvir Steels Pvt. Ltd. to the other allied companies. It must be kept in mind that Om Prakash Sharma is not signing one cheque. He had issued a number of cheques, which show his active involvement in the bank transaction. I agree that Ombir Singh was one of the Directors of M/s Kramvir Steels Pvt. Ltd. In such situation, Om Prakash Sharma could CC No. 48/2010 Page 73 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 have very well asked him to issue his cheques under his own signatures. However the maximum cheques vide which the amount Rs.2 crore 12 lacs was transferred to various allied companies have been issued under the signatures of Om Prakash Sharma, which is a clear evidence that Om Prakash Sharma was not a sleeping director rather he was actively participating in the affairs of M/s Kramvir Steels Pvt. Ltd. Now when it stands proved that Om Prakash Sharma had consciously issued the cheques and transferred the amount of Rs. 2 crores 12 lacs from his account to the other accounts, I would like to reproduce the details again at the cost of repetition as to what cheques were issued by Om Prakash Sharma and what are their details. I may point out that these cheques were issued after enhancement of the limit from Rs.40 lacs to 200 lacs. The details are reproduced as under :
Sl. Cheques issued in Cheque Amount Date of Cheque Cheque No. favour of No. Debit in presented signed the account through by
1. Golden Rathi Star 795824 2000000 31.11.2004 SBI, Najafgarh Om Industries Ltd. Road Branch, Prakash New Delhi Sharma
2. Golden Rathi Star 795826 4000000 1.12.2004 SBI, Najafgarh Om Industries Ltd. Road Branch, Prakash New Delhi Sharma CC No. 48/2010 Page 74 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 Sl. Cheques issued in Cheque Amount Date of Cheque Cheque No. favour of No. Debit in presented signed the account through by
3. Karan Steel 795829 2600000 1.12.2004 Canara Bank, Om Uttam Nagar Prakash branch, ND Sharma
4. Surya Steel 795830 900000 1.12.2004 Canara Bank, Om Traders Uttam Nagar Prakash branch, ND Sharma
5. Golden Rathi Star 795827 5000000 2.12.2004 SBI, Najafgarh Om Industries Ltd. Road Branch, Prakash New Delhi Sharma
6. Maharaja Ispat 795835 1700000 6.12.2004 Canara Bank, Om Pvt. Ltd. Uttam Nagar Prakash branch, ND Sharma
7. Golden Rathi Star 795834 5000000 7.12.2004 SBI, Najafgarh Om Industries Ltd. Road Branch, Prakash New Delhi Sharma Total 21200000 PW16 has proved the statement of account of M/s Kramvir Steels Pvt. Ltd., which proves the debit in its account to the aforesaid companies. This show that although he got the credit limit enhanced from Rs.40 lacs to 200 lacs for the purpose of doing the business, however he transferred the amount of Rs.2 crore 12 lacs in a very short period i.e. from 31.11.2004 till 7.12.2004. This amount was transferred by him to the accounts of his own near and dear ones, which shows that accused has dishonestly induced the Canara Bank to CC No. 48/2010 Page 75 / 76 Om Prakash Sharma etc. Judgment dt. 24.8.2013 deliver the aforesaid money to him by enhancing the limit to Rs.2 lacs and this I am of the opinion that prosecution has been able to prove its case beyond doubt under Section 420 IPC against him.
Accordingly, offence under Section 420 IPC stands proved against him.
In view of the above discussion, accused Ravi Sethi stands acquitted. His bail bond and surety bonds are cancelled. Although, it appears from the material on record that there was some bungling at the level of Circle Office of Canara Bank, however, there is no evidence that accused Om Prakash Sharma was acting in conspiracy with accused Ravi Sethi. Therefore, accused Om Prakash is acquitted for the offence u/s 120B IPC. However, he stands convicted for the offence u/s 420 IPC.
Announced in the open court on 24.8.2013.
(VINOD KUMAR) Spl. JudgeII, CBI, Rohini, Delhi CC No. 48/2010 Page 76 / 76