Bombay High Court
Central Bureau Of Investigation ) .. ... vs . on 18 January, 2014
Author: Roshan Dalvi
Bench: Roshan Dalvi
(1) SPSC 2/95 (J)
IN THE SPECIAL COURT (TRIAL OF OFFENCES RELATING TO
TRANSACTIONS IN SECURITIES) ACT, 1992
Amk
SPECIAL CASE NO. 2 OF 1995
Central Bureau of Investigation ) .. Complainant
Vs.
1. Bhupen Champaklal Dalal )
2. Haresh K. Dalal )
3. Jagdish Pannalal Gandhi (since deceased) )
4. Tejkumar Balkrishna Ruia )
5. Shankar Narayan Ramaswamy )
6. J. T. Basrai (since deceased) )
7. M. A. Balasinorwala (since discharged)
ig )
8. A. H. Khan (since discharged) ) .. Accused
9. C. S. Lalla (since discharged) )
10. A. D. Narottam (deceased) )
11. Rajesh H. Kamdar )
12. Manubhai Barodia (since deceased) )
13. Pravin K. Vakil )
14. Manubhai Maneklal (since deceased) )
15. Bhavesh Mehta )
16. Pranay B. Dalal )
Mr. R. S. Mahamane, Special P.P. for the CBI.
Mr. Sunil Kale a/w. Mr. Manoj Shukla for Accused No.1.
Accused No.1 present in Court.
Mr. D. U. Mirajkar for Accused No.2.
Accused No.2 present in Court.
Mr. Vijay Garg a/w. Ms. Sheetal Ghulane i/b Pandya & Gandhi & Co. for
Accused No.4.
Accused No.4 present in Court.
Accused No.5 present in Court.
Mr. Anil Galgali for Accused No.11.
Accused No.11 present in Court.
Mr. A. M. Vernekar for Accused No.13.
Accused No.13 present in Court.
Mr. Jaideep Lele i/b Bharat Rathod for Accused Nos.15 & 16.
Accused Nos.15 & 16 present in Court.
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(2) SPSC 2/95 (J)
CORAM : MRS. ROSHAN DALVI, J.
( SPECIAL COURT )
DATE : 18 th
JANUARY, 2014.
JUDGMENT
1. The prosecution case against the accused is under 17 distinct and separate transactions albeit of similar nature. Accused Nos. 1 & 13 are the brokers involved in the transactions. Accused Nos. 2 & 4 are the recipient and beneficiaries of the transactions. The other brokers involved in the transactions are accused Nos.4, 5, 10 (since deceased) and 14 (since deceased). The other accused involved in the transactions are employees of accused Nos. 1, 2, 4 & 13 besides the employees of the Bombay Mercantile Bank Ltd. (BMC Bank). The bank employees have been discharged or dead.
2. The prosecution has sought to show the transactions of monies of BMC Bank which was sought to be invested by BMC Bank in Government of India (GOI) securities with Bank of India (BOI). These monies have instead of BOI been diverted into the accounts of accused Nos.2 & 4 under the transactions shown to be brokered by accused Nos.1 & 13 on behalf of the BMC Bank. Accused Nos. 2 & 4 are shown to have transferred part or full of the amounts appropriated by them in their bank accounts to accused Nos.5, 10 or 14.
3. The prosecution has charged each of the accused with having committed offences under Sections 120-B, 409, 411, 420, 463, 465, 467 & 471 of the Indian Penal Code. There are separate charges under the aforesaid sections against each of the accused separately and independently. 101 charges have been framed. Each of them need not be separately considered. It would be prudent to consider the aforesaid ::: Downloaded on - 27/01/2014 23:10:26 ::: (3) SPSC 2/95 (J) charges together against the accused separately. For considering the essential charge of criminal conspiracy under Section 120-B of the IPC, it would have to be seen whether any and if so which, accused have done or caused to be done any illegal act under the aforesaid 17 transactions in agreement with some or all of them. If that is not seen the individual acts of the accused would have to be considered to see whether any offence of dishonestly receiving stolen property obtained upon misappropriation by any of the accused is done and by whom. Similarly it would have to be seen if any, some or all of the accused have in the course of the aforesaid 17 transactions or any of them cheated any party and dishonestly induced any person to deliver any property to them constituting the offence of cheating. Further it would have to be seen whether any or all of the accused has/have committed any forgery of any document or official record intending to cause damage or injury to the public or anyone. It would consequently have to be seen whether such forgery is of any valuable security or a document purported to be so and used for the purpose of cheating. It would further have to be seen whether such forged document was used as genuine knowing it to be forged by any or some or all of the accused upon seeing the case of cheating and misappropriation alongside the case of receiving property thus misappropriated by any of the accused. It would also have to be seen whether the statutory presumption under Section 114 of the Indian Evidence Act would be required to be drawn against any, some or all of them.
4. Two firms of brokers, accused Nos.1 & 13 who are charged with having acted under bogus transactions showing their brokerage but which was not paid to them would have to be judged upon they having received any part of any stolen property. The act of the two accused who initiated the 17 transactions, accused Nos. 2 & 4, would have to be judged ::: Downloaded on - 27/01/2014 23:10:27 ::: (4) SPSC 2/95 (J) upon whether their act tantamounted to cheating BMC Bank or any other person and whether the amount appropriated by them would constitute such misappropriation as to make it stolen property. The criminal intent in the acts of the other accused who are the employees of accused Nos. 1, 2, 4 & 13 out of which some have been discharged or dead would have to be seen. The bank employees are no more and consequently the charge against them of criminal breach of trust by a public servant would not survive for consideration.
5. Upon such paraphrasing and precising the verbose, numerous and voluminous charges the following points of determination arise;
1 Whether any of the accused committed any act of criminal conspiracy defined under Section 120-A and punishable under Section 120-B of the IPC, dishonestly received stolen property defined under Section 410 and punishable under Section 411 of the IPC, cheated and dishonestly induced delivery of any property to themselves or any other defined under Section 415 and punishable under Section 420 of the IPC, made any false document with intent to cause damage or injury to the public or any person causing such person to part with any property with intent to commit a fraud and thus committed forgery defined under Section 463 and punishable under Section 465 of the IPC, whether such forgery is of a valuable security and was made for the purpose of cheating or using as genuine a forged document knowing and having reason to believe that it was a forged document punishable under Sections 467, 468 and 471 respectively of the IPC.
The aforesaid points of determination are answered as follows:
(a) No case of criminal conspiracy is made out by the prosecution against any of the accused.
(b) No case of cheating, receiving stolen property or forgery is made out against accused Nos. 11, 15 & 16, the employees of accused Nos. 1, 2, 4 or
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(5) SPSC 2/95 (J)
(c) No case of cheating or committing forgery of any valuable security
for the purpose of cheating or using the forged documents as genuine is made out against accused No.5.
(d) Only the case of dishonestly receiving stolen property is made out against accused No.1.
(e) The case of cheating and dishonestly inducing delivery of property by BMC Bank to accused No.2 in transaction Nos. 1 and 3 to 17 and accused No. 4 in transaction No.2 is made out.
(f) No case of receiving stolen property, cheating or committing forgery of any valuable security for the purpose of cheating or using forged document as genuine as made out against accused No.4 in any of the transactions other than transaction No.2.
(g) No case of receiving stolen property, cheating or committing forgery of any valuable security for the purpose of or using any forged document as genuine is made out against accused No.13.
(h) The remaining accused are discharged or dead.
(i) The 17 transactions in this case would require to be enumerated columnwise to show the payments made by BMC Bank upon the contract note of the brokers' bill of accused Nos.1 & 13, the demand draft (DD) issued by BMC Bank along with their covering letter, the letter which is stated to be forged used instead by accused No.2 in all the transactions and accused No.4 in transaction No.2, the pay-in-slip of accused No.2 under which the amounts came to be credited to his personal current account being account No.8077 in BOI, credit and debit entries in their account showing the deposit of the amounts from BMC Bank and the transfer of those amounts, if at all, in full or in part, to any of the other accused and the repayment by such other accused to BMC Bank with certain interest thus:
::: Downloaded on - 27/01/2014 23:10:27 :::(6) SPSC 2/95 (J) TRANSACTIONS BETWEEN BMC BANK AND BOI FOR PURCHASE OF GOI SECURITIES BUT DONE BY BROKERS Transaction No. 1 Payment dt. 20.03.1991 Repayment dt. 02.04.1991 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Contract Memo or Pay Order Covering Forged Pay-in-slip Credit entry Cheques Debit Credit Contract Memo of Repayment Memo or Credit DD of Note of Bill of of MCB letter of letter of of Accused in BOI A/c. issued by entry in entry in Note of Confirmation contract Bill of voucher Bank of Broker Broker Bank MCB MCB No.2 of Accused Accused BOI A/c. account M. of broker Note broker of Bank Karad Accused Accused Bank Bank No.2 No.2 to of of other Motiram Accused No.2 of Karad No.13 No.1 Accused Accused broker Vakil No.10 No.2 Accused No.10 3 Cr 3.09 Cr 3.09 Cr 3.09 Cr 3.09 Cr 3.09 Cr 3.09 Cr - 3 Cr - - - - 3.12 Cr 3.12 Cr Ex.107 Ex.108 Ex.112 Ex.115 Ex.149 Ex.148 Ex.53 Ex.53 Ex.173 Ex.174 Transaction No. 2 1 2 3 4 5 Payment dt. 26.03.1991 6 7 8 9 10 11 12 Repayment dt. 25.06.1991 13 14 15 16 Contract Memo or Pay Order Covering Forged - Credit entry Cheques Debit Credit Contract Memo of Repayment Memo or Credit DD of Note of Bill of of MCB letter of letter of in Andhra issued by entry in entry in Note of Confirmation contract Bill of voucher Bank of Broker Broker Bank MCB MCB Bank A/c. Accused Andhra account M. of broker Note broker of Bank Karad Accused Accused Bank Bank of Accused No.4 to Bank A/c. of other Motiram Accused No.2 of Karad No.13 No.1 No.4 Accused of broker Vakil also No.10 Accused Accused letter of No.4 No.10 Accused No.10 Ex.98 5 Cr 5.23 Cr 5.23 Cr 5.23 Cr 5.23 Cr 5.23 Cr 4.70 Cr 4.70 Cr 4.70 Cr 5 Cr - - 5.52 Cr 5.52 Cr 5.52 Cr Ex.94 Ex.95 Ex.113 Ex.114 Ex.146 Ex.172 Ex.172 Ex.172 Ex.96 Ex.97 Ex.173 Ex.174 m ::: Downloaded on - 27/01/2014 23:10:27 ::: (7) SPSC 2/95 (J) Note : (1) Vouchers and cheques of Rs.76 lacs, Rs.3 crores and Rs.94 lacs issued by accused No.4 as the Director of Dhanraj Mills Pvt. Ltd. in favour of A. D. Narotam, accused No.10 Ex.172 colly. (2) Credit entry in account of A. D. Narotam and immediate debit entry for bank cheque issued both for Rs.4.70 crores. Ex.172 colly. (3) True copy of letter of A. D. Narotam accused No.10 dated 27.03.1991 directing Andhra Bank to issue cheques for Rs.3 crores, 94 lacs and 76 lacs Ex.143 tallying with his bank statement Ex.172.
Transaction No. 3Payment dt. 20.05.1991 Repayment dt. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Contract Memo or Pay Order Covering Forged Pay-in-slip Credit entry Cheques Debit Credit Contract Memo of Repayment Memo Credit DD of Note of Bill of of MCB letter of letter of of Accused in BOI A/c. issued by entry in entry in Note of Confirmation contract or Bill voucher Bank of Broker Broker Bank MCB MCB No.2 of Accused Accused BOI A/c. account M. of broker Note of of Bank Karad Accused Accused Bank Bank No.2 No.2 to of of other Motiram Accused No.2 broker of Karad No.13 No.1 Accused Accused broker Vakil Nos. 4 & No.2 Accused 10 Nos.4 & 10 10 Cr 10.14 Cr 10.10 Cr 10.10 Cr -- 10.10 Cr 10.10 Cr 9.10 Cr 9.10 Cr -- - - - - -- -- Ex.99 Ex.100 Ex.65 & Ex.76 & Ex.13 & Ex.53 (1) & Ex.15 Ex.53 (2) 3.55 L 3.55 L ig 3.55 L 3.55 L Ex.55 Ex.75 Ex.14 Transaction No. 4 Payment dt. 01.07.1991 Repayment dt. 06.08.1991 10 Cr & 10.06 Cr 10.06 Cr 10.06 Cr 10.06 Cr 10.06 Cr 10.06 Cr 10.06 Cr 10.06 Cr 10.06 Cr - - - - -- 10.26 Cr 5 Cr & -- Ex.54 & Ex.77 & Ex.193 & Ex.16 & Ex.53 & Ex.19 & Ex.19 & & 5.03 Cr Ex.174 & Ex.103 Ex.104 5.03 Cr 5.03 Cr 5.03 Cr 5.03 Cr 5.03 Cr 5.03 Cr 5.03 Cr 12.93 Cr Ex.56 Ex.78 Ex.193 Ex.17 Ex.53 Ex.18 Ex.53 Ex.174 m ::: Downloaded on - 27/01/2014 23:10:27 ::: (8) SPSC 2/95 (J) Transaction No. 5 Payment dt. 02.08.1991 Repayment NIL 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Contract Memo or Pay Order Covering Forged Pay-in-slip Credit entry Cheques Debit Credit Contract Memo of Repayment Memo Credit DD of Note of Bill of of MCB letter of letter of of Accused in BOI A/c. issued by entry in entry in Note of Confirmation contract or Bill of voucher Bank of Broker Broker Bank MCB MCB No.2 of Accused Accused BOI A/c. account Accused of broker Note of broker of Bank Karad Accused Accused Bank Bank No.2 No.2 to of of other No.2 Accused No.1 broker of Accused of Karad No.1 No.1 Accused Accused broker Accused No.1 No. 5 No.2 Accused No.1 No. 5 5 Cr 5.18 Cr 5.18 Cr 5.18 Cr -- 5.18 Cr 5.18 Cr 5 Cr 5 Cr 5 Cr 5 Cr 5 Cr - - -- -- Ex.122 Ex.123 Ex.116 Ex.117 X-48 Ex.53 Ex.166 Ex.53 Ex.215 Ex.167 Ex.134 admitted document Transaction No. 6 Payment dt. 08.08.1991 Repayment dt. 10.09.1991 10 Cr 10.39 Cr 10.39 Cr 10.39 Cr 10.39 Cr 10.39 Cr 10.39 Cr -- -- -- -- -- - - 10.58 Cr 10.58 Cr Ex.125 Ex.126 Ex.57 Ex.79 Ex.190 Ex.24 Ex.53 Ex.173 Ex.174 Transaction No. 7 Payment dt. 12.08.1991 Repayment dt. 17.09.1991 3 Cr 3.12 Cr 3.12 Cr 3.12 Cr 3.12 Cr 3.12 Cr 3.12 Cr 1.5 Cr 3.12 Cr Ex.215 3 Cr 3 Cr -- -- 3.18 Cr 3.18 Cr Ex.129 Ex.133 Ex.66 Ex.80 Ex.190 Ex.20 Ex.53 Ex.22, Ex.53 Ex.168 Ex.134 Ex.170 Ex.171 1.5 Cr Ex.23 & 12.17 L Ex.21 m ::: Downloaded on - 27/01/2014 23:10:27 ::: (9) SPSC 2/95 (J) Transaction No. 8 Payment dt. 19.08.1991 Repayment NIL 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Contract Memo or Pay Order Covering Forged Pay-in-slip Credit entry Cheques Debit Credit Contract Memo of Repayment Memo Credit DD of Note of Bill of of MCB letter of letter of of Accused in BOI A/c. issued by entry in entry in Note of Confirmation contract or Bill of voucher Bank of Broker Broker Bank MCB MCB No.2 of Accused Accused BOI A/c. account Accused of broker Note of broker of Bank Karad Accused Accused Bank Bank No.2 No.2 to of of other No.2 Accused No.1 broker of Accused of Karad No.1 No.1 Accused Accused broker Accused No.1 No. 5 No.2 Accused No.1 No. 5 - - 5.10 Cr 5.10 Cr 5.10 Cr 5.10 Cr 5.10 Cr 3.50 Cr 3.50 Cr 3.50 Cr 5 Cr 5 Cr 5.10 Cr -- -- -- Ex.58 Ex.81 Ex.190 Ex.25 Ex.53 Ex.26 Ex.53 Ex.215 Ex.168 Ex.134 Ex.131 Transaction No. 9 Payment dt. 18.09.1991 Repayment dt. 22.10.1991 10 Cr. Ex.129 10.30 Cr Ex.133 10.30 Cr Ex.59 10.30 Cr 10.30 Cr Ex.82 Ex.190 ig 10.30 Cr Ex.27 10.30 Cr Ex.53 4 Cr Ex.31 4 Cr 10.30 Cr 10.30 Cr Ex.53 Ex.215 -- 10 Cr Ex.129 -- -- 10.49 Cr Ex.189 - Ex.28 1 Cr Ex.29 30.98 L Ex.30 Transaction No. 10 Payment dt. 4.11.1991 Repayment dt. 28.12.1991 10 Cr 10.45 Cr 10.45 Cr 10.45 Cr 10.45 Cr 10.45 Cr 10 Cr 10 Cr 10 Cr 10 Cr 10 Cr Ex. 10 Cr Ex. 10.78 10.78 Cr Ex.128 Ex.133 Ex.67 Ex.83 Ex.32 Ex.53 Ex.33 Ex.53 Ex.215 Ex. 168 134 128 Cr Ex. Ex. 170 (20) (21) 133 m ::: Downloaded on - 27/01/2014 23:10:27 ::: (10) SPSC 2/95 (J) Transaction No. 11 Payment dt. 08.11.1991 Repayment NIL 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Contract Memo or Pay Order Covering Forged Pay-in-slip Credit entry Cheques Debit Credit Contract Memo of Repayment Memo Credit DD of Note of Bill of of MCB letter of letter of of Accused in BOI A/c. issued by entry in entry in Note of Confirmation contract or Bill of voucher Bank of Broker Broker Bank MCB MCB No.2 of Accused Accused BOI A/c. account Accused of broker Note of broker of Bank Karad Accused Accused Bank Bank No.2 No.2 to of of other No.2 Accused No.1 broker of Accused of Karad No.1 No.1 Accused Accused broker Accused No.1 No. 5 No.2 Accused No.1 No. 5 5 Cr. 5.23 Cr 5.23 Cr 5.23 Cr 5.23 Cr 5.23 Cr 5.23 Cr 2 Cr 4 Cr 4 Cr 5 Cr 5 Cr 5 Cr 5.35 Cr -- -- Ex.128 Ex.133 Ex.68 Ex.84 Ex.190 Ex.34 Ex.53 Ex.35 Ex.53 Ex.215 Ex.168 Ex.134 Ex.128 Ex.133 1 Cr Ex.36 1 Cr Ex.37 Transaction No.12 Payment dt. 03.01.1992 Repayment dt. 17.02.1992 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Contract Memo or Pay Order Covering Forged Pay-in-slip Credit entry Cheques Debit Credit Contract Memo of Repayment Memo or Credit DD of Note of Bill of of MCB Letter of letter of of Accused in BOI A/c. issued by entry in entry in note of confirmation contract bill of voucher Bank of Broker Broker Bank MCB MCB No.2 of Accused Accused BOI A/c. account Accused of broker note of broker of Bank Karad Accused Accused Bank Bank No.2 No.2 to of of other No.2 Accused No.1 broker of Accused of Karad No.1 No.1 Accused Accused broker Accused No.1 No.5 No.2 Accused No.1 No.5 10 Cr 10.24 Cr 10.24 Cr 10.24 Cr 10.24 10.24 Cr 10.24 Cr 10.24 Cr 10.24 Cr 10.24 Cr 10 Cr 10 Cr 10 Cr. 10.49 Cr 10.49 Cr 10.49 Cr Ex. 128 Ex.133 Ex. 60 Ex.85 Cr. Ex. 38 Ex.53 Ex. 39 Ex. 53 Ex. 215 Ex.168 Ex. 134 Ex. 130 Ex. 133 Ex. 173 Ex.174 Ex. 190 (26) (27) m ::: Downloaded on - 27/01/2014 23:10:27 ::: (11) SPSC 2/95 (J) Transaction No.13 Payment dt. 08.01.1992 Repayment dt. 24.02.1992 & 26.02.1992 Contract Memo or Pay Order Covering Forged Pay-in-slip Credit entry Cheques Debit Credit Contract Memo of Repayment Memo or Credit DD of Note of Bill of of MCB letter of letter of of Accused in BOI A/c. issued by entry in entry in Note of Confirmation contract Bill of voucher Bank of Broker Broker Bank MCB MCB No.2 of Accused Accused BOI A/c. account Accused of broker Note of broker of Bank Karad Accused Accused Bank Bank No.2 No.2 to of of other No.2 Accused No.1 broker of Accused of Karad No.1 No.1 Accused Accused broker Accused No.1 No. 5 No.2 Accused No.1 No. 5 5 Cr Ex. 5.07 Cr 5.07 Cr 5.07 Cr 5.07 Cr. 5.07 Cr 5.07 Cr 5.07 Cr 5.07 Cr 5.07 Cr 5 Cr 5 Cr -- -- 1.5 Cr & 1.5 Cr & 128 Ex.132 Ex. 62 Ex.86 Ex. 190 Ex. 40 Ex.53 Ex. 41 Ex. 53 Ex. 215 Ex.168 Ex 134 8.35 Cr 8.35 Cr (28) (29) Ex. 170B Ex.171A Transaction No. 14 Payment dt. 13.01.1992 Repayment dt. 24.03.1992 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Contract Memo or Pay Order Covering Forged Pay-in-slip Credit entry Cheques Debit Credit Contract Memo of Repayment Memo Letter dt. DD of Note of Bill of of MCB letter of letter of of Accused in BOI A/c. issued by entry in entry in Note of Confirmation contract or Bill of 22.10.91 Bank of Broker Broker Bank MCB MCB No.2 of Accused Accused BOI account Accused of broker Note of broker of Karad Accused Accused Bank Bank No.2 No.2 to A/c. of of other No.2 Accused No.1 broker of Accused Accused No.1 No.1 Accused Accused broker Accused No.1 No.5 No. 5 No.2 Accused No.1 No. 5 3 Cr. 3.05 Cr 3.05 Cr 3.05 Cr 3.05 Cr 3.05 Cr 3.05 Cr 3.05 Cr 3.05 Cr 3.05 Cr 3 Cr 3 Cr -- -- -- 13.79 Cr Ex.129 Ex.133 Ex.87 Ex.88 Ex.192 Ex.42 Ex.53 Ex.43 Ex.53 Ex.215 Ex.168 Ex.134 Ex.179 m ::: Downloaded on - 27/01/2014 23:10:27 ::: (12) SPSC 2/95 (J) Transaction No. 15 Payment dt. 12.02.1992 Repayment NIL 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Contract Memo or Pay Order Covering Forged Pay-in-slip Credit entry Cheques Debit Credit Contract Memo of Repayment Memo Letter dt. DD of Note of Bill of of MCB letter of letter of of Accused in BOI A/c. issued by entry in entry in Note of Confirmation contract or Bill of 22.10.91 Bank of Broker Broker Bank MCB MCB No.2 of Accused Accused No.2 BOI account Accused of broker Note of broker of Karad Accused Accused Bank Bank No.2 to Accused A/c. of of No.2 Accused broker of Accused Accused No.1 No.1 No.14 & Accused Kanil- No.1 Accused No.1 No.5 Kanilworth No.2 worth No.1 Pvt. Ltd. of Pvt. Accused No.4 Ltd. of Accuse d No.4 4.5 Cr. 4.62 Cr 4.62 Cr 4.62 Cr 4.62 Cr 4.62 Cr 4.62 Cr 2 Cr Ex.45 4.02 Cr 1.25 Cr 4.5 Cr 4.5 Cr -- -- -- -- Ex.129 Ex.133 Ex.63 Ex.89 Ex.191 Ex.45 Ex.53 50 L Ex.46 Ex.53 Ex.214 Ex.168 Ex.134 27 L Ex.47 1.25 CrEx.48 Transaction No. 16 Payment dt. 22.10.1991 Repayment NIL 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Contract Memo or Pay Order Covering Forged Pay-in-slip Credit entry Cheques Debit Credit Contract Memo of Repayment Memo or Letter dt. DD of Note of Bill of of MCB Letter of letter of of Accused in BOI A/c. issued by entry in entry in note of confirmation contract bill of 22.10.91 Bank of Broker Broker Bank MCB MCB No.2 of Accused Accused BOI A/c. account Accused of broker note of broker of Karad Accused Accused Bank Bank No.2 No.2 to of of other No.2 Accused No.1 broker of Accused Accused No.1 No.1 Accused Accused broker Accused No.1 No.5 No.5 No.2 Accused No.1 No.5 10.2 Cr. 10.49 Cr 10.49 Cr -- 10.49 Cr 10.49 Cr 10.49 Cr 10.49 Cr 10.49 Cr -- -- -- -- -- -- -- Ex.129 Ex.133 Ex.70 Ex.191 Ex.49 Ex.53 Ex.50 Ex.53 m ::: Downloaded on - 27/01/2014 23:10:27 ::: (13) SPSC 2/95 (J) Transaction No. 17 Payment dt. 08.04.1992 Repayment dt.05.05.1992 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Contract Memo or Pay Order Covering Forged Pay-in-slip Credit entry Cheques Debit Credit Contract Memo of Repayment Memo or Letter dt. DD of Note of Bill of of MCB Letter of letter of of Accused in BOI A/c. issued by entry in entry in note of confirmation contract bill of 22.10.91 Bank of Broker Broker Bank MCB MCB No.2 of Accused Accused BOI A/c. account Accused of broker note of broker of Karad Accused Accused Bank Bank No.2 No.2 to of of other No.2 Accused No.1 broker of Accused Accused No.1 No.1 Accused Accused broker Accused No.1 No.5 No.5 No.2 Accused No.1 No.5 14 Cr. 14.06 Cr 14.06 Cr -- 14.06 Cr 14.06 Cr 14.06 Cr 11.06 Cr 11.06 Cr 11.06 Cr -- 14 Cr -- 14.28 Cr 14.25 Cr 14.25 Cr Ex.129 Ex.131 Ex.71 Ex.191 Ex.51 Ex.53 Ex.52 Ex.53 Ex.215 Ex.129 Ex.133 Ex.173 Ex.174 m ::: Downloaded on - 27/01/2014 23:10:27 ::: (14) SPSC 2/95 (J)
6. The transactions have begun from 20.03.1991 and may be enumerated thus:
Transaction No.1 :
The first transaction involved Rs. 3 Cr. required to be invested by Bombay Mercantile Co-op. Bank (BMC Bank) with Bank of India (BOI) as counter-party (inter bank transaction). The broker's contract note is for Rs.3 Cr. The broker's bill including interest is for Rs.9,48,750/-. Hence the total amount of the transaction is Rs.3.09 Cr. The BMC bank issued a DD in favour of BOI on 20.03.1991 for Rs.3.09 Cr. along with its covering letter of that date for that amount addressed to the Manager, BOI for purchase of 11.5% Government of India loan of face value of Rs.3 Cr. through its broker with a request to BOI to issue Subsidiary General Ledger (SGL) form. That letter is stated to have been replaced by a forged letter favouring accused No.2 instead of BOI also dated 20.03.1991. Accused No.2 deposited the amount of the DD of Rs.3.09 Cr. issued in favour of BOI in his own personal current Account No. 8077 on 20.03.1991. His bank account shows a credit of Rs.3.09 Cr. on 20.03.1991.
Accused No.10 (since deceased) is shown to have issued a voucher upon Bank of Karad Ltd. for issuing a DD in favour of BMC Bank debiting his bank Account No.201 on 02.04.1991. Bank of Karad has issued a DD in favour of BMC Bank Ltd. for Rs.3.12 Cr. The debit entry is reflected in the account of accused No.10.
Hence Rs.3.12 Cr. was returned to BMC Bank on 02.04.1991 upon Rs.3.09 Cr of BMC Bank taken on 20.03.1991 after 12 days in which period accused No.2 utilized the said amount appropriated by him to his bank account.
Transaction No.2 :
::: Downloaded on - 27/01/2014 23:10:27 :::(15) SPSC 2/95 (J) In the second transaction 5 Cr. were to be invested by BMC Bank with Andhra Bank (inter-bank transaction) on 26.03.1991. The broker's contract note is for Rs.5 Cr. The broker's bill includes interest of Rs.23,42,361/-. The BMC Bank issued a DD upon Andhra Bank, the inter-
bank, BOI for Rs.5.23 Cr. along with its covering letter addressed to the Manager of Andhra Bank for purchase of 11.5% Government of India loan through its broker. That letter is stated to have been replaced by a forged letter also dated 26.03.1991 for crediting the DD in the account of Dhanraj Mills Pvt. Ltd. of accused No.4. The amount of Rs.5.23 Cr. has been credited to the bank account of accused No.4 in Andhra Bank on that day. Immediately thereafter accused No.4 as the Director of Dhanraj Mills Pvt.
Ltd. has issued 3 cheques for Rs.76 L, 94 L & 3 Cr. totalling to Rs.4.70 Cr. There are 3 debit entries showing the cheque numbers admittedly issued by accused No.4 in favour of A. D. Narotam accused No.10. Interestingly the admitted statement of account of the month of March, 1991 relied upon by accused No.4 and got produced by consent at Exhibit 172 colly shows only Rs.1.52 L in his bank statement prior to the credit of Rs.5.23 Cr. and after debit of Rs.4.70 Cr. shows a credit of Rs.54.95 L which has remained in his account. The corresponding documents for showing the credit in the account of accused No.10 (deceased) are copies of Andhra Bank pay-in-slip and debit voucher of Rs.4.70 Cr. also marked Exhibit 172 colly. The statement of account of accused No.10 shows a credit of Rs.4.70 Cr. and thereafter an immediate debit of Rs.4.70 Cr. for bank cheque issued which is also part of Exhibit 172 colly marked by consent. Corresponding to this entry is the letter of A. D. Narotam dated 27.03.1991 addressed to Andhra Bank, the true copy of which has been given by Andhra Bank to the Investigating Officer showing the directions for favouring his account with the enclosed cheques for Rs.76 L, Rs.94 L & Rs.3 Cr. totalling to Rs.4.70 Cr. marked Exhibit 143 along with pay-in-slip ::: Downloaded on - 27/01/2014 23:10:27 ::: (16) SPSC 2/95 (J) of Rs.4.70 Cr., the true copy of which is marked Exhibit 144. The aforesaid documents represent the payment transaction No.2 dated 26.03.1991.
The repayment on 25.06.1991 after 3 months is of Rs.5.52 cr. This is represented by the broker's contract note of Rs.5 Cr. along with broker's bill showing interest of Rs.35,13,806/- totalling to Rs.5.52 Cr. This correspondence with the letter of accused No.10 (deceased) directing his bank being Bank of Karad Ltd., to issue banker's cheque in favour of BMC Bank for Rs.5.52 Cr. is represented by the bank voucher and followed by the DD issued by Bank of Karad Ltd. in favour of BMC Bank for Rs.5.52 Cr.
Hence the initial investment of BMC Bank of Rs.5 Cr. was to be invested in Andhra Bank in which accused No.4 admittedly had an account. Rs.5.23 Cr. came to be credited to the account of his company Dhanraj Mills Pvt. Ltd. from there Rs.4.70 Cr. has been forwarded to accused No.2 making a clear profit of Rs.51.89 L by accused No.4. The ultimate repayment is for additional Rs.52.13 L after 3 months.
In this inter-bank transaction accused No.4 has thus ultimately benefited to the extent of utilisation of the monies by its appropriation for 3 months.
Transaction No.3 :
For the investment of BMC Bank with BOI in Government bonds of Rs.10 Cr., its broker's contract note was issued on 20.05.1991 with the interest of Rs.14,37,500/-. The bill was issued for Rs.10.14 Cr. Two DDs were issued by BMC Bank for Rs.10.10 Cr. and Rs.3.55 L accompanied by two covering letters of the same date for those amounts for investment in 11.5% Government loan. These amounts have been credited not to BOI directly but to the personal current account No. 8077 of accused No.2.
There is a credit entry in his bank statement for these amounts followed by ::: Downloaded on - 27/01/2014 23:10:27 ::: (17) SPSC 2/95 (J) a debit entry of Rs.9.10 Cr. upon issue of cheque of Rs.9.10 Cr. by accused No.2 in favour of Dhanraj Mills Pvt. Ltd of accused No.4. This shows the receipt of Rs.9.10 Cr. by accused No.4 and a net profit of Rs.1.03 Cr. made by accused No.2 in the absence of any repayment being shown by the prosecution or by accused No.2 or 4. (One debit entry of Rs.9 Cr. is seen immediately after the credit entry in the account of Dhanjaj Mills Pvt. Ltd. X-50. However, neither is the document X-50 admitted by accused No.4, nor is the entry explained by him.) Transaction No.4 :
This transaction shows two investments of Rs.10 Cr & Rs.5 Cr of BMC Bank in BOI (inter-bank transaction) made on 01.07.1991. The contract note of the broker dated 01.07.1991 is for Rs.10 Cr. and Rs.5 Cr.
The broker's bill for the transaction of Rs.10 Cr. includes interest of Rs.6,38,888/-. The broker's bill for the other transaction is not produced by the prosecution. The BMC Bank has made out two demand drafts for Rs.10.06 Cr. and Rs.5.03 Cr. in favour of BOI for purchase of 11.5% GOI loan sent under two separate letters and requested BOI to send it the necessary SGL form along with contract papers. The letters are stated to have been replaced by two forged letters also dated 01.07.1991 for crediting the amount of Rs.10.06 Cr and Rs.5.03 Cr in the account of accused No.2. Accused No.2 got deposited the said two amounts in his personal current account No. 8077 on that day itself and withdrew both the amounts on that day itself under two cheques, one made out in the name of Dhanraj Mills Pvt. Ltd., the company of accused No.4 and one in the name of accused No.10 (deceased). His bank account shows the debits and credits on the same day.
There are no documents showing repayment except two DDs of Bank of Karad dated 06.08.1991 in favour of BMC Bank for Rs.10.26 Cr. and ::: Downloaded on - 27/01/2014 23:10:27 ::: (18) SPSC 2/95 (J) 12.93 Cr. Both these accused have an account in Bank of Karad. Though the credit vouchers or the broker's documents relating to the repayment are not produced in respect of this transaction, the debit entry manifests Rs.10.06 Cr. having remained in the account of accused No.4 from 01.07.1991 to 06.08.1991 after which Rs.10.26 are returned to BMC Bank.
The amount of Rs.12.93 Cr shown to have been sent under DD of Bank of Karad cannot be accepted to be the amount debited from the account of accused No.10 (deceased) in respect of transaction showing receipt of Rs.5.03 Cr within a period of 36 days as claimed by the prosecution. The investment register of BMC Bank, Exhibit 90 shows completely different amounts returned and shall be dealt with presently.
Transaction No.5 :
This transaction is for investment of Rs.5 Cr made by BMC Bank in BOI (inter-bank transaction). The contract note of the broker accused No.1 dated 02.08.1991 is for Rs.5 Cr. The broker's bill for the transaction of Rs.5 Cr includes interest Rs. 18,68,750/-. The BMC Bank has sent a demand draft for Rs.5.18 Cr along with its covering letter for that amount for purchase of 11.5% GOI loan favouring BOI and requested the necessary SGL forms along with contract papers. Accused No.2 has got deposited Rs.5.18 Cr. in his personal current account with BOI No.8077 on 02.08.1991 itself. His bank account shows the credit of Rs.5.18 Cr. On that day accused No.2 has issued a cheque for Rs.5 Cr. to accused No.5.
The bank account of accused No.2 shows the said debit of that date.
This amount has not been shown to be repaid to BMC Bank by any accused. Only a memo of confirmation of accused No.1 and the contract note of accused No.2 both dated 02.08.1991 are produced ::: Downloaded on - 27/01/2014 23:10:27 ::: (19) SPSC 2/95 (J) showing the securities sold. However even after the sale the securities are not shown to be repaid.
Accused No.2 is shown to have made a profit of Rs.18,68,750/- on 02.08.1991 under this transaction. The principal amount on the loan also remains at large.
Transaction No.6 :
This transaction is for investment by BMC Bank in BOI (inter-bank transaction) on 08.08.1991. The contract note of the broker accused No.1 dated 08.08.1991 is for Rs.10 Cr. The broker's bill includes interest of Rs.39,29,166.67. The BMC Bank issued a DD of Rs.10.39 Cr along with its covering letter addressed to the Manager, BOI for Rs.10.39 Cr for purchase of 11.5% GOI loan through its broker accused No.1 and requested the necessary SGL forms. That letter is stated to be replaced by a forged letter favouring by accused No.2 instead of BOI also dated 08.08.1991. Accused No.2 got deposited the said DD in his personal current account No.8077 on that date itself. His bank account shows a credit of Rs.10.39 Cr on 08.08.1991.
The cheque issued by accused No.2 in favour of accused No.5 of any other accused is not produced. However his bank account shows a debit of Rs. 8.89 Cr in the account of accused No.2 on 08.08.1991 itself. It is not shown and not known to the bank account of which accused this amount is credited. The credit is not shown in the account of accused No.5, Exhibit
215. The repayment is shown only by the credit voucher of the Bank of Karad Ltd. showing the application made by Excel & Co. of accused No.5 for debiting its account for Rs.10.58 Cr. on 10.09.1991 followed by the DD of bank for the said amount of the said date. Consequently out of Rs.10.39 Cr of BMC Bank credited to the bank account of accused No.2 ::: Downloaded on - 27/01/2014 23:10:27 ::: (20) SPSC 2/95 (J) on 08.08.1991 Rs.1.5 Cr. remained with him credited to his account from 08.08.1991 to 10.09.1991 for a period of 33 days when Rs.10.58 Cr was returned to the BMC Bank.
Transaction No.7 :
In this inter-bank transaction between the BMC Bank and BOI dated 12.08.1991 accused No.1 issued a contract note for Rs.3 Cr. His bill (broker's bill) includes interest of Rs.12,17,083.33. The BMC Bank issued a DD for Rs.3.12 Cr along with its covering letter addressed to the Manager, BOI for Rs.3.12 Cr for purchase of 11.5% GOI loan through its broker accused No.1 and requested SGL form. That letter is stated to be replaced by a forged letter favouring accused No.2 instead of BOI also dated 12.08.1991. Accused No.2 got deposited the DD in his personal current account No.8077 on that date itself. His bank account shows the credit of Rs.3.12 Cr on 12.08.1991. Accused No.2 issued three cheques for Rs.1.5 Cr, 1.5 Cr and 12.17 L on 12.08.1991 itself in favour of accused No.5. His account is debited by the said three amounts on that date. The account of accused No.5 has been credited for a total amount of Rs.3.12 Cr upon the aforesaid three cheques.
On the same day accused No.2 issued a credit note in favour of accused No.5 for Rs.3 Cr. representing the sale of those securities. On that date itself accused No.1 issued a memo of confirmation upon accused No.2 for Rs.3 Cr. representing the sale of those securities.
The repayment is made by accused No.5 from his bank account under the credit voucher of the Bank of Karad Ltd. for debiting his account with the said bank in favour of BMC Bank for Rs.3.18 Cr. followed by a DD of the Bank of Karad Ltd. of that amount debiting the account of accused No.5.
Hence Rs.3.12 Cr. given by accused No.2 to accused No.5 on ::: Downloaded on - 27/01/2014 23:10:27 ::: (21) SPSC 2/95 (J) 12.08.1991 remained with accused No.5 until 17.09.1991 for the period of 36 days after which approximately Rs.4 L additionally came to be paid by accused No.5 to the BMC Bank.
Transaction No.8 :
This transaction is also shown to be inter-bank loan between BMC Bank and BOI dated 19.08.1991. No contract note or broker's bill is produced. The BMC Bank has issued its own DD in favour of BOI for Rs.5.10 Cr. along with its covering letter for that amount addressed to the Manager, BOI for purchase of 11.5% GOI loan through its broker accused No.1 and requested SGL form. That letter is stated to be replaced by a forged letter in favour of accused No.2 instead of BOI also dated 19.08.1991. Accused No.2 got deposited the DD in his personal current account No. 8077 on that date itself. His bank account shows the credit of Rs.5.10 Cr. on 19.08.1991. Accused No.2 has issued one cheque for Rs.3.5 Cr. in favour of accused No.5 on 19.08.1991. His account is debited by the said amount. The account of accused No.5 is credited by that amount.
On the very next day accused No.2 has issued a credit note in favour of accused No.5 for Rs.5 Cr representing the sale of those securities. On that date itself accused No.1 issued a memo of confirmation upon accused No.2 for Rs.5 Cr representing the sale of those securities. The bill of accused No.1 includes interest of Rs.1,08,811.11. The amount though shown in the credit note and the confirmation memo as securities sold is not shown to be repaid to the bank. Consequently out of Rs.5.10 Cr of BMC Bank credited to the account of accused No.2 Rs.1.6 Cr remained with him.
Transaction No.9 :
This transaction is for investment of Rs.10 Cr by BMC Bank with BOI ::: Downloaded on - 27/01/2014 23:10:27 ::: (22) SPSC 2/95 (J) dated 18.09.1991. The contract note of broker accused No.1 is issued on 18.09.1991 for Rs.10 Cr. The broker's bill includes interest of Rs.30,98,611.11. The BMC Bank has issued its own DD in favour of BOI for Rs.10.30 Cr. along with its covering letter for that day addressed to the Manager, BOI for purchase of 11.5% GOI loan through its broker accused No.1 and requested SGL forms. That letter is stated to be replaced by a forged letter in favour of accused No.2 instead BOI also dated 18.09.1991.
Accused No.2 got deposited the said DD in his personal current account No. 8077 on that date itself. His bank account was credited for Rs.10.30 Cr. on 18.09.1991. Accused No.2 has issued cheques for Rs.4 Cr., Rs.4 Cr., Re.1 Cr. and Rs.30,98,611.11 in favour of accused No.5 on 18.09.1991 and 19.09.1991. The account of accused No.2 is debited by the said amounts. The account of accused No.5 is similarly credited by those amounts.
The broker accused No.1 has issued his contract note dated 22.10.1991 for Rs.10 Cr. in favour of BMC Bank representing sale of those securities. On that date itself accused No.5 has issued a letter to his bank, the Bank of Karad Ltd. to issue banker's cheque for Rs.10.49 Cr. in favour of BMC Bank and enclosed his own cheque for that purpose.
This transaction shows the receipt by accused No.2 instead of BOI of Rs.10.30 Cr. Out of that accused No.2 has issued cheques of an aggregate amount of Rs.9.30 Cr. Rs. 1 Cr. is appropriated by accused No.2 to himself. Rs.9.30 Cr. is received by accused No.5 on 18.09.1991 and 19.09.1991. That amount remained with him until 22.10.1991 for 51/52 days when Rs.10.49 Cr. came to returned to the BMC Bank.
Transaction No.10 :
This is the transaction of BMC Bank for investment of Rs.10 Cr. in BOI (inter-bank transaction). Contract note of broker accused No.1 dated 04.11.1991 is for Rs.10 Cr. The broker's bill includes interest of ::: Downloaded on - 27/01/2014 23:10:27 ::: (23) SPSC 2/95 (J) Rs.45,68,055/-. The BMC Bank issued a DD for Rs.10.45 Cr. upon the inter-bank BOI for Rs.10.45 Cr. along with its covering letter addressed to the Manager of BOI for purchase of 11.5% GOI loan through its broker accused No.1. Accused No.2 is shown to have deposited the said DD of Rs.10.45 Cr. in his current bank account No. 8077 with BOI on 04.11.1991.
Immediately thereafter accused No.2 issued a cheque in favour of accused No.5 for Rs.10 Cr. on the same day. The first credit entry of Rs.10.45 Cr. is followed by a debit entry of Rs.10 Cr. in the account statement of accused No.2.
On the same day contract note is issued by accused No.2 in favour of accused No.5 for Rs.10 Cr. representing the sale of the securities. A memo of confirmation is issued by accused No.1 upon accused No.2 also on the same day for Rs.10 Cr. representing the sale of those securities.
The repayment is made on 28.12.1991 of Rs.10.78 Cr. This is represented by the contract note of accused No.1 dated 28.12.1991 along with his bill including interest of Rs.63,01,369/- totalling to Rs.10.78 Cr.
This repayment is made out of the account of accused No.5. This repayment is shown by the credit voucher of Bank of Karad dated 28.12.1991 for payment to BMC Bank issued under the DD of Bank of Karad debiting the account of accused No.5.
Hence for the initial investment of BMC Bank of Rs.10 Cr to be invested in BOI in which accused No.2 had an account, the amount of Rs.10.45 Cr. was credited to his personal account and only Rs.10 Cr. was issued to accused No.5 thus making a clear profit of Rs.45 L by accused No.2. The amount of Rs.10.45 Cr. came to be utilized by accused No.5 from 04.11.1991 until 28.12.1991 when Rs.10.78 Cr was returned to BMC Bank.
Transaction No.11 :
::: Downloaded on - 27/01/2014 23:10:27 :::(24) SPSC 2/95 (J) This transaction is also shown to be an inter-bank transaction between the BMC Bank and BOI dated 07.11.1991. The broker accused No.1 issued his contract note for Rs.5 Cr. on 07.01.1991. His bill includes interest of Rs.23,31,944.44. The BMC Bank issued a DD on 08.11.1991 for Rs.5.23 Cr. along with its covering letter addressed to the Manager, BOI for Rs.5.23 Cr. for issue of 11.5% GOI loan through its broker accused No.1 and requested SGL form. That letter is stated to be replaced by a forged letter favouring accused No.2 instead of BOI also dated 08.11.1991. Accused No.2 got deposited the said DD in his personal current account No. 8077 on 08.11.1991. His bank account shows the credit of Rs.5.23 Cr. on 08.11.1991. Accused No.2 issued three cheques for Rs.2 Cr., Rs.1 Cr. & Rs.1 Cr. on 08.11.1991 in favour of accused No.5. His account is debited by the said three amounts on that date. The account of accused No.5 has been credited for a total amount of Rs.4 Cr upon the aforesaid 3 cheques.
On 07.11.1991 itself, when accused No.1 the broker of the BMC Bank issued his contract note and even a day prior to the BMC Bank itself issuing its DD accused No.2 issued his contract note for Rs.5 Cr showing the sale of those securities on 07.11.1991 itself. Similarly the memo of confirmation of accused No.1 in favour of accused No.2 showing the sale of those securities is also issued on 07.11.1991 itself.
On 19.12.1991 a contract note is issued by the broker for Rs.5 Cr for those securities favouring the BMC Bank. His bill dated 19.12.1991 includes interest of Rs.30,08,904/-. However repayment to the BMC Bank is not shown. Rs.1.23 Cr. remained appropriated to accused No.2 in his bank account.
Transaction No.12 :
In this transaction of 03.01.1992 the BMC Bank was to invest Rs.10 Cr in BOI (inter-bank transaction). The contract note of the broker accused ::: Downloaded on - 27/01/2014 23:10:27 ::: (25) SPSC 2/95 (J) No.1 dated 03.01.1992 is for Rs.10 Cr. The broker's bill includes interest of Rs.24 L. BMC Bank issued a DD of Rs.10.24 Cr along with its covering letter addressed to the Manager, BOI for Rs.10.24 Cr for purchase of 12% GOI loan through its broker accused No.1. That letter is stated to be replaced by a forged letter favouring accused No.2 instead of BOI also dated 03.01.1992. Accused No.2 got deposited the said DD in his personal current bank account No. 8077 on that day itself. His bank account shows a credit of Rs.10.24 Cr on 03.01.1992. Accused No.2 issued a cheque of Rs.10.24 Cr in favour of accused No.5 on the same date. The first credit entry of Rs.10.24 Cr is followed by a debit entry of Rs.10.24 Cr in the account statement of accused No.2.
On the same day accused No.2 issued a credit note in favour of accused No.5 for Rs.10 Cr representing the sale of those securities. On that date itself accused No.1 issued a memo of confirmation upon accused No.2 for Rs.10 Cr representing the sale of those securities.
The repayment is made on 17.02.1992 of Rs.10.49 Cr. This is represented by the contract note of accused No.1 dated 17.02.1992 along with his bill including interest of Rs.39,16,515/- totalling to Rs.10.49 Cr. This repayment is made out of the account of accused No.5. This repayment is shown by the credit voucher of the Bank of Karad Ltd. by way of an application made by accused No.5 for debiting his account with Bank of Karad in favour of BMC Bank for Rs.10.49 Cr. followed by a DD of the Bank of Karad Ltd. of that amount debiting the account of accused No.5.
Hence for the initial investment of BMC Bank for Rs.10 Cr. to be invested in BOI, in which accused No.2 had an account, the amount of Rs.10.24 Cr. was credited to his personal account which was issued to accused No.5 and which was kept by accused No.5 in his account from 03.01.1992 until 17.02.1992 for a period of 45 days after which Rs.10.49 Cr. was returned by accused No.5 to BMC Bank. Accused No.2 is not ::: Downloaded on - 27/01/2014 23:10:27 ::: (26) SPSC 2/95 (J) shown to have made a profit under this transaction.
Transaction No.13 :
In this transaction the BMC Bank sought to invest Rs.5 Cr. with BOI (inter-bank transaction) on 08.01.1992. The contract note of the broker accused No.1 dated 08.01.1992 is for Rs.5.07 Cr. The broker's bill includes interest of Rs.12,83,333.33. The BMC Bank issued a DD for Rs.5.07 Cr. along with its covering letter addressed to the Manager, BOI for Rs.5.07 Cr. for purchase of 12% GOI loan through its broker accused No.1. That letter is stated to be replaced by a forged letter favouring accused No.2 instead of BOI also dated 08.01.1992. Accused No.2 got deposited the said DD in his personal current bank account No. 8077 on that day itself. His bank account shows a credit of Rs.5,07,83,333.33 on 08.01.1992. Accused No.2 issued a cheque for Rs.5,07,80,000/- in favour of accused No.5 on the same day leaving only Rs.3,333.33 in his account from the said transaction. The first credit entry of Rs.5,07,83,333.33 is followed by a debit entry of Rs.5,07,80,000 in the account statement of accused No.2.
On the same day accused No.2 issued a contract note in favour of accused No.5 for Rs.5 Cr representing the sale of those securities. On that date itself accused No.1 issued a memo of confirmation upon accused No.2 for Rs.5 Cr. representing the sale of those securities.
The repayment is stated to have been made on 24.02.1992 of Rs.1.5 Cr. and on 26.02.1992 of Rs.8.35 Cr. totalling to Rs.9.85 Cr. as per the case of the prosecution. This repayment is shown to be made out of the account of accused No.5. It is shown by two credit vouchers of Bank of Karad Ltd. by way of two applications made by accused No.5 for debiting his account with Bank of Karad in favour of BMC Bank for Rs.1.5 Cr. and Rs.8.35 Cr. totalling to Rs.9.85 Cr. followed by two DDs of Bank of Karad Ltd. also for Rs.1.5 Cr. dated 24.02.1992 and Rs.8.5 Cr. dated 26.02.1992 totalling to ::: Downloaded on - 27/01/2014 23:10:27 ::: (27) SPSC 2/95 (J) repaid amount of Rs.9.85 Cr. as reflected in the credit and debit entries in the bank account of accused No.5 as per the prosecution case.
Upon these documents it is seen that the initial investment of BMC Bank of Rs.5 Cr. sought to be made with interest of Rs.12,83,333.33 on 08.01.1992 was returned on 24.02.1992 and 26.02.1992 days with an accretion of Rs.4.85 Cr. This is rather unacceptable. Though the transaction of the purchase of 12% GOI loan by one bank from another for which the amount representing the loan as also the interest of the broker of the purchasing bank has been seen to be credited to the account of accused No.2 as per the forged letter and from which a large part of the amount has been transferred to the account of accused No.5, he is ultimately shown to have repaid the BMC Bank an almost double the amount.
Transaction No.14 :
This is also an inter-bank transaction between the BMC Bank and BOI dated 13.01.1992. The contract note of the broker accused No.1 is for Rs.3 Cr. issued on 13.01.1992. The broker's bill includes interest of Rs.8,20,000/-. The BMC Bank has issued its DD for Rs.3.05 Cr. on 13.01.1992 along with its covering letter for that amount addressed to the Manager, BOI for the purchase of 12% GOI loan through its broker defendant No.1 and requested SGL form. That letter is stated to be replaced by a forged letter in favour of accused No.2 instead of BOI also dated 13.01.1992. Accused No.2 got deposited the said DD in his personal current account No.8077 on that date itself. His bank account shows the credit entry of Rs.3.05 Cr. on 13.01.1992. Accused No.2 has issued one cheque for Rs.3.05 Cr. in favour of accused No.5. On 13.01.1992 itself his account is debited by the said amount. Account of accused No.5 is credited by that amount.::: Downloaded on - 27/01/2014 23:10:27 :::
(28) SPSC 2/95 (J) On that date itself accused No.2 has issued a credit note in favour of accused No.5 for Rs.3 Cr. representing the sale of those securities. On that date itself accused No.1 has issued a memo of confirmation upon accused No.2 for Rs.3 Cr. representing the sale of those securities. The bill of broker showing the interest charged by the broker accused No.1 is not produced.
However an amount of Rs.13.79 Cr. is stated to be the repayment of that amount to BMC Bank on 24.03.1992 by the DD issued by the Bank of Karad Ltd on behalf of accused No.5 debiting his account to that extent.
This amount remained with accused No.5 from 13.01.1992 until it was repaid on 24.03.1992 for the period of 71 days. However the fact that more than Rs.10 Cr is returned to BMC Bank stated to be in respect of this transaction under the DD dated 24.03.1992 cannot be accepted.
Transaction No.15 :
This transaction is also an inter-bank transaction between BMC Bank and BOI dated 12.02.1992. Contract note of the broker accused No.1 is issued on 12.02.1992 for Rs.4.5 Cr. The broker's bill includes interest of Rs.16,86,575/-. The BMC Bank has issued DD for Rs.4.62 Cr. on 12.02.1992 along with its covering letter on that date for that amount addressed to the Manager, BOI for purchase of 12% GOI loan and requested SGL form. That letter is replaced by a forged letter in favour of accused No.2 instead of BOI also dated 12.02.1992. Accused No.2 got deposited the said DD in his personal current account No. 8077 on that date itself. His bank account shows a credit entry of Rs. 4.62 Cr. on 12.02.1992. Accused No.2 has issued three cheques in favour of accused No. 14 (deceased) and one cheque in favour of Kenilworth Investments Pvt. Ltd. of accused No.4 all aggregating to Rs.4.02 Cr. leaving Rs.60 L ::: Downloaded on - 27/01/2014 23:10:28 ::: (29) SPSC 2/95 (J) appropriated in the account of accused No.2. The certified statement of account of Kenilworth Investments Pvt. Ltd. certified by its banker Allahabad Bank under the Banker's Book Evidence Act shows the deposits of Rs.1.25 Cr on 13.02.1992 which has been immediately withdrawn by two cheques for Rs.50 L and Rs.75 L on 14.02.1992 by the said company.
On the date of transaction itself accused No.2 had issued his contract note strangely upon accused No.5 for Rs.4.5 Cr showing the sale of those securities and accused No.1 has issued his memo of confirmation upon accused No.2 for Rs.4.5 Cr on that date. The amount is not shown to be repaid to the BMC bank.
Transaction No.16 :
This transaction is also inter-bank transaction between BMC Bank and BOI dated 17.02.1992. Broker accused No.1 issued his contract note for Rs.10.2 Cr on 17.02.1992. His bill includes interest of Rs.39,44,000/-. The BMC Bank issued a DD on 17.02.1992 for Rs.10.49 Cr. A letter stated to be forged favouring accused No.2 instead of BOI is also dated 17.02.1992 for Rs.10.49 Cr. Accused No. 2 got deposited the said DD in his personal current account No.8077 on 17.02.1992. His bank account shows a credit of Rs.10.49 Cr on 17.02.1992. Accused No.2 has issued his cheque for Rs.10.49 Cr in favour of accused No.5 on 17.02.1992 itself. His account is debited for Rs.10.49 Cr on that date. Account of accused No.5 has been credited for Rs.10.49 Cr on that date.
No repayment of this amount is shown.
Transaction No.17 :
This is also an inter-bank transaction between the BMC Bank and BOI dated 08.04.1992. The broker accused No.1 issued his contract note for Rs.14 Cr on 08.04.1992. His bill includes interest of Rs.6,31,944.44.::: Downloaded on - 27/01/2014 23:10:28 :::
(30) SPSC 2/95 (J) The BMC bank issued its DD on 08.04.1992 for Rs.14.06 Cr upon BOI representing the amount for the loan with interest of the broker. A forged letter is stated to have been issued favouring accused No.2 instead of BOI also dated 08.04.1992. Accused No.2 got deposited the said DD in his personal current account No.8077 on 08.04.1992. His bank account shows a credit of Rs.14.06 Cr on 08.04.1992. Accused No.2 issued a cheque for Rs.11.06 Cr upon accused No.5 on 08.04.1992 itself. His account is debited for Rs.11.06 Cr on that date. The account of accused No.5 has been credited for Rs.11.06 Cr on that date.
On 05.05.1992 accused No.1 on behalf of BMC Bank issued his contract note for Rs.14 Cr showing the sale of those securities. His bill issued along with his contract note includes interest of Rs.19,65,753 including an additional amount by way of interest on the amount of Rs.14 Cr itself aggregating to Rs.14.28 Cr on 05.05.1992.
Repayment is made by accused No.5 for Rs.14.25 Cr on 05.05.1992 by the bank voucher for that amount of that date in favour of BMC Bank showing the account of accused No.5 debited to that extent in the Bank of Karad Ltd. The said bank has issued its DD for Rs.14.25 Cr. upon the BMC Bank on 05.05.1992.
This transaction shows that accused No.2 credited Rs.14.06 Cr. to his account and issued a cheque for an amount less by 3 Cr. to accused No.5. Accused No.5 received 11.06 Cr. on 08.04.1992 and repaid Rs.14.25 Cr. to the BMC Bank on 05.05.1992, 27 days thereafter.
7. The details of these 17 transactions taken and read as a whole in a group of transactions in the statutory period are required to be marshalled to be appreciated. These are stated to be bogus transactions got executed by two broker's firms. The first four transactions are of the ::: Downloaded on - 27/01/2014 23:10:28 ::: (31) SPSC 2/95 (J) broker K. Motiram Vakil who is stated to be the father of accused No.13 and the sole proprietor of the firm of K. Motiram Vakil, share broker. The later 5th to the 17th transactions are of the sole proprietary concern of accused No.1.
8. Hence the 17 transactions in this case got initiated by the two brokers' firms M/s. K. Motiram Vakil, the partnership firm of the father of accused No.13 and BCD, the sole proprietary concern of accused No.1 must be viewed in respect of their bogus nature.
9. It would be pertinent to see the dates of the transactions to understand the frequency of the transactions. These are dated 20.03.1991, 26.03.1991, 20.05.1991 and 01.07.1991 of K. Motiram Vakil, the first being admitted and the last three being stated to have been forged and fabricated by someone removing the documents from his table in the stock exchange building which was open to all. These four transactions are followed by the 13 transactions of the firm of accused No.1, BCD through the constituted attorney of accused No.1 under the authority given in writing by accused No.1 under a Power of Attorney, Exhibit 121. These are of 02.08.1991, 08.08.1991, 12.08.1991, 19.08.1991, 18.09.1991, 04.11.1991, 07.11.1991, 03.01.1992, 08.01.1992, 13.01.1992, 12.02.1992, 17.02.1992 and 08.04.1992.
There are, therefore, continuous transactions in the aforesaid months.
10. The extent of the transactions has increased as much as their frequency. The four transactions of K. Motiram Vakil are in ascending order from Rs.3 Cr to Rs.5 Cr, 10 Cr and 15 Cr. The 13 transactions of accused No.1 BCD beginning from Rs.5 Cr and later of Rs.10 Cr, 3 Cr, 5 Cr, 10 Cr, 10 Cr, 5 Cr, 10 Cr, 5 Cr, 3 Cr, 4.5 Cr, 10.20 Cr and 14 Cr.
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11. On the first date of the transaction itself the brokerage is shown to have been charged by both the firms. It would be interesting to know the extent of the brokerage also. Needless to state that it increases with the increase in the value of the contract. Hence the brokerage shown to be of K. Motiram Vakil admittedly charged in the very first transaction being Rs.9,48,750/- has later increased to Rs.20,92,361/-, 14,37,750/- and then Rs.6,38,888/- which is for one of the two transactions in the same contract note, the other broker's bill not having been produced under transaction No.4. This would be the brokerage received by the brokers on the date of the transaction itself. This brokerage is calculated and shown paid for specified days prior to the date of the transaction as shall be seen from the register of BMC Bank, Exhibit 90 presently. The DD issued by BMC Bank upon BOI itself includes the brokerage to the above extent.
Similar brokerage shown to have been charged by accused No.1 under his contract notes would be material to see. The total brokerage would be Rs.18,68,750/-, 39,29,166/-, 12,17,083/-, 30,98,611/-, 45,68,055/-, 23,31,944/-, 24,00,000/-, 12,83,333/-, 8,20,000/-, 16,86,575/-, 39,44,000/- and 6,31,944/-. These amounts included in the DDs of BMC Bank would otherwise be the entitlement of accused No.1 as the broker on the date of the transactions themselves.
12. The interest of the two brokers in these transactions to the extent of the brokerage would be commensurate with the extent of the transactions that the broker either personally or through their employees in the firm, their partner or their constituted attorney, who as their agent in law, brokered.
13. This interest is seen to have been credited to the account of ::: Downloaded on - 27/01/2014 23:10:28 ::: (33) SPSC 2/95 (J) accused No.2 (and accused No.4 in transaction No.2) instead. The brokers would not have acted gratis had the transactions been genuine. They are not shown to have received the brokerage shown to have been charged by them under their respective broker's bills. The transactions were accordingly bogus.
14. Though these transactions initiated by these brokers were between the BMC Bank and the BOI, these were not the transactions that could have been entered into by them through such brokers as the BMC Bank did not have a Public Debt Office (PDO) Account with RBI. These are inter-bank transactions. Both the banks are governed by the circulars and resolutions of the Reserve Bank of India (RBI Guidelines). Banks, at the relevant time, were admittedly not having the complete authority to buy and sell the securities being GOI Bonds through brokers and on their own without Reserve Bank permission. The BMC Bank, therefore, sought SGL form from BOI in which it desired to invest its excess funds under its covering letters sending the DD for the total amount of the investment including the brokerage in the name of BOI (and in transaction No.2 in the name of Andhra Bank). These covering letters in the aforesaid 17 transactions bear respective dates of the transactions being Exhibits 115, 114, 75 @ 76, 77, 117, 79, 80, 81, 82, 83, 84, 85, 86, 88 & 89 respectively, the last two transactions showing no such letters. In each of these letters the BMC Bank has requested BOI to send the necessary contract papers along with SGL form. These are the SGL forms that never were. No transaction has shown the issue of SGL form.
::: Downloaded on - 27/01/2014 23:10:28 :::(34) SPSC 2/95 (J) All the transactions are reflected in the investment register of the BMC Bank Exhibit 90 thus:
1 2 3 4 5 6 7 8 9 10 11 Date of Amount Legal Interest Broker's Period of Date of Investment Date of Interest paid Difference of Pg transaction Rs. Amount Rs. interest interest return period in entry in to BMC Bank interest No. days investment register Transaction No.1 20/03/91 3 Cr @ 1,22,876.71 9,48,750 11/12/90 to 02/04/91 13 05/04/91 10,63,750 1,15,000 91 11.5% 20/03/91 Transaction No.2 26/03/91 5 Cr @ 14,33,561.64 20,92,311 15/11/90 to 25/06/91 91 27/06/91 35,13,806 14,21,445 92 11.5% 26/03/91 Transaction No.3 20/05/91 10 Cr @ 11,97,260.27 ig 14,37,500 Upto -- 38 27/06/91 26,19,460 11,81,960 92 11.5% 20/05/91 Transaction No.4 10 Cr @ 11,34,246.57 6,38,888.89 11/06/91 to 06/08/91 36 14/08/91 17,33,026.81 10,94,137.92 96 11.5% 01/07/91 01/07/91 5 Cr @ 6,93,150.68 3,19,444.44 11/06/91 to -- 44 14/08/91 8,50,747.62 5,31,303.18 96 11.5% 01/07/91 Transaction No.5 02/08/91 5 Cr @ 7,40,410.96 18,68,750 05/04/91 to -- 47 18/09/91 24,77,606.63 6,08,856.63 96 11.5% 02/08/91 m ::: Downloaded on - 27/01/2014 23:10:28 ::: (35) SPSC 2/95 (J) 1 2 3 4 5 6 7 8 9 10 11 Date of Amount Legal Interest Broker's Period of Date of Investment Date of Interest paid Difference of Pg transaction Rs. Amount Rs. interest interest return period in entry in to BMC Bank interest No. days investment register Transaction No.6 08/08/91 10 Cr @ 10,39,726.02 39,29,166.67 05/04/91 to 10/09/91 33 18/09/91 48,92,606.19 9,63,439.52 96 11.5% 08/08/91 Transaction No.7 12/08/91 3 Cr @ 3,40,273.97 12,17,083.33 05/04/91 to 17/09/91 36 18/09/91 15,33,661.32 3,16,577.99 96 11.5% 12/08/91 Transaction No.8 19/08/91 5 Cr @ 12,13,013.70 10,88,111.11 11/06/91 to -- 77 04/11/91 23,00,000 12,11,888.89 100 11.5% 19/08/91 Transaction No.9 18/09/91 10 Cr @ 10,71,232.87 30,98,611 11/06/91 to 22/10/91 34 04/11/91 41,90,410.96 10,91,799.96 100 11.5% 18/09/91 Transaction No.10 04/11/91 10 Cr @ 17,01,369.86 45,68,055.55 11/06/91 to 28/12/91 54 30/12/91 63,01,369.96 17,33,314.41 100 11.5% 04/11/91 m ::: Downloaded on - 27/01/2014 23:10:28 ::: (36) SPSC 2/95 (J) 1 2 3 4 5 6 7 8 9 10 11 Date of Amount Legal Interest Broker's Period of Date of Investment Date of Interest paid Difference of Pg transaction Rs. Amount Rs. interest interest return period in entry in to BMC Bank interest No. days investment register Transaction No.11 07/11/91 5 Cr @ 6,90,410.95 23,31,944.44 11/06/91 to 19/12/91 42 19/12/91 30,08,904 6,76,959.56 100 12% 07/11/91 Transaction No.12 03/01/92 10 Cr @ 14,79,452.05 24,00,000 21/10/91 to 17/02/92 45 20/02/92 39,16,515 15,16,515 100 12% 03/01/92 Transaction No.13 08/01/92 5 Cr @ 8,05,479.45 12,83,333.33 21/10/91 to 24/02/92 49 26/02/92 21,04,110 8,20,776.67 102 12% 08/01/92 Transaction No.14 13/01/92 3 Cr @ 7,00,273.97 8,20,000 21/10/91 to 24/03/92 71 27/03/92 15,30,000 7,10,000 102 12% 13/01/92 13 Cr [?] Transaction No.15 12/02/92 4.5 Cr @ 2,66,301.36 16,86,575 21/10/91 to - 18 28/02/92 18,93,699 2,07,124 102 12% 12/02/92 m ::: Downloaded on - 27/01/2014 23:10:28 ::: (37) SPSC 2/95 (J) 1 2 3 4 5 6 7 8 9 10 11 Date of Amount Legal Interest Broker's Period of Date of Investment Date of Interest paid Difference of Pg transaction Rs. Amount Rs. interest interest return period in entry in to BMC Bank interest No. days investment register Transaction No.16 17/02/92 10.2 Cr 13,07,835.61 39,44,000 21/10/91 to - 39 27/03/92 52,02,000 12,58,000 102 @ 12% 17/02/92 Transaction No.17 08/04/92 14 Cr @ 13,42,465.75 6,31,944.44 25/03/92 to 05/05/92 28 18/05/92 19,65,753 13,33,808.56 105 12.5% 08/04/92 Total Rs. 127.7 Cr 1,72,79,342.39 3,43,04,469.2 510,97,426.49 167,92,907.29 Broker's interest Transaction Nos.1 to 4 Rs. 54,36,894.33 Transaction Nos. 5 to 17 Rs. 2,88,67,574.87
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Rs. 3,43,04,469.2 m ::: Downloaded on - 27/01/2014 23:10:28 ::: (38) SPSC 2/95 (J) In a nutshell the statement reveals that upon an investment of Rs.127 Cr the BMC Bank would have earned legitimate interest of Rs.1.72 Cr had it invested and been allowed to invest under RBI guidelines in Govt. securities. Instead it earned interest of Rs.5.10 Cr. But having paid 3.43 Cr. by way of brokers' interest, it was left with net interest of Rs.1.67 Cr instead 1.72 Cr making a clear deficit of 5 L. One wonders why BMC Bank would ever go through with such transactions; a banker would have calculated the next loss well before. It is in this context that the criminal intent of the accused has to be weighed. Of course, the BMC Bank officers have been discharged or are dead. The main brokers remain for adjudication. The egregious extent of brokerage of Rs.3.43 Cr. so accounted for and shown to be paid as brokers' interest not actually paid into the accounts of accused Nos.1 & 13 by credits in their accounts but which instead went directly in the personal current bank account of accused No.2 in all but 1 transaction and into the account of accused No.4 in transaction No.2 must be considered upon the prosecution case of execution of 17 bogus transactions.
15. It is intriguing to note that the investment register of the BMC Bank produced as Exhibit 90 in evidence shows all the transactions in which interest has been paid exactly tallying with the interest charged by the two brokers in their bills.
(a) In transaction No.1 the broker's bill for Rs.9,48,750/- tallies with the entry of interest (Page 91 of investment register) paid on 05.04.1991 after the return of the amount is shown to be on 02.04.1991 of the precise amount of Rs.9,48,750/-.
(b) In transaction No.2 the broker's bill for Rs.20,92,361/- tallies with the entry of interest (page 92 of investment register) paid on 27.06.1991 after the return of the amount is shown to be on 25.06.1991 of the precise ::: Downloaded on - 27/01/2014 23:10:28 ::: (39) SPSC 2/95 (J) amount of Rs.20,92,361/-
Even the period for which the interest is charged from 11.11.1991 to 26.03.1991 is identical stated in the broker's bill and the investment register entry.
(c) In transaction No.3 the broker's bill for Rs.14,37,500/- tallies with the entry of interest (page 92 of investment register) paid on 27.06.1991 though repayment of this amount is not at all shown in the documents of the prosecution nor in any document produced by any of the accused brokers though it is much touted that the moneys are repaid as the fundamental and principal defence of the accused Nos.1, 2, 4 & 13.
(d) In transaction No.4 the broker's bill for Rs.6,38,888.89 tallies with the entry of interest (page 96 of investment register) paid on 14.08.1991 after the return of the amount is shown to be on 06.08.1991.
Even the period for which the interest is charged from 11.06.1991 to 01.07.1991 is identical stated in the broker's bill and the investment register entry.
(e) In transaction No.5 the broker's bill for Rs.18,68,750/- tallies with the entry of interest (page 96 of investment register) paid on 18.09.1991 though the return of this amount is not at all shown by the documents of the prosecution.
Even the period for which the interest is charged from 05.04.1991 to 02.08.1991 is identical stated in the broker's bill and the investment register entry.
(f) In transaction No.6 the broker's bill for Rs.39,29,166.67 tallies with the entry of interest (page 96 of the investment register) paid on 18.09.1991 after the return of this amount on 10.09.1991.
Even the period for which the interest is charged from 05.04.1991 to 08.08.1991 is identical stated in the broker's bill and the investment register entry.
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(g) In transaction No.7 the broker's bill for Rs.12,17,083.33 tallies with
the entry of interest (page 96 of investment register) paid on 18.09.1991 after the return of this amount on 17.09.1991.
Even the period for which the interest is charged from 05.04.1991 to 12.08.1991 is identical stated in the broker's bill and the investment register entry.
(h) In transaction No.8 the broker's bill for Rs.10,88,111.11 tallies with the entry of interest (page 100 of investment register) paid on 04.11.1991 though the return of this amount is not at all shown.
(i) In transaction No.9 the broker's bill for Rs.30,98,611.11 tallies with the entry of interest (page 100 of investment register) paid on 04.11.1991 after the repayment is shown to be made on 22.10.1991.
(j) In transaction No.10 the broker's bill for Rs.45,68,055.55 tallies with the entry of interest (page 100 of investment register) paid on 30.12.1991 after the return of this amount on 28.12.1991.
Even the period for which the interest is charged from 11.06.1991 to 04.11.1991 is identical stated in the broker's bill and the investment register entry.
(k) In transaction No.11 the broker's bill for Rs.23,31,944.44 tallies with the entry of interest (page 100 of investment register) paid on 19.12.1991. The repayment is not at all shown though reflected in the broker's contract note and bill dated 19.12.1991 under which Rs.30,08,904/- is paid and which is also reflected in the said entry.
(l) In transaction No.12 the broker's bill for Rs.24,00,000/- tallies with the entry of interest (page 100 of investment register) paid on 20.02.1992 after the return of this amount on 17.02.1992.
Even the period for which the interest is charged from 21.10.1991 to 03.01.1992 is identical stated in the broker's bill and the investment register entry.
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(m) In transaction No.13 the broker's bill for Rs.12,83,333.33 tallies with
the entry of interest (page 102 of investment register) paid on 26.02.1992 after the return of this amount on 26.02.1992 or 28.02.1992.
Even the period for which the interest is charged from 21.10.1991 to 08.01.1992 is identical stated in the broker's bill and the investment register entry.
(n) In transaction No.14 the broker's bill for Rs.8,20,000/- tallies with the entry of interest (page 102 of investment register) paid on 27.03.1992 after the return of this amount on 24.03.1992.
Even the period for which the interest is charged from 21.10.1991 to 13.01.1992 is identical stated in the broker's bill and the investment register entry.
In this transaction the return of Rs.13.79 Cr is too far-fetched to be accepted.
(o) In transaction No.15 the broker's bill for Rs.16,86,575/- tallies with the entry of interest (page 102 of investment register) paid on 28.02.1992 though the repayment is not at all shown.
Even the period for which the interest is charged from 21.10.1991 to 11.02.1992 is identical stated in the broker's bill and the investment register entry.
(p) In transaction No.16 the broker's bill for Rs.39,44,000/- tallies with the entry of interest (page 102 of investment register) paid on 27.03.1992 though the repayment is not at all shown.
Even the period for which the interest is charged from 21.10.1990 to 17.02.1992 is identical stated in the broker's bill and the investment register entry.
(q) In transaction No.17 the broker's bill for Rs.6,31,944.44 tallies with the entry of interest (page 105 of investment register) paid on 18.05.1992 after the return of this amount on 05.05.1992.
::: Downloaded on - 27/01/2014 23:10:28 :::(42) SPSC 2/95 (J) Even the period for which the interest is charged from 25.03.1992 to 08.04.1992 is identical stated in the broker's bill and the investment register entry.
16. Each of these entries is reflected in the investment register of BMC Bank Exhibit 90 kept in the normal course of the business of the bank.
17. An analysis of the above statement would show what interest amount the bank would have earned as legitimate interest in column 3. Instead the bank is shown to have paid brokers' interest on the date of issue of DD itself as shown in column 4. This interest is shown to represent the period of certain days prior to the date of DD itself as shown in column
5. The date of return of the investment shown in column 6 are several days after the investment shown in column 7. The entries are made in the investment register as shown in column 8 a few days after the return is shown. (In some cases the return is not shown either by the prosecution or by accused). The interest paid to the BMC Bank as shown in column 9 is received by the bank. The bank has shown the precise amount charged by the brokers under the contract note by way of his interest as interest paid to the broker in the remarks column which is reflected as brokers interest in column 4. This amount has been paid to accused No.2 (and to accused No.4 in transaction No.2) instead. The difference of these interests represents the profit made by the bank on its investments as shown in column 10. The return on investment upon a legitimate investment in inter-bank transactions as shown in column 3 exceeds the net return on investment by way of difference of interest made by bank as shown in column 10. It can be seen that in the first 9 transactions as also transaction Nos.11, 15 & 16 the bank has made a clear loss of investment shown by the ::: Downloaded on - 27/01/2014 23:10:28 ::: (43) SPSC 2/95 (J) difference in the two interests under columns 3 & 10. It is only in later transactions being transaction Nos. 10, 12, 13, 14 & 17 that the amount returned to the bank by way of interest representing the difference in interest is larger than what the bank would have made upon an investment in GOI loan in an inter bank transaction under SGL form.
18. The total of these entries demonstrate a striking position of return of investment.
19. Hence for the total investment of Rs.127.7 Cr of BMC Bank between the period 20.03.1991 to 18.04.1992, BMC Bank is shown to have actually paid an amount of Rs.3.43 Cr. as brokerage to the firms of accused No.13 & accused No.1. It was returned Rs.5.10 Cr. by way of interest. The difference of interest of Rs.1.67 Cr. that the bank earned during the period March, 1991 to May, 1992 is after payment of the brokerage of 3.43 Cr. Had the bank invested in the securities that it did directly into BOI (and Andhra Bank in transaction No.2) as inter bank transactions without payment of the brokerage of Rs. 3.43 Cr on the securities in which it invested and which are reflected in the contract notes of the brokers at the legal legitimate interest rate of 11.5%, later 12% and in the last transactions 12.5% for the period during which its monies remained invested it would have earned Rs. 1.72 Cr. in place of Rs.1.67 Cr. shown paid to the brokers, but which amount went into the bank accounts of accused Nos.2 or 4 and their transferees though accused No.13 and accused No.1 are shown to have earned brokerage of Rs.54.36 L and Rs.2.88 Cr.
20. It is the case of the prosecution that under each of these transactions a forged letter came to be executed by accused Nos.1, 2, 4, 5 & ::: Downloaded on - 27/01/2014 23:10:28 ::: (44) SPSC 2/95 (J) 13 acting in concert to deposit the DD made out in the name of BOI in the name of accused No.2 (and in transaction No.2 in the name of a company of accused No.4) instead. These letters have been marked exhibits as shown in the above statement. They have been sent to the handwriting expert and his opinion has been taken with regard to the handwriting in some of them. It is wholly unnecessary to delve into the author of the forgery. All that is required to be seen is the ultimate destination of the amounts of the DD. In all but one transaction the DDs have been admittedly deposited in the account of accused No.2 under pay-in-slips showing his admitted personal current account No.8077 with BOI. It matters not who fills in the pay-in-slip; it is a clerical job. What matters is in whose account the amounts have been deposited; the amounts have been deposited in the account of accused No.2. Exhibit 53 is a copy of the bank statement of accused No.2 of account No.8077 certified under the Banker's Book Evidence Act showing each of the DDs of BMC Bank credited into his account followed by debits of part or full amounts showing the transfer of funds to the names of accused Nos.4, 5, 10 (deceased) and 14 (deceased). The important aspect is where large amounts shown to be brokers' bills for brokers' interest came to rest.
21. Transaction No.2 is the only transaction in which the DD of BMC Bank has been issued in favour of Andhra Bank in which accused No.4 had the account of his limited company Dhanraj Mills Pvt. Ltd. That transaction is much like any other. It emanates from the contract note/memo of confirmation of the firm of accused No.13 for the investment of Rs.5 Cr in 11.5% bonds together with the broker's interest of Rs.22.92 lacs aggregating to Rs.5.23 Cr. The DD of Rs.5.23 Cr has been sent with the covering letter of BMC Bank to the Manager of Andhra Bank for purchase of 11.5% GOI loan through accused No.13 requesting SGL ::: Downloaded on - 27/01/2014 23:10:28 ::: (45) SPSC 2/95 (J) form. Instead the forged letter bearing the same signature as in transaction No.1, 3, 4 & 8 is issued for diverting the funds to the account of Dhanraj Mills Pvt. Ltd. with Andhra Bank. Incidentally it is the only letter amongst the letters stated to be forged letters in which the date is differently put -
whereas in all other letters the months are shown by their numbers, in this letter alone which is dated 26 th March, 1991 the month is stated in words.
The handwriting in this letter is different from the handwriting in any of the other letters. Be that as it as may, the receipt of Rs.5.23 Cr in the account of Dhanraj Mills Pvt. Ltd. has not only been specifically admitted by accused No.4 but accused No.4 has himself sought to bring in a statement of his account in Andhra Bank only for the period of March, 1991 showing the credit entry of Rs.5.23 Cr with three following debit entries showing transfer of 4.7 Cr therefrom immediately thereafter. The certified copy of the account relied upon by the prosecution has been got produced by accused No.4 with his consent and is marked Exhibit 172 colly. Incidentally the account had only Rs.1.52 L as a credit balance prior to the transfer of Rs.5.23 Cr and after debits of Rs.4.70 Cr had a credit balance of Rs.54.95 L showing a clear personal gain of accused No.4 to the extent of Rs.53 L. The three cheques admittedly issued by accused No.4 as Director and Authorized Signatory of Dhanraj Mills Pvt. Ltd. by the next day shows Rs.4.70 Cr transferred to accused No.10 (deceased) under the cheques and credit vouchers drawn on Andhra Bank, part of Exhibit 172 colly. The return of that amount is made by accused No.10. However, the return of the amount after 91 days is less than the amount the bank would have earned under 11.5% GOI loan as shown in the above statement.
22. In all transactions except transaction No.2 the demand draft made out by BMC Bank has been diverted into account of accused No.2.
::: Downloaded on - 27/01/2014 23:10:28 :::(46) SPSC 2/95 (J) The credit in his account is admitted by him. He has issued cheques in favour of Dhanraj Mills Pvt. Ltd. of accused No.4, accused No.5, accused No.10 (deceased) and accused No.14 (deceased). These persons have returned amounts to BMC Bank together with interest. However even that amount does not represent interest of 11.5%, 12% or 12.5% except in 5 transactions being transaction Nos.10, 12, 13, 14 & 17 where the bank has received more than that percentage. The defence of the accused that all the amounts have been returned with interest, and which has been sought to be passed off as 18% interest in the arguments on behalf of accused No.2, is, therefore, not only without arithmetical accuracy or any industry but a wholly incorrect defence.
23. Both these bank accounts have been kept in the normal course of the business of the bank. The entries made therein carry a presumption of their correctness. None of the entries is disputed or explained when shown to any of the accused.
24. As much as the investment register of BMC Bank, Exhibit 90 shows the return on investment made by BMC Bank, an analysis of the entries in the register show that the return on investment by the bank would have been more had the bank received the interest legally and legitimately due to it under the government securities as per the SGL forms to be issued by BOI had the transactions not been diverted by the BMC Bank to accused No.2 (and accused No.4 in transaction No.2) showing bogus broker's bills of accused Nos.1 & 13 and taken over by these accused for making personal gains.
25. Just as the investment register of BMC Bank, Exhibit 90 has reflected the inter-bank transactions of BMC Bank with BOI and the ::: Downloaded on - 27/01/2014 23:10:28 ::: (47) SPSC 2/95 (J) interest earned by the bank alongside the interest paid to the broker by the bank, the investment register of BOI is wholly devoid of these transactions.
None of the entries of any of the dates of the 17 transactions is reflected in the investment ledger of BOI, Exhibit 73. The SGL forms which was requested to be sent under the letters of BMC Bank sent along with their DD for investment of amount in BOI have never been issued. The ledger account of investment from Canara Bank, SBI, Citibank, Bank of Madurai, Bank of Travancore, Bank of America, Standard Chartered Bank, SBI etc. show SGL forms issued to these banks; there is no single entry of BMC bank of the period between 20.03.1991 to 08.04.1992.
26. The investment policy of the Reserve Bank of India in chapter 11 of the Instructions of the Reserve Bank of India for banks and banking operations relating to ready forward contracts in government securities under para 11.2 requires it to be entered into by a banking company with another banking company or a co-op. Bank or any other person maintaining subsidiary general ledger account (SGL account) and a current account with Reserve Bank of India, Mumbai shown in Annexure 11.2 thereof. The BMC bank is not such a co-op. Bank. It is not a bank which maintains an SGL account.
27. The BMC Bank apparently sought to invest in GOI loan as an inter-bank transaction with BOI (and in transaction No.2 with Andhra Bank). It necessitated issue of SGL form. The letters of the bank in each of the transactions show the request made by BMC Bank upon the Manager of BOI/Andhra Bank to issue SGL forms. Since the investment was not made in BOI as per the initial intent and as shown by the DD issued by BMC Bank but diverted into the account of accused No.2 in all but one transactions (and into the account of accused No.4 in transaction No.2), ::: Downloaded on - 27/01/2014 23:10:28 ::: (48) SPSC 2/95 (J) the investment never came to be reflected in the investment ledger of BOI and SGL forms never came to be issued.
28. Certain SGL forms are however shown to have been forged.
Consequently PW 15, who dealt with the SGL forms in the Government Paper Department of BOI, Mumbai, Main Branch where she served and who dealt with PDO at the relevant time, had no knowledge of the any of the transactions. Her evidence shows that the Government Paper Department of the BOI dealt with buying and selling of shares and Government securities. She dealt with PDO as BOI had account with PDO. She has deposed that she got prepared and signed the SGL forms and sent it to PDO. That would be for the actual and genuine buying and selling of shares and government securities. She has been shown 3 forms for transfer for operating the SGL account. She has deposed that these forms would have to be filled when BOI was the seller of the securities. She would sign those forms as she was authorized to operate the SGL account. She was shown two such forms ostensibly bearing her signature but she refuted were her signatures. She explained to Court that every signature of the Officer had to be accompanied by the officer's code number for verification and those forms did not have her code numbers. She could not identify the signatures on the forms and the forms have been left marked X-34 and X- 35, which remained to be identified. These are the forms that never were. These are forms that had to be if inter-bank transactions were effectuated.
Instead the transactions were effectuated by the brokers. Accused No.13 and later accused No.1 are shown to have brokered the transactions and charged interest thereon which went into the coffeurs of accused No.2 (and accused No.4 in transaction No.2) instead. The cross-examination of PW 15 on behalf of accused No.2 would show that SGL forms without code number of the officer would not be acted upon by RBI. The investment ::: Downloaded on - 27/01/2014 23:10:28 ::: (49) SPSC 2/95 (J) register of BMC bank, Exhibit 90 seen alongside the investment register of BOI, Exhibit 73 would show the investment made by BMC bank ostensibly in BOI on the specified dates of the 17 transactions in this case are not reflected in the register of BOI on those dates. This is precisely the prosecution case that bogus transactions under bogus contract notes of the brokers were entered into by the accused to make personal gain. PW 15 who was the Officer in BOI dealing with the investment in inter-bank transactions has deposed that no SGL form was issued in favour of BMC Bank. Indeed there was no entry of BMC Bank in the Register of BOI, Exhibit 73. Accused No.2 (and accused No.4 in transaction No.2) deposited the amounts in their respective bank accounts and later transferred them to accused Nos. 4, 5, 10 or 14 who later admittedly returned them to the BMC Bank along with interest, though in total lesser than what would have been under the GOI securities transactions.
29. Under the above 17 transactions the brokers who issued the initial contract notes being the firms of accused Nos.1 & 13 did not credit in their own bank accounts the interest reflected in their contract notes as also the demand draft issued by BMC Bank. Accused No.2 (and accused No.4 in case of transaction No.2) got those credits. These credits are shown in the bank account of accused No.2, Exhibit 53 and in the bank account statement produced by accused No.4 himself and marked part of Exhibit 172 colly by consent.
30. Accused No.4 is therefore the direct beneficiary in transaction No.2 and the transferee in certain other transactions. His case is analogous to that of accused No.2 in transaction No.2 and accused Nos.5, 10 (deceased) and 14 (deceased) in other transactions.
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31. Accused No.2 has further transferred the full or part of the amount of the credit obtained by him to accused Nos.4, 5, 10 & 14 in the above transactions except transaction No.2. Accused No.4 has transferred part of the credit received by him in his bank account in Andhra bank, part of Exhibit 172 colly to accused No.10 under three cheques of the dates of the transaction and a date thereafter. Accused Nos.4, 5 & 10 have in turn later returned the amount with interest to BMC Bank.
32. In several of these transactions accused No.2 has made a clear profit on the date of transaction itself. In some of the transactions he has transferred the entire amount to accused Nos.4, 5, 10 or 14. Accused No.4 has made a clear profit in transaction No.2. He dealt with that transaction in place of accused No.2. He acted upon the DD and the covering letter of BMC Bank addressed to the Manager, Andhra Bank in which he had his own company's account. He credited the amount of the DD in that account. He transferred a lesser amount to accused No.10. Out of Rs. 5.23 Cr he transferred Rs.4.70 Cr. Consequently, as explained hereinabove, he made a clear profit about Rs.53 L in transaction No.2 on a single day.
33. The profit made by accused No.2 in all the transactions except transaction No.2 seen above comes to a whopping Rs.10.69 Cr as follows:
Transaction Amount of DD Cheques issued to other Net profit Nos. brokers 1 3.09 Cr 3 Cr 9 L 2 TRANSACTION OF ACCUSED NO.4 --
3 10.14 Cr 9.10 Cr 1.04 Cr 4 10.06 Cr 10.06 Cr NIL 5 5.18 Cr 5 Cr 18 L 6 10.39 Cr Documents not produced 1.5 Cr but debit entry of Rs.8.89 Cr.::: Downloaded on - 27/01/2014 23:10:28 :::
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7 3.12 Cr 3.12 NIL
8 5.10 Cr 3.5 Cr 1.6 Cr
9 10.3 Cr 9.3 Cr 1 Cr
10 10.45 Cr 10 Cr 45 L
11 5.23 Cr 4 Cr 1.23 Cr
12 10.24 Cr 10.24 Cr NIL
13 5.07 Cr 5.07 Cr NIL
14 3.05 Cr 3.05 Cr NIL
15 4.62 Cr 4.02 Cr 60 L
16 10.49 Cr 10.49 Cr NIL
17 14.06 Cr 11.06 Cr 3 Cr
TOTAL 10.69 Cr
5.23 Cr
The profit made by accused No.4 in transaction No.2 is as follows:
4.70 Cr 53 L Such is the documentary evidence in this case.
34. The oral evidence, which stands excluded by such documentary evidence has been led purportedly by the prosecution and in fact relied upon by some of the accused ! It would be worth judging.
35. The Court would call attention to a unique attempt and effort on the part of the accused to create evidence not by leading evidence by themselves, but by moulding the evidence of the prosecution witnesses to favour them. In the times when the non-corruptibility of all persons including witnesses is at its lowest ebb, the Court must be particularly vigilant about such a dubious exercise and must know better than to accept endorse, acknowledge or approbate in it. It has been the case specially of accused Nos.1, 2 & 4 that various prosecution witnesses have given evidence, acceptable that it is, and which shows that the prosecution case itself favours the accused. How the prosecution has brought about such ::: Downloaded on - 27/01/2014 23:10:28 ::: (52) SPSC 2/95 (J) evidence to seep in is another matter. Whether or not such evidence can be accepted is the duty of the Court to actively see. There has been an attempt at fixing liability for the acts under the aforesaid transactions upon other brokers as also bank employees who have since been deceased or discharged. Since the prosecution case is of criminal conspiracy of the accused who have been brought to trial as also the others, the safest act of the accused has been to show that indeed the dead or discharged accused were involved but not the remaining accused who have stood the trial. This effort has been the most pronounced on behalf of accused No.2 who finds himself in the eye of the storm. The number of illustrations running through the evidence of bringing in extraneous matters, even to the point of absurdity, may be cited to show this dubious endevour. Some of these may be set out as follows, the others having resulted in a wasted effort need even not be adverted to.
(a) In a bid to have the case of accused No.2 corroborated not by any independent evidence produced by accused No.2 but through the mouth of prosecution witnesses, that the deceased accused No.14 Motiram Maneklal (MM) was operating his BSE card, bank account etc., as shall be seen presently, it is argued on his behalf that PWs 20, 26, 27 & 29 deposed in that behalf. PW 20 is a Chartered Accountant by profession who claimed to have known MM as a stock broker as he was looking after his tax matters. Consequently he has felt free to depose about how other brokers sat and dealt at the BSE. PW 26 was an employee of MM and deposed about knowing how MM operated the BSE card of accused No.2 and another broker one R. R. Bora. PW 27 who was a Chartered Accountant retained by accused No.2 deposed about MM, the other broker. PW 29 R. R. Bora himself deposed about how he was working with MM as his associate broker and how accused No.2 was under the thumb of MM. The evidence of all these witnesses only shows the situation in which a ::: Downloaded on - 27/01/2014 23:10:28 ::: (53) SPSC 2/95 (J) qualified chartered accountant such accused No.2 found himself degenerated upon surrendering to MM. The evidence cannot wipe off the criminal liability that accused No.2 would incur by such abject mental surrender.
(b) In the last para in the cross-examination of PW 12 Chunilal Kanani, the C.A. of accused No.1, who acted and signed various contract notes on his behalf and under his authority, was shown the copies of the covering letters of BMC Bank addressed to BOI annexing the DDs issued in favour of BOI, which ultimately went into the account of accused No.2 to depose that the copies of those covering letters were initialled by another broker one Manubhai Boradia, accused No.12 (since deceased). The covering letters have been signed by the Deputy General Manager (Accounts) or the authorized signatory of BMC Bank. It is absurd to suggest that a broker or a dealer of a contracting party such as a bank would initiate any of those letters. That is not even the prosecution case. That aspect has been stoutly relied upon in the argument of accused No.2. However it cuts no ice.
Though the Court would allow any document to be relied upon by any of the accused whilst cross-examining the prosecution witnesses, how these documents have been sought to be smuggled into the cross-examination of PW 12 would be interesting to see. The evidence of PW 12, who was the employee of accused No.1, shows the working of the firm of accused No.1 and identifies the documents in the transactions being the contract notes and securities vouchers. He has signed all the contract notes and his colleague one Krishnan has signed securities vouchers showing the broker's bills. He has also deposed about memos of confirmation of the firm of accused No.1 signed by him. Whereas his cross-examination on behalf of accused No.1 is to the end that monies out of the transactions did not come into the firm and that he was given the authority to sign the contract, which he independently executed, the cross-examination on behalf of ::: Downloaded on - 27/01/2014 23:10:28 ::: (54) SPSC 2/95 (J) accused No.2 was to show that these documents were made out only to make a show. The last paragraph of the cross-examination seeks to have the covering letters smuggled into his evidence which he was called upon to identify. Having known the initials of Manubhai Boradia, the other broker, who also used to work in the firm and take decisions, the witness has sought to identify his initials upon wholly extraneous documents that would never belong to one such as a broker or a dealer. These were the documents of the bank executed by the bank officials being the letters addressed to another bank, BOI but appropriated by none other than accused No.2 to have the proceeds of the DDs annexed to those letters made out in favour of BOI deposited in his bank account. It does not matter whether PW 12 Kanani identified some initials as that of Manubhai Boradia. It is not the case of either party that such was the statement of Kanani initially recorded by the IO.
(c) The IO himself has come under the hammer. His cross-examination seeks to show by way of a suggestion in para 38 that 10 letters of BMC Bank addressed to BOI were seized by him from the residence of J. P. Gandhi (accused No.10 since deceased). These were 10 original letters. The prosecution has produced as Exhibits 75 to 79 and 114 to 117 copies of those letters bearing the initials of bank officials. It is sought to be suggested that because the original letters are stated by the IO to have been found from the residence of J. P. Gandhi (since deceased), only he would be involved in the conspiracy. However it must be stated to the credit of the IO that the question meant to derail his thought has not resulted in an answer to release accused No.2 from the transactions. The IO was told on behalf of accused No.2 in his cross-examination that he formed an opinion that J. P. Gandhi would have replaced the original letter of BMC Bank sent to BOI. The IO has answered that his opinion was that he (J. P. Gandhi, since deceased) did that in conspiracy with the other ::: Downloaded on - 27/01/2014 23:10:29 ::: (55) SPSC 2/95 (J) accused. The implication of accused No.2 was not loosened. Hence whatever J. P. Gandhi may have done and was tried to be brought into the domain of the acts of J. P. Gandhi, through the mouth of the IO, the IO has stood his ground that that was an act of conspiracy with the other accused.
The transactions would show no other accused being involved in them as directly as accused No.2. Even the written argument on behalf of accused No.2 showing that the IO admitted such replacement does not bring out the whole truth thereunder. The argument shows not only the opinion with regard to J. P. Gandhi, as was the case in the cross-examination sought to be put to the IO, but also his opinion with regard to Manubhai Boradia , also since deceased, relating to the replacement of the letters, the replacement if at all having been deposed by the IO in his cross- examination to be by J. P. Gandhi and Manubhai Boradia in conspiracy with the other accused.
(d) In keeping with the tune of the accused and in complete harmony with some of them, more specially accused Nos.1 & 2, several witnesses have orally deposed about their relationship and knowledge of BCD, the firm of accused No.1. Aside from Kanani who was his authorized signatory, Bharat Darji PW 8 sat in his office though he served with accused No.10 (since deceased) who is stated to have looked after the firm of BCD. Kanani has deposed that accused No.1 dealt in shares as also securities and J. P. Gandhi was his dealer. His deposition also shows that accused No.10 (since deceased) was working in the same office and dealt in transactions of BCD. His deposition further shows that Manubhai Boradia took decisions, on behalf of BCD and has initialled various contract notes. Nevertheless that does not derogate from the power given to him by accused No.1 inter alia to transact.
PW 21 who also served in BCD as a typist did not even know who was the proprietor of the firm who paid her salary. The witness would ::: Downloaded on - 27/01/2014 23:10:29 ::: (56) SPSC 2/95 (J) hardly bear acceptance of her deposition.
PW 22 is the chartered accountant looking after accounts of BCD.
He has deposed about a securities department in the office of BCD. He has deposed about securities transaction with accused No.2 that the firm of BCD had with reference to certain contract notes and securities vouchers shown to him. It is sought to be suggested that the securities department of the BCD was headed by Manubhai Boradia and Dhananjay Gadgil who were dealers and that accused No.1 hardly dealt with securities but looked after the investment in public issues. The witness also deposed that he did not know whether he was aware of the contract note on his stationery. This evidence does not detract from the legal position of the authority given by accused No.1 to Kanani to execute the documents being the contract notes and memos of confirmation which he did under such express authorization.
(e) Similarly several witnesses have claimed knowledge of the spurious deeds of MM and accused No.2.
PW 26 has deposed about the fact that MM used to operate the cards of accused No.2 and R. R. Bora whilst he worked under MM. He has further deposed that he did not know whether MM used to operate the bank accounts of accused No.2 and Bora as has been the case of accused No.2.
PW 27 who was the chartered accountant retained by accused No.2 and who attended his work whenever required, claimed to know MM. He has also known about accused No.1 whilst working for accused No.2. Whilst he accepted in his cross-examination on behalf of accused No.2 that accused No.2 was a new entrant in 1990 and MM took his BSE card, he has clarified that that was the routine transaction of MM through accused No.2. He has further deposed in his cross-examination that he attended the office of accused No.2 as also MM for reconciling their accounts. This ::: Downloaded on - 27/01/2014 23:10:29 ::: (57) SPSC 2/95 (J) evidence shows that accused No.2 maintained a separate account. Whereas PW 26 could not say whether MM operated the bank account of accused No.2 and Bora also, PW 27 accepted that for the purpose of routine transactions through accused No.2 MM also took control of the cheque book and banking transactions of accused No.2. PW 26 who served MM could not depose of this fact. It is a moot point how a chartered accountant who was retained by accused No.2 and only attended his work whenever required would know the precise mode of business of accused No.1 whose accounts he never maintained and who was not retained by MM. As if he was an eye witness, he has deposed that accused No.2 signed the cheque book (was that only 1 cheque book ?) containing all the cheques and gave it to MM, a deposition not within the realm of knowledge of a retainer accountant who worked intermittently for the broker. His further evidence that for MM to transact in the name of accused No.2 all the stationery of accused No.2 was with MM also goes to the same way. Similarly the witness in the cross-examination on behalf of accused No.4 has nodded in agreement to state that the cheque issued by accused No.2 in favour of the company of accused No.4 was towards the loan taken by accused No.2 from accused No.4 though he did not know the amount of loan even approximately. In the cross-examination on behalf of accused Nos.15 and 16 the witness has further enhanced his embroidery of the evidence. He has accepted that the books of accounts of accused No.2 was handed over to MM because MM was handling the transactions of accused No.2. All the transactions and processes were done in the office of MM by the staff of MM. Since he was not the retainer of MM but only accused No.2, upon his evidence with regard to the documents collected by MM and the evidence with regard to the staff of MM in the question put by Court he deposed that he attended the work of MM and accused No.2 at two different places. It can be seen that he could not have attended the ::: Downloaded on - 27/01/2014 23:10:29 ::: (58) SPSC 2/95 (J) work of MM and could not have known all the documents of MM be it the cheque book, account books or the BSE card. His oral evidence also is in vain in view of the admission by accused No.2 himself of amounts under the transaction having been credited to his account and the cheques having been issued under his signatures, he being not an ignoramus.
PW 29 R.R. Bora who was a BSE member was working with MM and not accused No.2. His deposition shows that he allowed accused No.2 to use his office. He has deposed that MM was not his associate broker and that both did their respective work. He has refuted that accused No.2 or any other brokers were under the control of MM. He could not even say that MM even rooted his transactions through accused No.2. He, in fact, specified that MM did not root his transactions through him. As a broker working with MM, only his evidence would carry weight.
(f) Accused No.4 has followed the same stunt.
PW 30 was an employee of the company of accused No.4. He has deposed that accused No.4 was in the business of processing and warehousing as also investment and finance. It is not known how, but he remembered in his cross-examination on behalf of accused No.4 that there was a loan transaction between accused No.2 & accused No.4. To the question put by Court he deposed that he was an accountant and made entries of loan transactions, none of which has been produced by accused No.4. There has been no defence witness to prove the positive case of loan transaction and none has been proved by accused No.4 himself. Even if the cheques issued by accused No.2 in favour of accused No.1 were towards any loan transaction, they were paid as per the transfers of cheques made by accused No.2 in transaction Nos. 3, 4 or 15, but not transaction No.2 in which case the DD issued by BMC Bank in favour of Andhra Bank under the covering letter of the bank came to be deposited directly in the account of accused No.4. This witness has not deposed about that transaction.
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36. These witnesses, except PW 29, may have been allowed to be corrupted and moulded by accused Nos.1, 2 & 4. It has come to pass that the entire fabric of the national character of our country is corroded by the evil of corruption that has permeated every corner of the society. The Court would find itself alone and lonely when the view from the top demonstrates such mockery of the criminal justice system the State is expected to prosecute and the Court endevours to uphold.
37. However, such ill gotten evidence is of no legal utility.
38. It may be clarified that the oral evidence of any witness stands excluded by the documentary evidence on record under the salubrious principle in Section 91 of the Indian Evidence Act which runs thus:
91. Evidence of terms of contracts, grants and other dispositions of property reduced to form of documents.-
When the terms of a contract, or of a grant or of any other disposition of property, have been reduced to the form of a document, and in all cases in which any matter is required by law to be reduced to the form of a document, no evidence shall be given in proof of the terms of such contract, grant or other disposition of property, or of such matter, except the document itself, or secondary evidence of its contents in cases in which secondary evidence is admissible under the provisions hereinbefore contained.
39. Various documents of ostensible security transactions entered into by BMC Bank purportedly with BOI and Andhra Bank through the efforts of the accused as shown above show the contract of securities transactions under the aforesaid documents in each of the 17 transactions. Oral evidence with regard to who wrote and executed the document and the consequent knowledge of the author of the document or others would stand barred under the aforesaid section.
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40. The adage "witnesses is lie but documents do not" would apply with all its force to this case. The corruptibility, if at all, of those witnesses and the exercise which may have gone into the making of such evidence relevant has not in the least mattered to the prosecution case. In view of the admission of the execution of the documents by all these accused including the execution of the contract notes of accused No.1 (as also accused No.13), the credit of the cheques in the bank account of accused No.2 and accused No.4 in transaction No.2 as also the cheque Exhibit 139 in the bank account of accused No.1, which shall be considered presently, coupled with the acceptance of the Register of BMC Bank, Exhibit 90 leaves the entire oral evidence of the prosecution showing the business dealings of these accused as wholly irrelevant and inconsequential. The evidence cheerfully relied upon on behalf of these accused remains at that.
41. What the accused have had to say would now require some analysis.
42. Accused No.1 has admitted in the statement recorded under Section 313 of the Cr. P.C. that he was a broker in 1991-92. He has admitted memos of confirmation, Exhibit 134 colly prepared in his office and signed by his constituted attorney, Kanani. He has produced office copies of the memos of confirmation with a small detachable slip at the end. He has admitted the transactions with accused No.2 in reply to question No.12 in his statement under Section 313 of the Cr.P.C. Accused No.1 has been issued a cheque for Rs.10 lacs by accused No.2 who dealt with the aforesaid 17 transactions, though they were inter-bank transactions, showing accused Nos.13 & 1 as the brokers thereof. The cheque is dated 09.06.1992 for Rs.10 lacs, Exhibit 139 deposited in the ::: Downloaded on - 27/01/2014 23:10:29 ::: (61) SPSC 2/95 (J) account of the firm of accused No.1 in HSBC Bank admitted by accused No.1 as the correct account in reply to question No.7 in his 313 statement and credited on that date as shown in the statement Exhibit 161. In view of this statement of accused No.1 under Section 313 of the Cr.P.C. his admission of having received the cheque dated 09.06.1992, Exhibit 139 issued by accused No.2 in his favour for Rs.10 lacs and which was deposited in his account, as admitted in reply to question Nos.4 & 5 of his 313 statement, would have to be viewed. The cheque was drawn by accused No.2 and received by him into his account on 9 th June, 1992 during the relevant period. This statement of accused No.1 would bear importance in considering the defence of accused No.2 which shall be seen presently. The written statement of accused No.1 shows that the charge under Section 411 of the IPC against him is wholly uncalled for as he has not received any amount. The receipt of Rs.10 lacs by a single cheque would belie that contention and consequently his further contention in his written statement that Section 411 would not apply when the property is allegedly lost in the offence of cheating.
43. Accused No.1 has admitted having bank accounts with BOI and Bank of Karad Ltd in reply to question Nos.9 & 17. Whereas he has admitted the banking practice of BOI with regard to the securities transactions as deposed by PW Nos. 1, 2, 3 & 5 who are officers of BOI, except the covering letters (issued by BMC Bank) which is stated to be discontinued practice, in reply to question No.19, he has also set out his special relationship with Bank of Karad Ltd not only as an account holder but as a director with the co-accused No.10 (since deceased) and has shown how the bank meetings were held in his office when they were held in Bombay. His written statement shows acceptance of the contract notes issued by his firm as a part of the usual business transactions which were ::: Downloaded on - 27/01/2014 23:10:29 ::: (62) SPSC 2/95 (J) claimed by the prosecution as bogus transactions. The production of the memos of confirmation by him show the reversal of the transaction by the sale of the securities. The contract notes are their counter-parts showing the purchase of the securities as required by the BMC Bank under their DDs issued upon BOI but credited to the account of accused No.2 and with whom in turn he contracted as shown in the memos of confirmation for the sale of those securities by which certain amounts were repaid to BMC Bank by Bank of Karad Ltd in which he was an account holder as also its director.
44. Accused No.1 has claimed that he has been charged only because he was the proprietor of the firm of BCD which issued contract notes in the transactions. He claims to throw his hands up from the affairs of the proprietary concern which is not a separate legal entity. The proprietary concern would even otherwise act through its proprietor. Accused No.1 as the proprietor admittedly executed the Power of Attorney, Exhibit 121 in favour of Kanani who admittedly executed the contract notes under his express authority creating an agency for contract with third persons and entailing the same legal consequences as if the contract had been entered into and acts done by him as the principal in person under the Indian Contract Act, 1872. The legal effect of the acts of his business as the broker of the 5th to the 17th transactions must be considered. His contract notes are signed by Kanani who is admittedly his Constituted Attorney under the Power of Attorney dated 21.06.1988 duly witnessed and notarized on that date under which accused No.1 gave power to Kanani to act on behalf of his firm M/s. Bhupendra Champaklal Devidas (BCD) to settle any account or reckoning, receive any sum of money owing or belonging to the firm, deliver documents and securities, alter and modify securities, compound with any person, execute receipts and discharge, sell, dispose of, purchase, acquire shares and debentures, bonds ::: Downloaded on - 27/01/2014 23:10:29 ::: (63) SPSC 2/95 (J) and obligations, continue the current and overdraft accounts of the firm, enter into make, sign and execute contracts and generally to look after, manage and conduct the business of BCD as shares, stock, finance, brokers and all the business in which the BCD was interested and to do all acts deeds, matters and things particularly or generally as accused No.1., the grantor could do if the power of attorney was not made. Accused No.1 further declared that any reference to his name or his business shall be deemed to refer to the name in which his business was carried on and banking accounts were kept.
45. Accused No.1 has claimed that he did not know about the transactions which Kanani entered into as he was busy in other transactions and businesses, no particulars of which are furnished. The rights, privileges, obligations and liabilities of accused No.1 under the admitted power of attorney dated 21.06.1988 are under the law relating to agency contained in Sections 182 to 238 in Chapter X of the Indian Contract Act, 1872. The liability of accused No.1 for the transactions brokered by him through his agent would be as per the law of agency, the relevant parts of which run thus:
CHAPTER X AGENCY Appointment and authority of agents
182. 'Agent' and 'principal' defined.- An 'agent' is a person employed to do any act for another, or to represent another in dealings with third person. The person for whom such act is done, or who is so represented, is called the 'principal'.
Under Section 182 of the Indian Contract Act Kanani is the person employed to broker the transactions for accused No.1 or to represent accused No.1 in dealings with the BMC Bank as his principal.
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186. Agent's authority may be expressed or implied.- The authority of an agent may be expressed or implied.
187. Definitions of express and implied authority.- An authority is said to be express when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case.
Kanani's authority has been expressly set out in the power of attorney Exhibit 121 inconformity with Sections 186 & 187.
188. Extent of agent's authority.- An agent having an authority to do an act has authority to do every lawful thing which is necessary in order to do such act.
An agent having an authority to carry on a business, has authority to do every lawful thing necessary for the purpose, or usually done in the course, of conducting such business.
Under Section 188 Kanani would have authority to transact the brokerage contracts and do every lawful thing necessary for the transactions. Hence he would issue the contract notes and the broker's bills. He would receive the brokerage.
Effect of agency on contracts with third persons
226. Enforcement and consequences of agent's contracts.-
Contracts entered into through an agent, and obligations arising from acts done by an agent, may be enforced in the same manner, and will have the same legal consequences as if the contracts had been entered into and acts done by the principal in person.
46. In all the transactions between the BMC Bank and BOI entered into by Kanani on behalf of the BCD, the firm of accused No.1, as his agent under the aforesaid power of attorney accused No.1 would incur obligations arising from the acts done in the same manner and with the same legal consequences as if the contracts had been entered into and acts had been done by accused No.1 himself.
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47. These would be civil obligations under lawful contracts and would include criminal liability for illegal acts done by Kanani and illegal contracts executed by Kanani as if they were done by accused No.1 since none can shrug off criminal responsibility by executing a document in favour of a stooge.
48. Despite the admission of the execution of the power of attorney it has been argued on his behalf that he had no knowledge of the transactions because he frequently travelled abroad and at the relevant time managed public issues. His written statement also shows his peripatetic lifestyle. This is also not substantiated by any documentary evidence like his passport or the actual public issues managed by him or his firm and would go the same way as the other vague statement devoid of particulars and incapable of acceptance as the correct case of the accused. It may be mentioned that upon accused No.1 giving necessary particulars to substantiate his statement, the statement would have to be accepted without any cross-examination of the accused. However if a statement is made which remains unsubstantiated, the Court is not only not bound to accept it but would be enjoined to reject it. Consequently the claim to the lack of knowledge of the transaction also cannot avail accused No.1.
49. The naive attempt at forsaking the criminal liability of accused No.1 is sought to be made upon the premise that admittedly PW 12 Kanani actually executed the contract notes and signed them and, therefore, the prosecution did not take the sample handwriting of accused No.1. It is, therefore, argued that for his contract notes, he cannot be faulted, his acceptance of remuneration as brokerage under the cheque, Exhibit 139 notwithstanding. This would throw to the winds the entire law of agency ::: Downloaded on - 27/01/2014 23:10:29 ::: (66) SPSC 2/95 (J) and the liability of the principal for the acts of his agent done under the authority given by the principal, a profound knowledge of which cannot be imputed upon such argument. The argument that the agent did not even talk to accused No.1 to inform him of the transactions or to take his permission from time to time also beats the law of agency as an agent does not have to talk to his principal and take his permission. The power is the permission and the authority. The act of the agent becomes the act of the principal because the agent is authorized to act until the power is revoked.
50. The argument on behalf of accused No.1 with regard to the vicarious liability as the liability of the principal for the acts of the agent is contended to be made by placing reliance upon Sharon Michael & Ors. Vs. State of Tamil Nadu & Anr. (2009) 3 SCC 375 and K. C. Builders and Anr. Vs. Assistant Commissioner of Income Tax (2004) 2 SCC 731. The reliance is misconceived as the liability is not vicarious. It is the civil and criminal liability of the principal alone.
51. Vicarious liability is not the liability of a principal for the acts of his agent. That is a statutory liability under Section 226 of the Indian Contract Act, 1872. Vicarious liability is defined and explained in the Advanced Law Lexicon of P. Ramanatha Aiyar, 3 rd Edition, Volume 4, Page 4892 as the liability which falls on some persons as a result of action of some other person. e.g. that of a master for the actions of his servant or the liability that the supervisory party (such as an employer) bears for the actionable conduct of the subordinate or associate (such as an employee) based on the relationship between the two parties. Such liability is one that is incurred by one person but law imputes upon another to bear the responsibility for that act. It is, therefore, essentially tortuous liability arising out of the tort of another. It would essentially be for damages for ::: Downloaded on - 27/01/2014 23:10:29 ::: (67) SPSC 2/95 (J) negligence or other such torts.
52. It would however require the Court to consider these judgments.
53. The case of Sharon Michael & Ors. Vs. State of Tamil Nadu & Anr. (2009) 3 SCC 375 deals with the vicarious liability of one company for the acts of the employees of that company in an international contract of export of goods in which the company was sought to be held liable for the offence of cheating and criminal breach of trust under Sections 420 and 405 of the IPC.
In that case one company certified a certifying agent in respect of export. Its Assistant General Manager, Accounts Manager, Shipping Manager, Director and Consultant were sought to be prosecuted for cheating because the certification was challenged as the goods exported were claimed to be inferior than the goods contracted to be exported. It was held in para 17 of the judgment relying upon the case of R. Kalyani Vs. Janak C. Mehta (2009) 1 SCC 516 : (2008) 14 Scale 85 in that:
"A vicarious liability can be fastened only by reason of a provision of a statute and not otherwise. For the said purpose, a legal fiction has to be created. Even under a special statute when the vicarious criminal liability is fastened on a person on the premise that he was in charge of the affairs of the Company and responsible to it, all the ingredients laid down under the statute must be fulfilled. A legal fiction must be confined to the object and purport for which it has been created."
It is also observed in that judgment that in the case of vicarious liability "the company must be made an accused" and such liability would be civil liability. Of course, therefore, for the acts of one person the criminal liability cannot be imputed upon another. In that case the certification would require only the author to be criminally prosecuted but not the other ::: Downloaded on - 27/01/2014 23:10:29 ::: (68) SPSC 2/95 (J) managers and directors.
This is not one such case. This is a case in which an employee Kanani has acted specially upon the authority of accused No.1. None other than accused No.1 can be held liable in civil law, for criminal act or any tort.
54. The case of K. C. Builders and Anr. Vs. Assistant Commissioner of Income Tax (2004) 2 SCC 731 relates to accounts submitted before the income tax authority who sought to prosecute the assessee under the provisions of Income Tax Act for cheating. In such case also there is no question of any person acting under any power of attorney and hence the analogy does not apply.
55. The case of the British scamster Nick Leeson would bear reference in this context. Leeson's proprietary concern trading in Derivatives had front and back offices and made large reported profits speculating in options leading to collapse of Baring Group including Barings Securities (Singapore) Ltd. He traded in derivatives in more than one market. This would result in price differentials arising from different conditions prevailing in the 2 markets. He "switched" businesses - dealt not only in straight forward price anomaly arbitrage, but also intra day directional trading. The Directors of his bank were held responsible for their negligence in not restricting his activities even after and despite his conviction in the criminal prosecution for cheating and fraud. (See. Barings Plc (in liquidation) Vs. Coopers Lybrand and Barings Futures (Singapore) PTE Ltd (in liquidation) vs. Matter (2003) EWHC 1319 (ch) = 2003 Lloyd's Reports IR 566)
56. The deposition of PW 12 Kanani, the constituted attorney of ::: Downloaded on - 27/01/2014 23:10:29 ::: (69) SPSC 2/95 (J) accused No.1, that he never used to ask accused No.1 and never talked before he signed the contract notes is redundant. The argument that accused No.1 had no knowledge of the contract notes runs counter to the law of agency in view of his own production of confirmation notes with the attached slips showing his primaritur upon the transaction. The knowledge of accused No.1 as the principal is distinct. It would be unknown to his clerks including accused No.12 who cannot depose about the knowledge of accused No.1. Similarly the statement got out of PW 22 that accused No.1 hardly dealt with securities and used to look after only investments in public issues also matters little in view of the admitted power of attorney under which Kanani signed the contract notes upon the power given by accused No.1 in that behalf. The shelter taken under the evidence of PWs 14 & 22, the employees of accused No.1 who have claimed accused No.1 not to have had any involvement in the issuance of contract notes is also de hors the laws of agency. Consequently the evidence of PWs 8 and 14 about the independence of the various brokers who are otherwise stated to be working together matters little to accused No.1 who authorized the issue of contract notes. The ultimate reliance upon the evidence of the IO himself that he did not get any evidence indicating the flow of funds into the account of B. C. Dalal or transfer from the account of B. C. Dalal under these transactions is also of assistance to accused No.1 only up to a point. Indeed the evidence of BMC Bank under the DDs issued by BMC Bank did not go into the account of B. C. Dalal. The documentary evidence makes that clear. Similarly the transfers from the account of B. C. Dalal of the transaction amount are not seen. Thus the flow of funds has been into the account of only accused No.2 and of accused No.4 in transaction No.2. Similarly the transfers have been made from the account of accused No.2 and of accused No.4 in the case of transaction No.2. Hence the statement of IO so vociferously relied upon by accused No.1 does not matter.
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57. The only document showing the transfer of funds into the account of accused No.1 is under the cheque of accused No.2 Exhibit 139 which is shown to be a lumpsum amount paid and transferred by accused No.2 to accused No.1. The receipt of that cheque has been admitted. Accused No.1 has stated that it was for transactions in shares and badla with accused No.2 without absolutely of any particulars of any of those transactions. This is the only material evidence against accused No.1, the irrelevant statement of the IO notwithstanding and in fact despite such statement. PW 14 who served in Corporation Bank has deposed about cheque dated 09.06.1992 for Rs.10 L drawn on accused No.2 favouring accused No.1 deposited in the Corporation Bank, Fort Branch where he served through clearing by HSBC where accused No.1 had his account. His deposition that it was received in the bank through clearing is corroborated by the certified statement of HSBC Bank of accused No.1 issued by his bank under the Banker's Book Evidence Act the receipt of which is admitted by accused No.1. Hence it can be seen that for the remuneration of Rs.10 L accused No.1 caused the bogus contract notes and broker's bills to be issued by his employee who was his constituted attorney. Accused No.1 received a part of the property misappropriated by accused No.2 in the aforesaid 17 transactions. He came to be in possession of such property accordingly. It would have to be seen whether such property is stolen property and accordingly whether being so, accused No.1 is presumed to have received it knowing it to be so, since he has not satisfactorily accounted for it as having been received from shares or badla transactions with any particulars.
58. Accused No.1 has stated in his written statement about his preoccupation with other businesses of underwriting of public issues and as ::: Downloaded on - 27/01/2014 23:10:29 ::: (71) SPSC 2/95 (J) a financial services provider and claims to have often travelled abroad without giving any particulars of the businesses or the travels. These claims of accused No.1 are wholly unsubstantiated. Consequently accused No.1 is not seen as anything but a broker having accepted the issue of contract notes and the memos of confirmation of his firm in which he was the sole proprietor by his constituted attorney. The fact that they were inter-bank transactions from the sources of funds accepted in the transactions but which were contracted under the contract notes and the memo of confirmation between brokers being accused No.1 (and in four cases accused No.13) show their bogus nature. The fact that accused No.1 received a lump sum payment of Rs.10 lacs in the relevant period by the acceptance of the cheque, Exhibit 139 makes out a case of he having received the property under those transactions which would be only by way of his brokerage fees. The admitted transactions having been seen to be under the bogus documents of accused No.1 in which the demand drafts issued by BMC bank of the amounts invested as also the brokerage payable came to be deposited admittedly in the account of accused No.2 and withdrawn in part or full therefrom for the reversal of the transactions through the memos of confirmation of Accused No.1, Exhibit 134 collectively, the office copies of which are produced by accused No.1 himself show how accused No.1 dishonestly received and retained the property by way of the brokerage fees of Rs.10 lacs paid by a single cheque issued by accused No.2 knowing that it was from the aforesaid transactions which he had not only admitted but copies of which he has himself produced. The property contained in the demand drafts of BMC Bank which were issued in the name of the BOI and Andhra Bank under transactions which were meant to be inter-bank transactions in which brokers like accused No.1 had no place, show upon the admission of the transaction the criminal misappropriation of the property contained in the ::: Downloaded on - 27/01/2014 23:10:29 ::: (72) SPSC 2/95 (J) demand drafts. The property under the transactions initiated by the demand drafts is, therefore, stolen property which accused No.1 dishonestly received.
59. Similar is the prosecution case against accused No.13. These are under transaction Nos.1 to 4. They relate to the firm of M/s. K. Motiram Vakil initially started by his father in which accused No.13 was a partner and in which he later inducted his brother and his son. Accused No.13 has shrugged his shoulders with regard to all but one transactions.
The first two of his transactions precede the period of the Special Courts Act, 1992. The first of the transaction is the only transaction admitted by accused No.13 in his 313 statement. Accused No.13 has claimed that his stationery was lying in his office in BSE could have been misused by any other person. The evidence of PW 8 would suggest that accused No.10 (since deceased) gave the stationery of accused No.13 to him during the course of his employment. Accused No.13 has been more forthright in explaining the intrigues of dealing with BMC Bank in the aforesaid transactions. He has accepted the contract notes Exhibits 108, 109 & 110 as having his initials in reply to question No.3 when the documents were shown to him. He has accepted part of Exhibit 108 to be in his handwriting being top line in reply to question No.4. He has also accepted that each of the contract notes and broker's bills were on his firm's stationery in reply to question No.5. His handwritings were sent for analysis. He has accepted his handwriting on the specimen document marked S-87 to S-90. Similarly he has accepted the handwriting on the specimen document marked S-93 to S-95.
60. The first transaction under the contract note rubber stamped as memo of confirmation dated 20.03.1991 is admittedly signed by accused ::: Downloaded on - 27/01/2014 23:10:29 ::: (73) SPSC 2/95 (J) No.13 as the broker. His grandson PW 9 has deposed as to this fact. Accused No.13 has admitted that in his 313 statement and his written statement. It has been his case that the BMC Bank was to invest in GOI bonds of BOI. He was contacted as he was one of the bank's brokers. He accepted to broker the transaction. He initiated the transaction under his contract note. The very first contract note dated 20.03.1991 of K. Motiram Vakil which was his firm along with his father shows securities of Rs.3 Cr bought for the BMC Bank being 11.5% GOI. His bill shows the brokerage charged by him of Rs.9,48,750/-. The contract note initiated and issued together with the memo of confirmation under same date is likewise accepted by accused No.13. He claims that his brokerage was not paid. He claims that the transaction was initiated before the statutory period though repaid after the statutory period. He also claims that the other memos of confirmation and his contract notes are not signed by him on behalf of his firm. Incidentally, they are within the statutory period.
61. In his written statement he has explained the genesis of the transaction. His firm, started by his father and continued by him, dealt with government securities on a limited scale. He knew the directors of BMC bank as he was a shareholder in the bank. At the request of one of the directors one Shri. Rangoonwala, BMC Bank started transacting in shares and securities through his firm. This explained the first four transactions having contract notes of accused No.13 firm.
62. Accused No.13 has explained how the very first transaction commenced. On 18.03.1991 Shri. Rangoonwala, the then Chairman of BMC Bank desired to sell government securities held by the bank. He was to be contacted by accused No.6 (since deceased) and accused No.7 (since discharged). The transaction took place on 19.03.1991. It was to be for ::: Downloaded on - 27/01/2014 23:10:29 ::: (74) SPSC 2/95 (J) sale of government securities. It was for Rs.5 Cr. Accused No.13 was requested to issue a contract note and his cost memo (broker's bill). He did not play any part in the transaction other than issue of contract note and his bill. He has specified the number of the contract note as also his bill dated 19.03.1991 which are first two documents in the said transaction between the BMC Bank and BOI. The contract note was signed by him. The remainder of the documents were prepared by his staff. He was told that the bank employees will deal with the counter-party bank, BOI in the inter-bank transaction. He has also stated in his written statement that the role of his firm was confined to only issuing the credit notes and the cost memo so as to comply with the provisions of the Securities Contract Regulations Act. The transaction was, therefore, to defeat the provisions of the Securities Contract Regulations Act and would be a void transaction under civil law upon the provisions contained in Section 23 of the Indian Contract Act. 1872. The case of the prosecution that the accused in this case were involved in bogus transactions which were meant to be inter-bank transactions involving government securities is not only fortified and justified but substantially proved by the candid written statement of accused No.13 showing precisely what had transpired between him and the aforesaid two accused (since deceased and discharged).
63. The very first transaction of BMC Bank dated 19.03.1991, Exhibit 110 & X-32 is not shown as one of the 17 transactions in this case. It is the peak of the iceberg. It shows the commencement of a series of transactions of BMC Bank with other banks, more particularly BOI ostensibly for government securities. Accused No.13 has also detailed the 2nd transaction and described how it took place upon the telephonic conversations of the aforesaid bank officials of BMC Bank on 20.03.1991.
::: Downloaded on - 27/01/2014 23:10:29 :::(75) SPSC 2/95 (J) The transaction which was to be for the purchase of government securities of the face value of Rs.3 Cr from BOI required him to issue contract note and cost memo with the relevant details furnished by the aforesaid accused. He claims to have played the role of only issuing the bogus contract note and cost memo signed and initialled respectively by him.
64. The contract note and his bill Exhibits 107 & 108 dated 20.03.1991 form a part of transaction No.1 shown by the prosecution. He has specified in his written statement that he has not issued any other contract note and cost memo and he has no concern with the other transactions. He has stated that he has had no dealing with any other accused and has not received any monetary benefit from the transaction. He has claimed in his written statement that he was not paid the brokerage which was promised in the first two transactions and hence he was uninterested in further dealing with BMC Bank. This would show his intent to dishonestly receive the property of the bank contained in the two demand drafts of Rs.5 Cr. and Rs.3 Cr. under the transaction No.1 and the other transaction respectively, which were issued in favour of BOI but for which he executed the contract note and his bill thus having the property criminally misappropriated. He was indeed instrumental in misappropriating the property; he initiated the bogus transaction as a partner of his firm and aided BMC Bank in transacting with the BOI for the purchase of government securities that never were. Since he has not been shown to be paid any amount as brokerage or otherwise by any cheque, unlike the receipt of cheque Exhibit 139 by accused No.1, he cannot be taken to have dishonestly received or retained stolen property, being the property contained in the DDs of BMC Bank issued in favour of BOI but later criminally misappropriated to be deposited in the account of accused No.2.
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65. Accused No.2 has admitted the documents relating to him in each of the above transactions in his statement recorded under Section 313 of the Cr.P.C. He has admitted that he has current bank account with BOI which he had opened under the Account Opening Form Instructions and Declarations, Exhibit 12. That is account No. 8077 in which the demand drafts made out by BMC Bank in favour of BOI have been deposited instead. Accused No.2 has also accepted and admitted all the cheques issued by him in favour of accused Nos. 4, 5, 10 (since deceased) and 14 (since deceased). He has admitted his signatures on all the cheques shown to him including cheque No. 139, the only cheque in favour of accused No.1. Accused No.2 has accepted as correct all the credits and debits in his bank account, Exhibit 53. He has accepted all the DDs/POs to have gone into his account. He has also accepted the pay-in-slips crediting the amounts in account No. 8077. In fact he answered in reply to question No.14 that his account No.8077 was linked with the clearing houses and other banks like Corporation Bank. He has stated in reply to question No. 20 that he had accounts in both these banks. He has accepted the execution of the contract notes signed by him.
66. In the face of the clear documents which accused No.2 has specifically admitted, proving the transactions that have transpired as shown hereinabove, accused No.1 in his defence has stated that the current account which is specially opened was operated by MM. The cheques which he signed in blank were issued by MM. His BSE membership card was operated by MM. Hence his written statement would be required to be seen.
67. His written statement shows that he became a qualified ::: Downloaded on - 27/01/2014 23:10:29 ::: (77) SPSC 2/95 (J) chartered accountant in August, 1983. He desired to be a stock broker. He applied for BSE membership in 1987 in the "professional" category. He had to pay membership fee of Rs.7.5 L under the BSE Rules. He paid two installments of Rs.2.5 L each. He did not have the remaining money. He was introduced to MM as MM was his doctor brother's patient. MM showed his willingness to mentor accused No.2 and paid the last installment of Rs.2.51 L of BSE membership fee. He has not stated when he was paid Rs.2.51 L by MM and when he was issued BSE card. MM was accepted as a mentor but who acted without scruples and principles. The purpose shown by accused No.2 to join MM was to derive some knowledge upon his admiration of the man. The "arrangement" which accused No.2 and MM entered into would defy any admirable act. Para 2 of his written statement shows that the arrangement was that MM would do transactions in the name of accused No.2 in secondary stock market on the BSE although the transactions would appear to be done by him and he would receive only 5% of the net brokerage earned by MM on the transactions put through in the name of accused No.2. He has also stated that in 1990- 1992 MM was operating his account only from out of his other associate brokers. The arrangement entered into by a new aspirant seeking to make a career as a professional would put to shame a criminal. The awe that he claims to have for MM should vanish the moment MM showed the arrangement to use him as a pawn. The arrangement would neither augur for his benefit except at receiving a few pennies thrown to him, nor would augment his mental faculty or professional knowledge. MM, therefore, would be the mentor that never was.
68. Under such a situation accused No.2 claims that MM would have complete control over every aspect of the transaction and hence he was required to hand over to MM all the relevant stationery (admitted to ::: Downloaded on - 27/01/2014 23:10:30 ::: (78) SPSC 2/95 (J) have been signed by him in his 313 statement) such as contract notes, letter heads, bill books and cheques of his current account No. 8077 in BOI signed by him in blank to facilitate MM to trade in the manner he knew best without reference to accused No.2 and his hindrance in the conduct of business of MM. The signed blank cheques and blank stationery were to be used by MM for BSE secondary stock market transactions. Those were the transactions in which accused No.2 wanted to make a career but signed away his reputation together with his career. His written statement shows that it was not his intention that MM should use his bank account and his blank signed cheques and stationery for any transaction other than BSE transactions and that his arrangement was not for inter-bank transactions in government securities.
69. He has further stated about how he sat (like a puppet) in the office of MM such that MM operated his card "separately independently and without slightest element of my control or knowledge". It has remained issoteric why under such a transaction he would have required MM as his mentor at all. What use is the mentor who has not to refer to his mentee and who must operate without any reference or inference with the mentee? The arrangement shows mentoring that would beat common sense.
70. In para 5 of the written statement accused No.2 has stated about how he sought to carry on his business of personal trading. This is contrary to his dreams of being a mentee of the person he admired. He had no learning from his mentor in his independent business and had an experience of an entrant in the business without any ties or links with anyone.
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71. Though his arrangement shows that he would receive 5% of the brokerage of the MM when he joined MM in about 1987 when he had to pay last installment of his BSE membership fee, he is not shown to have been given or to have claimed even such sub-brokerage. Para 6 of his written statement shows that in April, 1992 when the "bank scam" broke out there were differences and disputes relating to the settlement of account between his mentor and him. Hence the mentor did not only fail to mentor accused No.2, but also failed to pay him for what he had signed away under the arrangement with MM. Accused No.2 claims to have been returned his account books and other documents by MM in May-June, 1992 when he became aware that his mentor, who never mentored him, instead misused his documents so that he had not only not entered into the transactions as per the arrangement between the parties, but had not even paid him his sub-brokerage. Though the sub-brokerage of 5% of MM's brokerage was like throwing a dog a bone, in this case underdog did not even get the bone!
72. Such was the qualified chartered accountant who would have brought glory to the institute that made him so.
73. If the incredible statement of accused No.2 is to be believed, it would mean that a professional chartered accountant of the Chartered Accountants Institute of India would hand over blank signed cheques and other documents to another person to trade in his name for a fee, however repulsive that would be. This went on for 4 - 5 years. During such period he would have had signed and handed over numerous cheque books containing numerous leaves of cheques. His bank account, Exhibit 53 shows numerous entries reflecting that many cheques to be issued and the accompanying documents for stock broking transactions which, he would ::: Downloaded on - 27/01/2014 23:10:30 ::: (80) SPSC 2/95 (J) have the Court believe, were given from time to time without any corresponding payment so that differences would arise only when the bank scam broke out in April, 1992.
74. Accused No.2 claims to have come to be aware of the dubious activity of his mentor only when he was returned his documents when he realized they were misused; how he realized that they were misused is not explained. The cheques which were misused could never been returned to accused No.2; they would have been in the custody of the banks of the payees. Accused No.2 claims to have been returned account books and other documents by MM. Which were those which made him aware of his mentor's deals are not shown. It leaves one wondrous as to what accused No.2, a newly qualified chartered accountant without experience as also finesse, could have wanted to learn from a mentor who never taught him a thing until a "bank scam" broke out and returned his documents and this is shown to be between 1987 when he joined BSE and 1992 when the scam broke out. Accused No.2 would, therefore, want to have the Court believe that the chartered accountants of his genre would pawn their minds, if not, soul to another they looked up to.
75. If this was true the cheques would have been given albeit for BSE secondary stock market transactions from 1987 to 1992. There is no count of how many such cheque books would have gone into the arrangement between the two unprofessional professionals.
76. One would also wonder whether in those 5 years that this arrangement continued without any other intellectual discourse between the mentor and mentee, how accused No.2 did not at all see his bank statement for the account in which he bared himself thus.
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77. In each of the 16 transactions amounts have been admittedly credited into the account of accused No.2. Accused No.2 claims that there have been "virtually instant debits on the same day" from his account.
That is incorrect. Though, of course, in certain transactions it is so, as shown in the statement above, in several of the transactions he has appropriated to himself plump pieces of the pie thus grossing the aforesaid egregious brokerage amount of more than Rs.10.69 Cr. His bank account Exhibit 53 does not show any amounts credited to the account of MM by way of "virtually instant debits on the same day" by the handy work of MM. Hence if what accused No.2 states was true, MM has credited the account of accused No.2 with the proceeds of the transactions and later of accused Nos.4, 5 & 10 and only in one case his own.
78. There appears to be just one thing which accused No.2 has learned in his chartered accountancy course; that "if any bank credits any amount to a particular account without any reason it will create liability on that account holder". Accused No.2 would claim that he would, therefore, never put the cheques (DDs) of BMC Bank in his account. Accused No.2 claims to have also known that "if any undeserved credit is given to an account, that has to be repaid". Upon such knowledge, set out in para 6 of the written statement, accused No.2 claims that BMC Bank has been repaid. He has further claimed that repayment is not from his account actually or ostensibly but has not shown how the repayment is made. The aforesaid 17 transactions show the DDs credited to his account, cheques issued to accused Nos.4, 5,10 (since deceased) and 14 (since deceased) from his account and the repayments made by accused Nos.4, 5, 10 and/or
14. The above statement would also show that the repayments are not of the entire amount with interest. They are of lesser or greater amounts ::: Downloaded on - 27/01/2014 23:10:30 ::: (82) SPSC 2/95 (J) arbitrarily given and accepted by BMC Bank and in certain transactions large parts of the credits made into account of the accused No.2 which had remained at that resulting in net unlawful gain of about Rs.10.69 Cr. as shown above. His contention that "his account and his cheques were pawns used in whatever financial game MM was playing" shows his sinecure position as a money spinner. Since he admittedly claims to have issued those cheques in blank and signed by him to MM, it was he who pawned himself thus. Accused No.2 who had dreams of working with MM allowed a mental pledge of himself and must deserve scorn and ridicule socially and criminal liability legally.
79. One small slip shows a mighty lie. Accused No.1 admittedly issued the cheque, Exhibit 139 to accused No.1. MM is not stated to have issued that cheque merely signed by accused No.2. Accused No.1 has sought to explain the badla or other transactions that he had with accused No.2, not MM. How come accused No.2 only issued this one cheque leaf out of the whole cheque book earlier presigned and handed over to MM?
80. The entire defence of accused No.2 deserves only a clear and complete rejection with contempt. He misappropriated large amounts shown as broker's fees in the bills of the 2 brokers and paid by BMC Bank and appropriated them to himself. That was stolen property. He paid a brokerage of Rs.10 L from such misappropriated property to accused No.1.
MM could not have paid that cheque to accused No.1. That is not even the case of accused No.1. In fact, accused No.1 has sought to explain how accused No.2 came to give him the cheque. Of course, that explanation is itself rejectable. Accused No.2 transferred part amounts to other brokers by his own cheques whilst retaining approx Rs.10.69 Cr. with himself.
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81. Accused No.4 who is seen to have transacted much like accused No.2 but essentially only in transaction No.2 is shown to have deposited the bank draft of Rs.5.23 Cr of BMC Bank, the only bank draft issued in favour of Andhra Bank where the company of accused No.4 M/s.
Dhanraj Mills Pvt. Ltd. admittedly has a bank account. That amount, as afore-explained, deposited in the account has been partly withdrawn and transferred to accused No.10 (since deceased) leaving a net profit of Rs.53 L for accused No.4. The return to BMC bank is not made by accused No.4 but by accused No.10 of the amount with lesser interest as shown in the statement above.
82. In transaction Nos. 3 & 4 Dhanraj Mills Pvt. Ltd. of accused No.4 and in transaction No.15 his other limited company in which he was a Director were transferred certain amounts by accused No.2.
83. Accused No.4 has been involved in transactions of 2 different types; he is directly concerned and involved in transaction No.2 and only transferred certain amounts by accused No.2 in transactions Nos. 3, 4 & 15. He has sought to link all the 4 transactions in this prosecution with other transactions he has had with accused No.2. Accused No.4 has admitted receipt of the cheque of Rs.5.23 Cr in reply to question No.2. In fact, he has produced his bank account statement but only of the date of transaction and immediately thereafter. Accused No.4 has admitted the deposit of the cheque in his account in reply to question No.3 and has claimed that it was deposited in his account by accused No.10. He has claimed in his statement under Section 313 of the Cr.P.C. that accused No.10 claimed interest @ 28% on the said amount of the purported loan claimed to have been taken by him but claimed to have deposited by accused No.10 in his account. Hence he claimed to have returned the loan ::: Downloaded on - 27/01/2014 23:10:30 ::: (84) SPSC 2/95 (J) of Rs.4.70 Cr immediately and Rs.50 L after some days. The latter return is left wholly unsubstantiated. Accused No.4 had to merely produce his later bank statement as he produced Exhibit 172 colly, but that is not done. His unsubstantiated statement cannot be accepted. The account statement of Rs.50 L is not produced by accused No.4. That payment is not shown or substantiated. He has made a clear profit of Rs.53 L as seen from the account statement produced by him as a part of Exhibit 172 colly. This amount of Rs.5.23 Cr was the DD issued in the name of Andhra Bank which was directly credited into his account under transaction No.2. The other amounts are the cheques issued by accused No.2 after the bank account of accused No.2 was directly credited by the DDs issued to him.
84. Accused No.4 has claimed to have taken loans from accused No.2. He claims to have had to recover Rs.23 Cr from accused No.2 for the year ended March, 1991 and claims to have to pay accused No.2 Rs.1.10 Cr in the year ended March, 1992. He has produced neither the audited accounts, nor the income tax returns evidencing these transactions. He claims that his documents were seized by the CBI but has not applied for return of the audited statements of the years ended March, 1991 and March, 1992. He could have produced the certified copies of the income tax returns which would have shown the audited accounts but that is also not done. The accounts are of a private limited company which would require to file annual returns with the Registrar of Companies (ROC) under Sections 159 to 163 of the Companies Act, 1956 which could have been produced by him but which is not done.
85. He is shown to have issued 3 cheques in favour of accused No.2 on 07.03.1991, 11.03.1991 and 18.03.1991 for Rs.75 L, Rs.75 L & Rs.3 Cr Exhibit 94A collectively which are admittedly executed by him but ::: Downloaded on - 27/01/2014 23:10:30 ::: (85) SPSC 2/95 (J) stated to be towards running loan account. The explanation given by accused No.4 in reply to question 4 runs diametrically different from the documents shown to him contained in the aforesaid cheques in question No.5. The running loan account stated by him is neither for Rs.75 L or Rs.
75 L or Rs. 3 Cr or the total thereof. If accused No.4 had to recover Rs.23 Cr from accused No.2, it is not explained how he would require to pay Rs.1.10 Cr to him in the next year. Whatever that be, those transactions do not relate to the prosecution case. The callous statement of a running loan account is wholly irrelevant.
86. The written statement of accused No.4 is much in the same light. After describing himself, narrating his bank accounts and denying the prosecution case, he contends that the cheques came to be deposited into the account of his company towards loan transaction between M/s. Dhanraj Mills Pvt. Ltd. and accused Nos.2 & 10. Accused No.4 has shown a decree and an order of this Court dated 26.03.2003 and 21.06.2006 respectively as Annexures I & III to his written statement respectively showing wholly different transactions which had no bearing upon the transaction No.2 in which accused No.4 is seen to have deposited the cheque of BMC Bank drawn on Andhra Bank in the account of his company instead. Even the arithmetical calculations done by accused No.4 towards his case of Rs.22 Cr loan payable by accused No.2 does not show the cheque under transaction No.2. It shows two cheques dated 21.05.1991 and 01.07.1991 having been received from accused No.2. It is thereafter claimed that after receiving those cheques Rs.1.10 Cr was due and payable to accused No.2 which arithmetical calculation is wholly incorrect. It shows a difference of Rs.1.72 Cr even after the two cheques stated by accused No.4. The decree dated 21.06.2006 for Rs.1.10 Cr is, therefore, sought to be shown wholly out of context. It has no relevance and bearing ::: Downloaded on - 27/01/2014 23:10:30 ::: (86) SPSC 2/95 (J) upon the prosecution case and consequently the defence of accused No.4 for transaction No. 2 of 1991.
87. In any event the orders and decrees shown by accused No.4 as annexures to his written statement all show the admitted claim of accused No.4 and ex parte decree came to be passed in favour of the custodian by this Court for Rs.71.75 L upon the admission of M/s. Dhanraj Mills Pvt. Ltd on 26.03.2003. Thereafter on 26.04.2005 interest came to be considered by the Court upon the admitted principal amount of Rs.71.75 Cr. In that order the contention of the custodian shows that the other respondents in that case who claimed to have lent and advanced that amount to M/s.
Dhanraj Mills Pvt. Ltd. were seen to have had no personal means for lending such large amounts of money to M/s. Dhanraj Mills Pvt. Ltd. and consequently it was contended that the monies were fraudulently diverted by M/s. Dhanraj Mills Pvt. Ltd. by the other accused in that case in collusion and conspiracy with one another. This case is not concerned with the other observations in that case and is upon a wholly distinct transaction No.2 of 1991.
88. Even the order dated 21.06.2006 annexed as Annexure III to the written statement of accused No.4 shows M/s. Dhanraj Mills Pvt. Ltd. willing to pay Rs.1.10 Cr. The amount is directed to be paid to the custodian on behalf of accused No.2 who was respondent No.2 therein since he was a notified person. That payment has no bearing upon the transactions in this case. He had not shown when that amount came to be due and payable. It is not shown why Rs.5.23 Cr. could have been credited in the account of accused No.4 at that time. The documents in transaction No.2 show otherwise. The documents show that on the date the DD of BMC Bank was issued on 26.03.1991, the amount was credited to the ::: Downloaded on - 27/01/2014 23:10:30 ::: (87) SPSC 2/95 (J) account of accused No.4 in Andhra Bank who was the payee under the DD. The ledger account of the bank statement of the company of accused No.4 is only for March, 1991. The part repayment that was made was also in March, 1991. The repayment was made by accused No.10 (not accused No.4).
89. In transaction Nos.3 & 4 the cheques have been issued by accused No.2 in favour of inter alia accused No.4. The cheque for Rs.9.10 Cr dated 21.05.1991 Exhibit 15 has been issued by accused No.2 in favour of accused No.4 a day after the date of transaction No.3. A cheque for Rs.10.06 Cr came to be paid by accused No.2 to the company of accused No.4 on 01.07.1991, the date of transaction No.4. The total of these two cheques shown by accused No.4 in his written statement does not leave a balance of Rs.1.10 Cr. Hence the decree for Rs.1.10 Cr against accused No.4 and in favour of the custodian passed upon the admission of accused No.4 on 21.06.2006 is an independent transaction.
90. Accused No.4 cannot be and is not held criminally liable for any of the cheques issued by accused No.2 to him in the transactions between BMC Bank and BOI as the case of criminal conspiracy is not made out by the prosecution. Hence for all those transactions (except transaction No.2) the dealings of accused No.4 need not be considered. His criminal liability as broker is seen only in transaction No.2 - on par with the criminal liability of accused No.2 as broker in all the other 16 transactions. In that transaction he has not explained the receipt of 53 L misappropriated to himself as aforesaid; the simple further bank statement of accused No.4 would have sufficed to substantiate his statement that he paid Rs.50 L later to accused No.10 (since deceased).
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91. Whereas the defence of accused No.2 is incredible, the defence of accused No.4 with regard to the pertinent transaction No.2 is not shown and with regard to transaction Nos. 3, 4 & 15 is irrelevant. It has been considered only to show otherwise its falsity and inaccuracy.
92. Another small slip has demonstrated the manifest lie of accused No.2. The claim of accused No.4 of the cheque issued by accused No.2 towards loan has left a void in the acts of MM. If accused No.2 gave all the presigned cheques to MM how did he issue cheques to accused No.4?
93. A reading of the statements and defences of accused Nos.1, 2, 4 & 13 must be evaluated in terms of the jurisprudence that has developed on the subject. Whether or not and how much of the statements of the accused carry weight must be seen. The statements of accused No.1 that there were badla transactions with accused No.2 and that he dealt in public issues is not at all substantiated. The statements of accused No.2 that he gave his cheque book/s to MM is belied by the statements of accused Nos. 1 & 4 who claim to have had badla and loan transactions respectively with him. The statement of accused No.4 that he had loan transactions with accused Nos. 2 and 14 (since deceased) is not at all substantiated either for obtaining or advancing the loans or for repaying them or being repaid. No substantiating documents are produced by either accused Nos. 1 or 4 to back their claims.
94. It would have to be seen whether a statement wholly devoid of such particulars can avail the accused.
95. The law with regard to the content and the acceptability of the ::: Downloaded on - 27/01/2014 23:10:30 ::: (89) SPSC 2/95 (J) statement of the accused has been well enshrined in various judgments of the Apex Court and may be considered to that end thus:
96. In the case of Rattan Singh Vs. State of Himachal Pradesh AIR 1997 SC 768 the evasive answer of the applicant to the question regarding the gun being found with the accused which was taken by the witness and handed over to the police was held to lend credence to the statement of the witness that the gun belonged to the accused and he was required to explain how it was got produced.
It was observed that Section 313 of the Cr. P. C. is not a mere formality. Answers given by the accused to the questions put to him during such examination have a practical utility for criminal Courts. Apart from affording an opportunity to the delinquent to explain incriminating circumstances against him, they would help the Court in appreciating the entire evidence adduced in the Court during trial.
97. In the case of Alister Anthony Pareira Vs. State of Maharashtra (2012) 2 SCC 648 the accused was charged with the offence of rash and negligent driving in drunken condition causing death of and injury to several persons and charged under Section 304 II of the Cr.P.C. The accused did not deny the occurrence of the accident. His defence was that it happened due to engine and mechanical failure. He relied upon the evidence of PW 15, the Motor Vehicle Inspector to show that the break and gear of the car were operative. The spot panchnama which was proved showed the break marks showing that the vehicle was driven at high speed and the appellant lost control. The evidence of PW 15 showed the condition of the car driven by the appellant after the accident. The explanation of the accused that despite the evidence of PW 15 showing the damage to the car, the break and the gear were seen to be operative from ::: Downloaded on - 27/01/2014 23:10:30 ::: (90) SPSC 2/95 (J) the evidence of PW 15, observed in para 20 of the judgment, resulted in the Court not accepting the explanation of the accused in para 76 of the judgment from such evidence only.
98. In the case of Ramnaresh & Ors. Vs. State of Chhattisgarh AIR 2012 SC 1357 which was a case of gang rape and murder, it has been held in para 22 of the judgment that if the accused does not avail of the opportunity to explain the circumstances against him and put forward his defence the consequence in law must follow. When he takes benefit of the opportunity and makes his statement under Section 313 of the Cr.P.C. it can be used against him for rendering conviction in so far as it supports the case of the prosecution.
In that case the accused denied their presence on the spot at the time of the occurrence. It was held that it was for the accused to prove that they were not present at the place of occurrence since the denial was in the nature of an alibi. It was observed that the accused had "miserably failed to establish that fact". The Court considered that on the contrary their behaviour was unnatural in the social setup in which the accused, the deceased and some of the witnesses were living being in a village where they would know each other well and would participate in the affairs of each other particularly sad occasions. Hence their version of absence in their 313 statement was unbelievable, unacceptable and it was held that there was no cogent evidence on record to support their plea.
99. In the case of Munish Mubar Vs. State of Haryana AIR 2013 SC 912 which was a case of murder, the circumstantial evidence was to be considered. The prosecution evidence showed inter alia one car belonging to the accused parked in the car parking stand of New Delhi Airport at the time of the arrival of the flight of the deceased. This was one of the ::: Downloaded on - 27/01/2014 23:10:30 ::: (91) SPSC 2/95 (J) circumstantial evidence along with a certain mobile phone number and the list of articles the deceased had brought with him on the flight and the records of a hotel in New Delhi. The accused was arrested whilst travelling in the car. The evidence showed that the accused was to receive the deceased at the New Delhi Airport upon his arrival from Mumbai.
The case of the accused was only of denial and illegal detention. It was held that the circumstantial evidence connected the accused with the crime and the accused failed to furnish any explanation in relation to the evidence.
It was held in para 24 of the judgment that it was obligatory on the part of the accused while being examined under Section 313 of Cr.P.C. to furnish some explanation with respect to the incriminating circumstances associated with him and the Court must take note such explanation, even in the case of circumstantial evidence, to decide whether or not the chain of circumstances was complete.
It was held in para 25 of the judgment that it was the duty of the accused to furnish some explanation to show under what circumstances his car had been parked at Delhi Airport and a mere bald statement that the documents were false and fabricated was not enough.
100. Finally in the latest case of Ravirala Laxmaiah Vs. State of Andhra Pradesh (2013) 9 SCC 283 the Supreme Court again emphasized the imperative of the explanation of the accused. Of course, that was a case of murder upon circumstantial evidence and the accused "was duty bound to explain" the circumstance that he was last seen with deceased in his house with the ornaments of the deceased in his possession which was not explained satisfactorily. The Supreme Court held that failure to explain or giving a false explanation is itself an additional link to the chain of incriminating circumstances.
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101. The law relating to failure to explain the circumstance of the amount of the cheque of Rs.5.23 Cr having been deposited in the account of the company of accused No.4 in Andhra Bank applies with equal vigour to accused No.4 as it does to accused No1, the frivolous argument on his behalf that the pay-in-slip showing the deposit is not produced as in the other transactions of accused No.2 notwithstanding.
102. Accused No.13 admittedly executed the contract note & bill in the first transaction. His role was only to do so. He was not paid brokerage though brokerage is reflected in the transaction. Accused No.1 also admittedly got executed, through his Constituted Attorney, contract notes, bills and confirmation memos, copies of which he himself produced.
He was not paid the brokerage shown in his bills. The bogus brokerage shown to be payable to the 2 brokers accused Nos.1 & 13 was credited to the account of accused No.2 (and accused No.4 in transaction No.2) instead. The credits are admitted by accused Nos.2 & 4. Whereas the defence of accused No.2 is an absurd tale that all the cheques were presigned and issued by MM, the defence of accused No.1 & accused No.4 is that accused No.2 issued the cheque, Exhibit 139 as also the cheque for Rs.5.23 Cr. in transaction No.2 for different reasons. Whatever be the reasons, no cheque could be issued by accused No.2 if MM had all his cheques presigned by him and if he did issue those cheques for whatever reasons, MM is out of the picture. The three accused Nos.1, 2 & 4 have certainly not co-ordinated their defences even if they colluded in their offences.
103. It would now have to be seen whether accused No.2 (and accused No.4 in transaction No.2) were the sole participants and ::: Downloaded on - 27/01/2014 23:10:30 ::: (93) SPSC 2/95 (J) beneficiaries of the transactions in which they acted singly. The fact that credit notes have been issued by the firms of accused Nos.1 & 13 would show some nexus of accused Nos.1 & 13 with accused No.2 (and accused No.4 in case of transaction No.2). Only intrinsic documentary evidence would show this fact.
104. The main role in the transaction for brokering the deal ostensibly between the bank and BOI is of accused No.2 (and accused No.4 in transaction No.2). Accused No.2 is only shown to have credited the amount in his personal bank account. However the contract notes and the broker's bills of the firms of accused Nos.1 & 13 are shown as the documents constituting the backbone of the transaction. The two brokers are not expected to work gratis. Judicial notice is required to be taken of such fact. Accused No.13 as one of the two brokers has made a grievance to call it a day after transaction No.1 itself. Accused No.1 who is shown to have brokered transaction Nos.5 to 17 from 02.08.1991 to 08.04.1992 admittedly through his constituted attorney Kanani under the power of attorney executed by him in favour of Kanani, has been paid a net brokerage of at least Rs.10 lacs as shown by the prosecution through the cheque issued by accused No.2 in favour of accused No.1 Exhibit 139 on 09.06.1992 at the end of the statutory period and after all the 17 transactions were through.
105. The receipt by accused No.4 in transaction No.2 is specifically and separately admitted by him by virtue of the document got produced by consent, Exhibit 172 colly. These documents read alongside the other documents of transaction No.2 being the contract note, Exhibit 94, the broker's bill, Exhibit 95, the DD issued by BMC Bank in favour of Andhra Bank in which accused No.4 has his personal account, Exhibit 113 and the ::: Downloaded on - 27/01/2014 23:10:30 ::: (94) SPSC 2/95 (J) covering letter of BMC Bank addressed to the Manager of Andhra Bank, Exhibit 114 show that a similar modus operandi was employed in the transaction in which accused No.4 credited Rs.5.23 Cr into his bank account and after issuing three cheques for Rs.4.70 Cr became privy to the net profit of Rs.53 L in the transaction.
106. Accused Nos.4, 5, 10 & 14 (except in transaction No.2 with regard to accused No.4) have been involved only upon receipt of the cheques of accused No.2. Accused Nos.5, 10 & 14 have later sought to pay off the BMC Bank with interest. These accused have, therefore, not initiated the transactions. They have also not acted upon the DD issued by the BMC Bank along with its covering letter.
107. The main accused involved in these transactions is accused No.2 (and accused No.4 in case of transaction No.2). They have utilized their personal bank accounts for crediting the proceeds of cheques/cheque of BMC Bank. They have thereafter issued cheque/cheques in favour of the other accused. Accused Nos.1 & 13 through their firms have assisted accused No.2 (and accused No.4 in case of transaction No.2) in obtaining and crediting the DD of BMC Bank and its proceeds into their personal bank account as brokers. Accused No.1 is seen to have been remunerated for such assistance. There is no such evidence for connecting accused No.13 with the transactions except transaction No.1 admitted by him and which, according to him, directly took place with BMC Bank.
108. The main prosecution case against all the accused of criminal conspiracy has been sought to be made out against the brokers accused Nos.1, 2, 3, 4, 5,10, 13 & 14 and their employees accused Nos.11, 12, 15 &
16. No role of the broker accused No.5 is seen in the initiation of the ::: Downloaded on - 27/01/2014 23:10:30 ::: (95) SPSC 2/95 (J) transaction. Accused Nos.10 & 14 have expired. Accused No.13 is seen to have played a limited role directly with the bank as stated above. Accused Nos.2 & 4 have transacted different transactions though accused No.4 has been the beneficiary of certain cheques of accused No.2, just as accused No.5 has, but which transactions he has himself has not initiated. Accused No.1 is seen to have acted through his constituted attorney and has received pecuniary advantage.
109. The prosecution has sought to show how the employees of accused Nos.1 & 13 played a role in the criminal conspiracy. The employees have nevertheless acted, if at all, upon the dictates of their employers, accused Nos.1 & 2. One such employee/dealer of accused No.1 has expired. The prosecution case is of the transactions being made under the forged letters shown in most of the transactions issued on the date of the transactions showing the amount of the transactions to be credited to the bank accounts of Accused Nos.2 & 4. This has been sought to be proved through the examiner of questioned documents who is the handwriting expert (expert). The expert has opined that in two of the forged letters the signatures tally with the specimen taken by the prosecution. Whoever that be, the writer of the documents is not shown to have obtained any specific personal pecuniary advantage. The case of the prosecution against the various employees of BMC Bank and BOI is not substantiated resulting in the discharge of those officers, one of them having expired. The case against any of the employees of accused Nos.1 & 13 who would act upon the dictates of accused Nos.1 & 13 of forgery is nebulous enough to be rejected. Accused No.11, 15 & 16 are, therefore, not seen to have committed offences under Sections 120-B, 411, 420, 465 or 471 of the IPC as charged.
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110. Similarly no evidence of any illegal act on the part of accused No.5 as a broker is seen. Accused No.5 much like accused Nos.10 & 14 since deceased, and accused No.4 in transaction Nos.3, 4 & 15 have been seen to have only been transferred a part of the amounts under the transaction with the bank credited to the account of accused No.2 by accused No.2. Accused No.5 has paid off BMC Bank under most of the transactions including far more amounts under 2 of these transactions. The receipt of monies constitute an offence; the payment is not a criminal offence.
111. No agreement by accused Nos.1 & 13 with accused Nos.2 & 4 is expressly shown or impliedly made out. Accused Nos.1 & 13 have acted in distinct and separate transactions under their contract notes and broker's bills being transaction Nos. 1 to 4 by accused Nos.13 and transaction Nos. 5 to 17 by accused No.1. Since there were no transactions upon shares or stocks in which accused Nos.1 & 13 dealt as share brokers but ostensibly for securities transactions, they are not seen to have made out false documents to support the claim of securities transactions for which BMC Bank parted with their DDs. Want of any agreement, express or implied between accused Nos.1 and 13 with accused Nos.2 or 4 or any of the officials of BMC Bank would rule out in case of criminal conspiracy against any of these accused.
112. Consequently the agreement contemplated under Section 120- A of the IPC showing agreement between persons to do or cause to be done (through another) any illegal act is not seen except a connection between accused Nos.1 & 2 by virtue of the cheque dated 09.06.1992 of Rs.10 L issued by accused No.2 in favour of accused No.1. There is no payment shown to be made to accused No.13. Accused Nos.2 & 4 alone, therefore, ::: Downloaded on - 27/01/2014 23:10:30 ::: (97) SPSC 2/95 (J) are the architects of the transactions which were ostensibly inter-bank transactions but which came to rest admittedly in their personal bank accounts in the two banks with which the BMC Bank sought to transact.
113. It need not detain the Court much longer to conclude that the charge of criminal conspiracy is not made out by the prosecution.
114. In view of the above narrow ambit of the transactions in this case which would have to be seen chiefly and only against accused Nos.2 & 4 and to the above limited extent against accused No.1, the case of dishonestly receiving stolen property punishable under Section 411 of the IPC, committing forgery punishable under Section 465 of the IPC or using a forged document as genuine punishable under Section 471 of the IPC or otherwise cheating and dishonestly inducing delivery of property under Section 420 of the IPC, which are the charges made out against accused Nos.1, 2 & 4, would have to be seen separately and individually against them.
115. Accused No.2 (and accused No.4 in transaction No.2) have indeed received the DDs of BMC bank though made out in the name of BOI in 16 out of 17 above transactions. He has credited each of those DDs in his personal current account No. 8077 with BOI. The DDs were not issued in his name. They have nevertheless been credited to his personal account.
The bank account statement of accused No.2, Exhibit 53 certified under the Banker's Book Evidence Act and the bank account statement of the company of accused No.4, Exhibit 172 colly show each of these credits.
116. It is from this simple act proved through documentary evidence of unimpeachable nature contained in the certified bank account ::: Downloaded on - 27/01/2014 23:10:30 ::: (98) SPSC 2/95 (J) statement of accused No.2 that the charge of cheating and dishonestly inducing delivery of property punishable under Section 420 of the IPC has to be seen against Nos. 2 & 4.
117. The documentary evidence in the case conclusively proves the charge of cheating by accused No.2. Accused No.2 has credited the DDs made out by BMC Bank in favour of BOI to his personal current account No. 8077 with BOI. Since the DD itself was not executed in his favour and he was not the payee thereunder the various credits in his account Exhibit 53 lends itself to the only conclusion of deceiving BMC Bank to get appropriated the proceeds of the cheque into his own account instead of the account of the payee, BOI. This could not have been done except by deceiving the bank. It is not even shown that the BMC Bank meant the proceeds of the DD to be credited to the account of accused No.2. Hence accused No.2 fraudulently and dishonestly induced BMC Bank to deliver the DDs to him which the bank would not otherwise do, given that the DDs were executed in favour of BOI. By this act accused No.2 has made clear and net profit of amount Rs. 10.69 Cr. as shown in the aforesaid statement constituting the offence of cheating punishable under Section 420 of the IPC.
118. The case of accused No.4 in transaction No.2 is identical to the case of accused No.2 in the other transactions. The DD issued by BMC Bank in favour of Andhra Bank came to be appropriated in the account of the company of accused No.4, Dhanraj Mills Pvt. Ltd. in which he was director. It has been shown to be utilized by accused No.4 by further entries of credits in the other accounts to a lesser extent retaining for himself the profit as reflected in the statement of account produced by himself, part of Exhibit 172 colly. The case of accused No.4 cheating BMC ::: Downloaded on - 27/01/2014 23:10:30 ::: (99) SPSC 2/95 (J) Bank in the same manner is made out. It may be mentioned that the case of loan sought to be made out by accused No.4, even if accepted, would be for transaction Nos.3, 4 & 15 which were transactions of accused No.2 who could have paid him as stated by him, but not for transaction No.2 in which accused No.2 was not involved and which was to be in favour of Andhra Bank where accused No.4 had an account.
119. Both accused Nos.2 & 4 are shown to have misappropriated amounts upon such transactions which they have retained with themselves so as to make a clear profit even after the BMC Bank came to be paid off a part of the amount transferred as shown in the statement above. Accused No.2 has blatantly transacted in all but one transaction thus. Accused No.4 has transacted only in transaction No.4 thus. It, however, does not matter how many transactions the accused entered into or how much was the property received and retained by each of them. The property was misappropriated by them by crediting the DD in favour of BOI in the account of accused No.2 and the DD in favour of Andhra Bank in the name of accused No.4. The misappropriation was for making the illegal gain upon bogus transactions. The property dishonestly misappropriated which came in the possession of accused No.2 and accused No.4 would be stolen property as defined in Section 410 of the IPC. The properties contained in the DDs which came to be credited in the accounts of accused No.2 and accused No.4 having been criminally misappropriated as shown above would constitute stolen property.
120. What is stolen property and dishonestly receiving it is described in Section 410 and 411 of the IPC which run thus:
Of the receiving of stolen property
410. Stolen property.- Property, the possession whereof has been transferred by theft, or by extortion, or by robbery, and property ::: Downloaded on - 27/01/2014 23:10:30 ::: (100) SPSC 2/95 (J) which has been criminally misappropriated or in respect of which criminal breach of trust has been committed, is designated as "stolen property", [whether the transfer has been made, or the misappropriation or breach of trust has been committed, within or without [India]]. But, if such property subsequently comes into the possession of a person legally entitled to the possession thereof, it then ceases to be stolen property.
411. Dishonestly receiving stolen property.- Whoever dishonestly receives or retains any stolen property, knowing or having reason to believe the same to be stolen property, shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.
121. It is the prosecution case that accused No.2 and accused No.4 have forged the letters of BMC Bank to have the proceeds of the DDs executed in favour of BOI and Andhra Bank to be credited to the personal current account of accused No.2 and the account of the company of accused No.4. However the fact of forgery sought to be shown by the evidence of the examiner of questioned documents, the handwriting expert remained nebulous. Consequently though the actual forgery as defined under Section 463 punishable under Section 465 using the forged documents being those letters as genuine under Section 471 of the IPC may elude accused No.2 and accused No.4, the prosecution has made out a clear case of accused Nos.2 & 4 having cheated BMC Bank by inducing it to deliver the letters addressed to BOI or Andhra Bank to them instead.
122. Accused No.1 is seen to have received property contained in the cheque of Rs.10 lacs from the proceeds of the transactions by accused No.2 at the end of the period of the 17 transactions being in the statutory period purportedly by way of his brokerage for allowing the ostensible securities transactions to go through under the bogus documents executed by his employees under his express authority granted in his power of ::: Downloaded on - 27/01/2014 23:10:30 ::: (101) SPSC 2/95 (J) attorney, Exhibit 121. It would have to be seen whether accused No.1 could be rightly charged under Section 411 of the IPC for dishonestly receiving stolen property. It would have to be seen whether the property contained in the cheque Exhibit 139 would constitute stolen property. The cheque is issued by accused No.2 from the funds contained in his personal bank account No.8077 which were misappropriated by accused No.2 as aforesaid from the proceeds of the transaction Nos.5 to 17 and accepted by accused No.1.
123. Upon the cheque being received by accused No.1 the presumption of the fact that the cheque was received from the proceeds of the BMC Bank would require to be drawn under Section 114 of the Indian Evidence Act which is the code with regard to the presumption and which runs along with relevant illustrations thus:
114. Court may presume existence of certain facts.- The Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case.
Illustration The Court may presume-
(a) That a man who is in possession of stolen goods soon after the theft is either the thief or had received the goods knowing them to be stolen, unless he can account for his possession
124. Accused No.1 being admittedly in possession of cheque of Rs.10 lacs, Exhibit 139 within the relevant period and after having got executed through his constituted attorney the various contract notes along with his bills must be presumed to have known that the amount came from BMC Bank and having come from accused No.2 that it was misappropriated by accused No.2 unless he otherwise accounts for the possession of the cheque.
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125. The Court would, therefore, require to presume that upon these transactions accused No.2 remunerated accused No.1 to the extent of Rs.10 L, they being brokers and not expected to transact with the bank or allow any transaction to go through gratis as would be the common course of human conduct of the business of such brokers. Accused No.1 being in possession of the said cheque would require to account for it. He was specifically asked about it in the statement recorded under Section 313 of the Cr. P. C. In reply to question Nos.4 & 5 of his statement he has accepted the receipt as also the deposit of the cheque on 19.03.2013. In reply to question No. 29 on 26.03.2013 he has again admitted that the cheque was credited to his account. He has stated that he has nothing to do with the securities transaction because he has other transactions with accused No.2 in shares and badla. No particulars of any such transaction is given by him. It is argued on his behalf that his reply on the next date of the recording of the statement was reasonable and probable. The Court cannot see the reasonableness or the probability of any other transaction of accused No.1 with accused No.2 in shares or badla because no particulars whatsoever are given of any of such transactions.
126. The aforesaid series of cases on the purposive ambit of Section 313 of the Cr. P. C. would require positive evidence to be shown by the accused once he takes a particular defence. Merely stating that there was a share or badla transaction is, therefore, unacceptable. It is for accused No.1 to show the particulars of such transactions, prima facie.
127. Upon the law as it stands the statement of accused No.1 with regard to cheuqe Exhibit 139 cannot be accepted.
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128. It has been argued that since the stolen property under Section 410 is only property transferred by theft, extortion, robbery, criminal misappropriation and criminal breach of trust, the charge under criminal breach of trust having not been made, the charge of dishonestly receiving stolen property under Section 411 would not entail the person receiving or retaining such property having reason to believe that it is such property.
129. Once his knowledge as well as his reason to believe that the same was stolen property being the property misappropriated by accused No.2 from the property of BMC bank under the various demand drafts for which his contract notes, broker's bills, memos of confirmation and securities vouchers were prepared is seen, he must be taken to have dishonestly received from accused No.2 and then retained in his HSBC account the said stolen property. This having been done with the knowledge and belief that it was so, lends himself liable as such dishonest receiver of stolen property.
130. Of course, the case of the prosecution of criminal conspiracy, forgery, using the forged documents as genuine and cheating is not made out against accused No.1.
131. The case against accused No.13 in respect of contract notes, broker's bills, memos of confirmation and securities vouchers of his firm shown to be drawn by him out of which the first transaction is admitted by him but which is outside the relevant period under the Special Courts Act has been left at that without showing any property received by him by way of any brokerage or otherwise. Consequently the case of criminal conspiracy or cheating or forgery or using forged document as genuine is not clearly made out against accused No.13. He having not received any ::: Downloaded on - 27/01/2014 23:10:30 ::: (104) SPSC 2/95 (J) brokerage or any other payment cannot be taken to have received or retained stolen property. Since there is no property delivered to him, accused No.13 cannot be taken to have dishonestly received stolen property punishable under Section 411 of the IPC and is required to be given benefit of doubt thereunder.
132. Consequently the prosecution has not made out any case of any of the accused having entered into any criminal conspiracy upon implied or express agreement to do any illegal act or to do any act by any illegal means as defined under Section 120-A and punishable under Section 120-B of the IPC. All the accused are acquitted of the charges under the said section.
133. The prosecution has also not made out any case of cheating or committing forgery of any document or valuable security for the purpose of cheating or to use any forged document as genuine by accused No.1. The prosecution has however made out a case of accused No.1 having dishonestly received stolen property defined under Section 410 and punishable under Section 411 of the IPC.
134. The prosecution has made out a clear case of accused No.2 having committed the offence of cheating in transaction Nos.1 & 3 to 17 by deceiving BMC Bank and fraudulently and dishonestly inducing BMC Bank to deliver the DDs made out in the name of BOI to him which caused damage and harm to BMC Bank being the offence defined under Section 415 and punishable under Section 420 of the IPC. The prosecution has however not made out any case of accused No.2 having received stolen property from another or having forged the letters of BMC Bank or any other valuable security for the purpose of such cheating or of using such ::: Downloaded on - 27/01/2014 23:10:30 ::: (105) SPSC 2/95 (J) document as genuine.
135. The prosecution has made out a clear case of accused No.4 having committed the offence of cheating in transaction No. 2 by deceiving BMC Bank and fraudulently and dishonestly inducing BMC Bank to deliver the DD made out in the name of Andhra Bank to him which caused damage and harm to BMC Bank being the offence defined under Section 415 and punishable under Section 420 of the IPC. The prosecution has however not made out any case of accused No.4 having received stolen property from another or having forged the letters of BMC Bank or any other valuable security for the purpose of such cheating or of using such document as genuine.
136. The prosecution has not made out any case of accused No.13 having received stolen property by any cheque issued to it by way of brokerage fees or otherwise. The prosecution has also not made out any case of cheating or committing forgery of any document or valuable securities for the purpsoe of cheating or using any document as genuine by accused No.13.
137. The prosecution has not made out any case of any of the offences against accused Nos.5, 11, 15 & 16.
138. Consequently accused No.1 is acquitted of the charges of cheating, committing forgery of any document or any valuable security for the purpose of cheating or using a forged document as genuine punishable under Sections 420, 465, 468 & 471 of the IPC. Accused No.1 is convicted of the charge of dishonestly receiving stolen property from accused No.2 criminally misappropriated by accused No.2 knowing and having reason to ::: Downloaded on - 27/01/2014 23:10:31 ::: (106) SPSC 2/95 (J) believe that the same was stolen property punishable under Section 411 of the IPC.
139. Accused No.2 is acquitted of the charges of receiving stolen property, committing forgery of any document of valuable security used for the purpose of cheating or using forged document as genuine punishable under Sections 411, 465, 467, 468 & 471 of the IPC. Accused No.2 is convicted of the offence of cheating BMC Bank and dishonestly inducing it to deliver the DDs made out in the name of BOI to accused No.2 which he criminally misappropriated into his own personal current bank account No.8077 in BOI punishable under Section 420 of the IPC.
140. Accused No.4 is acquitted of the charges of receiving stolen property, committing forgery of any document of valuable security used for the purpose of cheating or using forged document as genuine punishable under Sections 411, 465, 467, 468 & 471 of the IPC. Accused No.4 is convicted of the offence of cheating BMC Bank and dishonestly inducing it to deliver the DDs made out in the name of Andhra Bank which he criminally misappropriated into the bank account of the company in which he is a Director punishable under Section 420 of the IPC.
141. Accused No.13 is given benefit of doubt and accordingly acquitted of the charge of dishonestly receiving stolen property punishable under Section 411 of the IPC. Accused No.13 is acquitted of the charge of cheating or committing forgery of any document or valuable security for the purpose of cheating or using forged document as genuine punishable under Sections 420, 465, 467, 468 & 471 of the IPC.
142. Accused Nos.5, 11, 15 & 16 are acquitted of having committed ::: Downloaded on - 27/01/2014 23:10:31 ::: (107) SPSC 2/95 (J) the offence of cheating or forgery of any document of valuable security for the purpose of cheating or using any forged document as genuine punishable under Sections 420, 465, 467, 468 & 471 of the IPC.
143. Accused Nos.1, 2 & 4 are asked to state on the point of sentence.
144. Accused Nos. 1, 2 & 4 request to be represented by their counsel. Hence their counsel are heard.
145. They all apply for being released on probation under Section 4 of the Probation of Offenders Act, 1958. They claim that it has taken more than two decades since the date of transactions for this judgment to be delivered.
146. It is argued on behalf of accused No.1 that since he is convicted only of the offence of receiving stolen property which is punishable with sentence or with fine or with both and not other offences, the sentence of only reasonable fine be imposed.
147. It is argued on behalf of accused No.2 that the judgment should be restitutive rather than retributive, deterrent or corrective. Counsel on his behalf contended that the loopholes in the banking systems have been effectively plugged since these transactions were detected and hence there is no question of repeating these offences by the accused persons. He also claims that accused No.2 being a notified person cannot operate his BSE card and is working in a food chemical company for his sustenance. He however claims to be a useful member of the society and hence it is argued that any sentence would be counter-productive. He also ::: Downloaded on - 27/01/2014 23:10:31 ::: (108) SPSC 2/95 (J) claims to be a diabetic. It is also argued that restitution could be by way of reasonable compensation.
148. Accused No.2 has relied upon the judgment in the case of Chand Vs. State of Uttar Pradesh AIR (SC)-1972-0-955 for the order of release on probation in a case of an offence punishable under Section 304 of the IPC. The Court considered the case of the accused below 21 years age in that case which does not apply to accused No.2.
149. It is contended on behalf of accused No.4 that the transactions of the year 1991-92 came to be returned by payment of interest to the BMC bank prior to the FIR being lodged and the charge-sheet being filed. It is contended that, therefore, the repayment was not to wriggle out of the provisions of law but it reflects that the transactions were undertaken under the belief that they were legal. It is also contended that though the transactions were of the year 1991-92, the FIR has been lodged in 1993, the charge-sheet filed in 1995 and the charges were framed in 2007. It is claimed that the trial ended in 2014, there has been much sufferings for the accused who are entitled to the right of speedy trial. It is also contended that the compensation which is contemplated to be payable under Section 357 of the Cr.P.C. is for loss or injury caused by the offence and when the bank has been repaid the amount of interest and has not sought to prosecute any of the accused, there would be no loss or injury that may be compensated. It is also argued that since under Section 357(5) of the Cr.P.C. the compensation paid would have to be considered in civil trial for compensation, a reverse principle would apply since in this the amounts payable to accused Nos.2 & 10 have been paid off and only Rs.1.10 Cr. was held to be repayable by accused No.4 to accused No.10 in the civil trial. It is argued that accused Nos. 2 & 10 have been paid back ::: Downloaded on - 27/01/2014 23:10:31 ::: (109) SPSC 2/95 (J) the loan amount and there is no question of paying back either of the banks. Accused No.4 claims to be suffering from many conditions and illnesses and he stated to be 66 years old. Counsel on his behalf has relied upon the judgment in the case of Bonela Swaminatham Vs. State of A. P. AIR 2000 SC 3578(1) and Manilal Girdharilal Shah Vs. State of Gujarat AIR 1979 SC 1343.
150. Learned Special P.P. Contended that all the 17 transactions are in successive mode for which more than Rs. 125 Cr. have been siphoned off. The cheating of the bank constitutes misappropriation of public money which the accused had no right to utilize for inter se transactions amongst themselves. The accused have taken monies from the banks and applied the same for investment in stock market. He contends that it has been held that no leniency can be shown in such economic offences and that the period of 20 years for the ultimate sentence is also not a consideration for granting a lesser sentence then what would be deserved. He further contends that the provisions of Section 357 would be applied in addition to the sentence of imprisonment and fine which is held to be mandatory despite the use of the expression "may" in Section 357(1) of the Cr.P.C. He has submitted the aforesaid judgments in that behalf.
151. The Court has a discretion to impose a sentence of imprisonment or fine under Section 411 of the IPC in addition to which there could be the imposition of compensation under Section 357(1) of the Cr.P.C. The sentence must be commensurate with the offence and must reflect the conscience of the society since it is an offence upon the society at large. The Court has no such discretion under Section 420 of the IPC. The imposition of compensation under Section 357 of the Cr.P.C., therefore, is in addition to the sentence of imprisonment and fine. The repayment to ::: Downloaded on - 27/01/2014 23:10:31 ::: (110) SPSC 2/95 (J) BMC Bank is not made by accused No.2 but by accused No.4 in transaction Nos.3, 4 & 15, accused Nos.5 and 10 & 14 (since deceased). The reliance upon the aforesaid judgments by accused No.4 is an over simplification in as much as they relate to simple case of one time misappropriation and withdrawing the documents after detection of forgery which bears no comparison with the offence of cheating by accused No.4. The payment to any other accused for transactions, if any, that were between accused No.4 and that accused from the funds taken out of the BMC bank or Andhra Bank is itself an illegal diversion. It would be a mockery if the payment to an accused could be taken as discharge to the bank which was the victim in respect of those funds. None of the accused in a case of such economic offence would render himself amenable to any expediency for release on probation of good conduct. Each of the aforesaid accused shall have to repay the debt to the society and the country. The contention of the learned Special P.P. that no leniency be shown as specified in the case of State of M. P. Vs. Ghanshyam Singh (2003) 8 SCC 13 and the sentence must be corrective and deterrant as held in the case of Siddarama & Ors.
Vs. State of Karnataka (2007) 1 SCC (Cri) 72 has a lot of substance and must be complied by the Court.
152. Accused Nos.1, 2 & 4 have appropriated public funds for their own personal aggrandizement and profit. Accused No.2 has wiped off BMC Bank funds for large amounts under the guise of broker's fees which went into his personal bank account. Accused No.4 did much the same, albeit to a limited extent in only 1 transaction. Accused No.1 has been privy to a fee from the ill-gotten gains of accused No.2 from accused No.2 for lending the name of his firm through the work of his employee as his agent to secure for himself a sinecure position. These accused have acted for their own gain disregarding the economic interest of their country itself.
::: Downloaded on - 27/01/2014 23:10:31 :::(111) SPSC 2/95 (J) Though they may not suffer imprisonment for the maximum extent otherwise imposable deserved and the extent of imprisonment may be reduced, they require to defray the huge cost of the expenses incurred by the prosecution and in addition thereto also to compensate the State under Section 357 of the Cr.P.C. as per the judgment in the case of Ankush Shivaji Gaikwad Vs. State of Maharashtra (2013) 6 SCC 770 in which the Supreme Court has exalted and enjoined every criminal court to consider the amount of compensation which a convicted accused would have to pay the victim, in this case the State and the public treasury. The word "compensation" denotes an amount which "would compensate" for the loss suffered by the victim. It would, therefor, be commensurate with such loss. It should place the victim in a position it would have been had the loss not been suffered by the criminal act of the accused constituting the offence. It must require "compulsory recoupment by the wrongdoer of the damage inflicted", in this case calculable financial damage. (See. Maru Ram Vs. Union of India (1981) 1 SCC 107 cited in the case of Ankush (supra). Each of these accused who claim to be stock brokers, underwriters, financial consultants, industrialists, investors or advancers must be taken to have the capacity to repay.
153. The sentence against accused No.1 for the offence of dishonestly receiving stolen property of 1 year would be reasonable and appropriate. Accused No.1 is, therefore, convicted and sentenced to suffer rigorous imprisonment of 1 year with fine of Rs.1 lac and in default to suffer rigorous imprisonment of 3 months upon conviction of the offence of having dishonestly received stolen property punishable under Section 411 IPC.
154. The sentence against accused No.2 for the offence of cheating ::: Downloaded on - 27/01/2014 23:10:31 ::: (112) SPSC 2/95 (J) and dishonestly inducing delivery of property of 5 years would be reasonable and appropriate. Accused No.2 is, therefore, convicted and sentenced to suffer rigorous imprisonment of 5 years with fine of Rs.10 lacs and in default to suffer rigorous imprisonment of 1 year upon conviction of the offence of cheating and dishonestly inducing delivery of property punishable under Section 420 of the IPC.
155. The sentence against accused No.4 for the offence of cheating and dishonestly inducing delivery of property of 1 year would be reasonable and appropriate. Accused No.4 is, therefore, convicted and sentenced to suffer rigorous imprisonment of 1 year with fine of Rs.5 lacs and in default to suffer rigorous imprisonment of 3 months upon conviction of the offence of cheating and dishonestly inducing delivery of property punishable under Section 420 of the IPC.
156. The stolen property received and appropriated by accused No.1 forms a part of the public funds criminally misappropriated by accused No.2. It has remained with him from 1992 until now for a period of 21 years. He would require to compensate the victim which, in this case is the public treasury and the State for the amount appropriated by him and utilized by him for more than 2 decades. The compensation must be commensurate with his act as a broker in receiving the amount seen to be his brokerage fees for allowing the aforesaid bogus transaction Nos. 5 to 17 to be effectuated without GOI securities though they were meant to be inter-bank transactions. The appropriate compensation would be the amount that accused No.1 as an erudite broker would have made from Rs.10 lacs received by him dishonestly out of the funds criminally misappropriated and invested by him. At the normal commercial rate of interest of 18% p.a. calculated as simple interest, though it would have ::: Downloaded on - 27/01/2014 23:10:31 ::: (113) SPSC 2/95 (J) been compounded by any prudent investor such as accused No.1, it would be Rs. 37,80,000/- after 21 years. Accused No.1 shall, therefore, also be liable to pay compensation of Rs. 37.80 L to the State.
157. The profit of the outlandish amount of Rs.10.69 Cr. received and appropriated by accused No.2 by cheating forms a part of the public funds criminally misappropriated by accused No.2. It has remained with him from 1992 until now for a period of 21 years since he has not paid back any amount to BMC bank; accused No.4 in transaction Nos.3, 4 to 15 and accused Nos.5, 10 & 14 (since deceased) have done so and they are not accepted to have acted under any agreement with accused No.2.
Accused No.2, who claims that there is no criminal conspiracy between him and any of the accused, therefore, would require to compensate the victim for the amount appropriated by him and utilized by him for more than 2 decades. The victim is Mother India ! The compensation must be commensurate with his act in receiving the amount for allowing the aforesaid bogus transaction Nos. 1 & 3 to 17 to be effectuated without GOI securities and though they were meant to be inter-bank transactions. The appropriate compensation would be the amount that accused No.2 would have made from the investment of Rs.10.69 Cr. At the above rate of 18% p.a. simple interest, the said amount would aggregate to a neat accretion of Rs. 40,40,82,000/- after 21 years. Accused No.1, therefore, shall also be liable to pay compensation of Rs. 40.40 Cr. to the State.
158. The stolen property received and appropriated by accused No.4 of Rs. 53 lacs forms a part of the public funds criminally misappropriated by accused No.2. It has remained with him from 1992 until now for a period of 21 years. He would require to compensate the public treasury and the State for the amount appropriated by him and ::: Downloaded on - 27/01/2014 23:10:31 ::: (114) SPSC 2/95 (J) utilized by him for more than 2 decades. The compensation must be commensurate with his act in allowing the aforesaid bogus transaction No. 4 to be effectuated without GOI securities though it was meant to be an inter-bank transaction as also his alleged acts as an advancer of loans on which he would himself charge interest. The appropriate compensation would be the amount that accused No.4 as a seasoned investor would have made from Rs.53 lacs received by him dishonestly out of funds criminally misappropriated and invested by him at the normal commercial rate of 18% p.a. simple interest, though it would have been compounded by himself. It would, therefore, be Rs. 2,00,34,000/- after 21 years. Accused No.4 shall, therefore, also be liable to pay compensation of Rs. 2 Cr. to the State.
159. Hence the following order:
(i) All the accused are acquitted of the charge of criminal conspiracy punishable under Section 120-B of the IPC.
(ii) Accused Nos.5, 11, 15 & 16 are acquitted of all the charges against them.
(iii) Accused No.13 is acquitted of the charge of cheating, committing forgery of any document or valuable security for the purpose of cheating or using any forged document as genuine punishable under Sections 420, 465, 467, 468 & 471 of the IPC.
(iv) Accused No.13 is given benefit of doubt and acquitted of the charge of dishonestly receiving stolen property punishable under Section 411 of the IPC.
(v) Accused No.1 is acquitted of the charge of cheating, committing forgery of any document or valuable security for the purpose of cheating or using any forged document as genuine punishable under Sections 420, 465, 467, 468 & 471 of the IPC.::: Downloaded on - 27/01/2014 23:10:31 :::
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(vi) Accused No.1 is convicted of the charge of dishonestly receiving stolen property punishable under Section 411 of the IPC and is sentenced to suffer rigorous imprisonment for the period of 1 year and to pay fine of Rs.1 lac and in default to suffer further rigorous imprisonment for the period of 3 months.
(vii) Accused No.1 shall also pay compensation of Rs.37.80 lacs to the State/public treasury under Section 357(3) of the Cr.P.C.
(viii) Accused No.2 is acquitted of the charge of dishonestly receiving stolen property, committing forgery of any document of valuable security used for the purpose of cheating or using any forged document as genuine punishable under Sections 411, 465, 467, 468 & 471 of the IPC.
(ix) Accused No.2 is convicted of the charge of cheating and dishonestly inducing delivery of property punishable under Section 420 of the IPC and sentenced to suffer rigorous imprisonment of 5 years and to pay fine of Rs.10 lacs and in default to suffer further rigorous imprisonment for a period of 1 year.
(x) Accused No.2 shall also pay compensation of Rs. 40.40 Cr. to the State/public treasury under Section 357(3) of the Cr.P.C.
(xi) Accused No.4 is acquitted of the charge of dishonestly receiving stolen property, committing forgery of any document of valuable security used for the purpose of cheating or using any forged document as genuine punishable under Sections 411, 465, 467, 468 & 471 of the IPC.
(xii) Accused No.4 is convicted of the charge of cheating and dishonestly inducing delivery of property punishable under Section 420 of the IPC and sentenced to suffer rigorous imprisonment of 1 year and to pay fine of Rs.
5 lacs and in default to suffer further rigorous imprisonment for a period of 3 months.
(xiii) Accused No.4 shall pay compensation of Rs.2 Cr. to the State/public treasury under Section 357(3) of the Cr.P.C.
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(xiv) The period of imprisonment, if any, already undergone by accused Nos. 1, 2 & 4 shall be set off under Section 428 of the Cr. P. C.
(xv) The bail bonds of accused Nos.1, 2 & 4 are cancelled. (xvi) The bail bonds of accused Nos.5, 11, 13, 15 & 16 are discharged.
(ROSHAN DALVI, J.) ::: Downloaded on - 27/01/2014 23:10:31 :::