The High Court allowed the appeal of an insurance branch manager convicted for corruption, setting aside the conviction due to invalid sanction and insufficient evidence of conspiracy or misconduct, granting benefit of doubt.
Appellant acquitted of all offences; judgment of conviction and sentence set aside; appellant entitled to refund of fine.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 24th DAY OF NOVEMBER 2023
BEFORE
THE HON’BLE Mr. JUSTICE SHIVASHANKAR AMARANNAVAR
CRIMINAL APPEAL No.322 OF 2012
BETWEEN:
SRI. P. BALAKRISHNA S/O LATE B. LINGAPPA, AGED ABOUT 56 YEARS, R/A. A.516, MAY FLOWER, BRIGADE MILLENNIUM, J.P. NAGAR, 7TH PHASE, BANGALORE-560078.
… APPELLANT
(BY SRI.KIRAN S. JAVALI, SR. ADV. FOR SRI. CHANDRASHEKARA K. ADVOCATE)
AND:
SUPERINTENDENT OF POLICE, CENTRAL BUREAU OF INVESTIGATION, BELLARY ROAD, BANGALORE.
… RESPONDENT
(BY MISS. RAMULA K. ADVOCATE FOR SRI. P. PRASANNA KUMAR, ADVOCATE)
THIS CRL. A. IS FILED U/S.374(2) CR.P.C BY THE ADV. FOR THE APPELLANT /ACCUSED NO.1 PRAYING TO SET ASIDE THE ORDER DATED:14.3.12 PASSED BY THE XLVII ADDL.CITY CIVIL AND SESSIONS JUDGE AND SPECIAL JUDGE FOR CBI CASES, BANGALORE IN SPECIAL (CORRUPTION)CASE NO.128/08-CONVICTING THE APPELLANT/ACCUSED FOR THE OFFENCE P/U/S.120(B),409 AND 420 IPC AND FOR THE OFFENCE P/U/S.13(1)(d) P/U/S.13(2) OF PREVENTION OF CORRUPTION ACT. THE APPELLANT/ACCUSED IS SENTENCED TO UNDER GO RI FOR TWO YEARS AND PAY A FINE OF RS.25,000/-(RS.TWENTY FIVE THOUSAND)ID SI FOR SIX MONTHSFOR THE OFFENCE P/U/S.120(B) IPC. THE APPELLANT/ACCUSED IS
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SENTENCED TO UNDERGO RI FOR TWO YEARS AND PAY A FINE OF RS.25,000/-(RS.TWENTY FIVE THOUSAND)ID SI FOR SIX MONTHSFOR THE OFFENCE P/U/S.420 IPC. THE APPELLANT/ACCUSED IS SENTENCED TO UNDERGO RI FOR TWO YEARS AND PAY A FINE OF RS.50,000/-(RS.FIFTY THOUSAND)ID SI FOR ONE YEAR- FOR THE OFFENCE P/U/S.13(1)(d) P/U/S.13(2) OF PREVENTION OF CORRUPTION ACT, AND SENTENCED TO UNDERGO RI FOR TWO YEARS AND PAY A FINE OF RS.50,000/-(RS.FIFTY THOUSAND)ID SI FOR ONE YEAR.THE APPELLANT/ACCUSED IS SENTENCED TO UNDERGO RI FOR THREE YEARS AND PAY A FINE OF RS.50,000/(RS.FIFTY THOUSAND)ID SI FOR ONE YEAR-FOR THE OFFENCE P/U/S.409 OF IPC. ALL THE SENTENCES SHALL RUN COUCURRENTLY. THE APPELLANT/ACCUSED PRAYS THAT HE BE ACQUITTED.
THIS CRIMINAL APPEAL HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 11.10.2023 AND COMING ON FOR PRONOUNCEMENT OF JUDGMENT THIS DAY THROUGH VIDEO CONFERENCING AT DHARWAD BENCH, THE COURT PRONOUNCED THE FOLLOWING:
J U D G M E N T
This appeal is filed by appellant – accused No. 1 against the judgment of conviction and order of sentence dated 14.03.2012 passed in Special (Corruption) Case No. 128/2008 by the XLVII Additional City Civil and Sessions Judge and Special Judge for CBI cases, Bengaluru, convicting the appellant – accused No. 1 for offence punishable under Sections 120-B, 409 and 420 of IPC and Section 13(1)(d) punishable under Section 13(2) of Prevention of Corruption Act (for short hereinafter referred
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to as `the PC Act’) and sentencing to undergo rigorous imprisonment for a period of two years and to pay fine of Rs.25,000/- for offence under Section 120-B; to undergo rigorous imprisonment for a period of two years and to pay fine of Rs.25,000/- for offence under Section 420 of IPC; to undergo rigorous imprisonment for a period of two years and to pay fine of Rs.50,000/- for offence under Section 13(1)(d) punishable under Section 13(2) of PC Act and to undergo rigorous imprisonment for a period of three years and to pay fine of Rs.50,000/- for offence under Section 409 of IPC.
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2A. It is alleged that, Maruti Zen Car bearing
registration No. KA 04 P 8622 held in the name of Sri. K. Govindraj was Insured with NIACL, Jayanagar Branch, Bangalore. An accident claim application along with the estimate was submitted to NIACL and Rs.1,08,500/- was sanctioned by the competent authority based on the recommendation of accused No.1 - Branch Manager, and a cheque issued in favour of Sri. K.Govindraj was credited to his account held at M/s. Shree Tulasi Credit Co-operative Society, Bangalore. But the said Maruti Zen Car had actually not met with any accident on 21.07.2003 and that accused No.2 had submitted the claim applications and inspection reports in the names of accused No. 3 – Sri. A.Gabriel and accused No 4 – Sri. M.R. Anilkumar and accused No.1 had disbursed Rs.1,08,500/- based on the fraudulent claim application and the inspection/reinspection report and that the cheque was not forwarded through registered post as mandated. They had connived
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with Sri. Harish and got an account opened in the name of Sri. K. Govindraj at M/s. Shree Tulasi Credit Co-operative Society, Bangalore for the purpose of fraudulent encashment of cheque issued in favour of the claimant.
2B. Further it is alleged that, a Honda City Car bearing registration No. KA 05 MB 4147 held in the name of Sri. M.G. Krishnamurthy was insured with NIACL, Jayanagar Branch, Bangalore; a claim application along with the estimated damage of Rs.1,49,948/- was submitted to NIACL; Rs. 1,16,500/- was sanctioned by the competent authority based on the recommendation of Sri. P. Balakrishna, and a cheque for Rs.1,16,500/- issued in favour of Sri. M.G. Krishnamurthy was credited to his account. The extent of damage was exaggerated in the inspection/re-inspection reports and only Rs.65,000/- was paid by cash to the garage and remaining amount Rs.51,500/- was misappropriated by accused Nos. 1 and 2.
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2C. Further it is alleged by prosecution that, a Maruti
Zen car bearing registration No. KA 01 N 7705 held in the name of Sri. M. Jeevan Kumar was insured with NIACL, Jayanagar Branch, Bangalore; an accident claim application along with the estimated damage of Rs.86,065/- was submitted to NIACL. Sri. M. Jeevankumar had submitted the bills for Rs.64,927/-, accused No.1 had recommended sanctioning of Rs.44,681/- and submitted the same to NIACL, Divisional Office, Bangalore.
2D. Further it is alleged that, Sri. A. Gabriel had given a written clarification to NIACL, Divisional Office, Bangalore, that accused No. 2 had prepared inspection/re-inspection report in his name and in the name of accused No. 4 and had obtained his signature. The claimant does not reside at the given address, and that the number plate of another vehicle involved in accident has been superimposed with registration No. KA 01 N 7705 and the claim is pending for disbursal.
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2E. Further it is alleged that, Sri. P.Balakrishna –
accused No. 1 has committed similar irregularities in many
of the cases during his tenure as the Branch Manager, NIACL, Jayanagar Branch, Bangalore, thereby causing huge loss to NIACL and corresponding gain for himself and others.
2F. Further, investigation revealed that payment
towards survey fees for carrying out the survey of 6
vehicles was made as shown in below mentioned table:-
| Sl. No. |
Regn.No.of theVehicle |
Name of the Surveyor |
Cheque No./date/amount |
Name of the Beneficiary |
|---|---|---|---|---|
| 1 | KA 05 MB 4147 |
G.Venkatesh | Ch.No.135564 Dtd.9.10.2003 for Rs.2002/- |
G.Venkatesh |
| 2 | KA 04 P 8622 |
A Gabriel | Ch.No.285139 Dtd.31.3.2004 for Rs.2106/- |
A Gabriel |
| 3 | KA 04 P 8622 |
M.R.Anilkumar | Ch.No.285140 Dtd.31.3.2004 For Rs.643/- |
M.R.Anil Kumar |
| 4 | KA 04 Z 3053 |
G Venkatesh | Ch.No.166854 Dtd.30.6.2003 for Rs.991/- |
SB A/c.No.17614 Corporation Bank, SC Road Branch, Bangalore held in the name of G.Venkatesh |
| 5 | KA 04 Z 3758 |
M.R.Anil Kumar |
Ch.No.164011 Dtd.23.5.2003 |
SB A/c.No.51895 |
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| for Rs.1284/- | M/s.Ashok Nagar Co- operative Bank Ltd., Bangalore held in the name of M.R.Anilkumar |
|||
|---|---|---|---|---|
| 6 | KA 04 MB 4147 |
S.L.Suresh | Ch.No.135563 Dtd.9.10.2003 For Rs.643/- |
SB A/c.No.2339 State Bank of Hyderabad, Jayanagar, Bangalore held in the name of S.L.Suresh |
| 7 | KA 04 Z 3758 |
B.S.Ramesh | Ch.No.164006 Dtd.23.5.2003 for Rs.496/- |
Shri G.Venkatesh through SB A/c.No.54150 at Union Bank of India, Domlur Branch, Bangalore opened in the name of B.S.Ramesh |
| 8 | KA 05 Z 3053 |
B.S.Ramesh | Ch.No.166853 Dtd.30.6.2003 for Rs.527/- |
Shri G. Venkatesh through SB A/c.No.54150 at Union Bank of India, Domlur Branch, Bangalore opened in the name of B.S.Ramesh |
| 9 | KA 05 N 5764 |
B.S.Ramesh | Ch.No.164177 Dtd.16.6.2003 for Rs.772/- |
Shri G. Venkatesh through SB |
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| A/c.No.54150 at Union Bank of India, Domlur Branch, Bangalore opened in the name of B.S.Ramesh |
|---|
2G. Further it is alleged that, accused No.3 – Sri. A. Gabriel and accused No. 4 – Sri. Anilkumar had received surveyor fee though they had not carried out the survey of vehicles involved in the aforesaid transactions. They have connived with accused No. 2 and they have signed the survey reports though they had not carried out the survey and dishonestly received survey fee for lending their names for making fraudulent gains. Hence, they are the beneficiaries. Appellant - accused No.1 – Sri. P. Balakrishna and accused No. 2 – Sri. G. Venkatesh, accused No. 3 - Sri. Gabriel and accused No. 4 – Sri. Anilkumar, have entered into criminal conspiracy in the matter of settlement of insurance claims with a view to cheat NIACL, Jayanagar
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Branch, Bangalore and caused loss of Rs. 1,60,000/- as
shown in below mentioned table:-
| Sl. No. |
Name of the claimant & Claim number |
Vehicle No. | Sanctioned claim |
Mis- appropriated amount |
|---|---|---|---|---|
| 1 | K.Govindaraj 671901/31/03/0 0676 |
KA 04 P 8622 | Rs.1,08,500/- | Rs.1,08,500/- |
| 2 | M.G.Krishna murthy 671901/31/01/9 0000273 |
KA 05 MB 4147 |
Rs.1,16,500/- | Rs.51,500/- (Rs.65,000/- was paid by G.Venkatesh to S.K.Ananth(L W-8) in cash) |
| 3 | C.Shekar 671901/31/03/0 0049 |
KA 04 Z 3758 | Rs.39,500/- | Nil |
| 4 | K.R.Nanjappa 671901/31/03/0 0089 |
KA 05 Z 3053 | Rs.27,700/- | Nil |
| 5 | G.Raghunath 671901/31/03/0 00104 |
KA 05 N 5764 | Rs.5,980/- | Nil |
2H. Further, accused No.1 – Sri. P. Balakrishna had entered into criminal conspiracy with accused Nos. 2 to 4 in the matter of allotment of motor vehicle surveys and processing of motor vehicle accident claims on forged motor survey reports and accused No.1 allotted final survey/reinspection survey works to accused Nos. 2 to 4 dishonestly
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and fraudulently by abusing his official position and committed criminal breach of trust, thereby causing a loss of Rs.1,60,000-00 to NIACL, Jayangar branch, Bangalore. Further, accused Nos.2 to 4 forged certain documents such as survey reports, estimates of damage, cash bill/invoice, which they knew that they are forged documents pertaining to vehicles bearing registration Nos. KA 04 P-8622 Maruthi Zen car and had got sanctioned Rs.1,08,500/-, Honda City car bearing registration No. KA 05 MB-4147 and had got sanctioned Rs.1,16,500/from New India Insurance Company Ltd., Divisional Office, Basavanagudi, Bangalore, on the recommendation of accused No. 1, and fraudulently and dishonestly got encashed the cheques through the fake bank account opened in the name of claimants, at M/s. Tulsi Co-operative Credit Society, Yeswanthpur, Bangalore and Shree Nanjundeshwara Co-operative Credit Society, Yeswanthpur, Bangalore, respectively, intending to cheat the Insurance company.
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2I. Further it is alleged that, in furtherance of said
criminal conspiracy, accused Nos.2 to 4 signed the survey reports pertaining to vehicle bearing registration Nos. KA 04 P-8622 - Maruthi Zen car, Honda City car bearing registration No.KA 05 MB-4147, used the said survey reports as genuine, for making fraudulent claim of survey fees and insurance claims, and accused No.1 used survey reports, estimates of damages, cash bill/invoice as genuine and got Rs.1,08,500/- and Rs.1,16,500/- sanctioned in respect of the above said vehicles and dishonestly and fraudulently encashed through nominal account held in the name of claimants in the above said Co-operative Society, and fraudulently utilized the same and caused loss to the
NIACL, Jayanagar branch, Bangalore and corresponding gain for themselves and that thereby committed the alleged offence.
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vehicle accident claim without the knowledge and consent of the claimants thereby accused have committed the offence punishable under Section 120-B read with 409, 420, 467, 468 and 471 I.P.C. and Sections 13 (1) (c) and (d) read with Section 13(2) of Prevention of Corruption Act, 1988. Hence, charge-sheet was filed against accused Nos. 1 to 4 for the alleged offences.
accused No. 1 for offence punishable under Sections 120-B, 409, 420 of IPC and Section 13(1)(d) punishable under Section 13(2) of PC Act and framed charge against accused Nos. 2 to 4 for offence punishable under Sections 120-B, 420, 468 and 471 of IPC. The prosecution, in order to prove the charge, has examined P.W.1 to P.W.31 and got marked Ex.P.1 to Ex.P.78 and M.O. 1 to M.O.9. Statements of appellant – accused Nos. 1 to 4 were recorded under Section 313 Cr.P.C. The accused did not adduce defence evidence, but, got marked Ex.D.1 in the cross of P.W.2,
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Ex.D.2 in the cross of P.W.3, Ex.D.3 in the cross of P.W.4 and Ex.D.4 in the cross of P.W.9. The trial Court, after hearing arguments on both sides, formulated points for consideration and convicted the appellant – accused No. 1 as noted above. The trial Court also convicted accused No.
2 for offence punishable under Sections 120-B, 420, 468 and 471 of IPC. The trial Court acquitted accused Nos. 3 and 4 for offence punishable under Sections 120-B, 420, 468 and 471 of IPC. Said judgment of conviction and order of sentence has been challenged by appellant – accused No. 1 in this appeal.
1 has argued that sanction Ex.P.65 has been issued by P.W.29 and he is not a person competent to accord sanction. He further contended that there are no separate
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Rules of M/s. New India Assurance Company Limited (for short hereinafter referred to as NIACL) and the CDA Rules though were followed, said Rules have not been placed before the Parliament and no Gazette notification was issued. In the absence of CDA Rules having been notified as required, said Rules could not have been made applicable to NIACL and for this reason the sanction order will have to be held as bad in law. On that point he placed reliance on the decision of coordinate Bench of this Court in the case of K.T. Uthappa and another Vs. State of Karnataka, Crl.A. No. 933 C/w. 835/2010 dated 01.03.2012 wherein this Court referring to the decision of the Hon’ble Apex Court in the case of Rajendra Agricultural University Vs. Ashok Kumar Prasad1 has held that the sanction order is invalid in view of CDA Rules not being gazetted. He further contended that said decision of this Court was challenged before the Hon’ble Apex Court in
1 AIR 2010 SC 259
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Crl.A. Nos. 1872-1873/2014 , wherein the Apex Court while affirming the finding of this Court has observed as under “w e also keep on record that the General Insurance (Conduct, Discipline and Appeal) Rules, 1975 not even gazetted at any point of time and made applicable to the employees of the said Insurance Company” and dismissed the appeals.
that respondent – Insurance Company has not challenged the said order and it has become final. Therefore, he contended that there is no sanction at all to prosecute
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appellant – accused No. 1 and if the sanction order goes entire proceedings becomes redundant.
He contended that case came to be registered on source information. There is no complaint by New India Assurance Company or by any claimant or by any other person. As per the prosecution 5 cases are set out and out of them in item Nos. 1 to 4 the claim exceeds Rs.22,500/which is the limit of the Branch Manager and the said claims have been approved by the Divisional Office. P.W.2, P.W.3 and P.W.12 confirmed that if amount of claim exceeds Rs.22,500/- it has to be dealt with by the Divisional Office.
Since in those 4 items as the claim is approved by the Divisional Officer, no fault can be found with appellant – accused No. 1. There is no allegation of appellant – accused No. 1 conspiring with any officer of the Divisional Office. Said claims have been approved by the Divisional Officer by name Sri. Bopanna. The prosecution has not examined any of the officer of the Divisional Office. P.W.2 – Vigilance
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Officer has stated that he has verified only 3 files and he has not verified other 3 files. P.W.5 confirms that everything is proper. P.W.31 – Investigating Officer in his cross-examination has admitted that all 4 claims are approved by the Divisional Office. With regard to 5th claim, the amount of claim settled is Rs.5,899/- and it is by appellant – accused No. 1 and there is no discrepancy with regard to the claim and settlement of the amount. The prosecution which alleges that appellant – accused No. 1 allotted more number of surveys to accused No. 2 and to establish the same the prosecution has not produced Register of Survey Allotment. The prosecution has placed much reliance on the statement of one Sri. Harish recorded under Section 164 Cr.P.C. (Ex.P.78). Said Sri. Harish is one of the witnesses named in the charge sheet as C.W.11 and he has not been examined as he was reported dead. Said statement – Ex.P.78 has been marked in the evidence of P.W.31. Allegation against said Sri. Harish is that he
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fraudulently opened accounts in the names of the claimants in Nanjundeshwara Co-operative Society and Tulsi Cooperative Society in connivance with appellant – accused No. 1 and got enchased the cheques. Even though said Sri.Harish stated so, he has not been arraigned as an accused. Contents of the said statement – Ex.P.78 have not been proved by examining the Magistrate who recorded the said statement of Sri. Harish (Ex.P.78). Since accused Nos. 3 and 4 were acquitted, the allegation of conspiracy by appellant – accused No. 1 with accused Nos. 2 to 4 fails. Therefore, evidence on record does not attract the offence alleged against appellant – accused No. 1. The trial Court has erred in convicting appellant – accused No. 1. With this he prayed to allow the appeal and acquit appellant – accused No. 1.
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appellant – accused No. 1. He has supported the reasons assigned by the trial Court. He argued that by making reference to each of the instances and evidence with regard to that instance. Statement of Sri. Harish recorded under Section 164 Cr.P.C. (Ex.P.78) establishes that at the instance of appellant – accused No.1 he fraudulently opened accounts in the names of claimants in Nanjundeshwara Co-operative Society and Tulsi Cooperative Society and got encashed the cheques. The appellant – accused No.1 who is duty bound to verify the claims has not done so. He has violated the circulars and
directions. He placed reliance on the following decisions:
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2 2018 (15) SCC 192
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sanction, did not dispute the contentions raised by the learned counsel for appellant – accused No.1 and decisions relied on by him. But, he contended that only on the ground that sanction is bad, appellant – accused No.1 cannot be acquitted and on that point he placed reliance on the decision of the Hon’ble Apex Court.
perusal of the impugned judgment and the trial Court records, the following point arises for my consideration:
Whether the trial court has erred in convicting the appellant/accused No.1 for the offences punishable under Sections 120B, 409 and 420 of IPC and Section 13(1)(d) punishable under Section 13(2) of PC Act?
My answer to the above point is in the affirmative for the following reasons.
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No.1 was that, he had entered into criminal conspiracy with accused Nos.2 to 4 in the matter of allotment of motor vehicle surveys and processing of motor vehicle accident claims on forged motor survey records and accused No.1 allotted final service/re-inspection survey works to accused Nos.2 to 4 dishonestly an fraudulently by abusing his official position and committed criminal breach of trust, thereby caused loss of Rs.1,60,000/- to NIACL, Jayanagar Branch, Bangalore. Accused Nos.3 and 4 have been acquitted by the trial Court and therefore, the criminal conspiracy alleged against the appellant/accused No.1 with accused Nos.3 and 4 fails.
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claim exceeds Rs.22,500/- it has to be dealt with by the Divisional Office. Ex.P-2 which pertains to Financial Authority Powers Manual, there is a mention that the Branch Manager has authority to settle the motor own damage claims up to Rs.22,500/- and any claim in excess of that has to be approved by the Divisional Office. Accused No.1/appellant herein was the Branch Manager of Jayanagar Branch. The claim pertaining to Sri.K.Govindraj (Vehicle bearing No.KA 04 P 8622-Maruthi Zen car) is Rs.1,12,069/- and file is at Ex.P-3; the claim pertaining to Sri. M.G. Krishnamurthy (vehicle bearing No.KA 05 MB 4147-Honda City Car) is Rs.1,16,500/- and the file is at Ex.P-4; the claim pertains to Sri.C. Shekar (Vehicle bearing registration No.KA 04 Z 3758-Maruthi van) wherein the claim is Rs.39,500/- and file pertaining to the same is at Ex.P-6; the claim pertaining to Sri. K.R. Nanjappa (vehicle bearing registration No.KA 05 Z 3053-Maruthi van), the claim is Rs.27,700/- and the file pertaining to the same is
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at Ex.P-7 and the claim pertaining to Sri.G.Raghunath (vehicle bearing No.KA 05 N 5764-DCM-Ceillo) wherein the claim is Rs.5,980/- and the file pertaining to the said claim is at Ex.P-8. Except the claim pertaining to Sri.G.Raghunath, the other claims settled are above the financial limit of accused No.1, who was the Branch Manager which was Rs.22,500/-. In the said 4 cases, the claim files sent by the appellant/accused No.1 have been approved by the Divisional Office. The claim pertaining to Sri. G.Raghunath has been approved by the appellant/accused No.1 as the claim was within his financial limit. PW.25, who was working as the Senior Assistant in Jayanagar Branch in Claims Section, has deposed that she processed the claim file of G. Raghunath and survey was conducted by Sri. B.S. Ramesh and claim was settled for Rs.5,980/- which was approved by the appellant/accused No.1. She has deposed that she found no discrepancies in the documents and she has further stated that there is no
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fabrication of the documents which she has stated before the CBI. The Surveyor-B.S. Ramesh, who has been examined as PW-17, has deposed that survey report Exs.P6(c)(d), P-7(e)(f)and P-8(g) were issued on his letter head but he has not issued the same. The said Ramesh, Surveyor, has received the cheque of the survey fee and he has encashed the same. Therefore, the said claim processed by the appellant/accused No.1 and approved by him which was processed by PW.25 cannot be found fault with. There is no allegation of claim without accident.
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satisfied, then issues direction for issue of cheque. What was the procedure to be followed in the Divisional Office while approving the claims has not been brought on record. When the Divisional Office has approved the claim, processed and recommended by the Branch Manager, no fault can be found with the Branch Manager for recommending the claim. PW.8 in his cross-examination has stated that the Divisional Office after verifying and satisfying, then issues direction for issue of cheque. The appellant/accused No.1 who was working as a Branch Manager on the claim application survey report and considering the claim exceeding his financial limits, has forwarded the same to the Divisional Office.
officer in Divisional Office in his cross-examination has stated that the matter of verifying the estimate and making survey of the claim, is the job of the Surveyor and the Branch Manager has no role to play. In one case, the
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Divisional Office in respect of claim pertaining to Sri. Jeevankumar, the file of which is at Ex.P-5, the Divisional Office has not approved the claim recommended by the Branch Manager. The said claim of Sri. Jeevankumat is not settled since it is not approved by the Divisional Office. PW.9 has made observations as per Ex.P-40 and raised objections and therefore, the claim of Sri. Jeevankumar has not been approved by the Divisional Office. In respect of other claims, the Divisional Office has approved the claim and as per the directions of the Divisional Office, the Branch Office has issued account payee cheques in the names of the claimants.
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Sri.M.G. Krishnamurthy, Sri. K.R. Nanjappa and
Sri. G. Raghunath to whom the account payee cheques have been issued were encashed through bank account. The said Sri.Krishnamurthy has issued letter Ex.P-27 for having received the cheque for Rs.1,16,500/-. The signature of Sri.Krishnamurthy at Ex.P-27(a) has been admitted by PW-4 who is the son of Sri.Krishnamurthy. The cheques issued to the claimants at Ex.P-31 for Rs.1,08,500/- and Ex.P-32 for Rs.1,16,500/- have been encashed by the claimants through bank accounts. The accusation of opening of bank account by using fabricated document is against accused No.2 and one Sri. Harish, who is said to have given statement at Ex.P-78 under Section 164 of Cr.P.C. The said Harish has not been arrayed as accused who has opened the bank account in the name of the claimants. Even his statement Ex.P-78 stated to have been made under Section 164 Cr.P.C has been marked
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through PW-31-Investigating officer. Even though the statement-Ex.P-78 is marked, the contents of the statement is not proved by examining the Magistrate who has recorded the said statement. In the absence of the same, the contents of Ex.P-78-statement made by Sri.Harish-CW.11 are not established. Even what is stated in Ex.P-78 is that, the appellant/accused No.1 brought Sri.Govindraj and Sri.Krishnamurthy to Sri.Harish for discounting of the cheque. The said Sri. Harish in Ex.P-78 has stated that, he knows accused Nos.2 to 4 who used to come to him for discounting of the cheques. Even though he knows accused No.2, he did not say that two persons brought by accused No.1 on different dates for discounting of the cheque was accused No.2. The said Sri. Harish has stated that he could not identify the person brought by accused No.1 for discounting of the cheque. Sri. Harish has stated that he has discounted the cheque and gave cash to
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the person brought by accused No.1 and took his signature
on the Forms for opening the bank account etc.
of R.Venkatkrishnan v. Central Bureau of Investigation3 .
The Hon’ble Apex Court has observed thus:
“72. Criminal conspiracy in terms of Section 120-B of the Code is an independent offence. It is punishable separately. Prosecution, therefore, must prove the same by applying the legal principles which are applicable for the purpose of proving a criminal misconduct on the part of an accused. A criminal conspiracy must be put to action and so long a crime is merely generated in the mind of the criminal, it does not become punishable. Thoughts, even criminal in
3 (2009) 11 SCC 737
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character, often involuntary, are not crimes but when they take concrete shape of an agreement to do or cause to be done an illegal act or an act which is not illegal but by illegal means then even if nothing further is done, the agreement would give rise to a criminal conspiracy.
73. The ingredients of the offence of criminal conspiracy are:
Condition precedent, therefore, for holding the accused persons guilty of a charge of criminal conspiracy must, therefore, be considered on the anvil of a fact which must be established by the prosecution viz. meeting point of two or more persons for doing or causing to be done an illegal act or an act by illegal means.
74. The courts, however, while drawing an inference from the materials brought on record to arrive at a finding as to whether the charges of the criminal conspiracy have been proved or not, must always bear in mind that a conspiracy is hatched in secrecy and it is, thus, difficult, if not impossible, to obtain direct evidence to establish the same. The manner and circumstances in which the offences have been committed and the level of involvement of the accused
33
persons therein are relevant factors. For the said purpose, it is necessary to prove that the propounders had expressly agreed to or caused to be done the illegal act but it may also be proved otherwise by adduction of circumstantial evidence and/or by necessary implication. (See Mohd. Usman Mohammad Hussain Maniyar v. State of Maharashtra [(1981) 2 SCC 443 : 1981 SCC (Cri) 477] .)
75. The following passage from Russell on Crimes (12th Edn., Vol. 1) referred to by Jagannatha Shetty, J. in Kehar Singh v. State (Delhi Admn.) [(1988) 3 SCC 609 : 1988 SCC (Cri) 711] (at SCC p. 731, para 271) brings out the legal position succinctly:
“The gist of the offence of conspiracy then lies, not in doing the act, or effecting the purpose for which the conspiracy is formed, nor in attempting to do them, nor in inciting others to do them, but in the forming of the scheme or agreement between the parties. Agreement is essential. Mere knowledge, or even discussion, of the plan is not, per se enough.”
It was further noted in that case that to establish an offence of criminal conspiracy “[i]t is not required that a single agreement should be entered into by all the conspirators at one time. Each conspirator plays his separate part in one integrated and united effort to achieve the common purpose. Each one is aware that he has a part to play in a general conspiracy though he may not know all its
34
secrets or the means by which the common purpose is to be accomplished.”
In view of the above, the gist of the offences of conspiracy lies in forming of the scheme or agreement between the parties. Therefore, agreement is essential.
35
registered post and vouchers of the claimants have not been obtained. There is nothing on record to show that the appellant/accused No.1 was dispatching the cheques. There will be a separate staff in the Branch, who will be assigned with the duty of sending the cheques to the claimants in accordance with the procedure. Even if the cheques are not sent by registered post, it may be irregularity in the procedure.
“175. Moreover, it must be noted in this respect that banking norms and established practices and procedures would contain directions of law prescribing the mode in which
4 (2009) 15 SCC 643
36
the trust is to be discharged. The expression “direction of law” in the context of Sections 405 and 409 would include not only legislations pure and simple but also directions, instruments and circulars issued by an authority entitled therefor. The trust in this regard would therefore have to be discharged in terms of such directions. Acting in violation thereof causing wrongful gain to A-3 and loss to the Bank would bring the action within Section 409 IPC.”
Further, in the case of Sudhir Shantilal Mehta v. Central Bureau of Investigation5 the Hon’ble Apex Court has held as under:
“ 58. Whether a circular letter issued by a statutory authority would be binding or not or whether the same has a statutory force, would depend upon the nature of the statute. For the said purpose, the intention of the legislature must be considered. Having regard to the fact that Reserve Bank of India exercises control over the banking companies; we are of the opinion that the said circular letter was binding on the banking companies. The officials of UCO Bank were, therefore, bound by the said circular letter.”
they pertain to the Bank. In the case at hand, it is a
5 (2009) 8 SCC 1
37
Insurance Company and not a Bank. Accused No.1 by following the circular has forwarded the claims which exceeded his financial limit to the Divisional Office. What deviation of the procedure alleged against accused No.1 is that, the cheques to the claimants have not been sent by registered post and vouchers are not obtained. No circular or direction has been produced which contains the procedure that the cheque has to be issued only by a registered post to the claimants. If the cheque has been issued by deviating the said procedure, then it does not amount to committing an offence but it is a mere irregularity in the procedure. More so, none of the claimants have made any complaint against accused No.1 for not having received the cheque. Even there is no complaint by the Insurance Company against accused No.1. FIR came to be registered only on the basis of the source report.
38
committed ‘criminal breach of trust’. There is nothing on record to show that the appellant/accused No.1 has settled the claim and issued cheque where there is no accident. The appellant/accused No.1 has issued cheque only after approval of the files by the Divisional Office. Even the cheques have been issued in the name of the claimants that too through account payee cheques. Therefore, there is no criminal breach of trust committed by the appellant/accused No.1. The learned counsel for the respondent has placed reliance on the decision of the Hon’ble Apex Court in the case of Vinayak Narayan Deosthali v. Central Bureau of Investigation6 wherein it is held as under:
“ 15. … The appellant unauthorisedly credited the amount to Mehta’s account by abusing his position in conspiracy with Mehta. The Accused also issued bank receipts for security transactions without physical existence of securities which amounted to forgery. It is thus, safe to infer the abuse of position by the appellant-accused in conspiracy with and to the benefit of Mehta. Diversion of public funds by the
6 (2015) 2 SCC 553
39
accused amounted to criminal breach of trust by committing forgery/use of forged documents as well as offence under the provisions of the Corruption Act. ….”
cannot be inferred that the appellant/accused No.1 abused his position getting benefit to himself or others.
“16. Section 13 of the PC Act in general lays down that if a public servant, by corrupt or illegal means or otherwise abusing his position as a public servant obtains for himself or for any other person any valuable thing or pecuniary advantage, he would be guilty of “criminal misconduct”. Subsection (2) of Section 13 speaks of the punishment for such misconduct. Section 13(1)(d) read with Section 13(2) of the PC Act lays down the essentials and punishment respectively
7 (2017) 8 SCC 757
40
for the offence of “criminal misconduct” by a public servant. Section 13(1)(d) reads as under:
“ 13. Criminal misconduct by a public servant .—
(1) A public servant is said to commit the offence of criminal misconduct—
* * *
(d) if he—
(i) by corrupt or illegal means, obtains for himself or for any other person any valuable thing or pecuniary advantage; or
(ii) by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage; or
(iii) while holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest; or”
17. A perusal of the above provision makes it clear that if the elements of any of the three sub-clauses are met, the same would be sufficient to constitute an offence of “criminal misconduct” under Section 13(1)(d). Undoubtedly, all the three wings of clause (d) of Section 13(1) are independent, alternative and disjunctive. Thus, under Section 13(1)(d)(i), obtaining any valuable thing or pecuniary advantage by corrupt or illegal means by a public servant in itself would amount to criminal misconduct. On the same reasoning “obtaining a valuable thing or pecuniary advantage” by abusing his official position as a public servant, either for
41
himself or for any other person would amount to criminal misconduct.”
42
payee cheques which were encashed by them through their bank accounts.
placed reliance on the decisions on the point ‘what is reasonable doubt’. The Hon’ble Apex Court in the case of
43
Suresh Chandra Jana v. State of West Bengal and ors8
wherein it is has held as under:
“16. It may be mentioned that it is not every doubt but only a reasonable doubt of which benefit can be given to the accused. A doubt of a timid mind which is afraid of logical consequences, cannot be said to be reasonable doubt. The experienced, able and astute defence lawyers do raise doubts and uncertainties in respect of evidence adduced against the accused by marshalling the evidence, but what is to be borne in mind is—whether testimony of the witnesses before the court is natural, truthful in substance or not. The accused is entitled to get benefit of only reasonable doubt i.e. the doubt which a rational thinking man would reasonably, honestly and conscientiously entertain and not the doubt of a vacillating mind that has no moral courage and prefers to take shelter itself in a vain and idle scepticism. The administration of justice has to protect the society and it cannot ignore the victim altogether who has died and cannot cry before it. If the benefits of all kinds of doubts raised on behalf of the accused are accepted, it will result in deflecting the course of justice. The cherished principles of golden thread of proof of reasonable doubt which runs through web of our law should not be stretched morbidly to embrace every hunch, hesitancy and degree of doubt.”
8 (2017) 16 SCC 466
44
28. The Hon’ble Apex Court in the case of Bhagwan
Jagnnath Markad & Ors v. State of Maharashtra9 has held
as under:
“ 18. It is accepted principle of criminal jurisprudence that the burden of proof is always on the prosecution and the accused is presumed to be innocent unless proved guilty. The prosecution has to prove its case beyond reasonable doubt and the accused is entitled to the benefit of the reasonable doubt. The reasonable doubt is one which occurs to a prudent and reasonable man. Section 3 of the Evidence Act refers to two conditions-(i) when a person feels absolutely certain of a fact- “believes it to exist”, and (ii) when he is not absolutely certain and thinks it so extremely probable that a prudent man would, under the circumstances, act on the assumption of its existence. The doubt which the law contemplates is not of a confused mind but of prudent man who is assumed to possess the capacity to “separate the chaff from the grain’. The degree of proof need not reach certainty but must carry a high degree of probability.
20. Exaggerated to the rule of benefit of doubt can result in miscarriage of justice. Letting the guilty escape is not doing justice. A Judge presides over the trial not only to ensure that no innocent is punished but also to see that guilty does not escape.”
9 (2016) 10 SCC 537
45
46
accounts. Even the cheques issued to the Surveyors for making payment of survey charges are account payee cheques and they have been encashed through bank accounts.
as per the power of delegation given by the Board of Directors of the Company and as per the CDA Rules, he being the Deputy General Manager is competent authority to appoint as well as Disciplinary Authority of appellant - accused No.1. The prosecution has not produced any
47
authorization given by the Board of Directors of the Company to P.W.29. As per the Memorandum and Articles of Association Board’s authorization is a must. Second defect in the prosecution case with regard to sanction order is that there is no separate Rules for New India Assurance Company Limited and Rules which were applied were the General Insurance (Conduct, Discipline and Appeal) Rules, 1975 (CDA Rules). Said CDA Rules were not placed before the Parliament. No gazette notification was issued. A Coordinate Bench of this Court considering similar issue with regard to sanction to prosecute issued by Deputy General Manager has held as under:
41. Now coming to the sanction part of the case, P.W.1 has deposed in his evidence that, he issued the sanction order as per Ex.P.1. The witness has submitted that, he was not specifically authorized by the Board to issue the sanction. The Memorandum of Articles of Association placed on record by the accused as per Ex.D.1 indicates that the Board’s authorization is a must. The second defect in the prosecution case with regard to the
48
sanction order is that, the witness P.W.1 has stated in his evidence that there is no separate rules for the United India Insurance Company Limited and the rules which were applied were the General Insurance Conduct Discipline Appeal Rules 1975 (CDA Rules). It is also in his evidence that the CDA Rules were not placed before the Parliament. No Gazette Notification was issued. Whether in such circumstances, the CDA Rules could have been invoked is the point for consideration. In this connection the decision referred by the learned counsel Sri. Kiran S. Javali is required to be taken note of.
42. In the case of Rajendra Agricultura lUniversity Vs. Ashok Kumar Prasad (AIR 2010 SC 259) dealing with Bihar Agricultural Universities Act, 1987 and Section 36 of the said Act laying down steps for making or amending a Statute, the Apex Court has observed at para 9 that, if the Act lays down the manner in which a statute under the act should be made, it shall have to be made in that manner and no other. The court went on to hold that the requirement that the statute should be published in the official Gazette, is an integral part of the process of `statute making’ under section 36 of the Act and it is mandatory and not directory. It was
49
further held that, until publication in the official Gazette, the statute will be considered as still being in process of being made, even if it had received the assent of the Chancellor. Consequently, the court went on to observe that, a statute in the making’ or a statute in process’ is incomplete and is neither valid nor effect as a statute.
CBI, ACT, Bangalore Vs. K.T. Uthappa and another , wherein it is held as under:
“We do not agree with the reasoning given by Mr.P.K.Dey in these matters to set aside the impugned Order passed by the High Court on the ground that the sanction which has been given by the Authority was valid in law and the High Court has erroneously held that sanction granted by PW 1, the then A.G.M. was invalid. But it appears to us that no sanction was granted by the Board of Directors which
50
ought to have been done under the provisions of Law. We have further seen that it is a fact that the respondents-herein who were Officers of the Insurance Company have already been dismissed from the service on account of the disciplinary action taken by the United India Insurance Company Ltd. We also keep on record that the General Insurance (conduct, Discipline and Appeal) Rules, 1975 not even gazetted at any point of time and made applicable to the employees of the said Insurance Company.”
on the aforesaid decision of the Hon’ble Apex Court has quashed the order of sanction issued by Deputy General Manager for offence punishable under Section 120-B read with Sections 420, 468 and 471 of IPC and Section 13(2) read with Section 13(1)(c) and (d) of PC Act, 1988, in the case of Sri. P. Balarkishna Vs. Union of India and others, W.P.No. 6659/2011 decided on 02.02.2022 . In
the said case the appellant – accused No.1 herein was the petitioner. Learned counsel for respondent was also the
51
learned counsel for respondent No. 4 in the said writ petition and he has not disputed that the said order has not been challenged by the respondent. Aforesaid principles if applied to the case on hand would render the sanction order invalid in view of the CDA Rules not being gazetted. Learned trial Judge did not consider the aforesaid aspects while dealing with the contentions put forth by the accused in respect of validity of the sanction order.
aspects has erred in convicting the appellant/accused No.1 for the offences under Sections 120B, 409 and 420 of IPC and Section 13(1)(d) read with Section 13(2) of PC Act.
ORDER
The appeal is allowed. The judgment of conviction
and order on sentence passed by the learned XLVII Additional City Civil and Sessions Judge and Special Judge
52
for CBI cases, Bengaluru, in Special (Corruption) Case
No.128/2008 is set aside.
The appellant/accused No.1 is acquitted of the offences punishable under Sections 120B, 409 and 420 of IPC and Section 13(1)(d) read with Section 13(2) of PC Act.
The appellant/accused No.1 is entitled to refund of
fine, if any, paid by him.
JUDGE
LRS & Kmv CT-bck
3 issues framed by the court
Whether the trial court erred in convicting the appellant for offences under Sections 120B, 409, 420 IPC and Section 13(1)(d) read with Section 13(2) of the PC Act?
Whether the sanction order for prosecution was invalid due to CDA Rules not being gazetted?
Whether there was sufficient evidence to prove criminal conspiracy and misconduct against the appellant?
Colour shows how this judgement treated each authority
K.T. Uthappa and another Vs. State of KarnatakaReferred¶71
Crl.A. No. 933 C/w. 835/2010 dated 01.03.2012
Rajendra Agricultural University Vs. Ashok Kumar PrasadReferred¶72
AIR 2010 SC 259 · Who else cites this
State of Karnataka, CBI, ACT, Bangalore Vs. K.T. Uthappa and anotherAffirmed¶229
Crl.A. Nos. 1872-1873/2014
R Venkatakrishnan v CBIReferred¶89
(2009) 11 SCC 737 · Who else cites this
Mir Nagvi Askari v CBIReferred¶90
(2009) 15 SCC 643 · Who else cites this
Sudhir Shantilal Mehta v. CBIReferred¶91
(2009) 8 SCC 1 · Who else cites this
Vinayak Narayan Deosthali v CBIReferred¶92
(2015) 4 SCC 353 · Who else cites this
Vinayak Narayan Deosthali v CBIReferred¶93
(2015) 2 SCC 553 · Who else cites this
Neera Yadav v CBIReferred¶94
(2017) 8 SCC 757 · Who else cites this
Suresh Chandra Jana v State of West Bengal & Ors.Referred¶95
(2017) 16 SCC 466 · Who else cites this
Bhagawan Jagnnath Marked & Ors v State of MaharashtraReferred¶96
(2016) 10 SCC 537 · Who else cites this
Arvind Singh v State of MaharashtraReferred¶97
(2021) 11 SCC 1 · Who else cites this
Girish Sharma and others v State of Chhattisgarh and othersReferred¶99
2018 (15) SCC 192 · Who else cites this
5 provisions across 3 enactments
Sri. P. Balakrishna
Superintendent of Police, Central Bureau of Investigation, Bellary Road, Bangalore
Shivashankar Amarannavar
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
