N R Gururaja Vs the State of Karnataka

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NC: 2025:KHC:6543 CRL.A No. 196 of 2012

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13^TH DAY OF FEBRUARY, 2025

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BEFORE

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THE HON'BLE MR JUSTICE V SRISHANANDA CRIMINAL APPEAL NO. 196 OF 2012

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BETWEEN:

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N.R. GURURAJA, S/O N.G. RAMACHANDRA AGED ABOUT 57 YEARS RETIRED OFFICER , CANARA BANK R/O 51, K.E.B ROAD, OPP. TERRACE GARDEN APARTMENTS, BSK 3RD STAGE, KATHRIGUPPE, BANGALORE - 85.

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…APPELLANT

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(BY SRI. S.P. KULKARNI, SENIOR COUNSEL A/W SRI. K. SRIKANTH PATIL, ADVOCATE)

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AND:

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Digitally signed by MALATESH K C

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Location: HIGH COURT OF KARNATAKA

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THE STATE OF KARNATAKA, REPRESENTED BY INSPECTOR OF POLICE, CBI/ACB, BANGALORE - 560 001.

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THE UNION OF INDIA, REPRESENTED BY ITS SECRETARY, MINISTRY OF EXTERNAL AFFAIRS, PARLIAMENT BHAVAN, NEW DELHI - 110 001.

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THE JOINT SECRETARY (PSP) THE JOINT SECRETARY (PSP) AND CHIEF PASSPORT OFFICER,

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MINISTRY OF EXTERNAL AFFAIRS, C.P.V. DIVISION, NEW DELHI - 110 001.

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…RESPONDENTS

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(BY SRI. P. PRASANNA KUMAR, ADVOCATE)

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THIS CRIMINAL APPEAL IS FILED U/S. 374(2) OF CR.P.C PRAYING TO SET ASIDE THE ORDER DATED:31.1.12 PASSED BY THE XLVII ADDL.CC AND SJ AND SPL.JUDGE FOR CBI CASES, BANGALORE IN SPL. (CORRUPTION) CASE NO.257/04 - CONVICTING THE APPELLANT/ACCUSED FOR THE OFFENCE P/U/S 120(B) AND 420 OF IPC AND UNDER SEC.13(1)(d) P/U/S 13(2) OF PREVENTION OF CORRUPTION ACT.

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THIS APPEAL, COMING ON FOR HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: HON'BLE MR JUSTICE V SRISHANANDA

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ORAL JUDGMENT

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Heard the learned counsel Sri. S.P. Kulakarni and the learned counsel Sri. P. Prasanna Kumar for the respondents.

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Accused No.3 by name Sri. N.R. Gururaja who suffered an Order of conviction along with Accused Nos.1,

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2 and 4 in Spl. CC No.257/2004 for the offences punishable under Section 120B, 420 of the Indian Penal

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Code and Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act is the appellant.

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Appeal filed by accused Nos.1 and 2 in Crl.A.No.237/2012 and Crl.A.No.195/2012 were dismissed

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as abated on account of death of accused Nos.1 and 2.

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Insofar as accused No.4 is concerned, he had also filed a separate appeal in Crl.A.No.1117/2011 which also stood dismissed as abated on account of death of accused No.4.

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Facts in brief which are utmost necessary for disposal of the present appeal are as under :

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A charge sheet came to be filed by the Central

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Bureau of Investigation (hereinafter referred to as ‘CBI’ for

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short) against 21 accused alleging the commission of offence under Sections 120B read with Section 420, 468, 471 of the Indian Penal Code and as against accused Nos.1 to 3, under Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act.

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Charge sheet material would reveal that 1^st accused Y.N. Shenoy was the Chief Manager, Canara Bank, Benson Town, Bangalore, during the period August 2001 to August 2002. Accused No.2 Srinivas Desai was working as a Manager (Credit). Accused No.3 Sri. G.R. N.R. Gururaja (Appellant) was working as an Officer (Advances) of the said branch.

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It is alleged that Accused Nos.1 to 3 entered in a criminal conspiracy to cheat the Canara Bank and they further conspired with Accused Nos.4 to 21 and 17 housing loans were granted based on forged and fabricated documents submitted by accused Nos.4, 7 to 21. When the said fraud came to be light, there was an enquiry.

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It is further alleged that 4^th accused Prabhu played a prominent role in getting fraudulent documents and represented those documents are genuine documents and obtained housing loan from Canara Bank. Accused

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Nos.1 to 3 did not properly appraise the loan papers and ultimately resulted in wrongful loss caused to Canara bank and wrongful gain to the accused persons.

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After receipt of such a complaint, the CBI investigated the matter thoroughly and noted that accused Nos.4, 7 to 21 had obtained following loan and filed the charge sheet :

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SL.NO.	PARTIC	ULARS LOAN AMOUNT
01	Accused	No.4 21.5 Lakhs
02	Accused	No.7 15 Lakhs
03	Accused	No.8 17.5 Lakhs
04	Accused	No.9 16 Lakhs
05	Accused	No.10 17.5 Lakhs
06	Accused	No.11 17 Lakhs
07	Accused	No.12 23.75 Lakhs
08	Accused	No.13 24 Lakhs
09	Accused	No.14 24 Lakhs
10	Accused	No.15 24 Lakhs
11	Accused	No.16 24.5 Lakhs
12	Accused	No.17 24.5 Lakhs
13	Accused	No.18 24.5 Lakhs
14	Accused	No.19 24.5 Lakhs
15	Accused	No.20 24.5 Lakhs
16	Accused	No.21 24.5 Lakhs

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On receipt of charge sheet, the learned Special

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Judge took cognizance of the offences alleged against

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accused persons and thereafter secured the presence of the accused persons framed the charges for the aforesaid offences.

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All the accused persons pleaded not guilty.

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Therefore, trial was held.

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In order to bring home the accused persons, as many as 25 witnesses were examined on behalf of the prosecution as PWs.1 to 25 and voluminous documentary evidence were placed on record which were exhibited and marked as Exs.P1 to P355. On behalf of the defence, 13 documents were placed on record which were exhibited and marked as Exs.D1 to D13.

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On conclusion of recording of evidence, learned Trial Judge recorded the accused statement as is contemplated under Section 313 of the Code of Criminal Procedure wherein accused denied all the incriminatory materials that were put to them and did not submit any written submission as is contemplated under Section

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313(4) of the Code of Criminal Procedure nor examined any witnesses on behalf of the accused.

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Thereafter the learned Trial Judge heard the parties in detail and on cumulative evidence of material in record convicted accused Nos.1 to 4 and sentenced them as under:

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(i) Acting U/s.235(2) of Cr.P.C. accused No.1 to 4 are hereby convicted for the offence punishable under section 120(B) L.P.C. and sentenced to undergo Simple imprisonment for a period of two years each and to pay fine of Rs.30,000/each (Rupees Thirty thousand) IDSI for a period of six months each.

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(ii) Further, accused No.1 to 4 are hereby convicted for the offence punishable under section 420 1.P.C. and sentenced to undergo Simple imprisonment for a period of two years each and to pay fine of Rs.30,000/- each (Rupees Thirty thousand) IDSI for a period of six months each.

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(ii) Further the accused Nos. 1 to 3 are hereby convicted for the offence under section 13 (1) (d) punishable U/s.13(2) of Prevention of Corruption Act, and sentenced to undergo simple imprisonment for a period of two years each and to pay fine of Rs.40,000/- (Rupees Forty thousand) each, IDSI for a period of one year each.

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(iii) Further, accused No.4 is hereby convicted for the offence punishable under section 468 I.P.C. and sentenced to undergo Simple imprisonment for a period of two years and to pay fine of Rs.50,000/- (Rupees Fifty thousand) IDSI for a period of one year.

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(iv) Further, accused No.4 is hereby convicted for the offence punishable under section 471 I.P.C. and sentenced to undergo Simple imprisonment for a period of two years and to pay fine of Rs.50,000/- (Rupees Fifty thousand) IDSI for a period of one year.

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(v) Accused Nos.1 to 3 shall pay total fine of Rs.1lakh each and accused No.4 shall pay total fine of Rs.1,60,000/-.

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(vi) All the sentences shall run concurrently.

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Being aggrieved by the same, accused Nos.1 to

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4 preferred separate appeals. Those appeals filed by accused Nos.1, 2 and 4 stood dismissed as abated as referred to supra. Therefore, the present appeal is now confined only with regard to accused No.3.

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Learned counsel Sri. S.P. Kulkarni, learned senior counsel representing 3^rd accused reiterating the grounds urged in the appeal memorandum vehemently

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contended that it is the 4^th accused who was the kingpin in the fraud. Role of the 3^rd accused is only limited to the extent of appraising the loan proposal as he was only officer who was in the department of advances and had no power to sanction the loan nor recommend the sanction of loan. Said aspect of the matter has been ignored by the learned Trial Judge while convicting accused No.3 for the offences punishable under Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act. He further emphasized this no material is found against him to attract the offence under Section 120B or 420 of the Indian Penal Code and thus sought for allowing the appeal.

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Sri.S.P.Kulkarni would further contend that

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prosecution material placed on record would not even establish the semblance of wrongful loss caused to the Bank and corresponding wrongful gain caused to the appellant herein by virtue of discharge of work of an Officer (Advances) in Canara Bank, Benson Town Branch,

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Bengaluru and whereby he cannot be held liable for the

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offence under Section 420 of the Indian Penal Code.

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He would also contend that to establish the existence of element of criminal conspiracy, even though direct evidence is not available in a given case, the circumstance that has been enunciated by the prosecution would not be sufficient enough to hold that the appellant No.3 also conspired with accused Nos.1 and 2 and 4 to 21 for the sanction of 17 housing loans based on the fraudulent documents.

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It is further contended on behalf of the appellant that the appellant is not a well versed person as

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to appraise the genuineness and otherwise of the documents that has been placed on record by the prospective loanees and legal department attached to Canara Bank, Benson Town Branch, Bengaluru was the proper entity to appraise the genuineness of the documents. Based on the opinion furnished to the branch by the legal experts, further processing of the document

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has taken place and role of the present appellant was only to the extent of putting up an appraisal note as per the norms of the bank which has been done in all earnestness by the appellant. Therefore there was hardly any scope for convicting the appellant for the aforesaid offences and sought for allowing the appellant in toto .

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Alternatively Sri. S.P. Kulkarni would contend that in the event this Court upholding the Order of conviction for the appellant for the offence under Sections 120B and 420 of the Indian Penal Code, taking note of the fact that no evidence whatsoever available on record to attract the offence under Section 13(1)(d) read with Section 13(2) of Prevention of Corruption Act merely on the ground that the 3^rd accused - appellant is a public servant, conviction of the appellant for the aforesaid offence is per se not sustainable in law and thus sought for acquitting the appellant for the aforesaid offences and at least sought for allowing the appeal in part.

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In support of such contention, Sri. S.P. Kulkarni would contend that the apprehension expressed by the prosecution during the course of arguments is met with by filing an affidavit by the appellant whereunder he has undertaken to forego the retirement benefits and such other benefits attached to his office as an Officer (Advances) in Canara Bank in the event of acquittal is recorded for the offence under Section 13(1)(d) read with Section 13(2) of Prevention of Corruption Act.

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For the sake of certainty, the contents of the affidavit filed by the appellant is extracted as under:

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“I, N.R.GururajaS/o. N.G.Ramachandra, aged about 71 years, R/at 130, 5th Main, 9th Cross, Canara Bank Layout, Kodigehalli, Vidyaranyapura Post, Bengaluru-560 097, do hereby solemnly affirm and state on oath as follows:

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1. I state that I am the Appellant in the above appeal, I know the facts and circumstances of the case. Hence I am swearing to this affidavit.

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2. I state that the CBI had registered a case against me in Spl. (Corruption) Case No. 257/2004 by alleging that I have committed offences punishable U/Sec.120B, 420, 468, 471 of

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IPC R/W. Sec.13(1)(d) and Sec.13(2) of the Prevention of Corruption Act 1988.

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3. I say that I was arrayed as Accused No.3 in the said case and despite all my effective defence and cross examination of the witnesses for prosecution, the learned XLVII Addl. City Civil & Sessions Judge and Special Judge for CBI cases, Bengaluru has passed an order of conviction and sentence on 31.1.2012 for the said offences and has ordered me to undergo simple imprisonment and pay fine as held therein.

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4. I say that this Hon'ble Court admitted the above appeal and suspension of sentence was ordered with conditions to remit the fine amount. I say that I have complied with the order by remitting the fine amount.

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5. I say that I was inflicted the penalty of compulsory retirement in the post of Officer of Canara Bank on 23.3.2004 and I have been receiving minimum pension till today as per the order of the Bank Management.

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6. I say and swear on oath that, I am giving up my pensionary benefits and monthly pension from today in the said regard. I also submit that I will also not claim any pension from today from the complainant Canara Bank even in the future.

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Wherefore I pray that I may be acquitted of the said offences and appropriate orders be passed in this appeal, in the interest of justice and equity.”

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Per contra, Sri. P. Prasanna Kumar, the learned

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counsel for the Central Bureau of Investigation supports the impugned judgment in toto.

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He would further contend that but for the appraisal note furnished by the appellant loan papers would not have been further processed. He would also contend that it was a bounden duty of the appellant to verify the necessary documents including the documents which are furnished as security before putting up the appraisal note for the purpose of sanctioning housing loan.

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Sri. Prasanna Kumar would further contend that admittedly 17 housing loans became sticky and when the loans were not recovered, the bank has scrutinized 17 housing loan accounts and then the fraud has come to the light and on further enquiry, it reveals that accused No.1 Shenoy being the Chief Manager and Accused No.2 Srinivas Desai who was the Manager (Credit) and the appellant - Manager who was the Officer (Advances) had

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role in getting the loan papers processed without proper enquiry and without proper verification of the documents furnished by accused No.4 and 7 to 21.

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Sri. P. Prasanna Kumar would further contend

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that no prudent banker would allow appraisal note to be put up for further consideration without proper verification of the documents and in the case on hands ignoring to follow the established procedure for processing the loan papers by the present appellant has ultimately resulted in grant of 17 housing loans based on the fraudulent documents and thus, existence of elements of criminal conspiracy is to be inferred by this Court in the facts and circumstances of the case.

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It is also the arguments of the Sri. P. Prasanna Kumar that the role of the present appellant in putting up appraisal note if not has been carried on by the appellant, the loan papers would not have been further processed at all. Therefore in result of the proposal is immaterial while appreciating the presence of elements of criminal

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conspiracy in the given case and thus sought for dismissal of the appeal.

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Insofar as the charge under Section 420 of the Indian Penal Code is concerned, Sri. P. Prasanna Kumar would contend that material evidence placed on record did establish that there was a wrongful loss caused to the Canara Bank, Benson Town Branch, Bangalore on account of the fact that 17 housing loans were processed and sanctioned based on the fraudulent documents and the same were not recovered. Therefore corresponding wrongful gain to the appellant and other accused persons is established by the prosecution by placing cogent evidence on record.

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The learned counsel for CBI would further invite the attention of the Court to the wordings employed in Section 13(1)(d) of the Prevension of Corruption Act to sustain the conviction of the appellant for the aforesaid offence by contending that not only positive action is contemplated under Section 13(1)(d) of Prevention of

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Corruption Act but passive action in the form of for bear to do a legal duty would also attract Section 13(1)(d) of the Prevention of Corruption Act. Therefore, obtainment of illegal gratification for bearing to do a lawful act should be inferred in the set of circumstances and sought for dismissal of the appeal stands in t o to.

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Having heard the parties in detail, this Court perused the material on record meticulously. On such perusal of material on record, the following points would arise for consideration :

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(i) Whether the material evidence placed on record would be sufficient enough to maintain the conviction of the appellant for the offence under Section 120B and 420 of the Indian Penal Code and offence Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act?

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(ii) Whether the appellant makes out a case of legality infirmity or perversity in the impugned judgment?

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(iii) Whether the sentence needs modification?

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(iv) What order?

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31. Regarding Points No.1 and 2: In the case on

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hands, accused No.3 having worked as an Officer (Advances) in Canara Bank, Benson Town Branch, Bangalore. Therefore he was a public servant is not in dispute.

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Sanctioning Authority of the appellant did consider the material collected by the investigation agency and found that action attributable to the present appellant is not only irregularity, but it is illegality and then issued sanction order to prosecute the appellant.

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Validity of the sanction order is not seriously questioned on behalf of the appellant before the Trial Court and learned Trial Judge has held that the sanction order is valid. Same would prima facie establish that the acts attributable to the appellant in appraising of 17 housing loans on accused Nos.4, 7 to 21 would not only amounts to irregularity but illegality.

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Illegality has crept in because the document that has been furnished along with the loan application and security that has been offered were fraudulent documents.

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Sri. S.P. Kulakarni no doubt contended that

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appellant was required to accept the opinion obtained from the legal department and thereafter he has processed the loan applications and put up the appraisal note. No doubt the appellant was not legally competent to find out whether the documents furnished along with the loan application was in order or not genuine documents. But the role of present appellant would not stop there. He was bound appraise material on record while putting up the appraisal note as per the norms of the bank and inspection report as well as the sanction order has pointed out deficiency in adhering to the norms of the bank while processing the aforesaid application.

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Therefore, it is not a mere case of omission on behalf of the appellant in processing the application. Why only in respect of these 17 applications that the appellant

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No.3 has failed to adhere to the norms is a question that has to be answered by the appellant or at least explained at the time of recording accused statement. No such answer of explanation is forth coming on behalf of the appellant.

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It is in the above set of circumstances, the role of accused Nos.1 and 2 also to be seen in sanctioning the aforesaid housing loans. Accused No.2 being the Manager (Credit) and Accused No.1 being the Chief Manager, Canara Bank, Benson Town Branch, Bangalore were the proper persons to re-appreciate the note put up by the accused No.3 and then sanction the loan. On record, no explanation is forth coming from them at the time of recording the accused statement as to whether they really re-appreciated or they went by the note put up by the appellant. Death of accused Nos.1 and 2 has resulted in their appeal being abated, no further discussion is necessary insofar as the validity of the impugned judgment insofar as accused Nos.1 and 2 are concerned.

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However, to the limited extent of finding out whether there existed any criminal conspiracy which ultimately resulted in blindly accepting the note put up by accused No.3, role of accused Nos.1 and 2 is also reappreciated by this Court based on the material evidence on record.

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Admittedly, accused Nos.1 and 2 have blindly accepted the note put up by accused No.3 and proceeded to sanction 17 housing loans.

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Existence of element of criminal conspiracy is ticklish question to be decided in every case based on the material evidence on record. Positive evidence to establish the existence of criminal conspiracy is seldom available in a given case. Principles of law enunciated by the Hon'ble Apex Court in the case of Mohammed Khalid vs. State of West Bengal reported in (2002) 7 SCC 334, wherein the Hon'ble Apex Court reiterated the principles of law enunciated in the of Kehar Singh vs. State of Delhi reported in (1988) 3 SCC 609, would make it crystal

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clear that the Courts are not precluded from considering the circumstances and draw an inferential deduction of existence of criminal conspiracy.

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Keeping the above legal principles in the back ground, when the material on record in the case on hand is appreciated, 17 housing loan proposals were made to Canara Bank, Benson Town Branch, Bangalore. Accused No.1 to 3 being the persons who were alone responsible for processing those applications did process other applications based on fraudulent documents and there was a wrongful loss caused to the bank corresponding wrongful gain to the applicants which in turn is shared by the applicants to accused Nos.1 to 3 cannot be ruled out.

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What made accused Nos.1 to 3 to process 17 housing loan applications ignoring the norms set out by the bank is a question which remains unanswered on behalf of the accused which would result in an inference that it must be for some pecuniary gain in the absence of any extra affinity towards applicants.

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Therefore, on cumulative consideration of the positive acts on behalf of the appellant and accused Nos.1 and 2 especially accused No.3 forbearing to adhere to the norms of the bank in putting up appraisal note insofar as 17 housing loan accounts are concerned, the only inference that could be drawn by a normal prudent person is that there existed some understanding among accused Nos.1 to 3 which resulted in processing the application in a particular manner.

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It is to be borne in mind that Conspiracy is usually hatched in secrecy. Therefore, expecting positive evidence to prove the existence of conspiracy in every case is impermissible.

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Thus, even after re-appreciation of material evidence on record, this Court is unable to accept that Accused No.3 was not part of the criminal conspiracy with remaining accused persons.

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As already noticed, there was a wrongful loss caused to the bank corresponding wrongful gain to the accused persons. Repayment of the loan amount or recovery process initiated by the bank for loan amount.. would not ipso facto efface the criminal conspiracy as is contemplated under Section 420 of the Indian Penal Code. View of this Court is supported by the principles of law enunciated by the Hon'ble Apex Court in the case of Gian Singh vs. Sate of Punjab reported in (2012) 10 SCC 303.

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From the above discussion, this Court is of the considered opinion from the above observations. Voluminous documents placed on record which does not require a detailed discussion in this appeal inasmuch as majority of the documents are admitted documents which bears the signature of accused Nos.1 to 3 would establish the allegations levelled against accused Nos.1 to 3 in not properly processing the housing loan accounts.

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From the above discussion, this Court is of the considered opinion, even after re-appreciation, that material on record is sufficient enough to sustain the conviction finding of the guilt recorded by the learned Trial Judge in the impugned judgment for the offence under Sections 120B and 420 of Indian Penal Code.

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It is pertinent to note that the material evidence on record is not sufficient so as to maintain conviction of the appellant for the offence under Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act.

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Solely on the ground that the appellant is a public servant, has committed the offence under Section 120B and 420 of the Indian Penal Code, would not ipso facto establish all ingredients to attract the offence under Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act.

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In other words, prosecution has to place on record such other ingredients to attract offence under Section 13(1)(d) of the Prevention of Corruption Act. More so, having regard to the fact that under Section 13(1)(d) Prevention of Corruption Act, words fraudulently or dishonestly is conspicuously absent.

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Therefore, conviction of the appellant for the offence under Section 120B and 420 of the Indian Penal Code would not automatically result in an offence said to have been put by public servant under Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act. Therefore, conviction of the appellant for the aforesaid offence necessarily needs to be set aside. Accordingly, in view of the foregoing discussion, point Nos.1 and 2 are answered ‘partly in the affirmative’ .

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Regarding Point No.3: This Court having recorded an order of acquittal for the offence under Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act wherein compulsory minimum

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imprisonment of six months is prescribed, the Order of sentence, passed by the learned Trial Judge in the impugned judgment needs a re-look.

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Admittedly, the appellant is aged about 71 years and is a first time offender. He is also suffering from old age ailments. Taking note of the fact that for the offences under Sections 120B and 420 Indian Penal Code, there is no minimum imprisonment prescribed, directing the appellant to undergo simple imprisonment for a day till the rising of the Court by enhancing the fine amount in a sum of Rs.1,00,000/- for the offence under Sections 120B and 420 Indian Penal Code would meet the ends of justice in the peculiar facts and circumstances of the case on hand. Accordingly, point No.3 is answered ‘partly in the affirmative’.

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Regarding Point No.4: In view of finding of this

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Court on points No.1 to 3, following order is passed :

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ORDER

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(i) Criminal Appeal is allowed in part.

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(ii) Appellant – Accused No.3 is acquitted for the offence under Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act.

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(iii) Conviction of the appellant for the offence under Section 120B and 420 of the Indian Penal Code is maintained and sentence of imprisonment ordered in this impugned judgment is modified as under:

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a. Appellant shall undergo simple imprisonment for the day till rising of the Court and to pay enhanced fine of Rs.1,00,000/- on or before 15.03.2025. Failure to pay the enhanced fine, appellant shall undergo imprisonment as

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