Bombay High Court
Kishore Deshpande vs The State Of Maharashtra And Anr on 28 June, 2019
Author: S. S. Shinde
Bench: S. S. Shinde
(906) wp-2809.17.odt
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL WRIT PETITION NO.2809 OF 2017
Kishore Deshpande ]
Aged 70 yrs, Occup : retired ]
Residing at 507, Yash Plaza, ]
D'Silva Road, Dadar West ]
Mumbai - 400 028 ]..... Petitioner.
Versus
1] The State of Maharashtra ]
Through office of Public Prosecutor ]
]
2] Central Bureau of Investigation ]
BS & FC ]
3rd & 4th Floor, Plot No. C- ]
35A, 'G' Block, Bandra Kurla ]
Complex (BKC), Near MTNL ]
Exchange, Bandra (East), ]
Mumbai 400098 ]..... Respondents.
Mr. Sayaji D Nangre for the Petitioner.
Mrs. M R Tidke, APP for Respondent No.1/State.
Mr. H S Venegaonkar for Respondent No.2/CBI
CORAM : S. S. SHINDE, J
DATE : 28th June 2019
JUDGMENT :
1 Rule, with the consent of the learned counsel for the parties made returnable forthwith and heard.
2 By way of above Writ Petition, the Petitioner, who is original
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accused No.5, challenges the order dated 04/05/2017 passed by the learned Special Judge for CBI/The Additional Sessions Judge, Gr. Bombay (CR 51) by which order the Criminal Revision Application Nos.1045 of 2016, 1212 of 2016 and 371 of 2017 filed by original Accused Nos.2, 5 and 3 came to be dismissed, and resultantly the order dated 01/09/2016 passed by the learned Additional Chief Metropolitan Magistrate, 3rd Court, Esplanade, Mumbai rejecting the applications for discharge filed by the Petitioner and other accused under Section 239 of the Code of Criminal Procedure came to be confirmed. 3 The facts giving rise to filing of the present Writ Petition can in brief be stated thus :-
The Petitioner herein is original accused No.5 in FIR bearing NO.
RC 8/E/2010 registered at the instance of the officer of the Reserve Bank of India by Respondent No.2-CBI for the offences punishable under Section 120-B r/w Sections 409 and 420 of the Indian Penal Code. The Petitioner herein i.e. the Original accused No.5 Shri Kishor Deshpande, General Manager and accused No.4 Smt. Bhavana Jadhav, Assistant General Manager of CKP Co.Op Bank Ltd. by joining hands in glow with accused No.3 Smt. Nipha Sheth, a broker and accused No.1 Shri Milind Ghag trustees of Aadhar Charitable Trust, Navsarjan Foundation and Aroyanidhi Charitable Trust as well accused No.2 Smt. Sujal Desai, Chartered Accountant had violated the guidelines and circulars of RBI dated 19/04/2001 and 20/04/2002, and invested huge lgc 2 of 22 ::: Uploaded on - 08/07/2019 ::: Downloaded on - 21/07/2019 05:19:03 ::: (906) wp-2809.17.odt amount in Non SLR Securities (Non Statutory Liquidity Ratio) which was resulted into huge loss to the said bank. It is the case of the prosecution that accused No.3 Smt. Nipa Sheth is the Director of a firm which is on the Panel of the CKP Co.op Bank Ltd. as a broker since 2003. By virtue of aforesaid RBI Circular it was not possible to deal directly with accused No.3 - the broker by the Urban Cooperative Banks for the investment in Non SLR Securities, therefore at the instance of accused No.3, Smt. Sujal Desai - accused No.2, who was the chartered accountant, has floated the aforesaid three charitable trusts and appointed accused No.1 Milind Ghag as the trustee of the said trusts.
Accused No.3 generated funds from her firm Trust Capital Services (I) Pvt. Ltd. and from such funds the aforesaid trusts have purchased Non-SLR Securities and, sold the same to the CKP Co.op Bank Ltd. at a higher price. During the course of investigation it is revealed that the accused Nos.1 to 5 in collusion with each others committed a conspiracy to cheat and to cause loss to the CKP Co.op Bank through irregular sale/purchase transactions of Non-SLR Securities such as Zero Coupon Bonds (ZCB) by violating RBI guidelines. 4 After completing the investigation, the CBI filed charge sheet against the Petitioner and other accused before the learned Additional Chief Metropolitan Magistrate, 3rd Court, Esplanade, Mumbai and it is numbered as CC No.283/PW/2011. Thereafter the Petitioner and other accused have filed applications under Section 239 of the Cr.PC. before the Trial Court for lgc 3 of 22 ::: Uploaded on - 08/07/2019 ::: Downloaded on - 21/07/2019 05:19:03 ::: (906) wp-2809.17.odt discharge, which applications, as stated herein above, came to be rejected by the Trial Court. Against the said order, the Revision Applications filed by the Petitioner and other accused came to be rejected by the Special Judge for CBI/ Additional Sessions Court. Hence this Petition.
5 It is the case of the Petitioner - Original Accused No.5 that being General Manager he had discharged his duties in accordance with rules and regulations and he had not committed any offence. It is his case that the CBI has failed to collect any incriminating evidence against him. He has no role in purchasing the bonds. It is further the case of the Petitioner that he is not an alone person who has taken decision for investment in Non SLR Securities through the trust of accused Nos.1 and 2. He therefore prays that he is entitled for discharge under Section 239 of the Criminal Procedure Code. 6 Heard the learned counsel for the parties. The learned counsel for the Petitioner submits that the Petitioner had played no role in purchasing the bonds and there are no documents which could suggest that it is the Petitioner who was instrumental in purchasing the said bonds at higher price. He submitted that even the Petitioner did not suggest the names of the aforesaid trusts as counter parties in the meeting which was held on 12/04/2004 and being the General Manager, the Petitioner was merely present in the said meeting. The learned counsel for the Petitioner submits that the Petitioner did lgc 4 of 22 ::: Uploaded on - 08/07/2019 ::: Downloaded on - 21/07/2019 05:19:03 ::: (906) wp-2809.17.odt not involve in purchasing or selling the Zero Bonds. It is submitted that the decisions of investment in Non SLR Securities were not the sole decision of the Petitioner and the decision was unanimously taken by the Directors of the Bank. It is the contention of the learned counsel for the Petitioner that the Petitioner cannot be prosecuted under the provisions of Section 409 of Indian Penal Code as admittedly the Petitioner is not covered within the definition of public servant, and further the officers of Co.op Banks are not considered as public servant. The learned counsel for the Petitioner contended that the present proceedings are not maintainable in view of the legal bar under the provisions of Reserve Bank of India, 1934. According to the learned counsel for the Petitioner, the complaint ought to have filed by the officer of the RBI under Section 47 of the Banking Regulation Act and on filing such complaint only the Court can take cognizance in the matter. The learned counsel for the Petitioner submitted that as the bank has already paid penalty of Rs.5 lacs towards violation of RBI guidelines, now the present prosecution is nothing but abuse of process of law. According to him, the trial court ought to have considered the provisions of Banking Regulation Act as well as the provisions of Reserve Bank of India. In support of his contention, the learned counsel for the Petitioner sought to place reliance on the Judgment of the Apex Court in the matter of State of Maharashtra vs. Laljit Rajshi Shah & ors .1 and also unreported judgment of the Division Bench of this Court (Coram A V Nirgude, J) dated 03/12/2015 in Revision Application No.175 of 2014 in the case of R 1 2000 ALL MR (Cri.) 1370 lgc 5 of 22 ::: Uploaded on - 08/07/2019 ::: Downloaded on - 21/07/2019 05:19:03 ::: (906) wp-2809.17.odt Madhusudan v/s. The State of Maharashtra & anr . He therefore prays that the Petition may be allowed.
7 Per contra, the learned counsel appearing for the CBI submits that the FIR has been registered on the basis of the complaint received from the officer of the RBI and after investigation, the CBI filed charge-sheet against the trustees of the aforesaid trusts including the present Petitioner who at the relevant time was the General Manager of the CKP Co-op. Bank. It is further submitted that the Special Judge of Greater Bombay took cognizance of the case. It is the contention of the learned counsel for the CBI that the Petitioner/ accused hatched a conspiracy to give go-bye to the RBI circulars dated 19/04/2001 and 20/04/2002 and did illegal acts thereby caused wrongful loss to the bank. It is contended that the application for discharge filed by the Petitioner has been rejected by the learned Magistrate so also the revision against the said order has been rejected by the Special Court. He therefore contended that filing of this Writ Petition by the Petitioner is nothing but to protract the trial proceedings. It is further contended that the Petitioner herein i.e. accused No.5 along with Accused Nos.1 to 4 entered into criminal conspiracy and in collusion with each other cheated the CKP Co.op. Bank by fraudulently entering into sale and purchase transactions of Non-SLR Securities Deep Discount Bonds and Zero Coupon Bonds at a higher rate. They availed the bank fund unauthorizedly for the purpose of cheating the bank by violating lgc 6 of 22 ::: Uploaded on - 08/07/2019 ::: Downloaded on - 21/07/2019 05:19:03 ::: (906) wp-2809.17.odt RBI guidelines issued whereby the Urban Co-operative Banks were restricted for directly dealing with the brokers in purchase and sale of Non SLR Securities on principal to principal basis. It is the contention of the learned counsel for the CBI that the bank officials of CKP Co-op. Bank have circumvented the ban on leading to stock/share brokers by violating the RBI circular dated 19/04/2001. It is further contended that the officials of bank made available fund to the aforesaid accused persons and siphoned the funds of the bank. It is submitted that the firm of Accused No.3 was on the panel of CKP Co.op Bank as a broker and this firm was also aware of the restrictions to the bank for directly dealing with brokers in such transactions. It is submitted that during investigation it is revealed that the bank officials in conspiracy with the trustees of the aforesaid trusts entered into sale/purchase of Non SLR Securities with the said trusts as a counter party. It is contended that during investigation it is revealed that the broker purchased Non SLR Securities from other entities at lower rate and sold to the bank at higher rate through the trusts in which accused no.1 was appointed as trustee and again arranged to purchase the same securities from the bank in collusion with the Accused No.4 who is the Assistant General Manager of the Bank and the present Petitioner i.e. the Accused No.5 who is the General Manager of the bank for Rs.1,98,37,350/-. It is submitted that since 1985 the Petitioner was the General Manager in the bank and there were two Assistant General Managers namely Shri Maruti V Prabhu and, Mrs. Bhavna Jadhav i.e. accused No.4 who lgc 7 of 22 ::: Uploaded on - 08/07/2019 ::: Downloaded on - 21/07/2019 05:19:03 ::: (906) wp-2809.17.odt was head of investment department and she was also appointed as investment officer of the bank. It is submitted that as per the guidelines of RBI, the Urban Cooperative Banks are not permitted to extend any facilities to stock brokers and also prohibited to invest in equity/debentures either in secondary or primary market. It is submitted that the board of directors in board meeting held on 29/08/2003 formed the investment committee consisting of chairman, voice chairman, General Manager and Assistant General Manager and in 2003 to 2006 the Petitioner i.e. Accused No.5 and, accused No.4 Mrs. Bhavna Jadhav were the members of the investment committee, and the committee was formed for investment of the bank fund in various Govt. Securities, SLR and Non SLR securities like bonds, Mutual fund etc. It is further revealed that in the meeting of investment committee held on 12/04/2004 Mrs. Bhavana Jadhav i.e. the accused No.4 proposed for investment in charitable trust and she suggested the names of Aadhar Charitable Trust, Navsarjan Foundation and Arogyanidhi Charitable Trust in the said meeting. It is contended that there are 127 instances of sale purchase of Zero Coupon Bonds and DDBs carried out by the bank with the aforesaid trusts as counter party. It is submitted that as per the investment policy of the bank it is stipulated that the decision relating to investment of funds in various securities should be taken by the investment officer in consultation with the General Manager. It is contended that in the meeting held on 25/04/2006, accused No.4 Mrs. Bhavana Jadhav informed the committee for approval of the names of aforesaid trusts for dealing in Non lgc 8 of 22 ::: Uploaded on - 08/07/2019 ::: Downloaded on - 21/07/2019 05:19:03 ::: (906) wp-2809.17.odt SLR Investments as per the resolution passed in the previous investment committee held on 12/04/2004 and the minutes were signed by the chairman and initialed by accused No.4. It is submitted that from the facts revealed during investigation and the statement of witnesses recorded, it is clear that the present Petitioner along with other accused had entered into conspiracy and cheated the CKP Co.op Bank by purchasing Non SLR securities from other entities at lower rate and sold to the said bank at higher rate through the aforesaid three charitable trusts and again arranged to purchase the same securities from the said bank at lower rate. The learned counsel for Respondent
-CBI therefore submitted that the orders passed by the Trial Court and the Special Judge for CBI in rejecting the discharge application of the Petitioner was well reasoned order. He, therefore, relying upon the reasons assigned by the Courts below in the impugned judgments and orders and also the averments in the affidavit in reply filed in this Court, prays that the Petition may be rejected.
8 Having heard the learned counsel for the parties, I have bestowed my anxious consideration to the rival contentions. Perused the grounds taken in the Petition and the annexures thereto and also perused the material placed on record. As stated herein above, as per the Circulars and Guidelines issued by the RBI, the Urban Co-operative Banks are restricted to directly deal with the brokers for investment in Non SLR Securities. It is specifically alleged in lgc 9 of 22 ::: Uploaded on - 08/07/2019 ::: Downloaded on - 21/07/2019 05:19:03 ::: (906) wp-2809.17.odt the present case against the accused that by violating circulars of RBI dated 19/04/2011 and 20/04/2002, the accused have invested in Non SLR Securities through private broker and thereby cheated the Bank and availed the fund of the bank unauthorizedly thereby misusing the official position which resulted into huge loss to the bank.
9 The copy of the charge is annexed at page 53 of this Writ Petition. In Column No.16 thereof it is mentioned that the CBI has registered a criminal case on the basis of written complaint received from Sh. P K Arora, General Manager, Reserve Bank of india, Urban Banks Department. In paragraph (2) thereof it is stated as under :-
2) That, a conspiracy was hatched amongst :-
i) Shri Milind Ghag, one of the trustees of Aadhar Charitable Trust, Navsarjan Foundation and Aarogyanidhi Charitable Trust.
ii) Smt. Sujal Desai, Chartered Accountant who started above said three trusts;
iii) Mrs. Nipa Sheth, one of the Director's of Trust Capital Services (I) Pvt. Ltd.
iv) Mrs. Bhavana Jadhav, AGM, CKP C-operative
Bank Ltd, Mumbai and
v) Shri Kishor Deshpande, GM, CKP Co-operative
Bank Ltd, Mumbai
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the object of which was to cheat the public funds of CKP Co-operative Bank Ltd in the sale/purchase transaction of Non-SLR securities during 2004-2007 by floating charitable trust and thus violated RBI guidelines.
In the said charge in paragraph 5 under the caption "Result of Investigation" it is stated as under :-
"5) All the guidelines and circulars issued by the RBI time to time are applicable to the bank. The complainant in this case is RBI, which is the monetary authority of the country established under the RBI Act, 1935. One of the main responsibilities of RBI is to allow monetary expansion in such a way that it does not lead to inflation and at the same time sufficient liquidity is available for the growth of economy. This is one of the main objectives assigned to the RBI by the RBI Act, 1935. To achieve the aforesaid goal there are certain tools namely CRR :- Cash Reserve Ratio and SLR - Statutory Liquidity Ratio."
In paragraphs 8 to 15 of the said charge, it is stated as under :-
"8) During investigation, it is revealed that by violating the RBI instructions, the CKP Bank has made purchase and sales of securities directly with a number of financial entities as counter parties. The bank has dealt extensively with brokers and other entities on a principal to principal basis and thus violated RBI circular which is reproduced below :-
As per the RBI Circular UBD No.
th
Plan.PCB.CIR.41/09.29.00/2001-2002 dated 20 April 2002,
(i) The UCBs should not undertake by purchase/sale transactions with broking firms or other intermediaries and principal to principal basis.
(ii) The UCBs should seek a Scheduled Commercial Bank lgc 11 of 22 ::: Uploaded on - 08/07/2019 ::: Downloaded on - 21/07/2019 05:19:03 ::: (906) wp-2809.17.odt (SCB), a Primary Dealer (PD) or a Financial Institution (FI) as a counter party for their transactions. Preference should be given for direct deals with such counter parties. It will be desirable to check prices from the Banks or PDs with whom UCBs may be maintaining constituent SGL Account (CSGL).
(iii) If the deal is put through with the help of broker, the role of the broker should be restricted to that of bringing the two parties to the deal together. Under non circumstances, bank should give power of attorney or any other authorization to brokers/intermediaries to deal on their behalf in the money and securities market.
9) It is further revealed that the CKP, Co-operative Bank Ltd. also violated the guidelines of RBI under circular No.UBD No.DS.PCB. C1R.41/13.05.00/2000-01 dated 19.04.2001 in which the Urban Co-operative Banks (UCBs) are not permitted to extend any facilities to stock brokers and they are also prohibited to invest in equity/ debentures either in secondary or primary market. It has been directed to the management of UCBs not to lend to stock brokers and if made direct investment in shares and securities which were not permissible activities, they should take immediate steps to dispose off such investments.
10) It is further revealed that the first investment policy of the CKP Co.op Bank ltd was adopted by the board in April 2003 and subsequently modified and adopted every year by way of board approvels. The board of directors in board meeting held on 29.09.2003 formed the investment committee consisting the Chairman, Vice Chairman, GM, AGM. During 2003 to 2006, Shri S J Deshmukh, Chairman, Shri H. D. Kharkar, Vice Chairman, Shri Kishore Deshmukh, GM (A-5) and Mrs. Bhavana Jadhav, AGM (A-4) were the members of investment committee. The committee was formed for investment of the bank fund in various Govt. Securities, SLR and Non SLR securities like bonds, mutual fund etc. Mrs. Bhavana Jadhav (A-4) had been appointed as an investment Officer by investment Committee. It is also stipulated in the Investment policy that the decision relating to investment of funds in various securities such lgc 12 of 22 ::: Uploaded on - 08/07/2019 ::: Downloaded on - 21/07/2019 05:19:03 ::: (906) wp-2809.17.odt as Call Money, Bills Rediscounting, Treasury Bills and Govt. Securities etc. should be taken by the Investment Officer in consultation with the General Manager.
During 2004 to 2007 Shri Kishore Deshpande (A-5) was the General manager of the CKP Co.op Bank who was also a members of investment committee.
11) On going through the investment policy for the year 2003-2004, 2004-2005, it did not differ from RBI Guidelines as stipulated in Circular UBD No. Plan.PCB.CIR.41/09.29.00/2001-2002 dtd. 20.04.2002. The RBI advised the banks to strictly follow the RBI Guidelines in respect of sale/purchase transactions undertaking with Schedule Commercial Banks, Primary Dealers and financial institutions as counter party. On seeing the investment policies adopted for the F.Y. 2006- 2007 and 2007-2008, it is revealed that the board of the bank included mutual funds. Provident funds and Trust in addition to counter parties as laid down in RBI Circular dtd. 20.04.2002 on the basis of proposal by Mrs. Bhavana jadhav (A-4) & Shri Kishor Deshpande (A-
5). Thus, addition of trust as counter party in the amendment investment policy is violation of RBI Guideline/Circular dtd. 20.04.2002 and hence, Shri Kishor Deshpande (A-5) and Mrs. Bhavana Jadhav (A-4) paved the way for commencing dealing with trust as counter parties.
12) It is further revealed that in the meeting of the investment committee held on 12.04.2004, Mrs. Bhavana Jadhav, AGM (A-4) proposed for investment in Charitable Trusts. She suggested the name of Aadhar charitable Trust, Navsarjan Foundation and Aarogyanidhi charitable Trust in this meeting. But the name of the trusts have not been mentioned in the minutes of the meeting. The investment committee ratified this proposal. The Chairman Shri S J Deshmukh signed the minutes in the capacity of head of investment committee and Mrs. Bhavana Jadhav, AGM (A-4) initialed on its in the capacity of treasurer incharge. Shri Kishor Deshpande (A-5) was also present in this meeting. After the ratification by the Investment Committee on 12.04.2004 Mrs. Bhavana Jadhav, AGM (A-4) immediately started dealing with the above said lgc 13 of 22 ::: Uploaded on - 08/07/2019 ::: Downloaded on - 21/07/2019 05:19:03 ::: (906) wp-2809.17.odt charitable trusts in sale and purchase of various Non SLR securities.
13) During investigation, the A/c. Opening forms of the three charitable trusts have been obtained from the HDFC Bank, Fort Branch Mumbai, which show that these trusts were started on 14.02.2004 with Charity Commissioner, Mumbai and the SB accounts were opened on 04.03.2004 only.
14) During investigation, it is revealed that an investment committee meeting was held on 25.04.2006, in which Mrs. Bhavana Jadhav, AGM (A-4) informed the committee for approval of the name of Aadhar Charitable Trust, Aarogyanidhi charitable Trust and Navsarjan Foundation for dealing in Non SLR investments as per the resolution passed in the previous investment committee meeting held on 12.04.2004. The minutes were signed by Shri S J Deshmukh, Chairman and initialed by Mrs. Bhavana Jadhav, GM (A-4). Shri Kisbhore Deshpande, GM (A-5) was also present in this meeting along with other members.
15) During investigation, it is further revealed that the CKP Co.op. Bank Ltd. carried out about 127 sale/purchase transactions of Zero Coupon Bonds (ZCBs) of various corporates with Aadhar Charitable Trust, Navasarjan Foundation and Arogyanidhi Charitable Trust during 2004 to 2007 which was restricted by the RBI vide their circular dtd. 20.04.2002"
10 It is pertinent to mention at this stage that the Petitioner herein i.e. original accused No.5 was working with the CKP Co-op. Bank Ltd. as a General Manager since 1985 and accused No.4 was working as the Assistant General Manager in the said bank. It is also revealed during investigation that the Petitioner in the capacity of General Manager was also the member in the lgc 14 of 22 ::: Uploaded on - 08/07/2019 ::: Downloaded on - 21/07/2019 05:19:03 ::: (906) wp-2809.17.odt Investment Committee formed by the CKP Co-op. Bank, and original accused No.4 had been appointed as an investment officer. From the facts and material on record, it is transpired that accused No.3 Nipa sheth, who is the broker on the panel of CKP Co.op Bank since 2003, had floated three aforesaid charitable trust and generated funds for the said trusts from her own firm, and thereafter the said trusts have purchased non-SLR securities and sold it to the said bank at a higher rate and this is only for the purpose of giving go bye to the circulars and guidelines of the RBI. In the said process, accused Nos.1 and 2 have acted at the instance of accused No.3. It is required to be noted that the Petitioner herein i.e. original accused No.5 was working with the CKP Co-op. Bank Ltd. as a General Manager since 1985, and he was also the member in the capacity of General Manager in the Investment Committee formed by the CKP Co-op. Bank. It can only be possible to deal with the counter party in the transactions with the assistance of the bank officials i.e. accused Nos.4 and 5 who were holding the key posts such as General Manager and Assistant General Manager in CKP Co.op Bank.
11 It is contended by the learned counsel for the Petitioner that the victim bank I.e. CKP Co.op. Bank Ltd. has deposited the penalty as per the Banking Regulation Act and prosecution against the accused is nothing but an abuse of process of law. In this context, it is required to be noted that the said bank has deposited the penalty in the light of Section 47(A) of Banking lgc 15 of 22 ::: Uploaded on - 08/07/2019 ::: Downloaded on - 21/07/2019 05:19:03 ::: (906) wp-2809.17.odt Regulation Act, whereas the Petitioner and other accused are charge-sheeted for the offences punishable under Sections 420, 409 and 120B of the Indian Penal Code.
12 Now coming to the reliance placed by the learned counsel for the Petitioner on the judgment of the Apex Court in Laljit Rajshi Shah's case (supra), the Apex Court in the said case observed that the Chairman and Members of the Managing Committee of the Co-operative Societies governed by the Maharashtra Cooperative Societies Act, cannot be called public servants and therefore cannot be prosecuted as such under the Prevention of Corruption Act. As rightly submitted by the learned counsel for the CBI, neither the provisions of The Maharashtra Co-operative Societies Act, nor the provisions of Prevention of Corruption Act are invoked by the CBI, and therefore, there is no application of aforesaid judgment in the present case. It appears that in the case of Laljit Rajshi Shah (supra) the contention of the State was that by virtue of deeming definition in Section 161 of the Co-operative Societies Act by reference to Section 21 of the Indian Penal Code, the persons concerned could be prosecuted for the offences under the Indian Penal Code. However, the said contention of the State was not accepted by the Apex Court so as to prosecute the members of the Managing Committee of the Co-operative Societies under the Prevention of Corruption Act. In the said case, the Special Court, was constituted principally for trying the cases under the Prevention of Corruption lgc 16 of 22 ::: Uploaded on - 08/07/2019 ::: Downloaded on - 21/07/2019 05:19:03 ::: (906) wp-2809.17.odt Act. Hence the ratio laid down in the said case is not applicable to the facts of the present case. Be that as it may, the aforesaid contentions can be raised by the Petitioner during the course of final arguments upon conclusion of recording of evidence.
13 In the context of the submission of the learned counsel for the Petitioner that the complaint ought to have filed by the officer of RBI under Section 47, and then only Court can take cognizance in the matter, it is required to be noted that for the offence defined under Section 36AA, Sub- Section (5) and Section 46 of the Banking Regulation Act, 1949, the bank officer is required to file complaint as provided under the provision of Section 47 of the said Act. However in the present case the charge sheet filed against the Petitioner and other accused is for the offences punishable under Section 120B, 409 and 420 of the Indian Penal Code, and as such the offences under the aforesaid Sections of the Indian Penal Code no way concerned with the offences defined under Sections 36AA (5) and 46 of the Bank Regulation Act. 14 In so far as the present case is concerned, there are serious allegations against the Petitioner and other accused that the Petitioner and other accused hatched a conspiracy to give go-bye to the RBI Circulars dated 19/04/2011 and 20/04/2002, and to extent the benefit to the aforesaid trusts, thereby caused wrongful loss to the CKP Co.op Bank Ltd. Looking to the official lgc 17 of 22 ::: Uploaded on - 08/07/2019 ::: Downloaded on - 21/07/2019 05:19:03 ::: (906) wp-2809.17.odt position of the present Petitioner as General Manager in the said bank, it cannot be said that the Petitioner was not involved in decisions taken in the meeting and he was merely present in the meeting and, he has merely implemented the said decisions.
15 The CBI has recorded the statements of the witnesses during investigation. It is transpired during the investigation that the Petitioner herein was working as General Manager in the said Bank since 1985. He was aware about the activities of accused No.3 Nipa Seth as she was on the panel of the said bank as a broker. It is revealed from the statements of witnesses recorded by CBI that accused No.3 used to address correspondence connected with the aforesaid three trust to the victim bank by specifically referring the identity connected with her firm Trust Capital Services Ltd. Therefore it cannot be said that the officers who were holding the key position i.e. accused No.4 Jadhav as Assistant General Manager, and accused No.5 Deshpande i.e. the present Petitioner as General Manager, were not aware about the same. The CBI has placed sufficient material on record which prima facie shows, that the present Petitioner and the other accused in collusion with each other hatched a conspiracy to cheat and to cause loss to the CKP Co.op Bank through irregular sale/purchase transactions of Non-SLR Securities such as Zero Coupon Bonds (ZCB) by violating RBI circulars and guidelines. Whether the aforesaid transactions are legal or illegal, and whether the Petitioner had knowledge lgc 18 of 22 ::: Uploaded on - 08/07/2019 ::: Downloaded on - 21/07/2019 05:19:03 ::: (906) wp-2809.17.odt about the aforesaid transactions, can only be considered and clarified after recording of evidence during trial.
16 In so far as the present Petitioner is concerned, during investigation his involvement is shown as under :-
(i) Mrs. Bhavna Jadhav (A-4) was reporting to him. The amendments to the investment policy of 2006 were introduced by him and the AGM, Mrs. Bhavna Jadhav (A-4) for including the trust is spoken to by the Chairman of CKP Bank.
(ii) These trusts were not registered with SEBI, but introduced by Mrs. Bhavna Jadhav (A-4), AGM in the meeting held on 25th April 2006, Shri Kishor Deshpande, (A-5) was present in the said meeting (D-
4). His involvement in introducing this amendments is the same as that of A-5.
(iii) The Board Resolution dtd. 29.04.2005 indicates that all the investments decisions were to be taken by A-4 and Sh Kishore Despande (A-5). This shows that the he had a duty and responsibility along with A-4 for all investment decisions. Thus, he is equally responsible for the transactions in this case as that of A-4.
(iv) He has signed the cheques (D-165, D-169, D-176, D-
179) by which the funds for the purchase of the security at much higher rate than the FMMDA rates. These cheques have been issued in favour of the trust. These have been seized and duly identified.
(v) As a a GM of treasury Department, he could have/should have questioned the transaction and the rates before parting with the bank's fund. That, he did not verify the rates shows his willingness to cheat the bank for appropriate the bank's fund for others use by committing breach of trust.
(vi) In respect of the transactions in question as mentioned lgc 19 of 22 ::: Uploaded on - 08/07/2019 ::: Downloaded on - 21/07/2019 05:19:03 ::: (906) wp-2809.17.odt above, the deal slips were prepared by A-4.
(vii) He had a duty to verify the rates as per the Board's Resolution.
(viii)It is also the statement of Chairman, Shri Sham Deshmukh (PW 33) of the bank that Shri Kishore Deshpande (A-5) GM never made any comments about the functioning of Mrs. Bhavna Jadhav, AGM (A-4).
This shows that Mrs. Bhavana Jadhav, AGM (A-4) and Shri Kishore Deshpande (A-5), GM were working in league in the treasury Department and were equally responsible for all the transactions"
17 Now coming to the judgment of the Division Bench of this Court cited by the learned counsel for the Petitioner in R. Madhusudan's case (supra). The Division Bench of this court in paragraph 7 of the said case has observed as under :-
"7 Now let me see, whether the applicant had prima facie committed offence punishable under Section 13 of the Prevention of Corruption Act. Section 13 defines the term "criminal misconduct" by a public servant. Assuming for the sake of argument, that the applicant had intention to cause undue profit to a third party, the seller of the Bonds, and with that intention he recommended purchase of the Bonds. In the light of such assumption, one must further look into the case as to whether there is any material to indicate that the applicant received or accepted or agreed to accept any gratification other than legal remunerations. There is no such allegation made against the applicant. No evidence is collected to show that the applicant received some gratification from the seller of the Bonds. No offence, therefore, punishable under the Prevention of Corruption Act is leviable against the applicant. The applicant, therefore deserves to be discharged from the case.' In the said case there was no evidence collected to show that the applicant lgc 20 of 22 ::: Uploaded on - 08/07/2019 ::: Downloaded on - 21/07/2019 05:19:03 ::: (906) wp-2809.17.odt therein received some gratification from the seller of the bonds. In the present case, the officer of RBI has registered the FIR for violation of RBI guidelines and circulars. The facts revealed during the investigation show that the Petitioner and the other accused in collusion with each other hatched a conspiracy to cheat and to cause loss to the CKP Co.op Bank through irregular sale/purchase transactions of Non-SLR Securities such as Zero Coupon Bonds (ZCB) by violating RBI circulars and guidelines. Therefore in the present case the CBI has collected an overwhelming evidence during the course of investigation showing involvement of the present Petitioner and the other accused. The reliance sought to be placed on the said judgment of the Division Bench of this Court is misplaced.
18 Criminal conspiracy is an independent offence and it is punishable separately. The ingredients of the offence of criminal conspiracy are (I) agreement between two or more persons and (ii) an agreement to do or cause to be done either an illegal act or an act which is not illegal in itself but is done by illegal means. Generally criminal conspiracies are hatched in secrecy. In such cases prosecution has to prove charge of criminal conspiracy by leading mainly circumstantial evidence. Therefore, the prosecution needs to be given an opportunity to lead such evidence during the course of trial.
19 In that view of the matter, this Court is of the considered view that
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there is a prima facie involvement of the Petitioner in the commission of alleged offences as levelled against him. Considering the reasons assigned by both the Courts below against the Petitioner as also the material placed on record, in my view, no case for interference in the writ jurisdiction of this Court is made out. The Writ Petition stands rejected. Rule is accordingly discharged. 20 Needless to state that the observations made herein above are prima facie in nature and are confined to the adjudication of the present Writ Petition.
[S. S. SHINDE , J]
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