Delhi District Court
Cbi vs Harbir Singh Harnotia Others on 24 December, 2025
IN THE COURT OF MS. JYOTI MAHESHWARI,
ADDITIONAL CHIEF JUDICIAL MAGISTRATE-05,
ROUSE AVENUE DISTRICT COURT, NEW DELHI
CBI vs. HARBIR SINGH HARNOTIA & ORS.
FIR No. RC 2(A)/1993/CBI/SIU-X/Delhi
Branch : Special Investigation Unit (SIU-X)
Under Section:120-B r/w 420 IPC and Section 13(2) r/w 13(1)(d) of
PC Act 1988
Case No : 01/2019
Date of Institution : 30.09.1996
Date of Reserving : 16.12.2025
Date of Pronouncement : 24.12.2025
JUDGMENT
a) Serial number of the : 01/2019
case
b) Period of commission of : 1990-1992
offence
c) Name of the : Late Yogendra Makwana, the-
complainant then Chairman, Parishad Co-
operative Bank, Karol Bagh, New
Delhi.
d) Name, parentage and : 1. Sh. Harbir Singh Harnotia @ address of the accused H.S. Harnotia, S/o Sh Asha Ram R/o 2830, Bihari Colony, Shahdara, Delhi-32.
CBI vs Harbir Singh Harnotia Page no. 1 of 82 Digitally signed by JYOTI JYOTI MAHESHWARI MAHESHWARI Date:
2025.12.24 17:46:18 +0530
2. Sh. P. Singh, S/o Sh. Lautoo Singh, R/o Nutan Vidya Mandir School, GCR Enclave, Delhi-92.
(Proceedings abated vide Order dated 08.01.2015)
3. Ram Prakash Nagar @ R.P. Nagar, S/o Late Sh. Basant Ram, R/o B-7/67, Sector 18, Rohini, Delhi-85. (Trial Separated vide Order dated 28.07.2025 and abated vide Order dated 16.12.2025)
4. Sh. Rajesh Jain, S/o Late Sh.
S.C. Jain, R/o 4554, Deputy Ganj, Sadar Bazar, Delhi-6.
5. Mrs. Rashmi Jain, W/o Sh.
Rajesh Jain, R/o 4554, Deputy Ganj, Sadar Bazar, Delhi-6.
6.Mrs. Rani Jain, W/o Late Sh.
Anil Jain, R/o 4554, Deputy Ganj, Sadar Bazar, Delhi-6.
7. M/s Indo Dutch Foods Pvt.
Ltd., 107, Hargovind Enclave, Delhi-92.
8. M/s Shrestha Exporters Pvt.
Ltd., Shrestha Vihar, New Delhi.
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9. M/s Pious Chits & Cins Pvt.
Ltd. , 4834, Deputy Ganj, Sadar Bazar, Delhi-6.
10. M/s Pious Growth Fund Co.
Pvt. Ltd., Deputy Ganj, Sadar Bazar, Delhi-6.
11. M/s Pious Tours &Travels Pvt. Ltd., 4834, Deputy Ganj, Sadar Bazar, Delhi-6.
(Proceedings qua A-7 to A-11 were abated vide Order dated 28.07.2025)
e) Offences complained of : 120-B r/w 420 IPC and Section 13(2) r/w 13(1)(d) of Prevention of Corruption Act, 1988.
The accused (A-1) and (A-3) were discharged of the offences under Prevention of Corruption Act, 1988, vide Order of the Ld. Special Judge dated 22.02.2016.
f) Plea of the accused : Accused persons pleaded not guilty and claimed trial.
g) Final Order : H.S. Harnotia (A-1) & Rajesh Jain (A-4) stand CONVICTED.
Rashmi Jain (A-5) & Rani Jain (A-6) stand ACQUITTED.
h) Date of Decision : 24.12.2025 CBI vs Harbir Singh Harnotia Page no. 3 of 82 INDEX OF THE JUDGMENT S.No. Particulars Page No. 1. Case of the Prosecution 7 (a) Details of the accused 9 (b) Modus Operandi of the offence 10 (c) Flow of Funds and the role of accused. 13 2. Charge 15 3. Prosecution Evidence 15 4. Statement of the accused persons u/S 313 34 Cr.P.C. 5. Final Arguments 36 I Arguments raised by the Prosecution 36 II Arguments raised on behalf of A-1. 37 III Arguments raised by Ld. counsel for A-4 40 to A-6. 6. Analysis and Findings 42 I. The grounds of misjoinder of charges 42 II DCS Act having an overriding effect on 45 CBI vs Harbir Singh Harnotia Page no. 4 of 82 the provisions of IPC III Vicarious liability of the accused for the 48 acts of the companies. IV Testimony of the witnesses and its effect 50 on the case of the prosecution. V Charge of criminal conspiracy. 58 VI The offence of cheating u/S 420 IPC 66 VII Role of accused Rashmi Jain (A-5) and 72 Rani Jain (A-6) VIII Other contentions raised on behalf of the 75 accused. (a) Testimony of GEQD expert (PW-33) 75 (b) Witnesses not supporting the case of 76 prosecution. (c) The standard of proof required 79 9. Conclusion. 81 CBI vs Harbir Singh Harnotia Page no. 5 of 82 JUDGMENT
1. Vide this Judgment, the Court shall determine whether the accused persons, namely, Harbir Singh Harnotia (A-1), Rajesh Jain (A-4), Rashmi Jain (A-5) and Rani Jain (A-6) are guilty of the offences punishable, u/S 120B r/w 420 of IPC and the substantive offence u/S 420 IPC, for which they are charged in the present case. The case against the accused, summarily stated is that the accused, in conspiracy with each other, in order to cheat Parishad Co-operative Bank, caused wrongful loss to the tune of Rs. 35.68 Lakhs to the Bank and corresponding wrongful gain to themselves.
2. At the outset, before delving into the merits of the case, it is pertinent to mention that proceedings qua other co-accused, namely, P. Singh (A-2), Ram Prakash Nagar (A-3), M/s Indo Dutch Foods Pvt. Ltd. (A-7), M/s Shrestha Exporters Pvt. Ltd. (A-8), M/s Pious Chits & Cines Pvt. Ltd. (A-9), M/s Pious Growth Fund Co. Pvt. Ltd. (A-10), M/s Pious Tours & Travels Pvt. Ltd. (A-11), have already been abated vide Orders dated 08.01.2015, 16.12.2025, and 28.07.2025, respectively. Therefore, the present case is pending only qua accused H.S. Harnotia (A-1), Rajesh Jain (A-4), Rashmi Jain (A-5) and Rani Jain (A-6).
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3. Moreover, a revision petition was preferred by CBI, before the Hon'ble High Court of Delhi, assailing the Order dated 22.02.2016, of the Ld. Special Judge-CBI (PC Act)-06, Central, Tis Hazari, New Delhi, vide which the accused H.S. Harnotia (A-1) and R.P. Nagar (A-3) were discharged of the offences u/S 13(2) r/w 13(1)(d) of PC Act 1988. The revision petition was filed before the Hon'ble High Court in 2016 and till date, no stay has been granted on proceedings before this Court. Despite ample opportunity, no stay has been obtained by either party on the present proceedings. Additionally, this Court is only dealing with Magistrate-triable offences i.e. the offences u/S 120B r/w 420 IPC, which are not the subject matter of revision, before the Hon'ble High Court of Delhi. The present matter, instituted far back in 1996, is already more than 29 years old and in the considered opinion of this Court, any further delay will be detrimental to the interests of justice. Hence, in light of the same, this Court is proceeding with the present Judgment.
CASE OF THE PROSECUTION
4. The present RC was registered on 28.06.1993, on the basis of a complaint by Sh. Yogendra Makwana, the-then Chairman of the Parishad Co-operative Bank Ltd., Karol Bagh, New Delhi, ( hereinafter referred to as "PCB/ the Bank" alternatively) against the accused, levelling allegations of cheating the Bank to the tune of Rs. 35.68 Lakhs.
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5. The prosecution case, in brief, is that during the period 1990- 1992, the accused H.S. Harnotia (A-1) entered into a criminal conspiracy with Late P. Singh (A-2), Rajesh Jain (A-4), Late Anil Jain (expired during investigation) and others, to cheat PCB by adopting corrupt/illegal means and by abusing their official positions, as public servants. As a consequence of the said conspiracy, the Bank allegedly suffered a financial loss of Rs. 35.68 Lakhs, with corresponding wrongful gain to the accused persons.
6. It is alleged that upon approval given by Late R.P. Nagar (A-3) beyond his powers, the Bank purchased cheques of other accused, against which amount was credited into the accounts of A-7 to A-11 but many of the cheques, when presented for encashment, returned unpaid or were dishonored, due to insufficient funds.
7. It is alleged that cheques issued in favour of the accused and their companies (A-7 to A-11) were purchased by the Bank and amounts were credited in the bank account, against the same. However, a substantial number of such cheques, upon presentation for encashment, were dishonored due to insufficient funds. The approvals for such purchases were allegedly granted by Late R.P. Nagar (A-3), the then Manager-cum-CEO of PCB, beyond the scope of his authority.
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(a) Details of the accused:
8. The accused H.S. Harnotia (A-1) was serving as Chairman of PCB from May 1989 to January 1993. The accused was also a Managing Director/Director of the firm, M/s Indo Dutch Foods Pvt. Ltd. (A-7), during May 1990 to November 1992, while the accused Late R.P. Nagar (A-3) was functioning as Manager-cum-CEO of PCB during the period 1990-1993. The other Directors of M/s Indo Dutch Pvt. Ltd. (A-7) included Late P. Singh (A-2) and Rajesh Jain (A-4), who was appointed as Additional Director of the Company w.e.f. 17.08.1990.
9. Rashmi Jain (A-5) is the wife of accused Rajesh Jain (A-4) and accused Rani Jain (A-6) is the wife of Late Anil Jain, who was the elder brother of accused Rajesh Jain (A-4). The accused Rajesh Jain (A-4) and his brother Late Anil Jain were serving as Directors of the Pious group of companies i.e. M/s Pious Chits and Cines Pvt. Ltd. (A-9), M/ Pious Growth Fund Company Pvt. Ltd. (A-10) and M/s Pious Tours and Travels Pvt. Ltd. (A-11) ( hereinafter, collectively referred as "Pious Group of Companies").
10. The other accused company, namely, M/s Shreshtha Exporters Pvt. Ltd. (A-8) was incorporated on 14.02.1989 and the accused H.S. CBI vs Harbir Singh Harnotia Page no. 9 of 82 Harnotia (A-1) and Late P. Singh (A-2) were also Directors of the company, along with R.G. Luthra and Ayodhya Prasad.
(b) Modus Operandi of the offence:
11. The accused companies (A-7 to A-11) had opened their current accounts in PCB and the same was operated by the accused persons. The details of the accounts are mentioned below :
CC/CA No. Name of the company/ Firm Operated by CA no. 120 M/s. Indo Dutch Foods Pvt. Ltd. (A7) H.S. Harnotia (A-1) and Sh. P. Singh.
CA no. 91 M/s. Shrestha Exporter Pvt. Ltd. (A8) P. Singh (A-2) and R.G. Luthra.
CA no. 113 M/s. Pious Chits & Cines Pvt. Ltd. (A9) Anil Jain and Rajesh Jain (A-4) CA no. 116 M/s. Pious Chits & Cines Pvt. Ltd. (A9) Anil Jain and Rajesh Jain (A-4) CA no. 122 M/s. Pious Growth Fund Co. Pvt. Ltd. Anil Jain and Rajesh (A10) Jain (A-4) CA no. 150 M/s. Pious Tours & Travels Pvt. Ltd. Rajesh Jain (A-4)/ (A11) Anil Jain.
12. The-then Manager-cum-CEO of the Bank, Late R.P. Nagar (A-3) was authorized to purchase private cheques upto Rs. 25,000/- only, without the approval of Board of Directors (hereinafter, "BoD") and for any cheque exceeding the said amount, the approval of BoD was mandatory. It is alleged that the accused Late R.P. Nagar (A-3) in connivance with H.S. Harnotia (A-1) and the other accused, illegally CBI vs Harbir Singh Harnotia Page no. 10 of 82 and without due authorization, regularly purchased cheques for more than Rs. 25,000/- in the above-mentioned accounts.
13. During investigation, it emerged that on 09.09.1992, two cheques were purchased in Current Account No. 120 of M/s Indo Dutch Foods Pvt. Ltd. (A-7):
(i) Cheque No. 010342 for Rs.1,00,000/-, drawn on Ghaziabad Urban Co-operative Bank Ltd., and
(ii) Cheque No. 909701 for Rs.50,000/-, drawn on Oriental Bank of Commerce, Ghaziabad. Both cheques were purchased by Late R.P. Nagar (A-3), the-then Manager-cum-CEO of the Bank. While the cheque for Rs.1,00,000/- was realised, the cheque for Rs.50,000/- was dishonoured.
14. M/s Shreshtha Exporters Pvt. Ltd. (A-8) was sanctioned a cash credit limit of Rs.4,00,000/- on 17.10.1989, which was later enhanced to Rs.7.5 lakhs by the Board of Directors on 02.04.1990. The company's Current Account No. 91 was thereafter closed and its debit balance of Rs.1,14,309/- transferred to Cash Credit Account No. 2. Although the accounts were required to be operated jointly by Late P. Singh (A-2) and R.G. Luthra, H.S. Harnotia (A-1) also signed several cheques along with Late P. Singh (A-2), which were passed for payment.
15. A cheque bearing No. 694661 for Rs.1,58,211/-, drawn by Ideal Educational and Welfare Society, in favour of M/s Shrestha Exporters CBI vs Harbir Singh Harnotia Page no. 11 of 82 Pvt. Ltd. (A-8) was purchased on 30.03.1992 in its cash credit account and the cheque was dishonoured on 09.04.1992. Notably, Late P. Singh (A-2) was the General Secretary and authorised signatory of the said Society.
16. Current Account No. 113 of M/s Pious Chits & Cines Pvt. Ltd. (A-9), Faridabad was opened at the Parishad Cooperative Bank with the approval of Late R.P. Nagar (A-3) and stood overdrawn by Rs.30,24,376.84/-, as on 31.03.1993. Investigation revealed that 46 cheques amounting to about Rs. 67.25 lakhs were purchased in this account, of which 38 cheques worth approximately Rs. 44.73 lakhs were dishonoured.
17. Another account of the same company, Current Account No. 116 at Sadar Bazar, Delhi, was also opened with approval of Late R.P Nagar (A-3) and was overdrawn by Rs. 2,83,001.34/- as on 31.03.1993. In this account, 15 cheques valued at approximately Rs.67.25 lakhs were purchased, out of which 6 cheques amounting to about Rs. 8.21 lakhs were returned unpaid. Similarly, M/s Pious Growth Fund Pvt. Ltd. (A-10) opened Current Account No. 122 on 08.05.1990, which was overdrawn by Rs. 1,91,768.15/- as on 31.03.1993. Further, one cheque bearing no. 697094 for Rs. 1,41,570/- was purchased on 09.08.1992 in the current account of the company (A-10) and was sent for clearance in Central Bank of India, Karnal for CBI vs Harbir Singh Harnotia Page no. 12 of 82 collection, but it was found that the cheque was not received for collection by Central Bank of India, Karnal.
18. Further, the account of M/s Pious Tours & Travels Pvt. Ltd. (A-11) was opened as Current Account No. 150 on 02.09.1990, which stood overdrawn by Rs.2,80,728.20/-, at the end of FY 1992-93. In the said account, 6 cheques totalling Rs.11.37 lakhs were purchased, of which 4 cheques amounting to Rs.8.03 lakhs were dishonoured.
19. As regards the cheques which were dishonoured, 2 such cheques, valued for Rs. 4.62 lakhs were issued by accused Rajesh Jain (A-4), from his account maintained with Vaish Co-operative Bank, Yusuf Sarai, New Delhi. Further, 4 cheques totalling to Rs. 6.35 lakhs issued by accused Rashmi Jain (A-5) and 7 cheques totalling to Rs. 12.15 lakhs issued by accused Rani Jain (A-6), from their accounts maintained with Syndicate Bank, Sadar Bazar, Delhi and Oriental Bank of Commerce, Sadar Bazar, Delhi respectively; were returned unpaid, on account of insufficient funds. The details of all the dishonoured cheques are not being reproduced here, for the sake of brevity.
(c) Flow of Funds and the role of accused:
20. It transpired during investigation that during the period 1990-92, Late Anil Jain and Rajesh Jain (A-4) withdrew the amounts credited against the dishonored cheques from Current Account Nos. 113 and 116 of M/s Pious Chits & Cines Pvt. Ltd., as well as from Current CBI vs Harbir Singh Harnotia Page no. 13 of 82 Account Nos. 122 and 150 of M/s Pious Growth Fund Pvt. Ltd. and M/s Pious Tours & Travels Pvt. Ltd. Moreover, during the aforesaid period, the following amounts were transferred from the said accounts into Current Account No. 120 of M/s Indo Dutch Foods Pvt. Ltd. (A-7), in furtherance of the alleged conspiracy. It is alleged that the amount credited in Current Account No. 120 was withdrawn by H.S. Harnotia (A-1) and Late P. Singh (A-2).
Date Amount Transferred
From
06.04.91 Rs. 3,00,000 C/A 150
15.05.92 Rs. 25,000 C/A 113
19.05.92 Rs. 25,000 C/A116
23.06.92 Rs. 1,00,000 C/A 116
20.05.90 Rs. 2,00,000 C/A 122
07.08.90 Rs. 1,00,000 C/A 122
27.09.90 Rs. 1,00,000 C/A 150
21. On the basis of the above acts of the accused in furtherance of conspiracy with each other, it is alleged that the Bank consequently suffered a wrongful loss of Rs. 35.68 lakhs, resulting in corresponding wrongful gain to the accused persons. A charge-sheet, alleging offences u/S 120B r/w 420 IPC and Section 13(2) r/w 13(1) (d) of the Prevention of Corruption Act, 1988 was filed against all the accused on 30.09.1996.
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22. The Court took cognizance of the offences, as disclosed in the charge sheet, and accordingly, all the accused were summoned on 17.04.1997.
CHARGE
23. Vide Order dated 13.05.2002, the aspect of charge was decided by the-then Ld. Special Judge and it was held that charges be framed against all the accused persons u/S 120B r/w 420 of IPC and Section 13(2) r/w 13(1)(d) of PC Act, 1988 and the substantive offence u/S 420 IPC. Further, it was held that charges u/S 13(2) r/w Section 13(1)(d) of Prevention of Corruption Act, 1988 ("PC Act") were also made out against the accused H.S Harnotia (A-1) and Late R.P. Nagar (A-3). Charges were framed in light of the above, on 14.05.2002.
PROSECUTION EVIDENCE
24. The prosecution, in order to prove and substantiate its case, has examined as many as 84 witnesses, whose details are provided below. For better clarity, the prosecution witnesses have been categorized as follows:
i. Witnesses from PCB. ii. Witnesses pertaining to Vaish Co-operative Bank (hereinafter, "VCB"). iii. Witnesses from Oriental Bank of Commerce (hereinafter, "OBC"). iv. Witnesses from Punjab National Bank (hereinafter, "PNB"). CBI vs Harbir Singh Harnotia Page no. 15 of 82 v. Witnesses from RBI and other banks. vi. Witnesses pertaining to investigation of the case. vii. Other witnesses. (i). Witnesses pertaining to PCB: PW No. Name of Prosecution Designation & Role of Prosecution Witness Witness 1. Ramesh Kumar Clerk-Cum-Typist in PCB in 1990. 2. Uday Vir Singh Director of PCB in 1989 and Vice Chairman of the Bank in February 1992. 3. Ram Pal Singh Gautam Administrative officer in Indian Petro Chemicals Ltd. Nehru Place, New Delhi and co-opted as Director of PCB in 1991. 4. Anil Bakshi Clerk in PCB since June 1991. 5. Partap Singh Atal Clerk-cum-Cashier in PCB in 1987. 6. Ramji Lal Chairman of PCB, during the period of 1986 to 1989. 7. Sunita Chabra Official in PCB. 10. O.P. Kaim Director of PCB. 11. Kavita Chhabra Clerical post in PCB. 12. Jyoti Joshi Clerk-cum-Cashier in PCB. 25. Yogendra Makwana Founder of PCB, Karol Bagh, New Delhi and complainant in the present case. 73. Ashok Kapoor CEO of PCB in 1994-95. 82. Gopal Paharia Director of PCB in 1991. CBI vs Harbir Singh Harnotia Page no. 16 of 82 (ii). Witnesses pertaining to VCB : PW No. Name of Prosecution Designation & Role of Prosecution Witness Witness 13. Rakesh Kumar Gupta He joined VCB in 1986 and worked at Yusuf Sarai Branch during 1989-1992. 20. Kamlesh Gandhi Manager, VCB, Yusuf Sarai Branch, New Delhi. 22. Manish Malhotra Assistant Accountant in VCB. 23. Sunil Jain Service Manager, VCB, Laxmi Nagar, New Delhi. (iii). Witnesses pertaining to OBC: PW No. Name of Prosecution Designation & Role of Prosecution Witness Witness 16. S.C. Garg Senior Manager/ Chief Manager in OBC,
Shastri Nagar, Rajapur Branch, Ghaziabad.
17. K.L. Meena Clerk-cum-Cashier in OBC, Sadar Bazar, Delhi.
18. Surender Kumar Clerk-cum-Godown Keeper in OBC, Gandhi Nagar Branch.
29. V.D. Chhatwal Senior Manager in OBC, Sadar Bazar, Delhi.
31. Kuldeep Kumar Jain He was working in OBC, Sadar Bazar Branch, Delhi in 1982.
40. R.D. Beri Manager, OBC, Gandhi Nagar Branch from 1986-1990.
64. V.D. Taneja Senior Manager, OBC, Shastri Nagar Branch, Ghaziabad, during the year 1995.
72. Sudesh Choudhary Clerk-cum-Cashier, OBC, Rajapur Branch, Shastri Nagar, Ghaziabad, during the period 05.05.1986 to 12.05.1995.
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(iv). Witnesses Pertaining to PNB:
PW No. Name of Prosecution Designation & Role of Prosecution Witness Witness
34. N.K. Bhatnagar Special Asstt. in PNB, Khari Baoli, Delhi.
35. Mool Chand Clerk in PNB, Khari Baoli Branch.
41. Mahesh Kumar Jain Special Assistant, PNB, Sadar Bazar Branch.
45. S.C. Malik Officer in PNB, Old Faridabad Branch in the year 1996.
61. Daya Krishan Souparana Officiating Incharge, PNB, Jamal Sirsa since 1994.
62. S.P. Grover Accountant, PNB, Jamal Sirsa from 1987 to 1993.
74. S.K. Bhatta Manager, PNB, Kalram Branch, District Kathal, Haryana, in the year 1999.
79. Anil Kumar Officer, PNB, Nizamuddin (West Branch), New Delhi.
80. Bharat Bhushan Bisht Officer in New Bank of India (now PNB) Old Faridabad Branch, during the year 1990-
1993.
81. S.K. Gupta Senior Manager, PNB, during the year 1991- 1993.
(v). Witnesses from RBI and other banks:
PW No. Name of Prosecution Designation & Role of Prosecution Witness
Witness
8. Vinod Gupta Assistant Branch Manager of Central Bank
of India, Sadar Bazar Branch.
9. K.R. Awasthi Official in Reserve Bank of India during the
period of 1958-1996.
15. S.K. Sharma Assistant Manager in Syndicate Bank, Sadar
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Bazar Branch.
19 & 24. P.K. Dhar Assistant Banking Officer in Urban Bank
Department of RBI.
21. Ram Niwas Dutt Clerk-cum-Cashier, Union Bank of India,
Moti Bagh Branch during 1988-1995.
32. M.R. Chetiwal Assistant Manager, Syndicate Bank, Sadar
Bazar Branch, Delhi during the period of
August 1990 to June 1996.
36. C.J. Khurana Officer in Canara Bank Branch at Sakti
Nagar from 1990-1991 to 1996-1997.
37. Om Prakash Gupta Clerk-cum-Cashier, Bank of Baroda, Sadar
Bazar Branch, Delhi.
38. R.C. Miglani Clerk in Andhra Bank, Sadar Bazar Branch
and promoted as an Officer in 1984 in the
said Bank.
39. Yudhvir Singh Branch Manager, Urban Co-operative Bank
Ltd., Ghaziabad.
42. Ravi Kumar Aggarwal Field Officer, SBI, Sarai Quaza Branch
Faridabad, during the year 1994-1995.
47. Chander Kishore Regional Manager, Allahabad Bank, in the
Mehrotra year 1987.
49. Suresh Kumar Bhatia Accountant, Union Bank of India, Moti
Bagh Branch, during the year 1989.
50. Ashok Kumar Punia Branch Manager, Central Bank of India,
Chora Bazar, Karnal, during the period of
1988 to 1991.
51. Rajnish Kumar Officer, Andhra Bank, Sadar Bazar Branch
during the year 1991-1995.
52. Praveen Gupta Clerk, Syndicate Bank, Sadar Bazar Branch,
during the year 1983-1984.
58. Rajesh Kumar Kandpal Stenographer in SBI, HR, Parliament Street, New Delhi.
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63. Rajinder Kaur Single Window Operator, State Bank of Patiala, Nauni Branch District Solan.
63A. B.C. Gupta Clerk, New Bank of India, Old Faridabad Branch and promoted to officer in 1991.
65. J.A. Khan Assistant Manager (Security), State Bank of Travancore, Karol Bagh Branch, New Delhi in 1995.
71. Kewal Krishan Gandhi Special Assistant, State Bank of Patiala, Model Basti Branch, in 1995.
75. S.B. Gupta Officer in Zonal Office of Central Bank of India, in 1995.
76. Anil Chopra Deputy Manager, SBI, Sarai Khwaja, Faridabad, Haryana, in 1995.
77. H.L. Sharma Administration Officer in State Bank of Patiala, Regional Office, Jalandhar, Punjab, in 1995.
83. Raj Kumar Bhagat Assistant Manager in State Bank of Travancore, Arya Samaj Road, Karol Bagh, New Delhi during 1990-1995.
(vi). Witnesses pertaining to investigation of the case:
PW No. Name of Prosecution Designation & Role of Prosecution Witness Witness
33. Dr. B.A. Vaid GEQD examiner in the present case.
60. M.L. Arora Officer, Bank of India and witness to the specimen signatures of accused Rajesh Jain (A-4).
66. Komal Singh Inspector, SIU-X, CBI
67. S.C. Dandriyal Inspector, SIU-X, CBI and Investigating Officer (IO) of the present case.
68. R.P. Singh Branch Manager, SBI, Karol Bagh, New Delhi and witness to the specimen signatures CBI vs Harbir Singh Harnotia Page no. 20 of 82 of accused Rashmi Jain (A-5) and Rani Jain (A-6).
69. Mohinder Pal Singh Senior Manager (Vigilance), Punjab & Sind Bank, New Delhi, and witness to the specimen signatures of Rajesh Jain (A-4)
(vii). Other witnesses:
PW No. Name of Prosecution Designation & Role of Prosecution Witness Witness
14. Mukul Sarin Finance Executive in M/s Indo Dutch Foods Pvt. Ltd. (A-7) during 1993-1994.
26. Anand Kumar Jain Proprietor, Beautex Advertising Media.
27. Mukesh Chand Jain Proprietor of Jain Cutlery House, 4834 Deputy Ganj Sadar Bazar, Delhi.
28. Raj Kumar Aggarwal Proprietor, J.K Glass Company.
30. Mahesh Chand Jain Father of Pankaj Jain (PW-78) and relative of Rajesh Jain (A-4).
44. Munish Kumar Aggarwal Drawer of dishonoured cheque from A/c No. 6930, New Bank of India, New Delhi.
46. Sushil Kumar Jain Proprietor of Vandana Plastic Udyog, Delhi.
53. Nand Kishore Junior Accountant with M/s Ajay Glass Company at Multani Dhanda, Pahar Ganj, New Delhi.
54. N. Venkataraman He was running a Cargo company under the name and style of Genuine Cargo Service from 1984 to 2004.
55. Sunil Kumar Gupta He was running a packaging firm under the name and style of Sunar Packaging.
56. Dinesh Jain Known to Rajesh Jain (A-4) & Anil Jain.
57. Ajay Kumar Jain Childhood Friend of Anil Jain
59. Ayodhya Prashad Former Director of M/s Shrestha Exporters CBI vs Harbir Singh Harnotia Page no. 21 of 82 Pvt. Ltd. (A-8)
70. Rakesh Gupta Brother-in-law of accused Rajesh Jain (A-4)
78. Pankaj Jain He gave two cheques to Late Anil Jain at his request, which were dishonoured.
84. Praveen Kumar Proprietor of M/s Simplex Glass Work, Sadar Bazar, Delhi-110006, in 1990-1991.
25. The testimonies of certain witnesses, crucial for adjudication of the present case, are discussed below:
PW-1 Ramesh Kumar: The witness was posted as Clerk-Cum-
Typist in PCB, in the year 1990. He deposed about the opening of accounts of the accused firms/ companies (A-7 to A-11). Further, he also deposed about the purchase of cheques by PCB on various occasions, which discloses the modus operandi of the offence under consideration. He also testified that all the dishonored cheques would remain in the custody of Late R.P Nagar (A-3). He exhibited the following documents in his deposition:
S. No. Exhibit No. Description 1. Ex. PW1/A Account opening form of M/s Indo Dutch Foods Pvt. Ltd. (A-7). 2. Ex. PW1/B Original ledger sheets of account of M/s Indo Dutch Foods Pvt. Ltd (A-7). 3. Mark Ex. P1 Bill purchase register of the Bank. CBI vs Harbir Singh Harnotia Page no. 22 of 82 4. Ex. PW1/C Credit voucher pertaining to the credit of Rs. 1,00,000/- dated 09.09.1992. 5. Ex. PW1/D Credit voucher for the cheque of Rs. 50,000/-. 6. Ex. P2 Cheque for Rs. 1 Lac, purchased on 09.09.1992. 7. Ex. P4 Bill Collection Register of the bank. 8. Ex. PW1/E Ledger Sheets (three sheets) of M/s Shrestha Exporters Pvt. Ltd. (A-8). 9. Ex. PW1/F Loan application of M/s Shrestha Exporters Pvt. Ltd. (A-8). 10. Ex. PW1/G Recommendation by H.S. Harnotia (A-1) for loan under his signature. 11. Ex. PW1/H Account Opening Form No. 113 of M/s Pious Chit & Cine (P) Ltd. 12. Ex. PW1/I Ledger Sheet of C/A no. 113 of A-9. 13. Ex. PW1/J Ledger Sheet of C/A no. 116 of A-9. 14. Ex. PW1/K Ledger Sheet of C/A no. 122 of A-10. 15. Ex. PW1/L Ledger Sheet of C/A no. 150 of A-11. 16. Ex. PW1/M Credit voucher signed by Jyoti Joshi (PW-12). 17. Ex. PW1/N The cheque for Rs. 60,000/- passed by Late R.P. Nagar. 18. Ex. PW1/O The corresponding entry of the cheque. 19. Ex. PW1/P The cheque dated 14.09.1990 of Rs. 1,75,500/-. 20. Ex. PW1/Q The cheque dated 05.10.1990 of Rs. 85,000/-. 21. Ex. PW1/R The cheque dated 10.10.1990 of Rs. 3,25,000/-. CBI vs Harbir Singh Harnotia Page no. 23 of 82
PW-2 Uday Vir Singh: He was the Director of PCB in the year 1989 and became the Vice Chairman of the Bank in February 1992, at the time when H.S. Harnotia (A-1) was the Chairman and Late R.P Nagar (A-3) was Manager-cum-CEO of the Bank. He deposed that no prior approval of Board of Directors( BoD) was obtained by Late R P Nagar (A-3) for purchase of cheques in the accounts of A-9 to A-11. He further deposed that as per Bye-laws of the Bank, the Manager had the power to purchase cheques only upto Rs. 10,000/- which was later increased to Rs. 25,000/-. He further testified that the Chairman and the Directors were working without any remuneration. He exhibited the copy of the bye-laws of PCB as Ex. PW2/A, in his deposition.
PW-3 Ram Pal Singh Gautam: He was working as Administrative officer in Indian Petro Chemicals Ltd., Nehru Place, New Delhi in 1991 and was co-opted as Director of PCB on 03.03.1991. He deposed to the effect that the condition of the Bank was very bad and the Chairman and CEO did not listen to anyone. He further testified that the CEO worked on the instructions of the Chairman and did not listen to the Directors. He also testified that Late R.P Nagar was purchasing cheques, beyond his power, upon the directions of the Chairman. During the course of his cross-examination, he testified that the cash book etc. were never shown to him, despite his requests. He stated that though he used to complain verbally, he never filed a CBI vs Harbir Singh Harnotia Page no. 24 of 82 complaint in writing, regarding the irregularities in the functioning of the Bank. He exhibited the following documents in his deposition:
S. No. Exhibit No. Description
1. Ex. PW3/A Account opening form of M/s. Pious Growth
Fund Company (P) Ltd. (A-10).
2. Ex. PW3/B Account opening form of M/s Pious Tours &
Travels Ltd. (A-11).
3. Ex. PW3/DA Statement of the witness recorded u/S 161 Cr.P.C.
PW-4 Anil Bakshi: He was working as a Clerk in PCB since June, 1991. He deposed about the pay-in-slips, by which amount was deposited in the bank accounts of A-9 to A-11 and he also identified the signatures of Late R.P Nagar (A-3) on the various pay-in-slips. These pay-in-slips were exhibited as Ex.PW4/A to Ex.PW4/C (D-245 to D-296), during his deposition.
PW-5 Pratap Singh Atal: He was working as Clerk-cum-Cashier in PCB, from 1987 to 2003. He deposed that accused H.S. Harnotia (A-1) introduced the account of A-8 and the loan application of A-8 was also signed by H.S. Harnotia (A-1) and he also recommended the loan to A-8. He also deposed about the cheques, which were passed for payment, during the course of CBI vs Harbir Singh Harnotia Page no. 25 of 82 his deposition. He also deposed to the effect that no cheques were purchased during the tenure of Late Yogendra Makwana (PW-25) as Chairman. Further, the witness admitted that he was suspended by the order of accused H.S. Harnotia (A-1) and Late R.P Nagar (A-3). He exhibited the following documents in his deposition:
S. No. Exhibit No. Description
1. Ex. PW5/A Account opening form for account no. 120
2. Ex. PW5/B Original Ledger Sheet of account no. 120
3. Ex. PW5/C Account opening form of account no. 91 of M/s
Shreshtha Exporters (P) Ltd.
4. Ex. PW5/D The account opening form of Pious Chits & Cine
Pvt. Ltd.
5. Ex. PW5/E (D-237) Pay-in Slip of Rs. 2,20,000/-
6. Ex. PW5/E-1 Deposit voucher of Rs. 2 Lacs in Currency (D-238) Account no. 113.
7. Ex. PW5/F-1 to Ex. Cheques passed for payment, by R.P. Nagar PW5/F-6 (D-155 to (A-3).
D-160)
8. Ex. PW5/G-1 to Ex. Cheques passed for payment, by R.P. Nagar PW5/G-25 (A-3).
9. Ex. PW5/H-1 to Ex. Cheques passed for payment, by Ashok Kumar.
PW5/H-3 (D-164, D-174 and D-182)
10. Ex. PW5/I-1 to Ex. Cheques passed for payment, by R.P. Nagar PW5/I-34 (A-3).
11. Ex. PW5/J (D-221) Cheques passed for payment, by Ashok Kumar.
12. Ex. PW5/K The voucher passed by R.P. Nagar (A-3).
CBI vs Harbir Singh Harnotia Page no. 26 of 82
13. Ex. PW5/K-1 Voucher in sum of Rs. 25,000/- was transferred (D-290) from Account No. 113 to Account No. 120 of M/s Indo Dutch Foods Pvt. Ltd. (A-7).
PW-6 Ramji Lal: He was the former Chairman of PCB, Karol Bagh, New Delhi. During his tenure, the bye-laws of the bank were formulated, which defined the ambit of powers of the CEO regarding loan disbursement and approval of cheques. The witness deposed that CEO was authorised to give loan upto Rs. 10,000/- and if he gave loan from Rs.10,000/- to Rs.25,000/-, he had to take permission from Board of Directors (BoD) in the next meeting. He exhibited the photocopy of minutes of meetings as Ex. PW6/A, in his deposition.
PW-7 Sunita Chhabra: She was an official working in PCB from 1989 to 1996. She deposed about the transfer of money from the accused companies i.e. A-9 to A-11 into the account of M/s Indo Dutch Foods Pvt. Ltd. (A-7), during 1990 to 1992. She exhibited the following documents in her deposition:
S.No. Exhibit No. Description
1. Ex. PW7/A Entry dated 16.10.1990 in ledger sheet of CA No.
113 of M/s Pious Chits.
2. Ex. PW7/B Entry dated 04.12.1990 in CA No. 113.
3. Ex. PW7/C Entry dated 25.10.1991 in CA No. 113 for Rs.
CBI vs Harbir Singh Harnotia Page no. 27 of 82
1,54,020/-.
4. Ex. PW7/D- Entries dated 27.03.1992 and 27.08.1992, for
Ex.PW7/F various amounts..
PW-10 O.P. Kaim: He was the Director of PCB from 1989 to
1993. He deposed that Sh. R. P. Nagar (A3) violated the norms and bye-laws (Ex. PW2/A) of PCB, and did not seek any permission from Board of Directors (BoD) for purchasing of cheques in the accounts of Pious Group of Companies (A-9 to A-11).
PW-12 Jyoti Joshi: She was Clerk-cum-Cashier in PCB. She deposed about about the procedure of purchase of cheques by the Manager, PCB and how the amount qua the purchased cheques, would be credited in the accounts of the respective accused companies (A-9 to A-11).
PW-14 Mukul Sarin: He was working as Finance Executive in M/s Indo Dutch Foods Pvt. Ltd. (A-7), during 1992-1994. He deposed that an Arbitrator as appointed, regarding the amount to be paid by M/s Indo-Dutch Foods Pvt. Ltd. (A-7) to PCB and all the dues were paid by the accused company (A-7). He exhibited the following documents in his deposition:
CBI vs Harbir Singh Harnotia Page no. 28 of 82 S.No. Exhibit No. Description
1. Ex. PW14/A Memorandum and articles of association of M/s Indo Dutch Foods Pvt. Ltd. (A-7).
2. Ex. PW14/B Minutes Book of M/s Indo Dutch Foods Pvt. Ltd.
(A-7).
3. Ex. PW14/C Attendance register regarding the meeting of Directors.
4. Ex. PW14/D Entry at page 01 in the Cash Book dated 01.04.1991 and 06.04.1991.
5. Ex. PW14/E Entry dated 08.04.1991.
6. Ex. PW14/F Entry dated 10.04.1991 at page 04 of the Cash Book.
7. Ex. PW14/G Entry dated 10.04.1991 regarding withdrawal of Rs. 16,50,000/-
8. Ex. PW14/H Entry dated 11.04.1991 at page 05 of Cash Book.
9. Ex. PW14/J Entry dated 17.07.1991 at page 23 of Cash Book.
10. Ex. PW14/K Entry dated 25.07.1991 at page 24 of Cash Book.
PW-19 P.K. Dhar: He was posted as Assistant Banking Officer in Urban Bank Department of RBI for six years w.e.f. 1990- 1991. He deposed about the failure of PCB to file returns from 1990 onwards, despite repeated reminders and various complaints received against the malfunctioning of PCB. He was examined again as PW-24 and he exhibited the following documents in his deposition:
S.No. Exhibit No. Description
CBI vs Harbir Singh Harnotia Page no. 29 of 82
1. Ex. PW19/A & Directives with regard to the loans and Ex. PW19/B advances in UBD-DC-537/R.1-84/85 dated 16.10.1984.
PW-25 Late Yogendra Makwana: He was the founder of PCB and one of the share holders of the Bank. The witness was the complainant in the present case and exhibited his complaint (D-2), as Ex. PW 25/A in his deposition. He further stated that he had scrutinized the documents of PCB and found various irregularities and illegalities committed by the-then chairman H.S. Harnotia (A-1) and Late R.P. Nagar (A-3).
PW-29 V.D. Chhatwal and PW-31 Kuldeep Kumar Jain: The witnesses were working in OBC, Sadar Bazar, Delhi. Both the witnesses deposed about the return of multiple cheques, issued by accused Rani Jain (A-6), due to insufficient amount.
PW-15 S.K Sharma and PW-32 M.R. Chetiwal: The witnesses were working as Assistant Managers, Syndicate Bank, Sadar Bazar Branch, Delhi.The witnesses deposed about the return of cheques issued by accused Rashmi Jain (A-5) from her account no. 5336, maintained with Syndicate Bank and the return of cheques, due to insufficient funds. The documents were exhibited by the witnesses as Ex.PW15/A to Ex.PW15/P and the certified copies of various cheque returning registers were CBI vs Harbir Singh Harnotia Page no. 30 of 82 identified as Ex. PW-32/A to Ex. PW-32/K, during the deposition of PW-32.
PW-67 S.C. Dandriyal: He was posted as Inspector in CBI and was the Investigating Officer of the present case. He deposed about the various documents seized by him during investigation, the documents sent to GEQD for opinion and the recording of statements of various witnesses by him. He also deposed about the loss incurred by the Bank due to the acts of the accused persons. He exhibited the following documents in his deposition:
S.No. Exhibit No. Document No. Description
1. Ex. PW67/1 D-1 The FIR of Case RS 2(A)/93-SIU (X) dated 28.06.1993.
2. Mark PW67/A D-3 Photocopy of the seizure memo dated 24.07.1993.
3. Mark PW67/B D-32 Seizure memo of the documents seized from the Parishad Co-
operative Bank on 03.11.1993.
5. Ex. PW67/3 to D-9 to D-15/16 Seizure memos prepared by Sh.
Ex.PW67/11 R.K Sinha on various dates.
6. Ex. PW67/12 to D-16/2 to Seizure memos prepared by the IO
Ex.PW67/25 D-117 on various dates.
7. Mark PW 67/C D-107 Documents received from ROC,
Delhi & Haryana
8. Ex. PW67/26 -- Certified copy of cheque book
delivery register of Union Bank of
India.
CBI vs Harbir Singh Harnotia Page no. 31 of 82
9. Ex. PW67/27 D-345 and Details of the letters dated
-Ex.PW67/28 D-346 08.03.1995 and 11.08.1995.
10. Ex. PW67/29 to D-352 to Seizure memos prepared by the IO
Ex.PW67/31 D-357 on various dates.
11. Ex. PW67/32 to D-358-D-369 Letter sent and received by the IO
Ex.PW67/40 on various dates, pertaining to
investigation.
12. Ex. PW67/S-605 to D-312 Specimen handwriting of R.P.
S-619 Nagar (A-3).
13. Ex. PW67/S-335 to D-312 Certified copies and originals
S-353 attached in connected case RC No.
4(A)/93/SIU-X/New Delhi.
14. Ex. PW67/S-549 to D-339 Specimen handwriting of Rani Jain
S-553 (A-6).
15. Ex. PW67/S-580 to D-322 Specimen handwriting of H.S.
S-584 Harnotia (A-1).
16. Ex. PW67/41 AD-4 Search list dated 24.09.1993.
17. Ex. PW67/42 -- Attested photocopy of ledger sheet
pertaining to A/c No. 3734 in the
name of Sh. Phool Chand, vide
letter dated 20.07.1995.
18. Ex. PW67/43 -- Certified copy of the ledger sheet
pertaining to Account No. 3734.
19. Ex. PW67/C1 to -- Cheques drawn on PCB, Karol
Ex. PW67/C49 Bagh, New Delhi.
20. Ex. PW67/C50 -- Pay slip dated 30.03.1991, as
regards the cheque purchase of Rs.
1,58,211/- in A/c of M/s Shreshtha
Exporters Pvt. Ltd. (A-8)
PW-68 R.P. Singh and PW-69 Mohinder Pal Singh: The
specimen signatures of accused Rashmi Jain (A-5) and Rani Jain CBI vs Harbir Singh Harnotia Page no. 32 of 82 (A-6) were taken in the presence of PW-68 and the documents pertaining to the same were identified as Ex.PW68/1 (D-319) and Ex.PW68/2 (D-320). PW-69 exhibited the specimen writings (D-338) of the accused Rajesh Jain (A-4), as Ex. PW69/1 in his deposition, as the same were taken in his presence.
PW-73 Ashok Kapoor: He was posted as Chief Executive Officer, PCB in 1994-95. He deposed that the banking transactions of PCB were suspended by RBI and accordingly, an Administrator was appointed by the Registrar of Co-operative Societies ("RCS"). He exhibited the following documents in his deposition:
S.No Exhibit No. Description
.
1. Ex. PW73/1 (AD-19) Letter dated 09.04.1995
2. Ex. PW73/2 (part of Certified copy of dispatch register.
AD-19)
PW-82 Gopal Paharia: He was a member of PCB in the year
1989-1990 and later, he became Director of the Bank. He deposed about the role of H.S. Harnotia (A-1) in the present case and also stated that the Bank was flourishing under the Chairmanship of H.S. Harnotia (A-1).
CBI vs Harbir Singh Harnotia Page no. 33 of 82
26. Subsequently, the prosecution evidence was closed on 18.09.2015. After the conclusion of prosecution evidence, the accused H.S. Harnotia (A-1) and Late R.P. Nagar (A-3) were discharged of the offences under Prevention of Corruption Act, 1988, vide Order of the Ld. Special Judge dated 22.02.2016, and the matter was remanded to the Trial Court for consideration. Thereafter, the case was listed for recording the statement of the accused persons, u/S 313, CrPC.
STATEMENT OF THE ACCUSED PERSONS u/S 313 CrPC.
27. The statement of accused H.S. Harnotia (A-1) u/S 313 CrPC was recorded on 17.05.2025, wherein he denied all the allegations levelled against him and stated that he was serving as the Chairman of PCB, which is an honorary post and was not involved in the day-to-day functions of the Bank and thus, cannot be held responsible for the irregularities or wrongdoings of the Manager and other functionaries of the Bank. He further stated that the Bank was governed by Delhi Co- operative Societies Act, 1972 (hereinafter, "DCS Act") and the Banking Regulation Act, 1949, did not apply to PCB.
28. Further, the accused Rajesh Jain (A-4), Rashmi Jain (A-5) and Rani Jain (A-6) furnished their statements u/S 313(5) CrPC on 05.01.2023, wherein, it was stated that Late Anil Jain had taken a loan from PCB and therefore, all the affairs relating to the loan amount was looked into by Late Anil Jain and the accused persons i.e. A-4 to A-6 CBI vs Harbir Singh Harnotia Page no. 34 of 82 were not involved in any such activity. It was further submitted that the entire loan amount was repaid to the Bank, but the prosecution in the present case is motivated.
29. The statement of all the three accused was recorded on 28.07.2025, wherein they categorically denied the allegations levelled against them and stated that the prosecution witnesses had deposed falsely, at the behest of CBI. They submitted that they had deposited cheques with the Bank, out of which some cheques were dishonoured. They also contended that even if the loan amount was not paid to the Bank or that some cheques were dishonoured, the Bank could have filed a civil recovery suit or a complaint u/S 138 of the Negotiable Instruments Act, 1881 (hereinafter, "NI Act"), could be initiated. They also averred that no cheating or fraud was committed by them and they were falsely implicated in the present case.
30. Accused Rajesh Jain (A-4) further specifically re-emphasized in his statement recorded u/S 313 CrPC, that the business of A-9 to A-11, was being looked after by his elder brother, Late Anil Jain and he was not aware about the details of the bank accounts of A-9 to A-11. Additionally, the accused Rashmi Jain (A-5) and Rani Jain (A-6) also stated that they were not involved in any business activity and the business was looked after by their spouses i.e. Late Anil Jain and accused Rajesh Jain (A-4). However, none of the accused wish to lead CBI vs Harbir Singh Harnotia Page no. 35 of 82 any evidence in his/ her defence and the matter was listed for final arguments.
FINAL ARGUMENTS
31. Detailed final arguments were advanced on behalf of both prosecution and the accused and various judicial decisions were furnished by both the parties in support of their contentions, which are discussed in the following paragraphs:
I. Arguments raised by the Prosecution:
32. Ld. PP for CBI has argued that charges against all the accused stand established through the documentary evidence as well as the testimonies of the witnesses on record. Ld. PP for CBI has discussed the testimonies of the witnesses in depth and argued that there is overwhelming evidence on record to show the purchase of cheques by Late R.P. Nagar (A-3) beyond the scope of his authority, under the instructions of accused H.S. Harnotia (A-1). It is further submitted that the amount credited in the bank accounts of A-9 to A-11 in lieu of purchase of cheques, was withdrawn by late Anil Jain and Rajesh Jain (A-4) and an amount of Rs. 8,50,000/- was transferred to the account of M/s Indo Dutch Foods Pvt. Ltd. (A-7), of which accused H.S. Harnotia (A-1) and Rajesh Jain (A-4) were Directors.
CBI vs Harbir Singh Harnotia Page no. 36 of 82
33. It is contended on behalf of the proscution that in a case of criminal conspiracy, the possibility of bringing on record direct evidence is remote and therefore, the circumstances gain significance. Ld. PP for CBI averred that there is ample evidence on record, to establish that the accused persons (A-1 and A-4 to A-6) cheated the Bank, in pursuance of a criminal conspiracy. It was argued that although, there are minor contradictions in the testimony of witnesses, but the same are inconsequential and the allegations stand proved by virtue of Section 91 of Indian Evidence Act. On the basis of these contentions, it was submitted by Ld. PP for CBI that the commission of offence by the accused (A-1 & A-4 to A-6) was proved and they be convicted, as per law.
II. Arguments raised on behalf of Accused no.1:
34. Ld. Counsel for accused no.1 has submitted that the accused is entitled to acquittal on the ground, that the investigation is defective and the prosecution has failed to prove its case beyond reasonable doubt. The following arguments have been raised by Ld. Counsel for A-1:
a) The charge framed against the accused is in contravention of Section 219, CrPC, as more than three offences committed during the same year and offences committed for a period of more than one year were joined in the charge.
CBI vs Harbir Singh Harnotia Page no. 37 of 82
b) The statement of PW-33 Dr. B.A. Vaid, is not admissible in evidence, as the witness was examined u/S 22 (C) of Prevention of Corruption Act and accused no.1 did not have an opportunity to cross-examine the witness, till date. It is submitted that since accused no.1 has been discharged of the offences under Prevention of Corruption Act, he did not have an opportunity to move an application to recall PW-33 and thus, the statement of PW-33 cannot be read in evidence.
c) The present complaint was filed with a malafide intent by the complainant Late Yogendra Makwana, due to his enmity with the accused and the complainant has failed to corroborate his complaint, in his testimony as PW-25. Ld. Counsel for accused no.1 has placed reliance on the decision of the Hon'ble Supreme Court in Rameshwar Vs. State of Rajasthan, AIR 1952 SC 54, in this regard.
d) CBI was not empowered to investigate the alleged offences, as the Bank was under the purview of Delhi Cooperative Societies Act, 1972, which is a complete code in itself and thus, the provisions of IPC and PC Act are not applicable in the present case. Ld. Counsel for accused no.1 has placed reliance on the decisions of Greater Bombay Cooperative Society Ltd.
Vs. United Yarn Tex. Pvt. Ltd. & Ors., AIR 2007 SC 1587 and State of Maharashtra Vs. Laljit Rajshi Shah, 2000 CLJ 149, in this regard.
CBI vs Harbir Singh Harnotia Page no. 38 of 82
e) The IO did not conduct a fair investigation in the presesnt case and his testimony is replete with various inconsistencies; the benefit of which accrues to the accused. Moreover, no incriminating evidence is on record to prove the alleged offences against the accused and essential ingredients of Section 120 B and Section 420 IPC have not been fulfilled. Reliance in support of this, has been placed on the following decisions:
P.K. Narayana Vs. State of Kerala 550 Crime 1994 (3). Guru Bipin Singh Vs. Chongtham Manihar Singh (1996) 11 SCC 622.
State of Maharashtra Vs. Som Nath Thapa 1996 (4) SCC 659. L.K. Advani & Ors Vs. CBI, 1977 JCC 294.
Maksud Saiyed Vs. State of Gujarat 2008 (5) SCC 668. S.K. Alagh Vs. State of Uttar Pradesh 2008 (5) SCC 662. Thermax Ltd. Vs. KM. Johny 2011 (13) SCC 412. John Pandian Vs. State 2011 (1) JCC 193.
f) It is submitted that no vicarious liability can be fastened on accused H.S. Harnotia (A-1), for the acts and omissions of the Bank or M/s Indo Dutch Foods Pvt. Ltd. (A-7) and M/s Shrestha Exporters Pvt. Ltd. (A-8). Ld. Counsel has placed reliance on the decision of the Hon'ble Supreme Court in Aneeta Hada Vs. Godfather Travels and Tours Pvt. Ltd., 2012 (IV) AD SC 489, in support of his contentions.
CBI vs Harbir Singh Harnotia Page no. 39 of 82
g) The evidence on record has failed to prove that the accused H.S. Harnotia (A-1) entered into any criminal conspiracy and CBI has wrongly prosecuted the accused for mere civil wrongs, if any.
Reliance in this regard has been placed on the decisions of SVL Murthy and Ors. Vs. State, (2009) 6 SCC 77 and Anukul Singh Vs. State of Uttar Pradesh & Ors. 2025 INSC 1153.
h) The accused H.S. Harnotia (A-1) was falsely implicated in 6 cases, out of which he has already been acquitted/ discharged in 5 cases and the same goes on to show that the accused is innocent and has been falsely implicated in the present case.
III. Arguments raised by Ld. Counsel for A-4 to A-6
35. Ld. Counsel for A-4 to A-6 has submitted on similar lines and has additionally addressed the following arguments:
a) There is no iota of evidence to show meeting of minds or any agreement between the accused persons in the present case, which is the very basis for invoking the offence of criminal conspiracy u/S 120B IPC. It is further submitted that conspiracy cannot be inferred on the basis of mere suspicion or conjectures [State Vs. Nalini, (1999) 5 SCC 253].
b) The prosecution has failed to prove the essential ingredients of cheating u/S 420 IPC, in the present case. It is submitted that there is no evidence on record to show that the accused persons had any dishonest or fraudulent intentions, at the inception of the CBI vs Harbir Singh Harnotia Page no. 40 of 82 alleged transactions and mere subsequent events or alleged lapses, do not constitute cheating. [Hridaya Ranjan Prasad Verma Vs. State of Bihar, (2000) 4 SCC 168].
c) The testimony of IO is full of inconsistencies and even during his cross-examination, he admitted that the accused Rashmi Jain (A-5) and Rani Jain (A-6) were not the Directors in any of the companies i.e. A-9 to A-11 and have only been implicated in the present case, because the cheques issued by them were returned unpaid, due to insufficient funds. It is contended that mere dishonour of cheques is an offence only u/S 138 of NI Act, and cannot be made the basis of cheating.
d) It is submitted that grant of CC limits or overdraft facilities by bank is a commercial decision and does not amount to an offence, in the absence of mens rea. [CBI Vs. K. Narayana Rao (2012) 9 SCC 512].
e) Many witnesses, i.e. PW-3, PW-27 and PW-41 have not supported the case of the prosecution, and it is averred that when key witnesses turn hostile, the prosecution case becomes highly doubtful. [Sat Paul Vs. Delhi Administration (1976) 1 SCC 727].
f) The accused persons have suffered immense mental agony and harassment due to a trial pending for almost 3 decades and prolonged trial without credible evidence, is itself a ground for granting benefit of doubt. [P. Ramachandra Rao Vs. State of Karnataka, (2002) 4 SCC 578].
CBI vs Harbir Singh Harnotia Page no. 41 of 82 ANALYSIS AND FINDINGS
36. This Court has heard the arguments at length, perused the entire record and examined the judicial decisions furnished by the parties, in support of their contentions. For greater clarity and better appreciation of facts, the arguments raised by the parties shall be discussed under the following sub-heads:
I. The ground of misjoinder of charges. II. DCS Act having an overriding effect on the provisions of IPC. III. Vicarious liability of the accused for the acts of the companies.
IV. Testimony of the witnesses and its effect on the case of the prosecution.
V. Charge of criminal conspiracy.
VI. The offence of cheating u/S 420 IPC.
VII. Role of accused Rashmi Jain (A-5) and Rani Jain (A-6).
VIII. Other contentions raised on behalf of the accused.
I. The ground of misjoinder of charges.
37. It is submitted by Ld. Counsel for A-1 that the charges framed against the accused are in contravention of Section 219 CrPC, because more than three offences committed in one year, were joined in the charge and the same has caused prejudice to the accused, which CBI vs Harbir Singh Harnotia Page no. 42 of 82 entitles him to an acquittal. This contention has been vehemently opposed by Ld. PP for CBI on the ground, that this argument should have been taken at the stage of framing of charge and not at this belated stage. It is also submitted by Ld. PP for CBI that the accused has failed to show, as to how the same has caused prejudice to the accused in any way.
38. Section 218 to Section 223 of CrPC deal with the joinder of charges and lay down a statutory framework for joinder and separation of charges and trials. Although Section 218 CrPC stipulates the general rule that each distinct offence shall be tried separately, there are specific exceptions carved out to this rule, in Sections 219 to Section 223, where joint trials are permissible in the interests of justice. Moreover, it is pertinent to note that although Section 219 provides that three offences of same kind within a year may be charged together, an exception to the same is carved out in Section 220(1) CrPC, which stipulates that if in a series of acts so connected together, as to form the same transaction, more offences than one, are committed by the same person, he may be charged with and tried at one trial for every such offence.
39. Thus, Section 220(1) CrPC itself permits joinder of charges and trial for offences by the same person, even if they span for more than a year, if they are intricately connected together, to form the same transaction, which is the situation in the present case. It is pertinent to CBI vs Harbir Singh Harnotia Page no. 43 of 82 note that the acts of H.S. Harnotia (A-1) from 1990 to 1992, in acting as the Chairman of the Bank and also functioning as a Director of beneficiary companies i.e. M/s Indo Dutch Foods Pvt. Ltd. (A-7) and M/s Shrestha Exporters Pvt. Ltd. (A-8) are so intricately connected to the allegations levelled against the accused that the series of acts committed during this period, form part of the same transaction, as far as the present offence is concerned and thus, the joinder of charges is permissible u/S 220 (1) CrPC.
40. Further, Section 223 CrPC categorically provides that the persons accused of an offence of theft, extortion, cheating etc. may be charged and tried jointly. Thus, it is evident that even as per the statutory scheme of CrPC, all the accused persons being tried together is not an irregularity and the same is in consonance with the provisions of Criminal Procedure Code. The Hon'ble Supreme Court in the recent decision of Mamman Khan Vs. State of Haryana, 2025 INSC 1113, has held as follows:
"13.1. In particular, Section 223(d) provides that persons accused of different offences committed in the course of the same transaction may be charged and tried together. The legislative intent underlying these provisions is three-fold:
(i)to prevent multiplicity of proceedings, (ii) to avoid the risk of conflicting judgments on the same evidence, and (iii) to promote judicial economy while ensuring fairness to the accused.......
14. In the present case, there is no allegation that the acts attributed to the appellant arise from a distinct transaction, or that a joint trial would CBI vs Harbir Singh Harnotia Page no. 44 of 82 prejudice the prosecution. On the contrary, the prosecution's own case rests on an overarching conspiracy, and interlinked evidence. Segregation was ordered not on any legally recognized ground
- such as distinct facts, severable evidence, or demonstrated prejudice - but solely on account of the appellant's political office, by misapplying the directions in Ashwini Kumar Upadhyay (supra)."
41. Thus, in light of the above decision, it is evident that the joinder of charges, is as per the statutory scheme laid down in Section 218 to Section 223 of CrPC. Moreover, in any event, the accused has failed to show as to how the same has caused prejudice to the accused in any manner or occasioned failure of justice. Thus, the ground taken by accused H.S. Harnotia (A-1) regarding misjoinder of charges, is not tenable in law.
II. DCS Act having an overriding effect on the provisions of IPC:
42. It is submitted by Ld. Counsels for all the accused that PCB is governed by the provisions of Delhi Cooperative Societies Act, 1972 (DCS Act), which is a complete code in itself and provides for remedies of each of the misconduct/ offences, if any, committed by any member or office-bearers of the Society. Further, it is also submitted that Section 21 (2) of the Delhi Cooperatives Societies Act, 2003 stipulates that no prosecution shall be instituted under the DCS Act without the previous sanction of the Registrar and hence, CBI could not have investigated the present case. Moreover, Ld. Counsel for A-1 CBI vs Harbir Singh Harnotia Page no. 45 of 82 has relied on Section 140 of Delhi Cooperative Societies Act, 2003 which provides as follows:
"140. Act to override other laws.
The provisions of this act shall have effect notwithstanding anything in consistent therewith contained in another law."
43. At the outset, it must be noted that although the provisions of Delhi Cooperative Societies Act, 2003 are in pari materia with the provisions of the earlier Act i.e. Delhi Cooperative Societies Act, 1972 there is no provision in the 1972 Act to the effect that the DCS Act shall have an overriding effect over other laws. At the time of the commission of the alleged offences, the provisions of DCS Act 1972 governed the field.
44. Notwithstanding the above, the principle that a special law overrides the general law, cannot be denied. As far as the question of non-applicability of IPC to the present case is concerned, the same needs a greater scrutiny. The DCS Act lays down the law to govern the formation, registration, management and running of cooperative Societies, formed in Delhi. The IPC, on the other hand, is a penal law and is a general Act defining offences and prescribing the punishment for such offences. Thus, the sphere of operation of both the penal laws and the DCS Act are totally distinct.
CBI vs Harbir Singh Harnotia Page no. 46 of 82
45. Moreover, upon a perusal of the DCS Act, 1972, a separate Chapter i.e. Chapter XII deals with 'Offences and Penalties'. Undoubtedly, Section 82 of the DCS Act, 1972 provides certain offences and penalties, but the offence of criminal conspiracy and cheating are not provided for in DCS Act 1972. Further, the Hon'ble Supreme Court clarified this issue in the decision of State of Madhya Pradesh Vs. Rameshwar & Ors., 2009, wherein it was held as follows:
"38. Mr. Tankha's submissions, which were echoed by Mr. Jain, that the M.P. Co-operative Societies Act, 1960 was a / complete Code in itself and the remedy of the prosecuting agency lay not under the criminal process but within the ambit of Sections 74 to 76 thereof, cannot also be accepted, in view of the fact that there is no bar under the M.P. Co-operative Societies Act, 1960, to take resort to the provisions of the general criminal law, particularly when charges under the Prevention of Corruption Act, 1988, are involved.
39. The judgments referred to by Mr. Tankha regarding the tendency to convert civil disputes into criminal cases to pressurize the accused, are unimpeachable, but the same will not apply to the facts of this case where a conspiracy to cheat the Bank is alleged."
46. From a plain reading of the DCS Act, 1972, it can be said that it could not have been the intention of the legislature to provide for punishment, only for the offences mentioned in the Act and grant complete immunity for the offences, which are not explicitly stated. In the present case, criminal conspiracy and cheating are not offences covered under the DCS Act and thus, the provisions of IPC shall apply.
CBI vs Harbir Singh Harnotia Page no. 47 of 82
47. Thus, the argument that the provisions of IPC are not applicable to the present case and that the CBI could not have investigated the alleged offence, does not hold any ground.
III. Vicarious liability of the accused for the acts of the companies:
48. It is contended by all the accused that whatever irregularities and illegalities were committed, the same were committed by the accused companies i.e. A-7 to A-11 and the accused persons, cannot be held liable for the wrongful acts of the companies, as there is no concept of vicarious liability in criminal law. Accused H.S. Harnotia (A-1) was the Director of M/s Indo Dutch Foods Pvt. Ltd. (A-7) and M/s Shreshtha Exporters Pvt Ltd (A-8) and accused Rajesh Jain (A-4) was the Director of Pious Group of Companies i.e. M/s Pious Chits Cines Pvt Ltd (A-9), M/s Pious Growth Funds Pvt. Ltd.(A-10) and M/s Pious Tours and Travels Pvt. Ltd. (A-11) and also the Director of M/s Indo Dutch Foods Pvt. Ltd. (A-7).
49. It is submitted that all the above companies have been struck off from the Register of Companies and have lost their status as legal persons/ juristic entities, as they are no more in existence, as per law. Further, the proceedings qua A-7 to A-11 were abated by the Order of this Court dated 28.07.2025. Thus, since the companies, which were the alleged beneficiaries in the present case are no more in existence, thus, no criminal action can be continued against the accused persons CBI vs Harbir Singh Harnotia Page no. 48 of 82 i.e. H.S. Harnotia (A-1) and Rajesh Jain (A-4). Ld. Counsel for accused no.1 has placed reliance on the Aneeta Hada (supra) decision in this regard. However, it is pertinent to note in the Aneeta Hada case, the company was not arraigned as an accused and thus, it was held that in the absence of the company being arrayed as an accused, the proceedings against the Directors are not maintainable. Moreover, in the present case, as far as the liability of H.S. Harnotia (A-1) for the wrongful acts of Manager and other functionaries of PCB is concerned, the principle laid down in Aneeta Hada's case (supra) is not applicable, because here, the Bank itself is the victim and the accused H.S. Harnotia (A-1) was an office-bearer of the victim Bank.
50. Additionally, it is pertinent to note that the present case stands on a different footing, as the companies were arraigned as accused, i.e. A-7 to A-11, since the very inception of the present case. Moreover, merely because the companies have ceased to be in existence, the liability of the Directors cannot automatically be extinguished. Section 248(7) of the Companies Act, 2013, specifically stipulates that the liability, if any of every Director, Manager or other officer, who was exercising any power of management and of every member of the company dissolved under sub-section(5), shall continue and may be enforced, as if the company had not been dissolved. Thus, the Directors continue to be liable even after the dissolution of the accused companies.
CBI vs Harbir Singh Harnotia Page no. 49 of 82
51. Additionally, the Hon'ble Supreme Court in the recent decision of Sanjay Dutt Vs. State of Haryana, 2025 INSC 34, has held that a Director may be vicariously liable for the acts of the company, if the company itself is liable in the first place and secondly, if such Director personally acted in a manner, which directly connects their conduct to the company's liability. The first limb of the requirement has been fulfilled, as A-7 to A-11 were arrayed as accused in the present case. The second limb of the requirement i.e. the question, as to whether the Directors themselves personally acted in a manner, which connects their conduct to the companies' liability; shall be examined during the discussion on merits of the case.
IV. Testimony of the witnesses and its effect on the case of the prosecution:
52. Coming now to the merits of the case, the Court will embark on a discussion on the testimony of the prosecution witnesses and its effect on the case sought to be established by the prosecution. The first testimony to be considered here is the testimony of the complainant Late Yogendra Makwana, who deposed as PW-25. It is submitted on behalf of the accused that the present complaint is illegal, because the complaint was made by Late Yogendra Makwana, due to his personal enmity and ill-will against the accused H.S. Harnotia. It is further submitted that the complainant in his capacity as Chairman of PCB, CBI vs Harbir Singh Harnotia Page no. 50 of 82 was not authorized by the Board of Directors (BoD) to file the present complaint.
53. The contention that the present complaint was motivated and lodged due to personal enmity, are only speculative in nature and cannot be gone into by this Court. It may be possible that the complaint in the present case, i.e. Ex. PW25/A (D-2), was lodged to settle personal scores but the same ipso facto does not entitle the accused to an acquittal or the complaint to be held as illegal. The case has to be adjudicated on merits and the evidence adduced on record, in accordance with law.
54. Further, during his testimony, PW-25 deposed that certain documents were sent along with the complaint, but the same was contradicted by the testimony of the IO as PW-67 and as a matter of record, no documents were annexed with the complaint [Ex. PW25/1 (D-2)]. The witness was cross-examined regarding the details of his complaint and the amount and the date of cheques, to which he could not give any specific answer. On being cross-examined about the liability of H.S. Harnotia (A-1), he deposed that whenever cheques were purchased by the Bank, it was always through the Manager and the Chairman, is also responsible for the acts of the Manager. He deposed that the accused H.S. Harnotia (A-1), being the Chairman of PCB during the period in question, was equally responsible for the acts of the Manager.
CBI vs Harbir Singh Harnotia Page no. 51 of 82
55. It is pertinent to note that the witness was examined in 2008 i.e. about 15 years after he lodged the complaint and thus, it is reasonable that any person would not be able to remember the details of cheques or the exact amount of loss caused to the Bank, which were specified in the complaint. Unlike a case pertaining to offences against human body, in a case like the present one, which is overwhelmingly based on documentary evidence, a person cannot be expected to have a photographic memory and graphically remember the details of the offences committed and the wrongful loss caused to the Bank. Thus, the mere fact that the complainant as PW-25 was unable to depose about the details of the dishonored cheques, the documents annexed with the complaint or the loss incurred by the Bank, cannot accrue to the benefit of the accused, in the present case. The Hon'ble Supreme Court in the decision of Goverdhan Vs. State of Chattisgrah, (2025) INSC 47, while relying upon the earlier decisions of the Apex Court has cautioned against attaching too much importance to minor inconsistencies in the testimony of the witnesses which are natural and bound to occur, due to lapse of time and other factors.
56. The witnesses PW-1 Ramesh Kumar and PW-5 Pratap Singh Atal, have deposed about the opening of bank accounts of accused companies (A-7 to A-11) in the PCB and have proved the same. The witness PW-5 in his testimony also deposed that the accused H.S. Harnotia (A-1) was the introducer for the bank account of M/s Shrestha CBI vs Harbir Singh Harnotia Page no. 52 of 82 Exporters Pvt. Ltd. (A-8) and the loan application of A-8 was also signed by H.S. Harnotia (A-1), who also recommended the loan to the accused company (A-8). The witness PW-1 has also deposed about the fact that the accused H.S. Harnotia (A-1) was working as a Director of M/s Indo Dutch Foods Pvt. Ltd. (A-7), which is also buttressed by the testimony of PW-14 Mukul Sarin who was working in A-7 at the relevant point of time. Additionally, PW-1 also testified to the fact that H.S. Harnotia (A-1) was also serving as the Director of M/s Shrestha Exporters Pvt. Ltd. (A-8). Thus, the factum of accused working as a Director of the accused companies i.e. A-7 and A-8 has been amply proved beyond reasonable doubt and is also admitted by the accused.
57. Additionally, PW-14 Mukul Sarin in his testimony, also deposed that Rajesh Jain (A-4) was also a Director of M/s Indo Dutch Foods Pvt. Ltd. (A-7). The factum of accused Rajesh Jain (A-4), joining as a Director of M/s Indo Dutch Foods Pvt. Ltd. (A-7) from 1990 onwards has also been proved through the Attendance Register of the Meeting of Board of Directors [Ex. PW14/D (D-65)], which contains the name and signature of Rajesh Jain (A-4) as Director from the meeting dated 17.08.1990 onwards. This has not been disputed by A-4 during the entire course of prosecution evidence and thus, the factum of Rajesh Jain (A-4) also being a Director of M/s Indo Dutch Foods Pvt. Ltd. (A-7) from 1990 onwards, along with H.S. Harnotia (A-1) has been proved beyond reasonable doubt.
CBI vs Harbir Singh Harnotia Page no. 53 of 82
58. Moreover, the accused Rajesh Jain (A-4) admitted to being a Director of M/s Pious Group of Companies, u/S 294 CrPC in his statement recorded on 06.03.2012. Now the next question arises as to whether the cheques in question were being purchased by Late R.P. Nagar, Manager of PCB, beyond the scope of his authority and whether the accused H.S. Harnotia (A-1) was serving as Chairman of PCB during this period. In this regard, there is ample evidence in the form of documents on record as well as the testimony of various witnesses i.e. PW-2 Uday Vir Singh, PW-3 Rampal Singh Gautam, who was serving as the Director of PCB as well as PW-5 Pratap Singh Atal, who was working at PCB, alongwith many other witnesses. All these witnesses have deposed that the Manager-cum-CEO Late R.P. Nagar had the power to purchase cheques upto Rs. 10,000/- on his own and for purchase of cheques beyond Rs. 25,000/-, prior approval of the Board of Directors was mandatory. The witnesses have also testified to the effect that for any cheque between the value of Rs. 10,000/- to Rs. 25,000/- the Manager could approve the same, but it had to be ratified in the next Board meeting. All these witnesses have also deposed that the Manager was purchasing cheques beyond Rs. 25,000/- without the approval of Board of Directors on a regular basis and the same is also evident from the cheques as well as the pay-in slips on record.
59. PW-2 Uday Vir Singh in his testimony has categorically deposed that no prior approval of Board of Directors was obtained by Late R.P. Nagar (A-3) for purchasing the cheques of accused companies i.e. A-9 CBI vs Harbir Singh Harnotia Page no. 54 of 82 to A-11, which is further buttressed by the testimony of PW-10 O.P. Kaim. PW-3 Rampal Singh Gautam also testified that the condition of Bank was very bad and the Chairman and CEO did not listen to anyone. He also categorically deposed that "only the Chairman used to direct the Chief Executive Offier and with his approval, the cheques were purchased."
60. Moreover, as per the evidence on record, as well as the testimony of PW-5 various cheques of Pious Group of Companies i.e. A-9 to A-11 were passed for payment by Late R.P. Nagar, the-then Manager-cum-CEO and the same is on record in the form of cheques (Ex. PW5/F1 to Ex.PW5/I34) and pay-in slips (Ex. PW4/B1 to Ex. PW4/) [D-251 to D-302]. It is an admitted case that H.S. Harnotia (A-1) was working as the Chairman of PCB during this period from late 1989 to 1992. Thus, it has been amply established that during the Chairmanship of H.S. Harnotia (A-1), Late R.P. Nagar as the Manager- cum-CEO regularly purchased cheques issued in favour of Pious Group of Companies (A-9 to A-11), much beyond his powers and the scope of his authority.
61. The issuance of cheques by the accused persons i.e. A-4 to A-6, which returned unpaid due to insufficient funds, has been proved by the testimony of various witnesses i.e. PW-15, PW-29, PW-31 & PW-32. Further, the issuance of cheques by third persons, in favour of CBI vs Harbir Singh Harnotia Page no. 55 of 82 A-9 to A-11 has also been proved by way of ample documentary as well as witness testimonies, on record.
62. It is also evident from the material on record as well as the testimonies of PW-5 Pratap Singh Atal and PW-12 Jyoti Joshi that after the purchase of cheques, amount would be credited into the account of the parties i.e. the Pious Group of Companies (A-9 to A-11) on the same day or the next day.
63. The next contention to be proved is the withdrawal of amount credited in the accounts of A-9 to A-11 by accused Rajesh Jain (A-4) and Late Anil Jain. The same is evident from the testimonies of PW-4 Anil Bakshi and PW-5 Pratap Singh Atal as well as the documents (D-155 to D-229), which have been proved on record. Further, it is also evident from the testimony of PW-5 Pratap Singh Atal that amount was credited into the account of M/s Indo Dutch Foods Pvt. Ltd. (A-7) during 1990 to 1992, from the accounts of A-9 to A-11, through the specific entries in the ledger sheets of the accused company (A-7), which were exhibited as Ex. PW5/B and these ledger entries are relevant u/S 34 of Indian Evidence Act, as corroborative evidence. Futher, the transfer of money from the account of Pious Group of Companies (A-9 to A-11) to M/s Indo Dutch Foods Pvt. Ltd. (A-7) also stands proved through the following documentary evidence:
CBI vs Harbir Singh Harnotia Page no. 56 of 82 ▪ Transfer of Rs. 3,00,000/-from C/A 150 to C/A no. 120 of A-7 [Ex. PW4/B7 (D-288)].
▪ Transfer of Rs. 25,000/- on 15.05.1992 from C/A 113 to C/A no.
120 of A-7 [Ex. PW5/K (D-289)].
▪ Transfer of Rs. 25,000/- from C/A 113 to C/A no. 120 of A-7 [Ex. PW5/K1 (D-290)].
▪ Transfer of Rs. 2,00,000/- from C/A 122 to C/A no. 120 of A-7 [Ex. PW5/K2 (D-291)].
▪ Transfer of Rs. 1,00,000/- from C/A 122 to C/A no. 120 of A-7 [Ex. PW5/F6 (D-292)].
▪ Transfer of Rs. 1,00,000/- from C/A 150 to C/A no. 120 of A-7 [Ex. PW5/F2 (D-157)].
64. The said transfer of amount into the account of M/s Indo Dutch Foods Pvt. Ltd. (A-7) from the accounts of A-9 to A-11 is also buttressed by the testimony of the IO as PW-67, wherein he proved the ledger entries as Ex. PW67/D6. The accused persons have failed to show that any of the above transactions were genuine or took place, during the course of regular business activity.
65. Thus, the withdrawal of money credited into the accounts of A-9 to A-11 by Rajesh Jain (A-4) and transfer of money into the account of M/s Indo Dutch Foods Pvt. Ltd. (A-7) by the Pious Group of Companies (A-9 to A-11) during the period 1990-1992 stands established, both from the material on record as well as the testimony CBI vs Harbir Singh Harnotia Page no. 57 of 82 of witnesses. It may be argued that the testimony of PW-5 is the testimony of an interested witness, as the witness Pratap Singh Atal was suspended by the order of H.S. Harnotia (A-1) and Late R.P. Nagar (A-3), as admitted by him during his cross-examination, but the same is not a sufficient basis to discredit the entire testimony of the witness, when it otherwise inspires confidence. The Hon'ble Supreme Court has, on a plethora of occasions, held that the testimony of an interested witness cannot be discredited solely, because of the fact that he is interested. It is trite law that the Court must closely scrutinize such evidence, but the evidence of such a witness cannot be ignored or thrown out solely, because it comes from an interested person ( Mohd. Rojali Ali Vs. State of Assam, (2019) 19 SCC 567 ). The evidence of PW-5, in the considered opinion of the Court, has been consistent and has withstood the test of cross-examination and thus, reliance can be placed on his testimony.
66. In light of the above discussion, the modus operandi and commission of the alleged offences, stand proved. The Court must now examine, as to whether the role of the accused in the commission of the alleged offences has been proved beyond reasonable doubt.
V. Charge of Criminal Conspiracy:
67. Ld. Counsels for all the accused have vehemently argued that for the offence of criminal conspiracy u/S 120 B IPC, prior meeting of minds and an agreement between the parties to commit an illegal act is CBI vs Harbir Singh Harnotia Page no. 58 of 82 essential, but there is no iota of evidence on record, to show the same. On the other hand, Ld. PP for CBI has countered these arguments by submitting that, in a case of criminal conspiracy, there is hardly any possibility of bringing direct evidence on record and the offence of criminal conspiracy can only be inferred from the conduct of the accused persons and the surrounding circumstances.
68. This Court has perused the record in the light of respective arguments. The standard for evaluating the evidence in case of criminal conspiracy was laid down by the Hon'ble Apex Court in Kehar Singh Vs. State (Delhi Administration) (1988) 3 SCC 609, wherein it was observed as follows:
"It is however, essential that the offence of conspiracy requires some kind of physical manifestation of agreement. The express agreement, however, need not be proved. Nor actual meeting of two persons is necessary nor it is necessary to prove the actual words of communication. The evidence as to transmission of thoughts sharing the unlawful of thoughts sharing the unlawful design may be sufficient".
69. Further, it is trite law that direct independent evidence of criminal conspiracy is generally not available and its evidence is a matter of inference. The inference is normally deduced, from the act of the parties, in pursuance of a common purpose between the conspirators. It has also been held that in order to show the element of criminal conspiracy; the circumstances before, during and after the CBI vs Harbir Singh Harnotia Page no. 59 of 82 occurrence have to be considered to decide the complicity of accused persons. Reference in this regard can also be made to the decision of Ram Narayan Popli Vs. CBI & Ors., 2003 AIR SCC 2748.
70. Further, it was held in State (N.C.T of Delhi) Vs. Navjot Sandhu & Ors., 2005 11 SCC 797, that a few bits here and a few bits there, on which the prosecution relies cannot be held to be adequate, for connecting the accused, with the offence of criminal conspiracy. The circumstances before, during and after the occurrence and antecedents and subsequent conduct among other factors can be proved to decide about the complicity of accused. It was further held that the cumulative effect of proved circumstances, should be considered in determining the guilt of accused, rather than adopting an isolated approach to each of the circumstance.
71. In light of the position of law as discussed above, this Court shall now determine whether the offence of criminal conspiracy is attracted in the present case. Admittedly, H.S. Harnotia (A-1) was the Chairman of PCB during the relevant period from 1990 to 1992 and was simultaneously the Managing Director/ Director of M/s Indo Dutch Foods Pvt. Ltd. (A-7) till November 1992. Additionally, the accused Rajesh Jain (A-4) also became a Director of A-7 in 1990 and he was the Director of M/s Pious Group of Companies i.e. A-9 to A-11.
CBI vs Harbir Singh Harnotia Page no. 60 of 82
72. Further, as has been discussed above, Late R.P. Nagar (A-3) engaged in the purchase of high-denomination cheques of A-9 to A-11 beyond the authorized limits during this period. A perusal of the record shows that about 38 cheques of A-9 bearing account no. C/A 113; 6 cheques of A-9 bearing account no. C/A 116; 1 cheque of A-10 bearing account no. 122 and 4 cheques of A-11 bearing current account no. 150, were returned unpaid during this very period from 1990 to 1992. Thus, a total of 49 cheques, issued in favour of A-9 to A-11, were dishonoured during this period.
73. Thus, the above purchase of cheques by the Manager, PCB and credit in the account of A-9 to A-11, while the cheques returned unpaid, is contemporaneous with the time, when accused H.S. Harnotia (A-1) was serving as the Chairman of PCB. Moreover, it must also be noted that an amount of Rs. 8,50,000/- was transferred from the accounts of A-9 to A-11, to the C/A no. 120 of M/s Indo Dutch Foods Pvt. Ltd. (A-7) during this period from 1990 to 1992 , where H.S. Harnotia (A-1) himself was serving as the Managing Director.
74. Therefore, the evidence on record shows that the accused H.S. Harnotia (A-1) was instrumental in facilitating the purchase of high- value cheques beyond authorised limits and amounts from the accounts of accused companies i.e. A-9 to A-11, were systematically transferred into the account of M/s Indo Dutch Foods Pvt. Ltd. (A-7), thereby, CBI vs Harbir Singh Harnotia Page no. 61 of 82 clearly demonstrating control by A-1 over both the Bank and the accused company (A-7) during this period of time.
75. It has been argued at length on behalf of accused H.S. Harnotia (A-1) that the post of the Chairman was only an honorary post and he was not involved in day-to-day affairs of the Bank. It has further been contended that he cannot be held accountable for the irregularities committed by Late R.P. Nagar (A-3) in accepting cheques, beyond the scope of his authority.
76. However, the very fact that Late R..P. Nagar was not competent to purchase such cheques and was regularly doing so between 1990- 1992, when a majority of cheques of the Pious Group of Companies (A-9 to A-11) were returning unpaid, for want of sufficient funds in the accounts of the drawers, who were none other than close associates of the accused (A-4 to A-6), gives rise to an inference that the cheques continued to be purchased knowingly, without the earlier accounts being settled, with a deliberate design.
77. There is ample evidence on record of the witnesses, who have deposed that the post of Chairman was honorary in nature and many witnesses have also deposed to the effect that H.S Harnotia (A-1) was not involved in day-to-day affairs of PCB. However, at the same time, prosecution witnesses i.e. PW-3 Rampal Singh Gautam and PW-5 Pratap Singh Atal have categorically deposed that the Manager cum CBI vs Harbir Singh Harnotia Page no. 62 of 82 CEO i.e. Late R.P. Nagar (A-3) used to work on the instructions of the Chairman H.S. Harnotia (A-1). Further, as has been discussed above PW-3 Rampal Singh Gautam specifically deposed that only the Chairman used to direct the CEO and with his approval, the cheques were purchased. Thus, the pivotal and crucial role of H.S. Harnotia (A-1) in the entire arrangement has been clearly made out, not only from the circumstances on record, but also from the testimony of the witnesses.
78. As far as the role of Rajesh Jain (A-4) is concerned, he was serving as the Director in the Pious Group of Companies (A-9 to A-11), i.e. the companies whose cheques were being regularly purchased by Late R.P. Nagar (A-3), despite these cheques being repeatedly dishonoured, when sent for clearance. It is submitted by Ld. Counsel for A-4 that the affairs of accused companies i.e. A-9 to A-11 was being looked after only by his brother Late Anil Jain and he had no role to play in the same. However, this submission is not supported by any evidence on record and is itself belied by the fact, that various cheques of Pious Group of Companies (A-9 to A-11) during the period 1990-1992, in favour of 'SELF' were signed by accused Rajesh Jain himself [Ex. PW5/G20 to Ex. PW5/G24 (D-185 to D-189), for reference]. This demonstrates a clear intention on the part of Rajesh Jain (A-4) to withdraw the amount credited in the account of A-9 to A-11, his active participation in the entire arrangement and derive wrongful gains.
CBI vs Harbir Singh Harnotia Page no. 63 of 82
79. At the same time, it cannot be lost sight of, that accused H.S. Harnotia (A-1) was simultaneously functioning as the Managing Director/Director of M/s Indo Dutch Foods Pvt. Ltd. (A-7) i.e. the beneficiary company, in the present case. Thus, it stands to reason that being a Manager, Late R.P. Nagar (A-3) would not be in a position to reject the cheques, which were sent for purchase by these companies, in which the Chairman of the Bank was himself personally interested.
80. Thus, it has been established from the evidence and the material on record that during the period 1990 to 1992, cheques in favour of accused companies i.e. A-7 to A-11 were purchased by PCB, after approval by Late R.P. Nagar (A-3), far beyond the scope of his authority. Once PCB purchased these cheques, the amount was credited in the respective accounts of A-9 to A-11, and the cheques were sent for clearance which repeatedly returned dishonoured. Moreover, the amount credited in the accounts of these companies (A-9 to A-11) was either transferred to A-7, where H.S. Harnotia (A-1) was functioning as the Managing Director/Director or was withdrawn by Rajesh Jain (A-4) and his brother Late Anil Jain, through the issuance of self cheques. This is further corroborated by the testimony of PW-4 and PW-5. The contemporaneity of the dishonor of cheques and their credit in the bank accounts of the accused companies, while the accused H.S. Harnotia (A-1) and Rajesh Jain (A-4) were serving as the Directors of the accused companies and the CBI vs Harbir Singh Harnotia Page no. 64 of 82 accused H.S. Harnotia (A-1) was also serving as the Chairman of the Bank; cannot be discarded as a mere coincidence or any irregularity, which could have escaped the notice of H.S. Harnotia (A-1), being at the helm of the affairs of PCB. The same is also a relevant fact u/S 8 of the Indian Evidence Act. This is not a case where the accused H.S. Harnotia (A-1) was simply acting in his honorary position and not aware of the wrongdoings of the Manager, but one where he was actively supervising and controlling the actions of the Manager, so as to ensure that pecuniary benefit is derived by the accused companies.
81. The above discussion shows as to how A-1 and A-4 through the mechanism of accused companies (A-7 and A-9 to A-11) acted in concert with each other and put the Bank to loss, as a huge number of cheques were dishonored. The evidence on record does not show mere tit bits of conspiracy, as alleged by the accused; but it unmistakably points towards the existence of a pre-arranged plan and concerted action on the part of the accused to cause wrongful loss to the bank, as discussed above. The accused persons on the other hand, have failed to offer any plausible explanation for such repeated and regular transactions. Accordingly, the offence of criminal conspiracy is u/S 120-B r/w Section 420 IPC is clearly attracted against H.S. Harnotia (A-1) and Rajesh Jain (A-4).
CBI vs Harbir Singh Harnotia Page no. 65 of 82
VI. The offence of cheating u/S 420 IPC:
82. For proving the offence of cheating u/S 420 IPC, it must be proved that the accused dishonestly induced the victim to deliver property, resulting in wrongful loss. The Hon'ble Supreme Court in the SVL Murthy v. State (represented by CBI, Hyderabad) , AIR 2009 SC 2717; while discussing the offence of cheating, has held as follows:
"An offence of cheating cannot be said to have been made out unless the following ingredients are satisfied:
i) deception of a person either by making a false or misleading representation or by other action or omission.
(ii) fraudulently or dishonestly inducing any person to deliver any property; or
(iii) to consent that any person shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit."
For the purpose of constituting an offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 of the Indian Penal Code can be said to have been made out ( emphasis supplied).
We may reiterate that one of the ingredients of cheating as defined in Section 415 of the Indian Penal Code is existence of an intention of making initial promise or existence thereof from the very beginning of formation of contract."
CBI vs Harbir Singh Harnotia Page no. 66 of 82
83. It is contended by the accused that the ingredients of the offence of cheating u/S 415 IPC are not attracted in the present case, as the prosecution has failed to prove the existence of a dishonest intention from the very inception. Per contra, it is submitted by Ld. PP for CBI that the very fact that the accused persons, namely, A-4 to A-6 were issuing cheques, despite knowing that the same would not be honoured, due to lack of sufficient funds and the conduct of Rajesh Jain (A-4) in withdrawing the money credited against these cheques, which were purchased by the Bank, are clearly indicative of an intention of the accused to defraud the Bank. Moreover, the act of H.S. Harnotia (A-1) in controlling the affairs of the Bank, when these high- denomination cheques were repeatedly purchased by Late R.P. Nagar (A-3) as Manager, shows wrongful intent on the part of A-1 to defraud the Bank.
84. The dishonest intention of the accused is evident from the following:
the pattern of repeated dishonour of cheques (as evident from the testimony of PW-2, PW-3 and PW-5);
Immediate withdrawal of funds after the amount is credited into the bank account (as evident from the testimony of PW-5);
Failure to make good the amounts, despite dishonour and resultant heavy loss to the Bank (as evident from the testimony of the IO, PW-67 and complainant, PW-25). CBI vs Harbir Singh Harnotia Page no. 67 of 82
85. Thus, it is evident that the accused persons, in conspiracy with each other, represented to the Bank that the cheques issued in favour of A-9 to A-11 i.e. Pious Group of Companies (A-9 to A-11) would be honoured and there is sufficient credit in the account of the drawers of the cheques; despite the knowledge that there was no sufficient credit in the account of the drawers. This is apparent from the testimony of PW-31 Kuldeep Kumar Jain, who deposed that maximum balance in the account of Rani Jain (A-6) was Rs. 13,250/- and despite the same; she issued multiple high -denomination cheques and 7 cheques totalling to Rs. 12.15 lacs were dishonoured. Similarly, the testimony of PW-15 S.K. Sharma shows that accused Rashmi Jain (A-5) was regularly issuing cheques, despite insufficient funds in her account and 4 cheques issued by her were dishonoured. There are many other drawers (PW-52, PW-78 etc.), from whom cheques were taken by Late Anil Jain and Rajesh Jain (A-4) and the cheques in this regard had all returned unpaid.
86. As regards the aspect of wrongful loss incurred to the Bank, the accused have placed on reliance on testimony of PW-73, who deposed that whenever any cheque was dishonored, the amount would be debited from the accounts of the companies. However, no evidence has come on record to show that the amount was debited from the accounts of A-9 to A-11. Moreover, the complaint on record (Ex. PW25/1), which was proved by PW-25, in his testimony, specifically mentioned CBI vs Harbir Singh Harnotia Page no. 68 of 82 that on most occasions, the amount of the dishonored cheques was not debited from the accounts of Pious Group of Companies (A-9 to A-11).
87. The extent of wrongful loss incurred by the Bank has been further proved by the IO in his testimony as PW-67, where in his cross- examination dated 30.09.2015, he identified the ledger entries as Ex. PW67/D1 - Ex. PW67/D6 (Files D-4 to D-6). The same has not been challenged or disputed by the accused persons, during the course of cross-examination of IO and thus, the testimony of IO in this regard, has withstood the test of cross-examination.
88. To counter the contention of wrongful loss, the accused have placed reliance on the testimonies of PW-14 Mukul Sarin and PW-73 Ashok Kapoor. PW-14 Mukul Sarin, during the course of his examination, testified that after he joined M/s Indo Dutch Foods Pvt. Ltd. (A-7), there was some dispute regarding the amount to be paid to PCB, and an Arbitrator was appointed and the amount was paid by M/s Indo Dutch Foods Pvt. Ltd. (A-7) to the Bank, and there remained no outstanding. He further testified that M/s Shrestha Exporters Pvt. Ltd. (A-8) had also paid the amount to PCB, which was due to them in compliance of the award of the Arbitrator. PW-73 Ashok Kapoor also deposed on similar lines and testified that during his tenure as CEO, PCB had recovered all the outstanding loans from a number of defaulters, and the Bank did not suffer any monetary loss.
CBI vs Harbir Singh Harnotia Page no. 69 of 82
89. However, upon being questioned specifically by the Court, during the course of his testimony dated 14.07.2015, he expressed ignorance, as to whether PCB had recovered all the outstanding dues from A-7 to A-11. It is pertinent to note that the accused have not led any evidence to show that the entire amount was paid by A-7 or A-9 to A-11 and there was no amount due to PCB and there is nothing on record to show that the outstanding amount was paid by these companies.
90. It is only during the course of final arguments that accused H.S. Harnotia (A-1) furnished a copy of the award of Arbitrator, in relation to the dispute between M/s Shrestha Exporters Pvt. Ltd. (A-8) and PCB. Further, the fact that M/s Shrestha Exporters Pvt. Ltd. (A-8) had paid all its dues, has no bearing on the question of payment of dues by M/s Indo Dutch Foods Pvt. Ltd. (A-7) and Pious Group of Companies (A-9 to A-11), for which there is no material on record, to suggest the absence of liability.
91. Thus, the contention of the accused that the outstanding amount has already been paid by M/s Indo Dutch Foods Pvt. Ltd. (A-7) and Pious Group of Companies (A-9 to A-11), of which H.S. Harnotia (A-1) and Rajesh Jain (A-4) were serving as Directors, has not been proved. On the other hand, wrongful loss to the Bank has been proved through the material on record and the evidence adduced by the CBI vs Harbir Singh Harnotia Page no. 70 of 82 prosecution and thus, the offence u/S 420 IPC stands attracted qua A-1 and A-4.
92. Ld. Counsels for the accused have contended that the acts attributed to the accused, at the most, even if taken at their face value, constitute at best a civil wrong and do not attract criminal liability in the present case. Ld. Counsels for the accused have placed reliance on the decisions of Anukul Singh (supra) & SVL Murthy (supra), in this regard. These decisions relied upon by the accused, are factually distinguishable, from the present case.
93. This Court is mindful of the distinction between a mere breach of contract or civil wrong and the commission of a criminal offence. Undoubtedly purchase of cheques, when viewed in isolation, is a civil transaction in nature. However, the repeated purchase of cheques by Late R.P Nagar (A-3), without authority and with the knowledge that most of these cheques were returning unpaid, due to insufficient funds, in the accounts of the drawers and subsequent transfer of money in the companies where the accused H.S. Harnotia (A-1) and Rajesh Jain (A-4) had a vested interested; all these circumstances stand testament to a pre-arranged plan and the existence of a dishonest intention from the very inception of these transactions, which amount to the offence of cheating u/S 420 IPC. In the ordinary course of banking transactions, once a cheque purchased was returned unpaid, the Bank would have debited the account of the company, from which the CBI vs Harbir Singh Harnotia Page no. 71 of 82 cheque was purchased. This would then have closed the doors, for further purchase of cheques. However, the accounts of these accused companies (A-9 to A-11) were not debited and Late R.P. Nagar (A-3), under the Chairmanship of accused H. S. Harnotia (A-1) continued purchasing these cheques, thereby causing wrongful loss to the Bank.
94. The above discussions show that the actions of the accused i.e. H.S. Harnotia (A-1) and Rajesh Jain (A-4) were not mere civil wrongs and were intended to cause wrongful loss to the Bank and corresponding wrongful gain to the accused. Further, as discussed above, the dishonest intention existed from the inception of the transactions and thus, the offence of cheating u/S 420 IPC is clearly attracted against H.S. Harnotia (A-1) and Rajesh Jain (A-4).
VII. Role of accused Rashmi Jain (A-5) and Rani Jain (A-6):
95. As far as the role of both the above-mentioned accused is concerned, multiple cheques were issued by both the accused Rashmi Jain (A-5) and Rani Jain (A-6), which were repeatedly dishonoured. It has come in the testimony PW-15 S.K. Sharma that despite insufficient balance, high-value cheques were being repeatedly issued by account no. 5336 of accused Rashmi Jain (A-5), maintained with Syndicate Bank, and all these cheques returned unpaid, on account of insufficient funds in the account of accused Rashmi Jain (A-5).
CBI vs Harbir Singh Harnotia Page no. 72 of 82
96. Further, the witnesses PW-17 K.L. Meena and PW-31 Kuldeep Kumar Jain have deposed that all cheques issued by accused Rani Jain (A-6) returned due to insufficient funds and maximum balance in the account of Rani Jain (A-6) was Rs. 13,250/-, which was clearly insufficient to honour any of the cheques issued by her. Interestingly, there are many other drawers of cheques, whose names are mentioned in the list of witnesses, whose cheques returned unpaid, due to insufficient funds and these drawers have not been arraigned as accused.
97. In this context of the alleged liability of accused Rashmi Jain (A-5) and Rani Jain (A-6), the testimony of IO becomes relevant, who during his cross-examination as PW-67 deposed that "The accused Rani Jain and Rashmi Jain have been made accused in the present case, only due to the reason that they had issued number of cheques knowing well, that they have no sufficient funds in their account to honour the cheques. Except accused Rani Jain and Rashmi Jain having issued the cheques, with complete knowledge that they have no sufficient funds for encashment of the cheques, no other evidence or allegation appeared during my investigation. I had called accused Rani Jain and Rashmi Jain to join the investigation and their statements were recorded, but those statements have not been filed along with charge-sheet as same was not required."
CBI vs Harbir Singh Harnotia Page no. 73 of 82
98. Further, when questioned as to the reasons for their husbands being arrayed as accused, the IO categorically deposed that the companies in whose favour, the cheques were issued belonged to their husbands, who were the ultimate beneficiaries . Thus, the IO, in his testimony himself has clarified that the present offence is not concerned with mere dishonour of cheques, but one of deriving wrongful gain, after deceiving the Bank through a systematic dishonour of cheques. There is nothing on record to show the complicity of accused Rashmi Jain (A-5) and Rani Jain (A-6) in the affairs of Pious Group of Companies (A-9 to A-11) or they being Directors of the companies, at any point of time.
99. It is important to note that the moot question in the present case does not revolve around mere dishonour of cheques, due to insufficient funds, which is, by itself, only an offence u/S 138 of NI Act but the underlying controversy is one of systematically causing wrongful loss to the Bank through the entire arrangement of cheque purchase, dishonour of cheques and withdrawal of money credited into the accounts of the accused companies, in order to derive wrongful gains.
100. Thus, no involvement of both the above-mentioned accused has surfaced in the present case, as regards the conspiracy to cheat the Bank and deriving wrongful gain, after causing loss to the Bank. Therefore, no offence as alleged is made out against the accused Rashmi Jain (A-5) and Rani Jain (A-6).
CBI vs Harbir Singh Harnotia Page no. 74 of 82 VIII. Other Contentions raised on behalf of the accused :
101. Ld. Counsels for the accused have contended that the accused persons have been acquitted in other cases of a similar nature and therefore, are entitled to acquittal in the present case as well. However, this Court is of the humble opinion that findings rendered by a Court of coordinate or equivalent jurisdiction are not binding upon this Court and only carry a persuasive value. Moreover, the facts and nature of evidence adduced in those cases, stand on a distinct footing from the evidence led in the present case. Thus, each case must be decided on its own facts and the evidence on record in the present case, warrants an independent appreciation.
102. The Court shall now discuss the remaining grounds based on which, the accused have sought acquittal.
(a) Testimony of GEQD expert (PW-33)
103. It is submitted on behalf of accused H.S. Harnotia (A-1) that the testimony of PW-33 Dr. B. A. Vaid, cannot be read in evidence against him, as he did not have an opportunity to cross-examine the witness. The said contention, however, is devoid of merit. The report of the Government Examiner of Questioned Documents (GEQD) is per se admissible under Section 292 (1) CrPC and does not require formal proof. [State of Himachal Pradesh v. Mast Ram¸ (2004) 8 SCC 660].
CBI vs Harbir Singh Harnotia Page no. 75 of 82 Thus, the opinions (Ex. PW 33/X1 to Ex. PW 33/X3) are admissible in evidence and can be relied upon.
104. It is also significant to note that PW-33 was examined far back in 2015, and at no stage, did the accused invoke Section 311 CrPC seeking recall of the witness for cross-examination, despite having ample time and opportunity to do so. Having consciously chosen not to avail such remedy, the accused cannot, now be permitted to raise this objection, as a subterfuge in his defence. Further, accused Rajesh Jain (A-4) has admitted to signing the cheques on behalf of Pious Group of companies (A-9 to A-11) in his Statement recorded u/S 313 CrPC, which further corroborates the opinion rendered by the GEQD expert.
105. In any event, the gravamen of the present case does not hinge upon the proof of forgery of documents but squarely rests on the allegations of criminal conspiracy and cheating, which stand duly established on the basis of cogent and independent evidence, as discussed above, even dehors the opinion of the GEQD expert.
(b) Witnesses not supporting the case of the prosecution:
106. With respect to the remaining testimonies on record, it is contended by Ld. Counsel for A-4 to A-6 that PW-27 Mukesh Chand Jain and PW-41 Mahesh Jain have resiled from the case of the prosecution and the same entitle the accused to benefit of doubt. A perusal of the testimony of PW-27 Mukesh Chand Jain shows that he CBI vs Harbir Singh Harnotia Page no. 76 of 82 did not remember whether he issued any cheque to A-9 i.e. M/s Pious Chits and Cines Pvt. Ltd. (A-9) or not. Thus, it is evident that the witness did not completely resile from the version of the prosecution, as regards the factum of issuance of cheques to the accused company and mere lapse of memory, due to passage of time, cannot be equated to retracting from the case of the prosecution.
107. It is noteworthy that the said witness is the brother of Rajesh Jain (A-4) and Late Anil Jain and otherwise also, the issuance of cheque by the accused has been amply proved by the documentary evidence on record in this regard i.e. Ex. PW-15/G (D-87) and Ex. PW-15/N. Further, Section 91 of the Indian Evidence Act mandates that where the terms of a transaction have been reduced to writing, no evidence shall be given in proof of such terms, except the document itself. Oral testimony is admissible only within the limited exceptions carved out under Section 92 of the Indian Evidence Act. In the present case, the documentary evidence unequivocally proves the transaction of issuance of cheques by the witness, rendering the alleged inconsistency in oral testimony, inconsequential. Similarly, the lacunae in the testimony of PW-41 Mahesh Jain, have been overcome both through the documentary evidence (Ex. PW-33/D-24, Ex. PW-33/28) as well as the testimony of PW-53 Nand Kishore, who proved the issuance of blank cheques to Ajay Jain, at the instructions of late Anil Jain.
CBI vs Harbir Singh Harnotia Page no. 77 of 82
108. Ld. Counsel for A-1 has placed considerable emphasis on the testimony of PW-82 Gopal Paharia wherein he deposed, "The progress of the bank was tremendous in the tenure of Sh. H.S. Harnotia , as a Chairman." The said witness was serving as a Director of PCB, till 1993 and also deposed about certain associates of the complainant, who had defaulted in loan repayment to PCB. However, these aspects are wholly extraneous to the issues arising for consideration in the present case and do not advance the defence of the accused in respect of the allegations under trial.
109. Interestingly, the same witness during his testimony also deposed that "I cannot say if during my tenure, Sh. H.S. Harnotia had done all the work according to law." Thus, the assertion of "tremendous progress under the Chairmanship of accused H.S. Harnotia", does not tantamount to the banking affairs of PCB taking place in conformity with the law and applicable regulatory framework.
110. The fact that there were irregularities in the functioning of PCB has amply been brought to light through the testimonies of PW-19 PK Dhar (also later examined as PW-24), who deposed that PCB had not submitted the statutory Returns from 1991 onwards, despite various reminders and several complaints were received regarding malfunctioning of the Bank. Further, PW-73 Ashok Kapoor categorically deposed that the banking transactions of PCB were suspended by RBI and RBI had advised the Registrar of Co-operative CBI vs Harbir Singh Harnotia Page no. 78 of 82 Societies (RCS) to appoint an Administrator. Thus, the irregularities in the affairs of PCB have been sufficiently brought to light, through the testimonies of the witnesses and the selective reliance placed by the defence, on isolated portions of the testimony of PW-82 does not aid the defence of the accused.
(c) The standard of proof required.
111. It is a settled proposition of criminal law, that it is for the prosecution to establish its case beyond all reasonable doubt. It is for the prosecution to travel the entire distance between 'may be true' to 'must be true' and the same must be proved by legal, reliable and unimpeachable evidence. (Sarwan Singh Rattan Singh v. State of Punjab, AIR 1957 SC 637). Ld. Counsels for accused have argued that the lacunae in the case of the prosecution have benefitted the accused and the same is a ground for acquittal.
112. However, in the considered opinion of this Court, in light of the foregoing discussion and the evidence brought on record, the commission of offences punishable under Section 120-B read with Section 420 IPC, as well as the substantive offence under Section 420 IPC, by both accused, namely, H. S. Harnotia (A-1) and Rajesh Jain (A-4), stands proved beyond the threshold of reasonable doubt.
CBI vs Harbir Singh Harnotia Page no. 79 of 82
113. Further, in a case such as the present one, which rests predominantly on documentary evidence, minor inconsistencies or trivial contradictions in the testimony of witnesses do not, by themselves, corrode the substratum of the prosecution case, once the same has been otherwise proved beyond reasonable doubt. The Hon'ble Apex Court has, on numerous occasions, held that minor discrepancies on inconsequential matters, which do not go to the root of the case, cannot be a ground for discarding otherwise reliable evidence, and has cautioned Courts against adopting a hyper-technical approach, by picking sentences torn out of context. ( State of U.P. v. M.K. Anthony, AIR 1985 SC 48).
114. This Court is also reminded of the recent observations of the Hon'ble Supreme Court in Sushil Kumar Tiwari v. Hare Ram Sah (2025 INSC 1061), wherein while elucidating the application of proof beyond reasonable doubt, the Apex Court observed as follows:
"Before closing, we deem it fit to observe that noticeably, the principle of beyond reasonable doubt has been misunderstood to mean any and every doubt in the case of the prosecution. Often, we come across cases wherein loose acquittals are recorded on the basis of minor inconsistencies, contradictions and deficiencies, by elevating them to the standard of reasonable doubts. A reasonable doubt is one that renders the version of the prosecution as improbable, and leads the Court to believe in the existence and probability of an alternate version of the facts. It is a serious doubt which must be backed by reason.
CBI vs Harbir Singh Harnotia Page no. 80 of 82 The underlying foundation of the principle of beyond reasonable doubt is that no innocent should face punishment for a crime that he has not done. But a flipside of the same, of which we are conscious, is that at times, owing to a mis-application of this principle, actual culprits manage to find their way out of the clutches of law. Such misapplication of this principle, resulting into culprits walking free by taking benefit of doubt, is equally dangerous for the society. Every instance of acquittal of an actual culprit revolt against the sense of security of the society and acts as a blot on the criminal justice system."(emphasis supplied ) CONCLUSION
115. When the evidence is viewed not in fragments, but as an integrated whole, the veil over the transactions stands lifted, revealing a design, that was neither accidental nor benign. What masqueraded as routine financial dealings was, in truth, a calculated abuse of position, executed with deliberation and continuity. The law does not permit such conduct to seek refuge, behind the facade of civil transactions. Where intention is tainted at inception and deception is woven into the very fabric of the dealings, criminality is writ large. The scales of justice, therefore, do not tilt on conjecture or sympathy, but on proof - and in the present case, the proof stands firm.
116. Therefore, upon a conspectus of the entire facts and circumstances of the case and in view of the foregoing discussion, it is CBI vs Harbir Singh Harnotia Page no. 81 of 82 evident that the prosecution has successfully proved the commission of alleged offences by the accused H.S. Harnotia (A-1) and Rajesh Jain (A-4), beyond reasonable doubt. Accordingly, the accused H.S. Harnotia (A-1) and accused Rajesh Jain (A-4) stand CONVICTED of the offences u/S 120B r/w Section 420 IPC and the substantive offence u/S 420 IPC.
117. Further, this Court is of the considered opinion that the prosecution has failed to prove the offences, which the accused Rashmi Jain (A-5) and Rani Jain (A-6) are charged with, in the present case. As a result, the accused persons, namely, Rashmi Jain (A-5) and Rani Jain (A-6), are ACQUITTED of the offences punishable u/S 120B r/w Section 420 IPC and the substantive offence u/S 420 IPC.
118. Copy of this Judgment be given to the convicts, free of cost.
119. Before parting, this Court would like to underscore its appreciation for the Ld. Counsels for accused as well as Ld. PPs for CBI, for the superlative assistance rendered, during the trial and arguments of the present case.
Digitally signed by JYOTI JYOTI MAHESHWARI
MAHESHWARI
Date: 2025.12.24
17:46:45 +0530
(JYOTI MAHESHWARI)
Addl. Chief Judicial Magistrate-05
Rouse Avenue Courts Complex
New Delhi/24.12.2025
CBI vs Harbir Singh Harnotia Page no. 82 of 82