Dismissed¶27

State rep. by its Duputy Superintendent of Police, Cbi., v. D.Bhaskara Rao

Andhra Pradesh HC17 Mar 2025CRLA/1536/2006

Case brief

AI extract

What is this about?

Appeal against acquittal; S.378(4) Cr.P.C.; CBI vs former IOB Eluru Branch Manager and contractor; bank fraud, M.C.C. limits and demand-bill (DBP) purchases; forgery and cheating charges (ss.120B/420/468/471/409 IPC) and PC Act ss.13(1)(c), 13(1)(d)(ii) r/w 13(2) not proved; compelling-and-substantial-reasons test from Harbans Singh AIR 1962 SC 439; non-examination of Regional Manager A.K.Das fatal to prosecution; inspection-report findings no substitute for evidence; acquittal confirmed, criminal appeal dismissed (Andhra Pradesh High Court, 18-03-2025).

What did the court decide?

None - the Criminal Appeal is dismissed and the judgment dated 19.01.2006 in C.C.No.10 of 2000 (acquittal) is confirmed; pending miscellaneous petitions, if any, in the Criminal Appeal stand closed. ¶27

State rep. by its Duputy Superintendent of Police, Cbi… — Corruption | Andhra Pradesh HC (2025)

What the court decided

AI extract

Outcome

None - the Criminal Appeal is dismissed and the judgment dated 19.01.2006 in C.C.No.10 of 2000 (acquittal) is confirmed; pending miscellaneous petitions, if any, in the Criminal Appeal stand closed.

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Issue for consideration

Whether the prosecution is able to bring home the guilt of the respondents/A.1 and A.2 for the respective charges framed against them. +1 more

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Court's answer

The prosecution failed to produce and prove the alleged forged/fabricated documents relied on in the charge-sheet - the copies of the letter purportedly issued by the Superintending Engineer, Panchayat Raj, Eluru showing award of work of Rs.54.00 lakhs to A.2, the alleged GPA of P.S.Kumar, the alleged 13 false bills, the alleged contract certificate dated 20.7.1996 of the Deputy Executive Engineer, Irrigation Department, and the alleged profit and loss account of M/s. Kanaka Durga Traders said to have been issued by P.V.Prasad & Co. - and therefore failed to establish by cogent oral and documentary evidence that the accused forged the aforesaid documents.

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Ratio / Principle

In dealing with appeals against acquittal, though this Court has full power to re-appreciate the evidence, it will be slow to interfere; the presumption of innocence is strengthened by an order of acquittal, and unless there are substantial or compelling reasons - such as a perverse finding, omission to consider admissible evidence, or reliance on inadmissible evidence - this Court will not ordinarily disturb the findings of the trial Court.

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Key takeaways

None of the prosecution witnesses deposed about the alleged conspiracy between A.1 and A.2 to cause wrongful loss to the Bank and wrongful gain to A.2.ratio¶17
From the evidence of P.Ws.2, 10 and 13 it is clear that the then Regional Manager A.K.Das knew about the M.C.C. limits, the excess limits and the DBP cheque purchases pertaining to the account of Bose (A.2).ratio¶21
A.1 did all the acts alleged against him on the directions of, and with the permission of, the then Regional Manager A.K.Das; a Branch Manager has to act as per the instructions of the Regional Office and oral approvals are also obtained from the Regional Manager.

Detailed headnote1 paragraphs

Criminal Appeal (CRLA.No.1536 of 2006, decided 18-03-2025) by CBI under Section 378(4) Cr.P.C. against the acquittal judgment dated 19.01.2006 of the Special Judge for CBI Cases, Visakhapatnam in C.C.No.10/2000, whereby a former Senior Manager of Indian Overseas Bank, Eluru (A.1) and a contractor (A.2), charged under Sections 120B, 420, 468, 471 and 409 IPC and Sections 13(1)(c) and 13(1)(d)(ii) read with 13(2) of the P.C. Act, 1988 for allegedly cheating the Bank of Rs.85,16,592/- through purchase of bills and disbursal of M.C.C. limits to A.2 and his group firms, were acquitted. Held (single judgment, K. Sreenivasa Reddy, J.), relying on Harbans Singh v. State of Punjab (AIR 1962 SC 439): interference with an acquittal requires substantial or compelling reasons such as perversity or mis-appreciation of admissible evidence; the alleged forged documents (Superintending Engineer letter, GPA, 13 bills, contract certificate, Chartered Accountant profit-and-loss account) were neither produced nor proved; no witness spoke to the conspiracy; A.1 acted on the directions and with the permission of Regional Manager A.K.Das, who knew of the excess drawals and DBP cheque purchases but was not examined despite being cited at Sl.No.8; the valuation evidence (P.W.9/Ex.P87) stood unchallenged and the Ex.P96 panel valuer was not examined; findings in inspection/enquiry reports (Exs.P94, P112, P165) cannot substitute for proof in a criminal case; there was no stipulated end-use of M.C.C. funds and the outstandings were recovered with interest; no dishonest intention at inception was inferable, so the Prevention of Corruption Act charges did not stand. Appeal dismissed; acquittal confirmed.

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IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAV

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TUESDAY, THE EIGHTEENTH DAY OF MARCH TWO THOUSAND AND TWENTY FIVE

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PRESENT

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THE HONOURABLE SRI JUSTICE K SREENIVASA REDDY

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CRIMINAL APPEAL NO: 1536 OF 2006

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Appeal under Section 378(4) of Cr.P.C., against the Judgment in C.C.No. 10/2000, dt. 19-01-2006 on the file of the Court of the Special Judge for C.B.I Cases, Visakhapatnam.

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Between:

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State represented by its Deputy Superintendent of Police, Central Bureau of Investigation., Special Police Establishment, Visakhapatnam.

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...Appellant/Complainant

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AND

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D.Bhaskara Rao, S/o Satyanarayana Rao, age 53 years, Formerly Senior Manager, Indian Overseas Bank, Eluru, West Godavari District.

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Javvadi Subhash Chandra Bose, S/o late Venkateswara Rao, age 31 years, Contractor, Eluru Municipality, Eluru.

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...Respondents/Accused

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Counsel for the Appellant: Sri P S P Suresh Kumar, Special Public Prosecutor for CBI

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Counsel for the Respondent No.1: Sri A Hariprasad Reddy

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Counsel for the Respondent No.2: Sri Turaga Sai Surya

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The Court made the following:

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THE HON’BLE SRI JUSTICE K. SREENIVASA REDDY

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CRIMINAL APPEAL No. 1536 OF 2006

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JUDGMENT:

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This Criminal Appeal is preferred by State, represented by the Deputy Superintendent of Police, Central Bureau of Investigation, Special Police Establishment, Visakhapatnam, against the judgment dated 19.01.2006 in C.C.No.lO^of2000on the file of the Special Judge for C.B.l. Cases, Visakhapatnam(fo^r short, ‘the Special Court’), whereunder and whereby the respondents herein/Accused Officers 1 and 2 were found^not guilty of the charges levelled against them and accordingly they were acquitted of the same.

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The appellant herein is the complainant and respondents herein are A. 1 and A.2, in the Calendar^Case. For sake of convenience, the psirties are hereinafter referred^to,as they are arrayed in the Special Court.

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The allegations, in brief, are as follows,

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(a) A. 1 worked as Senior Manager of Indian Overseas^Bank (lOB), Eluru from 09.12.1994 to 16.8.1997. His duties^include purchase of bills, recommending and disbursement of^M.C.C.

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Limits, etc. A. 2 is a private contractor, registered with Eluru Municipality. It is alleged that A.l,ⁱⁿ i conspiracy with A.2, dishonestly and fraudulently purchased cheques/ bills of A.2 and recommended and disbursed M.C.C. Limits to A.2 and his group of firms, facilitated A.2 i n diverting funds of the Bank for acquiring immovable properties and did not ensure their proper utilization.

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(b) It is alleged that A.2 opened a current account No.818 with lOB, Eluru branch on 05.12.1995 with introduction of A.l. Another current account No.820 was opened by A.2 in the name of Sri Prasanth Book Center with his own introduction. Another current account No.821 was also opened on 23.12.1995 in the name of Sri Venkata Dinesh Traders, with the younger brother of A.2 J.Jawaharlal Nehru as its Proprietor on the introduction of A.2. On 18.06.1996, A.l authorized opening of another current account No.831 in the name of Venkata Dinesh Traders with the younger brother of A.2 J.Jawaharlal Nehru as its Proprietor with the introduction of A.2. a.2 also opened another current account No.832 in the name of Sri Venkata Rajitha Enterprises as its Proprietor. Another current account No.852 was also opened on

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of Sri Kanaka Durga Traders, 11.03.1997 in the name K.Sobha Rani and the name of introduced by A. 2, in and her husband respectively, K.Narayana Swamy, sister of A.2 dishonestly and fraudulently It is alleged that A.l (c) iz. Sri Venkata 13 bills of A.2 and his group firms viz purchased Traders between and Sri Kanaka Durga Dinesh Traders Out of the said 13 cheques 06.12.1995 and 24.04.1997. for clearing by A. 1, and purchased, only four cheques were sent A.l intentionally did all the four cheques returned unrealized and did not send the not report the same to Regional Office concerned drawer bank for clearing. remaining cheques to the discovered during inspection by the The said cheques were All the cheques, except three cheques, were Inspectors of lOB. himself, and the other three issued in favour of A.2 by A.2 Thus, A.l and A.2 issued by Sri P.S.Kumar. cheques were of Rs.27.70 lakhs dishonestly caused wrongful loss to the tune to the lOB and it caused corresponding wrongful gam to A.2. further alleged that on 06.12.1995, A.2 (d) It is credit facility of Rs.5.40 lakhs for submitted an application for out contract works. A.l his working capital for carrying recommended the said proposal to Regional Office for sanction

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of Rs.5.00 lakhs M.C.C. Limit. After obtaining approval of Central Office, the Regional Office conveyed its sanction dated 19.3.1996. A.2 submitted another application for enhancement of credit facility up to Rs.lO. 00 lakhs, on 03.02.1996, and the same was recommended by A. 1 on 04.06.1996, and sanctioned by the Regional Office after obtaining approval from Central Office. It is alleged that while recommending the facility, A.l deliberately concealed the fact of return of cheques purchased by him in the credit of A.2 and misled i It. It is alleged that as against total sanctioned M.C.C. limits of Rs. 10.00 lakhs, A.l allowed A.2 to draw up to Rs. 12.67 lakhs as on 10.07.1996 and Rs.3,27,820/- on 11.7.1996. When an explanation is called from Regional Office, A. 1 falsely informed that the account was regularized. On that day, A.l deliberately and fraudulently purchased cheque No.551561, dated 19.8.1996 of A.2 and adjusted the excess drawals in his account. On 02.09.1996, A. 1 deliberately forwarded copies of false bills of A.2 to the Regional Office falsely showing the end use of funds by him, fully knowing and having reason to believe that they were false. On 10.07.1996, A.l addressed letter to the Regional Office recommending sanction of Rs.20.00 lakhs as open cash credit

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limit to A.2 in addition to Rs. 10.00 lakhs M.C.C. limit availed by A. 2. A. 1 falsely informed the Regional Office vide^letterdated 17.07.1996 that his dealings in the account were satisfactory. In form No.209 enclosed to the proposal, A. 1 deliberately^did not mention number of bills purchased and returned unpaid. In view of the same, the Regional Office allowed Rs.^10.00lakhs additional M.C.C. Limit to A.2. A. 1 allowed excess drawal of Rs.15,44,529/- as against sanctioned limit of Rs.20.00^lakhs. (e) On 10.07.1996, J.Jawaharlal Nehru, younger brother of A.2, submitted application to A. 1 for credit facility of Rs.20.00 lakhs for Venkata Dinesh Traders and the same^was recommended by A. 1 to the Regional Office on 17.07.1996. On 19.8.1996, A. 1 falsely informed the Regional Office that the party was in the activity for one year on modest scale,^butin fact, the applicant was in the college in the said period and was waiting for result. A. 1 could not give reasoned justification^of the projected turn over of Rs.2.88 crores of the applicant. On 13.9.1996, the Regionail Office sanctioned M.C.C. Limit of Rs. 10.00 lakhs to the applicant, On 3.12.1996, he made another application to A.l for sanction of credit facility of Rs.30.00 lakhs against the existing facility of Rs.^10.00lakhs.

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and the same was recommended by A. 1 on 16.12.1996 and A. 1 allowed excess amounts in M.C.C. account of A.2, guarantor for the limit of M/s. Venkata Dinesh Traders. He was also allowed to draw on behalf of J.J.Nehru, an amount of Rs.25.06 lakhs as on 19.6.1997 against the sanctioned limit of Rs. 10.00 lakhs i n the name of M/s. Venkata Dinesh Traders. (f) On 12.02.1997, another application was made for sanction of credit facility of Rs.20.00 lakhs in the name of Sri Kanaka Durga Traders by K.Sobharani sister of A.2 as Proprietrix, and A.l recommended the same to the Regional Office on 01.03.1997. It is alleged that A.l forwarded false and bogus profit and loss account, balance sheets, etc. of the firm purported to have been issued by Sri P.V.Prasad 86 Co., Chartered Accountants, Koti, Hyderabad, knowing or having reason to believe that they were false. A. 1 also falsely^informed the Regional Office that some of the family members of the applicant had experience in rice bran trading. The Regional Office sanctioned M.C.C. Limit of Rs. 15.00 lakhs on 22.03.1997 with instructions to regularize the excess allowed in M/s. Venkata Dinesh Traders before release of the limit, But, against the said instruction, A. 1 allowed excess amount of

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Rs.9,65,453/- as on 30.05.1997 in the account of M/s.^Venkata Dinesh Traders, against the sanctioned limit of Rs.^15.00lakhs, for which explanation was called from A. 1 by the Regional Office. (g) It is further alleged that A. 2 submitted forged documents viz. copies of letter purported to have been issued by S.E., Panchayat Raj, Eluru showing the award of work of Rs.54.00 lakhs to A.2; G.P.A. purported to have been given by Sri P.S. Kumar, Secretary, Sri Krishna Vaddera 86 S.C. Cooperative Society Limited, Eluru; 13 false bills showing proper utilization of funds of the Bank; contract certificate dated 20.07.1996 purported to have been issued by the Deputy E.E., Irrigation Department; profit and loss account^ofM/s. Kanaka Durga Traders, purported to have been issued^byM/s. P.V.Prasad 86 Co., Chartered Accountants, Koti, Hyderabad,ⁱⁿ as support of the claims for M.C.C. Limits and used them genuine. It is alleged that there is over-valuation of the collateral security properties. A. 1, with dishonest intention. agreed to the same and recommended the application^ofA.2 and his group of firms. A.l intentionally did not ascertain

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genuineness of the documents presented by A. 2 and^his group of firms.

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(h) It is alleged that the collateral securities offered by A.2 for the sanction of M.C.C. limit were purchased by A.2 with the funds of the Bank, and after sanction of M.C.C. limits, all the outstanding amounts towards the purchase of cheques were adjusted from the funds obtained through M.C.C. Limits. (i) Thus, it is alleged that A.l and A.2, during 1995 to 1997, were parties to criminal conspiracy, cheated^the lOB^to a tune of Rs.85,16,592/- in purchase of bills, disbursement of limits to A.2 and his group of firms and in pursuance^ofthe said conspiracy, A.l recommended, got sanctioned and disbursed M.C.C. limits to A.2 and his group of firms through A.2 though A.2 never indulged in any of the contract/business activities as claimed by him. It is further alleged that in pursuance of the said conspiracy, A. 1 abused his official position as public servant dishonestly and fraudulently purchased the cheques/bills of A.2, did not dispatch^themfor clearance, got over-valuation of collateral securities, accepted false documents of A.2 knowing or having reason to^believethat they were false and forged, and recommended and got

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sanctioned M.C.C. limits to A.2 and his group and did not ensure proper utilization of the funds to the Bank.

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G) P.W.8, General Manager, lOB, Chennai, who is competent to remove A. 1 from the office, accorded sanction under Section 19 (1) (c) of the Prevention of Corruption^Act, 1988 for prosecution of A.l. Hence, the charge sheet.

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After furnishing copies of case documents and examining the accused under Section 239 CrPC, charges^forthe offences under Sections 120B, 420, 471 and 468 IPC were framed against both the accused; charge for the offence^under Section 409 read with 120B and/or 109 IPC against A.2^and charge for the offence under Section 409 IPC and Sections¹³ (1) (c) read with 13 (2) of the P.C. Act, 1988 and 13 (1) (d) (ii) read with 13 (2) of the P.C. Act, 1988 against A.l. When the charges were read over and explained to the respective accused, they pleaded not guilty and claimed to be tried.

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During trial, P.Ws.l to 25 were examined and Exs.Pl on to PI79, including Exs.2A, 6A and 8A, were got marked behalf of the prosecution. No oral evidence was adduced on on behalf of the defence, but Exs.Dl to D5 were got marked behalf of the defence.

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The learned Special Judge, after considering the evidence on record, found A.l and A.2 not guilty of the offences under Sections 120B, 420, 471 and 468 IPC; found A.l not guilty of the offences under Sections 409 IPC and 13 (1) (c) read with 13 (2) of the P.C. Act and 13 (1) (d) (ii) read with 13 (2) of the P.C. Act, 1988; found A.2 not guilty of the offence under Section 409 read with 120B and/or 109 IPC, and accordingly acquitted them of the respective charges. Challenging the same the present Criminal Appeal i IS preferred by the appellant/State.

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The learned Special Public Prosecutor appearing for the appellant /CBI contended that from the voluminous documentaiy evidence coupled with evidence of material prosecution witnesses P.Ws.l, 2, 10, 12 and 13, the prosecution is able to establish its case against the accused beyond reasonable doubt, It is his contention that the accused had drawn excess amount than the amount allowed under the M.C.C. limits and caused wrongful loss to the Bank, which is evident from the evidence of P.Ws.l and 2. He submits that A. 1 dishonestly recommended the application^of A.2 and his group of firms for sanction of M.C.C. limits, and

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that for obtaining the M.C.C. limits, A.2 dishonestly and fraudulently submitted forged documents. He submits that A.l and A.2, during 1995 to 1997, were parties to criminal conspiracy, cheated the lOB to a tune of Rs.85,16,592/i__m purchase of bills, disbursement of limits to A.2 and his group of firms, and that in pursuance of the said conspiracy, A.l recommended, got sanctioned and disbursed M.C.C. limits to A.2 and his group of firms through A.2 though A.2 never indulged in any of the contract/business activities as claimed by him. He submits that in pursuance of the said conspiracy, A.l abused his official position as public servant dishonestly and fraudulently purchased the cheques/bills of A.2,^did not dispatch them for clearance, got over-valuation of collateral securities, accepted false documents of A.2 knowing or having reason to believe that they were false and forged, and recommended and got sanctioned M.C.C. limits to A.2 and his group and did not ensure proper utilization of the funds to the Bank. He submits that the learned Special Judge has not appreciated the evidence on record in proper perspective^and erred in acquitting the accused of the charges levelled against

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them. Hence, he prays to allow the Criminal Appeal and convict the accused of the charges levelled against them.

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On the other hand, learned counsel for the respondents 1 and 2/A.l and A. 2 contended that the prosecution is not able to establish that there was misappropriation of the amounts drawn through the M.C.C. accounts either by A.l or A.2, and the evidence of P.W.13 ISi relevant on this aspect. He submits that the alleged forgery or fabrication of documents is also not established by the

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prosecution. He submits that there was no fraudulent or dishonest intention entertained by the accused so as to attract the offence of cheating, and there is no conspiracy between the accused to cause any wrongful loss to the public excheque r. He submits that the allegation of over-valuation of the properties offered as collateral security has been disproved. He submits that except making bald allegations, no material has been produced by the prosecution to substantiate its allegations beyond reasonable doubt. He submits that the Special Judge considered these aspects in right perspective and rightly acquitted the accused, and there are no compelling or substantial reasons to interfere with the judgment of acquittal

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passed by the learned Special Judge and hence, he prays to dismiss the Criminal Appeal.

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Now, the point for determination in the present Criminal Appeal is whether the prosecution is able to bring home the guilt of the respondents/A. 1 and A.2 for the respective charges framed against them and whether the impugned judgment passed by the learned Special Judge^needs any interference ?

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This is an appeail against an Order of acquittal. There IS a presumption available under law that an accused is presumed to be innocent unless the guilt is established beyond reasonable doubt. That presumption of innocence is further strengthened by an order of acquittal passed by the^trialCourt. In dealing with the appeals against acquittal, though^thisCourt has full power to re-appreciate the evidence, at the same time,^it would be slow in interfering with the order of acquittal^because the presumption under law that accused is presumed to be innocent unless contrary is proved, is further strengthened by the order of acquittal. Unless there are substantial or compelling reasons, this Court will not ordinarily^disturbthe

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findings of the trial Court. If the trial Court has given any perverse finding, then it can be a ground to interfere with the order of acquittal. Similarly, if admissible evidence has not been taken into consideration or inadmissible evidence has been looked into for the purpose of arriving at a particular finding, then also it can be said to be a compelling reason to interfere with the same.

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On this aspect, it is pertinent to refer to a decision in Harbans Singh & another v. the State of Punjab^ wherein it ISi: held as follows: (para 8)

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“The question as regards the correct principles to be applied by a Court hearing an appeal against acquittal^of a person has engaged the attention of this Court from the very beginning. In many cases, especially the earlier ones, the Court has in laying down such principles emphasized the necessity of interference with an order of acquittal being based only on ‘compelling and substantial reasons’ and has expressed the view that unless such reasons are present in an Appeal, Court should not interfere with an order of acquittal (Vide Suraj Pal Singh V. The State, 1952 SCR 193: (AIR 1952 SC 52); Aj mer Singh V. State of Punjab, 1953 SCR 418: (AIR 1953 SC 459). The use of the words, ‘compelling reasons’ embarrassed some of the High Courts in exercising their jurisdiction in appeals against acquittals and difficulties occasionally arose as to what this Court had, meant by the words ‘compelling reasons’. In later years the^Court has often avoided emphasis on ‘compelling reasons’^but nonetheless adhered to the view expressed earlier that before interfering in appeal with an order of acquittal a

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AIR 1962 SC 439

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Court must examine not only questions of law and factⁱⁿ all their aspects but must also closely and carefully examine the reasons which impelled the lower courts^to acquit the accused and should interfere only if satisfied, after such examination that the conclusion reached by the lower court that the guilt of the person has not^been proved is unreasonable.”

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Heard. Perused the evidence on record.

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There is no dispute with regard to the fact that A. 1 is a public servant within the meaning of Section 2 (c) of the Act, 1988. P.W.8 worked as the General Manager, lOB, Chennai during the relevant point of time of the

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incident. He issued Ex.P86-sanction order to prosecute A. 1 issued by P.W.8. It is his evidence that after going through the material papers and application of mind,^he issued the sanction to prosecute A.l and he is competent to issue the same.

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The allegations against the accused are that A.l conspired with A.2 to commit fraud on lOB, Eluru branch and caused wrongful loss to the said bank and wrong gain to A.2 or his associate borrowers, and thereby cheated the Bank by submitting false, fake and forged documents by A.2 for obtaining sanction of M.C.C. limits and enhancement of the said limits, and A.l

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recommended the same to the Regional Office with false facts and figures and thus induced the Regional Office of the Bank and also by purchasing the demand bills and cheques presented by A.2 exceeding the financial powers of A.l and by not sending certain cheques for clearance and not acting upon certain dishonoured cheques (which were returned uncleared). It is further alleged that the accused fraudulently or dishonestly used as genuine the forged, fake and false documents i. e. copies of false bills of A.2, false and bogus profit and loss account, balance sheets, etc. submitted along with the application for credit facility of Rs.20.00 lakhs in the name of M/s.Kanaka Durga Tranders, belonging to sister of A.2; forged documents like copies of letter purported to have been issued by the Superintending Engineer, Panchayat Raj Eluru showing the award of work of Rs.54.00 lakhs to A.2; the GPA purported to have been given by P.S.Kumar, Secretary of Sri Krishna Vaddera and SC Co-operative Society Limited, Eluru; 13 false bills showing the proper utilization of funds of the bank; purported contract certificate dated 20.7.1996 as if issued by the Deputy

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r- :'f

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Executive Engineer, Irrigation Department and the purported profit and loss account of M/s. Kanaka Durga Traders said to have been issued by P.V.Prasad & Co., having knowledge or reason to believe that those documents are forged. It is the further allegation^thatthe accused forged all or any of the aforesaid documents intending that the said documents be used for the purpose of cheating. It is further alleged that A.l, being Senior Branch Manager of lOB, Eluru branch, having been entrusted with or having dominion over, the money of the bank in such capacity, committed criminal breach of trust in respect of the said money by allowing M.C.C. Limits beyond his powers to A. 2 and his associates and also his firms and allowed A. 2 and his associates to withdraw the amounts from the bank beyond the sanctioned limits and by not regularizing the limits by purchasing the demand bill exceeding his limits and^failed to collect the same, and he, being a public servant, dishonestly misappropriated the said monies entrusted to him or over which he has domain by virtue of his said position and allowed A.2 to misappropriate the amounts

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drawn from the bank from time to time and obtained pecuniary advantage to A.2 by abusing his position as a public servant and committed criminal misconduct, It is further alleged that A.2 abetted A.l to mi - misappropriate the monies of the Bank by purchasing 13 demand bills and by not taking action for clearance of the said cheques and also by allowing M.C.C. Limits exceeding his powers to A.2 and also by allowing him to withdraw the amounts from the said bank exceeding the sanctioned limits.

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A.l worked as Senior Manager of lOB, Eluru branch. a.2 was a private contractor, registered with Eluru Municipality. Opening of current accounts with the Bank in the name of A.2 and i in the name of his firm M/s. Sai Venkata Rajitha Enterpri rises, and also by P.Ws.3 and 4 in the name of their partnership firm M/s. Kanaka Durga Traders, Eluru and by P.W.24 in the name of his firm M/s. Venkata Dinesh Traders, Eluru, is not in dispute. Further, purchase of 13 bills (cheques) belonging to A.2 and his group firms, by A.l and presentation of credit and debit vouchers i - in the Bank, is also not disputed. The same is evident from the evidence

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of P.Ws.2, 3, 4 and 24 and from the documents Exs.P2^to

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P67 marked in their evidence.

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It is the allegation that A.l dishonestly recommended for sanction of M.C.C. limits to A.2 and^his group of firms, and A.2 dishonestly and fraudulently submitted forged documents for obtaining the said M.C.C. limits. However, a perusal of the evidence on record goes to show that the prosecution failed to produce and^prove said documents viz. copies of letters said to have^been issued by the Superintending Engineer, Panchayat Raj, Eluru showing the award of work of Rs.54.00 lakhs to^A.2; the alleged GPA said to have been given by P.W.5P.S.Kumar, Secretary of Sri Krishna Vaddera and SC^Co operative Society Limited, Eluru; the alleged 13 false^bills showing the proper utilization of funds of the bank;^the alleged contract certificate dated 20.7.1996 as if^issuedby the Deputy Executive Engineer, Irrigation Department^and the alleged profit and loss account of M/s. Kanaka^Durga Traders said to have been issued by P.V.Prasad & Co. Therefore, the prosecution failed to establish by adducing

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cogent oral and documentaiy forged the aforesaid documents.

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and documentaiy evidence, that accused

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It is the further allegation that A.l purchased the subject 13 cheques of A.2 and his group of firms by exceeding his financial powers and has not obtained prior permission from the Regional Office for purchasing the cheques exceeding his financial powers, and that with regard to sanction of M.C.C. limits to A.2 and his group of firms. It is pertinent to mention here that none of the prosecution witnesses deposed about the alleged conspiracy between A.l and A.2 to cause wrongful loss to the Bank and wrongful gain to A.2. P.W.2, who worked as Assistant Manager of JOB, Eluru branch at the relevant point of time of the incident. deposed with regard to opening of current accounts with the Bank i - in the name of A.2 and in the name of his firm M/s. Sai Venkata Rajitha Enterprises, and also by P.Ws.3 and 4 in the name of their partnership form M/s. Kanaka Durga Traders, Eluru and by P.W.24 i m the name of his firm M/s. Venkata Dinesh Traders, Eluru. The evidence of P.Ws.3, 4 and 24 also runs on the same lines about opening of the said accounts

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at the instance of A.2. A.2 is brother-in-law of P.W.3. P.W.4 is wife of P.W.3. P.W.24 is younger brother of^A.2.

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P.W.2 deposed in cross-examination that A.2, being a Senior Manager, was attending to clerical job^also due to dearth of staff, and that all the cheques that^were sent for clearance would be reflected in the cheques purchase referred register and monthly return of cheques purchased is known as CAF-4, in which all the cheques which were purchased in that month would be entered and the same would be sent to the Regional Office every month for review. P.W.2 further stated that D.B.P. (Demand Bills Purchase) cheques are reflected in Ex.P82, sent to office of the Regional original of which was Manager. He further stated that the RM office will^have knowledge of the excess purchase of DBPs by the branch after receipt of original of Ex.P82, and to his knowledge, RM office did not raise any queries after receipt of^Ex.P82 with regard to excess DBP purchase, He further stated that A. 1 used to send special letters with regard^toexcess purchases of DBPs to the RM, and A.l used to follow^the oral telephonic instructions of RM office in respect of

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purchase of excess DBFs. He further stated hat ini some cases, the valued customers approach the RM, who will give suitable instructions to the Manager i.e. A.l.

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P.W. 10 worked as Assistant General Manager, lOB during the relevant noi point of time of the incident. He deposed that while disbursing the loan to A.2, sanctioned terms and conditions were uot adhered to; that disbursement was made exceeding the limits and it was not brought to the notice of higher authorities, He also deposed about some irregularities i in case of accounts of Venkata Dinesh Traders, Kanaka Durga Traders and JSC Bose account.

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P.W. 13 worked as Deputy General Manager in Central Office, Chennai. He deposed that in the year 1997, as during regular branch i inspection conducted in the Bank by one Ramaswamy, Inspector of Central Office, Inspection Department, serious irregularities were noticed, the General Manager of the Bank asked him to investigate into those matters in Regional Office, Visakhapatnam. It is his evidence that he found

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procedural irregularities in the matter of conduct of the accounts. In cross-examination, he deposed that he did not record separate statements of A. 1 and one A.K.Das, Regional Manager. He further deposed that during interactive meeting, A. 1 told him in the presence of said A.K.Das that he sought RM’s permission for cheque purchases and that he did not dispatch the purchased cheques as the RM told him not to dispatch the same since they were accommodation cheques only, and A.K.Das, the then R.M. kept quiet. He further deposed that when he questioned A. 1 during the said meeting^asto whether R.M. was aware of the fact that the cheque purchases amounts were credited to M/s. Venkat Dinesh Traders and to Bose’s account, which were drawn in cash by Bose, immediately, A.K.Das, the then R.M. intervened and admitted that he permitted the BM to adjust other dues and start running business smoothly, P.W.13 further stated that he detailed the lapses on the part^of the Regional Manager, in Ex.P112. He further states that the documents verified by him revealed that the Regional Manager A.K.Das knew about the M.C.C. limits and

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excess limits and the DBP cheque purchases pertaining to accounts of Bose.

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From the evidenee of P.Ws.2 and 10, Iti is evident that A.l, being the Branch Manager, has to act as per the instructions of the Regional Office. Their evidence, coupled with the evidence of P.W.13, makes it clear that the Regional Manager A.K.Das knew about the M.C.C. limits and excess limits and the DBP cheque purchases pertaining to the account of Bose (A.2), and A. 1 did all the acts on the directions and with the permission of the then Regional Manager A.K.Das. Further, P.W.l deposed in cross-examination that if a Braneh Manager wants to exercise his discretionary powers and exceed his limits, he has to take prior permission from the Regional Manager, and that oral approvals are also being obtained from the Regional Manager. But, the then Regional Manager A.K.Das is not examined as a witness for the reasons best known to the prosecution, though he was cited at sl.No.8 in List of Witnesses i n charge sheet. His examination would have certainly thrown some light with regard^tothe veracity of allegations made as against A. 1.

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As regards the allegation of conspiracy between both the accused in over-valuing the properties offered^by of firms as collateral security for the A.2 and his group of excess drawals of M.C.C. amounts, the purpose prosecution examined P.W.9-Retired Executive Engineer, who was a valuer for lOB, Vijayawada branches and LIC He deposed that he valued the Housing Finance. properties of Eluru as the parties wanted to submit to the valuation certificates before the lOB, Eluru. His evidence the valuation given by him in Ex.P87-valuation supports report. He deposed that at the instance of the Branch Managers, they would go to the places to fix up the valuations and as per the prevailing standard schedule of rates he evaluated the building and vacant site and also enquired about the local rates prevailing at that time for When such is the fixing the values of the vacant site, evidence of P.W.9, the prosecution failed to adduce any other evidence or produce any documentary evidence^m that the values shown by P.W.9 m support of its case Virtually, the evidence of EX.P87 are on higher side. P.W.9 and the recitals in Ex.P87 remained unchallenged.

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No valuation certificates from the Sub Registrars concerned are produced to substantiate i - Its case by the prosecution. It is a fact that the prevailing market value of the property is different from the Sub Registrar’s valuation. Though prosecution marked Ex.P96-valuation reports given by one M.Raghu Kumar, Panel Valuer, lOB, Eluru, the same is not substantiated by examining the witness concerned.

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The evidence of P.W.12, who conducted inspection of lOB, Eluru branch and submitted Ex.P94inspection report, is clear that some records verified by him revealed that the Branch granted excess limits and M.C.C. limits was within the knowledge of Sri A.K.Das, Regional Manager. However, he stated that he did not examine the valuers and the panel Advocate who gave the legal opinion, and the Bank valuer estimated the values of

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the properties at Rs. 152.30 lakhs. The M.C.C. limits availed by the three firms from the Bank is Rs.45.00 lakhs. More over, the entire transactions are within the knowledge of the Regional Manager A.K.Das, and the evidence of P.W. 10 is clear that a Branch Manager has to

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act according to the instructions of the Regional Office, and that he has not taken steps to obtain values from^the office of the Sub Registrar concerned.

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Further more, the evidence of P.W.13 is clinching that he found procedural irregularities in^the matter of conduct of the accounts, and during interactive meeting, A. 1 told in the presence of A.K.Das, R.M.^thathe sought the latter’s permission for cheque purchases^and that he did not dispatch the purchased cheques as the latter told him not to dispatch the same since they^were accommodation cheques only, for which the latter kept quiet. It is also evident from the evidence of P.W.13^that during the meeting, when he questioned A. 1 as to whether the R.M. was aware of the fact that the cheque purchases amounts were credited to accounts of M/s. Venkat Dinesh Traders and A.2, the then R.M. intervened and admitted that he permitted the Branch Manager to adjust other^and start running business smoothly, It is his evidenee that he recorded the minutes of the interactive meeting. It is the further evidence of P.W.13 that the documents verified by him revealed that the A.K.Das, R.M. knew about the

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M.C.C. limits and excess limits and D.B.P. purchases cheque pertaining to the account of A.2 It is also evident from the evidence of p.w 22, who Deputy Chief worked as Officer, Regional Office, Visakhapatnam, and JOB, JOB, was working as the Chief Officer, Chennai, at the time af giving conducted i inspection of the Bank submitted and Ex.P165- ^eport, that the Regional Office straight away sanctioned the M.C. C. Limits of Rs. 15.00 lakhs basin g on Exs.P173 PI74 without roi raising any queries. Further, as held ■supra, the prosecution did not produce and prove any document which forged or fabricated document ■ The concern ofIti theallegedlendinas Bank is to secure repayment of the g amounts lent with the interest stipulated. and in order to secure the same. sufficient immovable properties were furnished as securities by A.2 and his g^oup of firms, as is evident from Ex.P95-sale heeds deposited "■ith the bank by creating equitable mortgages by deposit of title deeds and from Ex.P96 and other valuation reports furnished by panel valuers P.W.9 and another. Further, there i IS no material

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forthcoming that in view of the alleged acts of the accused, financial loss. On the lOB, Eluru branch sustained any the evidence of P. W. 1, it is clear that the other hand, from amounts relating to the aforesaid the entire outstanding recovered along with interest. customers were

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From the aforesaid discussion, it is clear that the prosecution failed to establish its case beyond reasonable doubt that the accused forged any document for cheating and used for the purpose of using the same any forged document as genuine, and A.l conspired with A.2 and over-valued the properties offered by A.2 and his collateral security for the purpose of group of firms as Further more, it is excess drawals of M.C.C. amounts, aforesaid discussion that A.l did all also clear from the the acts alleged against him on the directions and at the instance of the Regional Office at Visakhapatnam. There that the standard of proof required cannot be any dispute in an enquiry is different than that of in a criminal case. and the findings in inspection and enquiry reports cannot The be the basis for convicting an accused person. findings, if any , in the inspection/enquiry reports under

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Exs.P94, pi 12 and PI65, cannot be the basis to find an accused guilty of the charges in the present case. It is not the case of prosecution that the fir ms of A. 2 and his relatives are fictitious firms. Further, from the evidenee of P-W.IO, it is clear that there i IS no stipulation with regard to the end use of the funds released through M.C.C. facilities. Further, from the evidence of P.W.13, it is clear that the adjust of amounts to M.C.C. accounts through various transfer vouchers under Exs.P127 to P133 and P135 to P152, was done on the advice of A.K.Das, the then Regional Manager. As such, the allegation of misappropriation or criminal breach of trust by the accused in respect of allowing M.C.C. limits to A.2 and his group firms beyond the powers of A.l does not arise. No dishonest intention at the inception can be inferred from any of the proved circumstances or evidence, In view of the aforesaid findings, the charges under the Prevention of Corruption Act, 1988 do not stand. There is no legal evidenee to find the accused guilty of the charges levelled against them.

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In view of the foregoing discussion, this Court has no hesitation to hold that the prosecution failed to establish its case against the accused for the charges levelled against them, beyond all reasonable doubt, The trial Court, upon appreciation of the evidence on recordⁱⁿ right perspective, rightly found the accused not guilty^of the charges levelled against them and accordingly acquitted them. There are no compelling or substantial reasons to interfere with the impugned judgment. The Criminal Appeal is devoid of merits.

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In the result, the Criminal Appeal is dismissed. confirming judgment dated 19.01.2006 in C.C.No.lO of 2000 on the file of the Special Judge for C.B.I. Cases, Visakhapatnam.

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As a sequel, pending miscellaneous petitions, if any,ⁱⁿ the Criminal Appeal shall stand closed.

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Sd/- V. DIWAKAR DEPUTY REGISTRAR //TRUE COPY// ECTION OFFICER

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To,

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