R Shivakumar Vs the State of Karnataka

THIS CRL.A. IS FILED U/S.374(2) OF CR.P.C PRAYING TO SET ASIDE THE ORDER DATED: 9.12.11 PASSED BY THE XXXII ADDL.C.C. AND S.J., AND SPL.JUDGE FOR CBI CASES, BANGALORE IN SPL.C.C.NO.134/07 - CONVICTING THE APPELLANT/ACCUSED FOR THE OFFENCE P/U/S 120(b) R/W 468, 471, 477A, 420 OF IPC AND U/S 13(1)(d) R/W 13(2) OF PREVENTION OF CORRUPTION ACT 1988. AND THE APPELLANT/ACCUSED IS SENTENCED TO UNDERGO S.I. FOR ONE YEAR FOR THE OFFENCE P/U/S 120B OF IPC.

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IN CRL.A NO. 26/2012

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BETWEEN:

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SRI. NAGESH V GOKARN AGED ABOUT 58 YEARS, S/O VINAYAK, PRESENTLY WORKING AS SENIOR MANAGER, UCO BANK, PANJIM BRANCH, GOA

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...APPELLANT

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(BY SRI. M. VINAYA KEERTHY, ADVOCATE)

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AND:

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STATE BY INSPECTOR OF POLICE CENTRAL BUREAU OF INVESTIGATION, ACB, BANGALORE

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...RESPONDENT

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(BY SRI. P. PRASANNA KUMAR, ADVOCATE)

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THIS CRL.A. IS FILED U/S.374(2) OF CR.P.C PRAYING TO SET ASIDE THE ORDER DATED:9.12.11 PASSED BY THE XXXII ADDL.C.C. AND S.J., AND SPL.JUDGE FOR CBI CASES, BANGALORE IN SPL.C.C.NO.134/07 - CONVICTING THE APPELLANT/ACCUSED FOR THE OFFENCE P/U/S 120(b) R/W SEC.468, 471, 477A, 420 OF IPC. AND SEC.13(1)(d) R/W 13(2) OF PREVENTION OF CORRUPTION ACT 1988.

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IN CRL.A NO. 125/2012

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BETWEEN:

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LAKSHMI NARAYAN BEHAL, S/O. LATE KISHAN GOPAL BEHAL, AGED ABOUT YEARS, OCC: DIRECTOR, M/S. SRIRAM AUTO HOUSE, PRIVATE LTD., P.B. ROAD, DAVANAGERE.

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RESIDING AT NO.4226/1920, SIDDAVEERAPPA LAYOUT, DAVANAGERE.

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SRI. G.B. DHANYA KUMAR, S/O. L.G. BASAVARAJAPPA, R/AT. BASACANALA POST, LINGADAHALLI, DAVANAGERE.

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SRI. RAKESH BEHAL, S/O. LATE KISHAN GOPAL, BEHAL OCC: MANAGING DIRECTOR,

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M/S. SRIRAM AUTO HOUSE PRIVATE LTD., PARTNER M/S. GAJANANAD MOTOR AND CYCLE MART, P.B. ROAD, DAVANAGERE. R/AT. NO. 4226/1920 SIDDAVEERAPPA LAYOUT, DAVANAGERE.

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SRI. RADHA RANI BEHAL W/O. LATE KISHAN GOPAL, AGED ABOUT YEARS, BEHAL, R/O RESIDING AT. NO. 4226/1920, SIDDAVEERAPPA LAYOUT, DAVANAGERE.

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SMT. SHALLU BEHAL W/O. LAKSHMI NARAYANA BEHAL, AGED ABOUT YEARS, RESIDING AT. NO. 4226/1920, SIDDAVEERAPPA LAYOUT, DAVANAGERE.

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SMT. SAPNA BEHAL W/O.MURALIDHAR AGED ABOUT YEARS, RESIDING AT. NO. 4226/1920, SIDDAVEERAPPA LAYOUT, DAVANAGERE.

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SRI. K.B. GIRISH S/O. RAMACHANDRA NAIK AGED ABOUT YEARS,

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R/AT. KABLA, CHENNAGIRI TALUK, DAVANAGERE DISTRICT.

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SRI. SATISH S., S/O. SHANKAR NAIK, AGED ABOUT YEARS, R/AT. KABLA, CHENNAGIRI TALUK, DAVANAGERE DISTRICT.

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SRI. K.J. SATHISH S/O. JAYANNA, R/AT. 11^TH MAIN ROAD, 12^TH CROSS, VINOBHANAGARA, SHIVAMOGGA.

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SRI. SANGAPPA B.P., S/O. PARAPPA, 7^TH CROSS, BHAGAT SINGH NAGARA, NEAR DEEPAK FLOUR MILL, DAVANAGERE.

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SRI. KHAJAPEER, S/O. SHABBIR SAB, OCC: PRIVATE PERSON, R/AT. NO.10711, 2^ND MAIN, 2^ND CROSS, JALINAGARA, DAVANAGERE.

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SRI. MOHD SHARIFF, S/O. SYED AMEER SAB, OCC: PRIVATE PERSON, R/AT. IST MAIN, OLD ARLAPURA, ANJANEYA BADAVANE,

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HARIHARA.

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SRI. MURALIDHAR BEHAL S/O. KISHAN GOPAL BEHAL, OCC: MANAGING DIRECTOR, M/S. SRIRAM AUTO HOUSE, PVT., AND PARTNER, M/S. GAJANAND MOTOR AND CYCLE MART, P.B. ROAD, DAVANAGERE.

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R/AT.NO. 4226/1920, SIDDAVEERAPPA LAYOUT, DAVANAGERE.

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SRI. SRIKANTH KULKARNI S/O. LATE KISHAN GOPAL, BEHAL, OCC: DIRECTOR, M/S. SRIRAM AUTO HOUSE, PVT LTD., P.B. ROAD, DAVANAGERE.

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R/AT. NO. 4226/1920, SIDDAVEERAPPA LAYOUT, DAVANAGERE.

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...APPELLANTS

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(BY SRI. R. NAGENDRA NAIK, ADVOCATE)

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AND:

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STATE BY CENTRAL BUREAU OF INVESTIGATION, GANGANAGARA, BELLARY ROAD, BANGALORE

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...RESPONDENT

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(BY SRI. P. PRASANNA KUMAR, ADVOCATE)

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THIS CRL.A. IS FILED U/S.374(2) OF CR.P.C PRAYING TO SET ASIDE THE ORDER DATED: 9.12.11 PASSED BY THE XXXII ADDL.C.C AND S.J., AND SPL.JUDGE FOR CBI CASES, BANGALORE IN SPL.C.C.NO.134/07 - CONVICTING THE APPELLANTS/ACCUSED FOR THE OFFENCE P/U/S 120(b) R/W 468, 471, 477A, 420 OF IPC.

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THESE APPEALS, COMING ON FOR HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE V SRISHANANDA

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ORAL JUDGMENT

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Heard Sri S.P. Kulkarni, learned Senior Counsel appearing on behalf of Sri Vasanth Kumar, counsel for the appellant in Crl.A.No.04/2012, Sri M. Vinaya Keerthi, learned counsel for the appellant in Crl.A.No.26/2012, Sri R. Nagendra Naik, learned counsel for the appellant in Crl.A.No.125/2012 and Sri P.Prasanna Kumar, learned counsel for the respondent.

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The appellants are the accused in Special C.C.No.134/2007 who have suffered an order of conviction before the learned Single Judge for CBI cases, Bengaluru (CCH34) by judgment dated 09.12.2011 and sentenced as under:

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“The accused Nos.1 to 7, 9 to 15, 17 to 19 are convicted and sentenced to undergo simple imprisonment for one year for the offence punishable U/s 120B of IPC.

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2) The accused Nos.1 to 7, 9 to 15, 17 to 19 are convicted and sentenced to undergo SI for one year for the offence punishable U/s 468 IPC and shall pay fine of Rs.5,000/- each and in default of fine, they shall under go simple imprisonment for 6 months.

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3) The accused Nos.1 to 7, 9 to 15, 17 to 19 convicted and sentenced to undergo SI for one year are for the offence punishable U/s 471 IPC and shall pay fine of Rs.5,000/- each and in default of fine they shall under go simple imprisonment for 6 months.

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4) The accused Nos.1 to 7, 9 to 15, 17 to 19 are convicted and sentenced to undergo SI for one year for the offence punishable U/s 477A IPC and shall pay fine of Rs.5,000/- each and in default of fine, they shall under go simple imprisonment for 6 months.

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5) For the offence punishable U/s 420, the accused Nos.1 to 7, 9 to 15, 17 to 19 are convicted and sentenced to undergo SI for one year and shall also pay fine of Rs.5,000/- each and in default of payment of fine, they shall undergo SI for 6 months.

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6) For the offence punishable U/s 13(2) r/w 13(1)(c) and (d) of Prevention of Corruption Act, 1988, the accused Nos.1 to 3 shall undergo SI for 1 year and shall also pay fine of Rs.5,000/- and in default of

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payment of fine, shall undergo simple imprisonment

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for 6 months.

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It is further ordered that the substantive sentences shall run concurrently.”

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Rank of the appellants before the Trial Court and

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before this Court and offences for which appellants have been convicted and sentenced is tabulated herein for ready

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reference:

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Name of the accused	Rank before Spl. Court.	Spl. C.C. No.	Criminal Appeal No. before this Court	Conviction for the offence p/u/s	Sente pass	nce ed
Sri R. Shivakumar	Accused No.2	134/2007	04/2012	120B,	SI for year	one
				468, 471, 477A, 420, 13(2) R/W 13(1)(c)(d)	SI for year shall fine Rs.5,00 each o offence and default fine, shall undergo for months	one and pay of 0/- the s in of they SI 6
Sri Nagesh V Gokarn	Accused No.1	134/2007	26/2012	120B	SI for year	one
				468, 471, 477A, 420, 13(2) R/W 13(1)(c)(d)	SI for year shall fine Rs.5,00	one and pay of 0/-

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					each of offences and default fine, shall undergo for months	the in of they SI 6
Sri Muralidhar Behal	Accused No.4	134/2007	125/2012	120B	SI for year	one
Sri Lakshmi Narayan Behal	Accused No.5			468, 471, 477A, 420,	SI for year shall	one and pay
Sri Srikanth Kulkarni	Accused No.6				fine Rs.5,00	of 0/-
Sri G.B.Dhanya Kumar	Accused No.7				each of offences and	the in
Sri Rakesh Behal	Accused No.9				default fine, shall	of they
Sri Radha Rani Behal	Accused No.10				undergo for months	SI 6
Smt.Shallu Behal	Accused No.11
Smt.Sapna Behal	Accused No.12
Sri K.B.Girish	Accused No.13
Sri Satish .S	Accused No.14
Sri K.J.Sathish	Accused No.15
Sri Sangappa.B.P	Acused No.17
Sri Khajapeer	Accused No.18
Sri Mohd. Shariff	Accused No.19

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Most essential facts which are necessary for disposal of the present appeal are as under:

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As per the prosecution papers, accused No.1 - Nagesh V.Gokarna, Branch Manager of UCO Bank, between the period 14.08.1998 to 14.05.2002, accused No.2 – R. Shivakumar was the successor of the Branch of UCO Bank, Indiranagar on and from 06.05.2002 to 2005, accused No.3S.H.Siddappa was the Assistant Manager of UCO Bank, Davanagere and were all public servants.

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As per prosecution case, accused Nos.1 to 3 said to have conspired with Sri Muralidhar Behal (accused No.4), who was the managing Director of M/s. Srirama Auto House Private Limited, Davanagere. Said company was in the business of sale of Bajaj Motor cycles and autorikshaws. Accused No.5 Lakshminarayan Behal was one of the Directors of Srirama Auto House Private Limited. Srikanth Kulkarni, G.V.Dhanya Kumar, deceased Krishnagopal Behal who are the accused Nos.6 to 8, accused No.9 - Prakash Behal was the director of M/s. Srirama Auto House, accused No.10 Smt. Radharani Behal was the

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proprietor of Lakshmi motors, accused No.11 – Smt. Shellu Behal, accused No.12 – Sapna behal, accused No.13 – G.V. Girish, accused No.15 – K.J. Sathish, accused No.16 – K. Jayanna, accused No.17 Sangappa, accused No.18 Khwaja Peer, accused No.19 – Mohammed Sharief are the employees. Accused No.10 to 12 are the family members of accused No.4.

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Prosecution case further reveals that between the period 2002 to 2005 in furtherance of conspiracy, they indulged in cheating and forging various documents like balance sheet, financial statement, valuation report of immovable properties, annual returns. Using such forged documents as genuine documents accused have cheated the bank by falsifying the accounts in connection with obtaining various loans.

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On receipt of the complaint, CBI investigated the matter and conducted detailed investigation and filed the charge sheet.

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According to the prosecution sum of

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Rs.7,51,70,124/- is the amount that was cheated to the UCO Bank, Davanagere. It is further alleged that the misdeeds of

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the accused persons resulted in wrongful loss to the UCO Bank and on corresponding wrongful gain to the appellants.

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On receipt of charge sheet, learned Trial Judge took cognizance of offences mentioned in the charge sheet and secured the presence of accused persons. Thereafter, learned Special Judge framed the charges for the offences punishable under Section 120B, 468, 471, 477A, 420 IPC and Section 13 (1) (d) r/w Section 13 (2) of Prevention of Corruption Act.

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All the accused persons pleaded not guilty. Therefore, trial was held.

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In order to bring home the guilt of the accused, 31 witnesses were examined on behalf of the prosecution as P.Ws.1 to 31 and as many as 782 documents were placed on record which were exhibited and marked as Exs.P.1 to P.782.

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On conclusion of recording of evidence, learned Trial Judge recorded the accused statement, wherein accused persons have denied all the incriminatory materials.

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Accused Nos.5, 9, 10, 11, 12 filed their written statement, placing their version about the incident. So also

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accused Nos.7, 15, 17, 18 and 19 filed their separate written statement placing their version. Accused Nos.5, 9, 10, 11 and 12 denied the entire case of the prosecution by contending that it is the accused No.4 who was looking after the family business, but they admitted the financial assistance obtained from the bank, but contended that in the guise of obtaining the financial assistance, their signatures were obtained by accused No.4 and believing the words of accused No.4, they subscribed their signatures unintentionally and therefore, they cannot be held liable for the alleged criminal offences and sought for acquittal.

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There was no defence evidence placed on record.

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Thereafter, learned Special Judge heard the arguments of the parties and by judgment dated 9^th December, 2011 convicted the appellants and sentenced as referred to supra.

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Being aggrieved by the same, accused Nos.1 to 7, 9 to 15, 17 to 19, have preferred the above appeals.

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On behalf of the appellants, it was tried to impress upon this Court that allegations made against the appellants as

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to cheat the bank, causing financial loss, committing forgery were all, only suspicions in the absence of proper proof thereof, and as such, conviction of the appellants for the offences as referred to supra has resulted in great miscarriage of justice and sought for allowing the appeals.

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Sri S.P. Kulkarni, learned Senior Counsel, while addressing his arguments submitted that even though voluminous documentary evidence is placed on record in the form of Exs.P1 to P.782, the ingredients that is required to attract the offences as against the appellants were not established by placing necessary oral and documentary evidence on record, which have been ignored by the learned trial Judge while passing the impugned judgment.

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Sri S.P. Kulkarni, also contended that appellants never disputed obtaining of financial assistance from UCO Bank, Davanagere Branch for the business purpose and repaid the same.

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He further contended that while granting the loan if some small irregularities are committed at the Bank level, either in not securing the loans in the proper form or improper

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appraisal of the documents are to be treated as irregularities and not illegality, as there is no material evidence placed on record on behalf of the prosecution to show the fraudulent intension at the inception of obtaining the loans, which is sine qua non to attract the allegation of fraud and cheating.

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Since the entire loan amounts have been repaid to the Bank and Bank has not suffered any loss, question of wrongful loss to the Bank and on corresponding wrongful gain to the appellants including the public servants would not arise at all. Therefore, conviction of the appellants for the aforesaid offences is per se illegal.

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He also pointed out that insofar as the allegation of falsification of accounts are concerned, borrowers did not have any role in that and it is only the public servants, who are responsible for the alleged offences. Even, insofar as the public servants are concerned, if no proper entries are made and ultimately the loan amount is recovered, then the very ingredient of falsification of account would not arise. Therefore, appellants ought not have been convicted for the offence of

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falsification of account as is contemplated under Sections 468, 471 and 477A of the Indian Penal Code.

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It is also the argument of Sri S.P. Kulkarni, that if the entire amount is repaid, and at the most, there is minor deviation in sanctioning the loan to the business concern by public servants, Court cannot presume that there was an illegal gratification obtained by public servants from the appellants to accede to their financial request and therefore, the conviction of the public servants for the offences punishable under the provisions of Prevention of Corruption Act would not also get attracted.

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It is his last submission that in the absence of any material on record, which would attract IPC offences or the offences under the provisions of Prevention of Corruption Act, offence under 120B would loose its significance and thus, sought for allowing the appeals.

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Sri Vinaya Keerthi, learned counsel representing the accused No.1 submitted that he initially sanctioned the financial assistance to the business concern of Behal family and subsequently, he had no role in the alleged deviations.

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Therefore, convicting accused No.1 also for the subsequent mistakes in the accounts of M/s. Srirama Auto House Pvt. Ltd., Davanagere (for short 'Srirama') and thus, sought for acquittal of accused No.1.

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Sri R. Nagendra Naik, learned counsel while

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adopting the arguments of Sri S.P. Kulkarni, learned Senior Counsel, contended that his client is only accused No.5, who is the beneficiary and she has signed at the behest of accused No.4 and therefore, there is no independent contribution made by accused No.5 in the incident and sought for allowing the appeal.

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Learned counsels for appellants alternatively contended that in the event this Court upholding the conviction of the appellants, insofar as public servants are concerned, in the absence of proper proof to attract the offence of Provisions of Prevention of Corruption Act, public servants are entitled for an order of acquittal for the offence under Section 13(1)(d) r/w Section 13(2) of the Prevention of Corruption Act.

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They would also submit that public servants would not claim any benefits, if an order of acquittal is recorded by

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this Court on re-appreciation of the materials on record for the offences under Section 13(1)(d) r/w section 13(2) of the Prevention of Corruption Act contending that there is no disqualification.

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In order to have certainty with regard to the said submission, affidavits of accused Nos.1 and 2 are placed on record. Contents of those affidavits are extracted hereunder for ready reference:-

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Affidavit of accused No.1

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I, Nagesh V. Gokarn S/o. Vinayak, aged about 72 years, R/at No.8, Maragondanahalli, K.R Puram post, Bengaluru-560036, 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. C.C.No.134/2007 by alleging that I have committed offences punishable U/Sec. 120B, 468, 471, 477A and 420 of IPC R/W. Sec. 13(1)(c) and 13(1)(d) and Sec. 13(2) of the Prevention of Corruption Act 1988.

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3. I state that I was arrayed as Accused No.1 in the above case, I say that I am innocent throughout and I have not committed any offence. The allegation against me was that

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in the capacity of public servant as Manager of UCO Bank I have entered into criminal conspiracy with the customers of the bank and was responsible for getting them loans from the Bank and in the said regard there is loss caused to the complainant Bank. I submit that despite all my effective defence and cross examination of the witnesses for prosecution in the trial, learned XXXII Addl. City Civil and Sessions Judge, Special Judge for CBI, CCH-34, Bengaluru has passed the order of conviction and sentence on 9.12.2011 for the said offences and directed that I have to undergo 3.1. and pay fine as below;

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a) Sec. 120B IPC-Criminal Conspiracy 1 year S.I.

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b) Sec. 468 IPC-Forgery for cheating - 1 year S.I. & Rs.5,000/-fine.

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c) Sec.471 IPC Using forged documents as genuine 1 year S.I. & Rs.5,000/- fine.

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d) Sec.477A IPC Rs.5,000/- fine. Falsification of Accounts 1 year S.I. &

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e) Sec. 420 IPC - Cheating and dishonestly inducing delivery of property 1 year S.I. & Rs.5,000/- fine.

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f) Sec. 13(2) R/W. Sec. 13(1)(c) & (d) P.C. Act, 1988 1 year S.I. and Rs.5,000/- fine.

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4. I state that this Hon'ble Court by the order dt:2.1.2012 admitted the above appeal and also granted suspension of sentence on 5.1.2012 and the above appeal is pending consideration till date.

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5. I state that I was not committed any offence as alleged by the respondent, the major allegation are after may 2002 only till that time I was transferred from that place, and there is no evidence to show that the criminal conspiracy and also there is no evidence to show my involvement in the alleged offence under sec 13(2) R/w Sec. 13(1)(c) & (d) P.C. Act, 1988. The very complainant himself admitted that I was not cheated the bank or received any kick back, hence the appeal is required to be allowed and the conviction and sentence passed by the learned special judge required to be set aside.

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6. I state that this in the event this hon'ble court dropped the charges/sentence against me I am herewith undertakes that I will not claim any monitory benefits from the UCO Bank.

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Wherefore, it is prayed that this Hon'ble Court be pleased to allow the present Criminal Appeal and by considering my undertaking be pleased to set aside the Judgment/Order of Conviction of the Sentence dated 05.10.2010 made in Spl.C.C.No.134/2007, passed against me, in the interest of justice and equity

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Affidavit of accused No.2

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I, R.Shivakumar S/o. N.Ramasubramanian, aged about 70 years, R/at No.17/1, Muddappa Road, Maruthi Seva Nagar, Bengaluru, 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. C.C.No.134/2007 by alleging that I have committed offences punishable U/Sec. 120B, 468, 471, 477A and 420 of IPC R/W. Sec.13(1)(c) and 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.2 in the above case and despite all my effective defence and cross examination of the witnesses for prosecution, the learned XXIII City Civil & Sessions Judge and Special Judge for CBI (CCH-35), Bengaluru has passed an order of conviction and sentence on 9.12.2011 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 by its order dtd: 2.1.2012 admitted the above appeal and suspension of sentence was ordered on 5.1.2012 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 dismissed from service in the post of Manager as back as 2006 after registration of the case. I say that I am not drawing any pension from the bank nor I am seeking any monitory benefits from the bank. I submit that I will also not claim any such benefit from the complainant 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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31. Sri S.P. Kulkarni, learned Senior counsel appearing

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on behalf Sri Vasanth Kumar K.M., counsel for the accused No.2 submits that the following decisions in support of his arguments.

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(i) Rajeevan Aswathy v. Superintendent of Police, 2011 SCC OnLine Ker 4024

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17. It is an admitted fact that even before the disbursal of the loan amounts in all the three cases, the loans were fully secured by collateral security. If so, an intention to cheat the bank cannot be readily inferred. ************

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18. *********** This is a case in which P.W. 23 who was a Scale I officer had with full authority recommended all the loans. He was initially made the 2ndaccused in the case but was deleted from the array of accused only on the date of filing the final report after recording his statement under Sec. 161 Cr.P.C. on the same day. If P.W. 23 was the senior officer who was incharge of loans and advances and if it was he who had conducted the pre-sanction inspection and had also prepared the CRs in all the three loans and if it was P.W. 23 who had recommended to sanction the loans, A1 cannot be blamed if he acting on such recommendation in good faith had sanctioned the loans in question. Absolutely no reasons have been given as to why P.W. 23 who had performed all the pre-sanction formalities in all the three cases was exonerated by the investigating officer.

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20. All the loans were granted on the strength of collateral security after taking into account the valuation made by the valuers namely one Asokan and one Subrahmania Iyer (both of whom were not examined) and also on the strength of confidential reports which were suppressed. A1 had sanctioned the loans acting on the recommendations of P.W. 23, the Senior Manager who had conducted the pre-sanction inspection and who had not made any report to the effect that any of the firms including Distributors Quilon was fictitious. If so, A1 the Branch Manager cannot be blamed at all in sanctioning the loans. The Court below was not right in accepting the prosecution case in this behalf.

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23. ********** When the loan was sanctioned on the strength of adequate collateral security and after conducting proper enquiries and pre-sanction inspection and on the strength of CRs. legal opinion etc. and on the recommendation of P.W. 23, it was not open to the prosecution to contend that A1 was sanctioning the loan dishonestly and without proper verification.

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32. This was an avoidable prosecution if P.W. 1 had exercised due care and caution. P.W.s 2 and 3 also did not take pains to personally verify whether the three firms namely, Distributors Quilon, K.S. Agencies and Deepak Industries were really existing or not. The C.B.I. also had the opportunity to conduct a detailed probe into the allegations in Ext. P1 complaint and find out the truth. Instead, they also resorted to unjustifiable modes of collection of evidence to eventually place the accused persons for trial.

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33. The amounts involved were also not large enough to justify the investigation and prosecution. The trial Judge also was not alive to the requirements of law while conducting the trial. The appellants were the unfortunate victims of a concatenation of all the above adverse circumstances.

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34. The conviction entered and the sentence passed against the appellants overlooking the above vital aspects of the matter cannot be sustained and are accordingly dislodged. The appellants are found not guilty of the offences punishable under Sections 120B, 420 and 468 I.P.C. and Sec. 13(2) read with Sec. 13(1)(d) of the P.C. Act and are acquitted thereunder. They are set at liberty forthwith. Their bail bonds shall stand cancelled.

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(ii) Ismail Khan Shah v. State, 2011 SCC OnLine Kar 3899

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26. In order to attract Section 420 of the I.P.C., it is incumbent on the part of the prosecution to establish that the accused had deceived the bank while taking loan or that they had acted dishonestly or fraudulently. When the trial Court itself did not find any convincing material being placed by the prosecution to show that the accused had either given wrong addresses or that the units in question were not in existence, the question of the appellants deceiving the bank when they made the applications for cash credit facility, therefore, does not arise. The intention on the part of the appellants to cheat the bank had to be established and the prosecution falls in its attempt to prove this and consequently, as rightly argued by learned senior counsel C.V. Nagesh, mere non-payment of the loan amount itself cannot be construed as satisfying the ingredients of Section 420 of the I.P.C.

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27. The learned trial Judge has also observed in the course of his judgment that, even if the accused had repaid the loan amount during the course of the trial, that would have not attracted Section 420 of the I.P.C. Merely because the accused had not repaid the loan amount, the Court, therefore, inferred from this act that the accused had committed the offence of cheating. The said reasoning of the trial Court cannot be accepted as

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the essential ingredient of Section 420 of the I.P.C. viz., to cheat, was found missing in the instant case.

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28. Apart from that, the learned senior counsel for the appellant is also justified in pointing out that the trial Court could not have convicted the appellants separately under Sections 120-B and 420 of the I.P.C. as if the accused were tried in respect of these two offences separately when the charge against the accused was to the effect that they had committed the offence under Sections 120-B read with 420 of the I.P.C. Therefore, point No. (ii) also stands answered accordingly.

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30. For the aforesaid reasons, both the appeals are allowed and the judgment of conviction and sentence passed by the trial Court cannot be sustained in law and accordingly it is set aside and all the appellants herein are acquitted of the offences with which they were charged. Their bail bonds shall stand cancelled. The fine amount, if any deposited by the appellants herein, shall be refunded to them.

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(iii) Sherimon v. State of Kerala, (2011) 10 SCC 768

¶203

16. It is undoubtedly true that PW 4 had not repaid the entire loan to City Auto Finance. He was in arrears. However, in our opinion, on the basis of the evidence on record to which we have made a reference hereinabove, it was wrong on the part of the trial court and the High Court to come to the conclusion that the appellant was a party to the alleged criminal conspiracy entered into by the appellant and A-1 to A-3 to repossess the said autorickshaw irrespective of the consequences and, pursuant thereto, on 31-3-1999, A-1 to A-3 murdered the driver of the said autorickshaw and repossessed it. It was wrong to come to the conclusion that the evidence referred to hereinabove indicates the existence of a strong motive on the part of City Auto Finance to repossess the said autorickshaw at any cost. When it is

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not the case of the prosecution that the appellant was present when the murder took place and when no overt act is attributed to him by any witness, to hold him responsible for the offence under Section 324 IPC with the aid of Section 120-B is clearly improper and illegal.

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17. The gist of the offence of conspiracy is the agreement between two and more persons to do or cause to be done an illegal act or a legal act by illegal means. There must be meeting of minds resulting in an ultimate decision taken by the conspirators regarding commission of the crime. In this case, no such evidence has come on record. PW 5 Biju, the employee of City Auto Finance at Moovattupuzha was the only witness examined by the prosecution to prove the alleged meeting between the appellant and the other accused. He has turned hostile. Therefore, there is nothing on record to establish meeting of minds between the appellant and the other accused.

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18. Assuming that the appellant had produced certain documents pertaining to the said autorickshaw, it cannot be concluded on the basis thereof that he had entered into a conspiracy with A-1 to A-3 to repossess the said autorickshaw because the loan amount was not repaid and in pursuance thereof A-1 to A-3 murdered the driver of the said autorickshaw. The evidence on record is totally inadequate to come to such a conclusion. It is, therefore, not possible to sustain the impugned judgment.

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(iv) Sujit Biswas v. State of Assam, (2013) 12 SCC 406

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13. Suspicion, however grave it may be, cannot take the place of proof, and there is a large difference between something that “may be” proved, and something that “will be proved”. In a criminal trial, suspicion no matter how strong, cannot and must not be permitted to take place of proof. This is for the reason

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that the mental distance between “may be” and “must be” is quite large, and divides vague conjectures from sure conclusions. In a criminal case, the court has a duty to ensure that mere conjectures or suspicion do not take the place of legal proof. The large distance between “may be” true and “must be” true, must be covered by way of clear, cogent and unimpeachable evidence produced by the prosecution, before an accused is condemned as a convict, and the basic and golden rule must be applied. In such cases, while keeping in mind the distance between “may be” true and “must be” true, the court must maintain the vital distance between mere conjectures and sure conclusions to be arrived at, on the touchstone of dispassionate judicial scrutiny, based upon a complete and comprehensive appreciation of all features of the case, as well as the quality and credibility of the evidence brought on record. The court must ensure, that miscarriage of justice is avoided, and if the facts and circumstances of a case so demand, then the benefit of doubt must be given to the accused, keeping in mind that a reasonable doubt is not an imaginary, trivial or a merely probable doubt, but a fair doubt that is based upon reason and common sense. (Vide Hanumant Govind Nargundkar v. State of M.P. [(1952) 2 SCC 71 : AIR 1952 SC 343 : 1953 Cri LJ 129] , State v. Mahender Singh Dahiya [(2011) 3 SCC 109 : (2011) 1 SCC (Cri) 821 : AIR 2011 SC 1017] and Ramesh Harijan v. State of U.P. [(2012) 5 SCC 777 : (2012) 2 SCC (Cri) 905] )

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14. In Kali Ram v. State of H.P. [(1973) 2 SCC 808 : 1973 SCC (Cri) 1048 : AIR 1973 SC 2773] this Court observed as under : (SCC p. 820, para 25)

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“25. Another golden thread which runs through the web of the administration of justice in criminal cases is that if two views are possible on the evidence adduced in the case, one pointing to the guilt of the accused and the other to his innocence, the view which is favourable to the accused should be adopted. This principle has a

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special relevance in cases wherein the guilt of the accused is sought to be established by circumstantial evidence.”

¶219

(v) A. Ramanuja v. State by CBI, Crl.A.No.1002/2010 C/w. Crl.A.No.1024/2010 dated 18.12.2020

¶220

105. The learned counsel appearing for accused No.1 relied upon several Judgments with regard to the conspiracy as well as the involvement of the accused and this Hon’ble Court in N.R.Bhat’s case (supra), with regard to non-production of the Vigilance report categorically held that, much credence cannot be attached and further held an adverse inference under Section 114(g) of the Evidence Act will have to be drawn for not producing a very vital report submitted by the Vigilance Officer to the Investigating officer. In the case on hand also PW.8 categorically admits that he gave the report to the Head Office and the said report is not produced before the Court. The very base document to initiate the proceedings against accused No.1 has not been placed before the Court.

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106. The Kerala High Court also in Rajeevan Aswathy’s case (supra), held that when the loan was fully secured by collateral security, the intention to cheat the Bank cannot be inferred. In the case on hand also no dispute with regard to the property of Venkataswamy is created as collateral security. PW.8 also categorically admits that it is a secured loan. Further he admits that the subsequent Manager has not taken care of it. In the case on hand, only he has made the recommendation but PW.1 has sanctioned the loan. The said Judgment is also aptly applicable to the case on hand.

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107. The learned counsel also relied upon the judgment of the Apex Court in Sujit Biswas’s case (supra), the Apex Court held that while convicting the accused, it requires proof beyond reasonable doubt and there

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cannot be conviction based on mere conjectures or suspicion and the said Judgment is applicable to the case on hand.

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108. The learned counsel relied upon the judgment of the Apex Court in Subramanian Swamy’s case (supra), regarding conspiracy is concerned and in this Judgment also, the Apex Court held that only based on surmise and assertive intervention with regard to any official position misusing, the offence under Section 120-B cannot be invoked. In order to attract the provisions of Section 120-B, no doubt, as rightly contended by the learned counsel appearing for the State there cannot be any direct evidence and there must be a circumstantial evidence. In the case on hand, I did not find any circumstantial evidence and no doubt accused No.1 sent the proposal and also recommended with regard to the existence of the Firm of accused No.2 and also sent the report.

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132. In view of the discussion made above, I pass the following:

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ORDER

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(i) The appeals are allowed.

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(ii) The judgment of conviction and order on sentence dated 31.08.2010 passed in Spl.CC.No.18/2000, on the file of XXI Additional City Civil and Sessions Judge and Special Judge for CBI Cases, Bengaluru (CCC4) is hereby set aside.

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(iii) Accused No.1 is acquitted for the offences punishable under Sections 120B read with Sections 420, 468 and 471 of I.P.C. and Section 13(2) read with 13(1)(d) of Prevention of Corruption Act, 1988.

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(iv) Accused No.2 is acquitted for the offences punishable under Sections 120B, 420, 468 and 471 of IPC.

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(v) The fine amount, if any, deposited before the Trial Court shall be refunded to the accused Nos.1 and 2 forthwith.

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(vi) The Registry is directed to transmit the TCR to the Trial Court forthwith.

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(vi) Vijayee Singh v. State of U.P., (1990) 3 SCC 190

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16. The phrase “burden of proof” is not defined in the Act. In respect of criminal cases, it is an accepted principle of criminal jurisprudence that the burden is always on the prosecution and never shifts. This flows from the cardinal principle that the accused is presumed to be innocent unless proved guilty by the prosecution and the accused is entitled to the benefit of every reasonable doubt. Section 105 of the Evidence Act is in the following terms:

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“105. When a person is accused of any offence, the burden of proving the existence of circumstances bringing the case within any of the General Exceptions in the Penal Code, 1860, or within any special exception or proviso contained in any other part of the same Code, or in any law defining the offence, is upon him, and the court shall presume the absence for such circumstances.”

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The section to some extent places the onus of proving any exception in a penal statute on the accused. The burden of proving the existence of circumstances bringing the case within the exceptions mentioned therein is upon him. The section further lays down that the court shall presume non-existence of circumstances

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bringing the case within an exception. The words “burden of proving the existence of circumstances” occurring in the section are very significant. It is well settled that “this burden” which rests on the accused does not absolve the prosecution from discharging its initial burden of establishing the case beyond all reasonable doubts. It is also well settled that the accused need not set up a specific plea of his offence and adduce evidence. That being so the questions is : What is the nature of burden that lies on the accused under Section 105 if benefit of the general exception of private defence is claimed and how it can be discharged? In Woolmington v. Director of Public Prosecutions [1935 AC 462] , Viscount Sankey, L.C. observed: (AC p. 482)

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“When evidence of death and malice has been given (this is a question for the jury) the prisoner is entitled to show, by evidence or by examination of the circumstances adduced by the Crown that the act on his part which caused death was either unintentional or provoked. If the jury are either satisfied with his explanation or, upon a review of all the evidence, are left in reasonable doubt whether, even if his explanation be not accepted, the act was unintentional or provoked, the prisoner is entitled to be acquitted.”

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It is further observed: (AC pp. 481-82)

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“Just as there is evidence on behalf of the prosecution so there may be evidence on behalf of the prisoner which may cause a doubt as to his guilt. In either case, he is entitled to the benefit of the doubt. But while the prosecution must prove the guilt of the prisoner, there is no such burden laid on the prisoner to prove his innocence and it is sufficient for him to raise a doubt as to his guilt; he is not bound to satisfy the jury of his innocence...

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Throughout the web of the English criminal law one golden thread is always to be seen, that it is the duty of the prosecution to prove the prisoner's guilt subject to what I have already said as to the defence of insanity and subject also to any stationary exception. If, at the end of and on the whole of the case, there is reasonable doubt, created by the evidence given by either the prosecution or the prisoner, as to whether the prisoner killed the deceased with a malicious intention, the prosecution has not made out the case and the prisoner is entitled to an acquittal. No matter what the charge or where the trial, the principle that the prosecution must prove the guilt of the prisoner is part of the common law of England and no attempt to whittle it down can be entertained.”

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In Emperor v. U. Damapala [AIR 1937 Rang 83 : 14 Rang 666] , a Full Bench of the Rangoon High Court following the Woolmington case [1935 AC 462] held that the ratio therein is not in any way inconsistent with the law in British India, and that indeed the principles there laid down form valuable guide to the correct interpretation of Section 105 of the Evidence Act and the Full Bench laid down that even if the evidence adduced by the accused fails to prove the existence of circumstances bringing the case within the exception or exceptions pleaded, the accused is entitled to be acquitted if upon a consideration of the evidence as a whole the court is left in a state of reasonable doubt as to whether the accused is or is not entitled to the benefit of the exception pleaded.

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26. The maxim that the prosecution must prove its case beyond reasonable doubt is a rule of caution laid down by the courts of law in respect of assessing the evidence in criminal cases. Section 105 places ‘burden of proof’ on the accused in the first part and in the second part we find a presumption which the court can draw regarding the absence of the circumstances which

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presumption is always rebuttable. Therefore, taking the section as a whole the ‘burden of proof’ and the presumption have to be considered together. It is axiomatic when the evidence is sufficient as to prove the existence of a fact conclusively then no difficulty arises. But where the accused introduces material to displace the presumption which may affect the prosecution case or create a reasonable doubt about the existence of one or other ingredients of the offence, then it would amount to a case where prosecution failed to prove its own case beyond reasonable doubt. The initial obligatory presumption that the court shall presume the absence of such circumstances gets lifted when a plea of exception is raised. More so when there are circumstances on the record (gathered from the prosecution evidence, chief and cross-examinations, probabilities and circumstances, if any, introduced by the accused, either by adducing evidence or otherwise) creating a reasonable doubt about the existence of the ingredients of the offence. In case of such a reasonable doubt, the court has to give the benefit of the same to the accused. The accused may also show on the basis of the material a preponderance of probability in favour of his plea. If there are absolutely no circumstances at all in favour of the existence of such an exception then the rest of the enquiry does not arise in spite of a mere plea being raised. But if the accused succeeds in creating a reasonable doubt or shows preponderance of probability in favour of his plea, the obligation on his part under Section 105 gets discharged and he would be entitled to an acquittal.

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33. ************ The general burden of establishing the guilt of accused is always on the prosecution and it never shifts. Even in respect of the cases covered by Section 105 the prosecution is not absolved of its duty of discharging the burden. The accused may raise a plea of exception either by pleading the same specifically or by relying on the probabilities and circumstances obtaining in the case. He may adduce the evidence in

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support of his plea directly or rely on the prosecution case itself or, as stated above, he can indirectly introduce such circumstances by way of crossexamination and also rely on the probabilities and the other circumstances. Then the initial presumption against the accused regarding the non-existence of the circumstances in favour of his plea gets displaced and on an examination of the material if a reasonable doubt arises the benefit of it should go to the accused. The accused can also discharge the burden under Section 105 by preponderance of probabilities in favour of his plea. In case of general exceptions, special exceptions, provisos contained in the Penal Code or in any law defining the offence, the court, after due consideration of the evidence in the light of the above principles, if satisfied, would state, in the first instance, as to which exception the accused is entitled to, then see whether he would be entitled for a complete acquittal of the offence charged or would be liable for a lesser offence and convict him accordingly.

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(vii) N.R. Bhat v. State, 2016 SCC OnLine Kar 1107

¶260

13. In the light of non-submission of the report said to have been prepared by Shivaraman which is the basis for the bank to suspect the role of accused Nos. 1 and 2, much credence cannot be attached to the evidence of Shivaraman. On the other hand, an adverse inference under Section 114(g) of the Evidence Act will have to be drawn for not producing a very vital report submitted by Shivaraman, to the Investigating Officer. That report must necessarily have contained all the details relating to the documents verified by him and the statements or information given to him by the staff of the branch.

¶261

15. Sri Amarsingh, handwriting expert has not spoken anything about Ex. P-50 with reference to the handwriting and signatures found thereon. This being

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the position, the Learned Judge could not have considered Ex. P-50 as a proved document to connect with this case i.e., loan of Dr. K. Srinivasan. When the Trial Court has acquitted these accused in regard to the loan availed on the fixed deposits of one customer, Dr. Srinivasan in Crl. Appeal Nos. 2190/2006 c/w. 2185/2006 holding that evidence of handwriting expert is not trustworthy, the Trial Court could not have laid much emphasis on the same in this case.

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32. Some more documents were submitted to the IO long after investigation had commenced and statements of material witnesses were recorded. A specific reference is made to the letter addressed by M/s. Deepam Silks International. Unless these materials were kept with him, the IO could not have recorded the statements of material witnesses and therefore, serious contradictions have arisen in the evidence of material witnesses. These aspects have not been considered by the Trial Court while evaluating the evidence.

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33. As rightly pointed out by Learned Senior Counsel, Mr. P.S. Rajagopal, the genesis of the prosecution appears to be doubtful. Mere seriousness of allegations would be insufficient, unless they are established not by mere preponderance of probabilities, but by adducing proof beyond reasonable doubt. What is proof beyond all reasonable doubt has been discussed and well considered at length by the Hon'ble Apex Court in the case of State of U.P. v. Krishna Gopal [AIR 1988 SC 2154].

¶267

34. Taking all these serious inconsistencies emanating from the case of the prosecution and material witnesses not supporting the prosecution case, the Trial Court is not justified in convicting the accused. On the other hand, the accused are entitled to be acquitted by giving them the benefit of doubt. Accordingly point No.(1) is answered in the negative.

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35. Point No.(2) : In view of the negative finding on point No. (1), the appeal will have to be allowed in its entirety and the accused will have to be acquitted of all the offences alleged against him. In the result, the following order is passed:

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ORDER

¶272

The appeal filed under Section 374(2), Cr.PC. is allowed in its entirety, by setting aside the judgment of conviction and sentence passed in Spl. C.C. No. 131/00 by the XXI Additional City Civil and Sessions Judge, and Special Judge for CBI Cases, Bengaluru. Accordingly the accused is acquitted of all the charges leveled against him. Bail bonds executed by the accused and the sureties stand cancelled.

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(viii) Lalita Kumari v. Govt. of U.P., (2014) 2 SCC 1

¶274

101. According to the Statement of Objects and Reasons, protection of the interests of the poor is clearly one of the main objects of the Code. Making registration of information relating to commission of a cognizable offence mandatory would help the society, especially, the poor in rural and remote areas of the country.

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102. The Committee on Reforms of Criminal Justice System headed by Dr Justice V.S. Malimath also noticed the plight faced by several people due to nonregistration of FIRs and recommended that action should be taken against police officers who refuse to register such information. The Committee observed:

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“7.19.1. According to Section 154 of the Code of Criminal Procedure, the officer in charge of a police station is mandated to register every information oral or written relating to the commission of a cognizable offence. Nonregistration of cases is a serious complaint against the police. The National Police Commission in its

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4th Report lamented that the police ‘evade registering cases for taking up investigation where specific complaints are lodged at the police stations’. It referred to a study conducted by the Indian Institute of Public Opinion, New Delhi regarding ‘Image of the Police in India’ which observed that over 50% of the respondents mention non-registration of complaints as a common practice in police stations.

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7.19.2. The Committee recommends that all complaints should be registered promptly, failing which appropriate action should be taken. This would necessitate change in the mind-set of the political executive and that of senior officers.

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***

¶282

7.19.4. There are two more aspects relating to registration. The first is minimisation of offences by the police by way of not invoking appropriate sections of law. We disapprove of this tendency. Appropriate sections of law should be invoked in each case unmindful of the gravity of offences involved. The second issue is relating to the registration of written complaints. There is an increasing tendency amongst the police station officers to advise the informants, who come to give oral complaints, to bring written complaints. This is wrong. Registration is delayed resulting in valuable loss of time in launching the investigation and apprehension of criminals. Besides, the complainant gets an opportunity to consult his friends, relatives and, sometimes even lawyers and often tends to exaggerate the crime and implicate innocent persons. This eventually has adverse effect at the trial. The information should be reduced in writing by the SHO, if given orally, without any loss of time so that the first version of the alleged crime comes on record.

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7.20.11. It has come to the notice of the Committee that even in cognizable cases quite often the police officers do not entertain the complaint and send the complainant away saying that the offence is not cognizable. Sometimes the police twist facts to bring the case within the cognizable category even though it is noncognizable, due to political or other pressures or corruption. This menace can be stopped by making it obligatory on the police officer to register every complaint received by him. Breach of this duty should become an offence punishable in law to prevent misuse of the power by the police officer.”

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103. It means that the number of FIRs not registered is approximately equivalent to the number of FIRs actually registered. Keeping in view the NCRB figures that show that about 60 lakh cognizable offences were registered in India during the year 2012, the burking of crime may itself be in the range of about 60 lakhs every year. Thus, it is seen that such a large number of FIRs are not registered every year, which is a clear violation of the rights of the victims of such a large number of crimes.

¶286

104. Burking of crime leads to dilution of the rule of law in the short run; and also has a very negative impact on the rule of law in the long run since people stop having respect for the rule of law. Thus, nonregistration of such a large number of FIRs leads to a definite lawlessness in the society.

¶287

105. Therefore, reading Section 154 in any other form would not only be detrimental to the scheme of the Code but also to the society as a whole. It is thus seen that this Court has repeatedly held in various decided cases that registration of FIR is mandatory if the information given to the police under Section 154 of the Code discloses the commission of a cognizable offence.

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115. Although, we, in unequivocal terms, hold that Section 154 of the Code postulates the mandatory registration of FIRs on receipt of all cognizable offences, yet, there may be instances where preliminary inquiry may be required owing to the change in genesis and novelty of crimes with the passage of time. One such instance is in the case of allegations relating to medical negligence on the part of doctors. It will be unfair and inequitable to prosecute a medical professional only on the basis of the allegations in the complaint.

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119. Therefore, in view of various counterclaims regarding registration or non-registration, what is necessary is only that the information given to the police must disclose the commission of a cognizable offence. In such a situation, registration of an FIR is mandatory. However, if no cognizable offence is made out in the information given, then the FIR need not be registered immediately and perhaps the police can conduct a sort of preliminary verification or inquiry for the limited purpose of ascertaining as to whether a cognizable offence has been committed. But, if the information given clearly mentions the commission of a cognizable offence, there is no other option but to register an FIR forthwith. Other considerations are not relevant at the stage of registration of FIR, such as, whether the information is falsely given, whether the information is genuine, whether the information is credible, etc. These are the issues that have to be verified during the investigation of the FIR. At the stage of registration of FIR, what is to be seen is merely whether the information given ex facie discloses the commission of a cognizable offence. If, after investigation, the information given is found to be false, there is always an option to prosecute the complainant for filing a false FIR.

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Conclusion/Directions

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120. In view of the aforesaid discussion, we hold:

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120.1. The registration of FIR is mandatory under Section 154 of the Code, if the information discloses commission of a cognizable offence and no preliminary inquiry is permissible in such a situation.

¶297

120.2. If the information received does not disclose a cognizable offence but indicates the necessity for an inquiry, a preliminary inquiry may be conducted only to ascertain whether cognizable offence is disclosed or not.

¶298

120.3. If the inquiry discloses the commission of a cognizable offence, the FIR must be registered. In cases where preliminary inquiry ends in closing the complaint, a copy of the entry of such closure must be supplied to the first informant forthwith and not later than one week. It must disclose reasons in brief for closing the complaint and not proceeding further.

¶299

120.4. The police officer cannot avoid his duty of registering offence if cognizable offence is disclosed. Action must be taken against erring officers who do not register the FIR if information received by him discloses a cognizable offence.

¶300

120.5. The scope of preliminary inquiry is not to verify the veracity or otherwise of the information received but only to ascertain whether the information reveals any cognizable offence.

¶301

120.6. As to what type and in which cases preliminary inquiry is to be conducted will depend on the facts and circumstances of each case. The category of cases in which preliminary inquiry may be made are as under:

¶302

(a) Matrimonial disputes/family disputes

¶303

(b) Commercial offences

¶304

(c) Medical negligence cases

¶305

(d) Corruption cases

¶306

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(e) Cases where there is abnormal delay/laches in initiating criminal prosecution, for example, over 3 months' delay in reporting the matter without satisfactorily explaining the reasons for delay.

¶309

The aforesaid are only illustrations and not exhaustive of all conditions which may warrant preliminary inquiry.

¶310

120.7. While ensuring and protecting the rights of the accused and the complainant, a preliminary inquiry should be made time-bound and in any case it should not exceed fifteen days generally and in exceptional cases, by giving adequate reasons, six weeks' time is provided. The fact of such delay and the causes of it must be reflected in the General Diary entry.

¶311

120.8. Since the General Diary/Station Diary/Daily Diary is the record of all information received in a police station, we direct that all information relating to cognizable offences, whether resulting in registration of FIR or leading to an inquiry, must be mandatorily and meticulously reflected in the said diary and the decision to conduct a preliminary inquiry must also be reflected, as mentioned above.

¶312

Per contra, Sri P. Prasanna Kumar, learned counsel for the C.B.I., opposes the appeal grounds in toto . He would further contend that even though there is a thin line of difference between irregularity and illegality, but that thin line

¶313

is subtle in nature. It is well settled that every irregularity cannot be treated as illegality, but whenever an action attributed to the public servant resulting in pecuniary loss to

¶314

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¶315

the Institution would automatically turn out the irregularity into illegality in a given case.

¶316

He would further contend that the irregularities which were initially noticed in the UCO Bank, Davanagere Branch were further focused upon and necessary documents have been collected by the Investigating Agency, wherein it is crystal clear that advancing to M/s. Srirama has been serviced by the UCO Bank, Davanagere Branch, time and again by throwing to wind all the banking norms in advancing such financial assistance.

¶317

Sri P. Prasanna Kumar, learned counsel also pointed out that good number of documentary evidence has been collected by the Investigating Agency, which have been placed on record and got exhibited would go to show that in majority of the transactions, there is a deviation from the existing banking rules which was mandatory in nature resulting in the inferential deduction of the existence of conspiracy.

¶318

Learned counsel for the respondent further emphasized that for the purpose of appreciating the material evidence placed on record either for the offence under Section

¶319

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420 or for 120B or for that matter, the offence under Section 13(1)(d) r/w Section 13(2) of the Prevention of Corruption Act, positive evidence in a given case is seldom available and the Court has to infer the existence of criminal conspiracy and obtainment of illegal gratification by cumulatively considering the attendant facts and circumstances in a given case.

¶322

Learned counsel for the respondent also contended that in a matter of this nature, very fact of advancing the loans against the banking rules and norms, would automatically result in inferring the existence of conspiracy, especially when the branch has shown extra interest in a particular borrower.

¶323

He also contended that oral evidence of prosecution witnesses coupled with the documentary evidences would establish all ingredients to attract the offences arrived against the accused persons-appellants and thus, sought for dismissal of the appeal.

¶324

Insofar as alternate submissions canvassed on behalf of the appellants are concerned, Sri P. Prasanna Kumar would contend that if accused Nos.1 and 2 are shown any leniency or mercy, the same would enjoy similarly placed public

¶325

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servants to indulge in such activities in future and therefore, sought for dismissal of the appeals in toto .

¶328

In support of his arguments, learned counsel for the respondent places reliance on the judgment of the Hon'ble Apex Court in the case of Neeraj Dutta v. State (Government of NCT of Delhi) reported in (2023) 4 Supreme Court Cases 731 .

¶329

He invites the attention of this Court to the judgment of the Hon'ble Apex Court in the case of Sita Soren v. Union of India reported in (2024) 5 Supreme Court Cases 629 wherein the constitution Bench judgment of ' Neeraj Dutta' is considered and upheld.

¶330

Having heard the learned counsel for parties in detail, this Court perused the material on record meticulously.

¶331

On such perusal of the material on record, the following points would arise for consideration:-

¶332

(i) Whether the material evidence on record would be sufficient enough to maintain the conviction of the appellants for the offences punishable under section 120(b) r/w section 468, 471,

¶333

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477A, 420 IPC and under Section 13(1)(d) r/w Section 13(2) of the Prevention of Corruption Act insofar as accused Nos.1 and 2 are concerned (appeal of accused No.3 is disjuncted from the present case as he failed to address the arguments and non-bailable warrant is issued against accused No.3)?

¶336

(ii) Whether the appellants make out a case of illegal infirmity or perversity in the impugned judgment?

¶337

(iii) Whether the sentence needs modification?

¶338

(iv) What order?

¶339

43. Regarding point Nos.1&2: In the case on hand,

¶340

accused Nos.1 to 3 being the public servants of UCO bank, Davanagere is not in dispute. This Court restricts its discussion on the above points only with regard to the other accused persons as appeal filed by accused No.3 is disjuncted from the above cases as he did not choose to address the arguments and remained absent and Non Bailable Warrant is issued against him.

¶341

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¶343

Case of accused No.1 is that at the time of granting the loan to Srirama, he was the Manager and there was no irregularity or illegality committed at the time of granting loan to Srirama at the inception.

¶344

Material on record would go to show that valuation report furnished by the borrowers to secure the loan was imperfect and before sanctioning the loan at the first instance, the accused No.1 did not bestow his attention to the validity of the documents especially the document that was furnished as security to the loan. As such, arguments advanced on behalf of accused No.1, that he is no way responsible for the alleged offences cannot be countenanced in law.

¶345

Having said thus, Srirama and partnership firm M/s. Gajananda Motors and Cycle Mart, Davanagere, (for short 'Gajananda'), the family members of Muralidhar Behal are the directors of the firm. Not only the male members of the family of Accused No.4 were involved in this business, but also the women folk were involved in the firm.

¶346

The written statements filed at the time of recording the accused statement by accused Nos. 5, 9, 10, 11

¶347

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and 12 would go to show that they have been falsely implicated in the case as they were only subscribing their signatures at the instance of accused No.4. In other words, there is no dispute that they are signatories to the document but they tried to impress upon the Trial Court that they were not having any intention to cheat the bank.

¶350

By filing such written statements by none other than the family members of accused no.4, it is crystal clear that documents were given to the UCO Bank, Davanagere, which were not in order. Therefore, majority of the documents placed on record as exhibits by the prosecution is not in serious dispute.

¶351

Further, even though prosecution has stated that there is a huge loss to UCO Bank, Davangere Branch to the tune of Rs.7,51,70,124/-, material on record would also disclose that major portion of the loan is repaid. Likewise, the credit facility limit which was enhanced resulted in the monetary loss to the tune of Rs.5,00,00,000/- according to the prosecution for want of proper security being furnished.

¶352

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¶354

Material on record did disclose to substantiate the

¶355

said allegation inasmuch as there was no inspection conducted before sanctioning the loan. Encashment of cheques and failing to take necessary steps in that regard by the Managers of UCO bank who are accused Nos.1 to 3 is apparent on record which would be sufficient enough to establish that their acts were not mere irregular acts.

¶356

As rightly contended on behalf of the prosecution, irregularity will turn itself into illegality when there is a pecuniary loss occurred to the bank. Had the accounts being regular and repayments had been made by Srirama and Gajananda Motors in time, hardly there was any scope for the bank to show in their books the outstanding amount insofar as these two accounts are concerned.

¶357

It is pertinent to note that repayment of the civil liability would not efface the criminal liability ipso facto. View of this Court is fortified by principles of law enunciated by the Hon'ble Apex Court in the case of Gian Singh v. State of Punjab and Another reported in (2012) 10 Supreme Court Cases 303 .

¶358

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¶360

Likewise, the amounts which are granted to the two accounts namely Srirama and Gajananda were not in accordance with the banking rules and norms. Serious deviations are noted and the materials in that regard is collected by the prosecution and placed on record and exhibited. Even though there is a detailed cross- examination of the prosecution witnesses, hardly any contradiction or favourable admission is elicited, in such cross-examination on behalf of the appellants to establish that there was no illegality at all in sanctioning the loan to Srirama and Gajananda.

¶361

Case of the prosecution thus, hinges predominantly on the documentary evidence rather than the oral testimony of the prosecution witnesses. Majority of the prosecution witnesses have deposed in respect of the authority to produce the documents and the contents of the document.

¶362

Likewise, it is to be observed that the documents that have been collected by the prosecution are the documents at an undisputed point of time and hardly there is any scope for concocting those documents only with an intention to foist a false case against the appellants herein.

¶363

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¶364

When the business was running properly, there were repayments also made by Srirama and Gajananda, which would act as a catalyst for the bank to advance the additional loans. But it must be noted that running of a business is not always profitable. Even though material on record would not make out that the sanctioned loan was misutilised, why it could not be repaid in time is to be established by accused. There is no attempt either by way of suggestion to the prosecution witnesses nor there was any explanation offered by accused No.4 in particular and other accused persons in general in regard to repayment of loan in time.

¶365

Further, as is rightly contended on behalf of respondent by Sri P. Prasanna Kumar, expecting positive evidence to establish the offence under Section 120-B IPC is incorrect in every case.

¶366

Usually conspiracy is hatched in secrecy. Positive evidence to establish the existence of conspiracy is seldom available. Therefore, Courts are expected to infer the existence of conspiracy by considering the circumstantial evidence placed on record. View of this Court, fortified in the judgment of

¶367

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Hon'ble Apex Court in the case of Mohd. Khalid v. State of West Bengal reported in (2002) 7 Supreme Court Cases 334 , wherein their Lordships have reiterated the principles of law with regard to the proof of existence of conspiracy as is held in the Constitution Bench judgment in the case of Kehar Singh v. State (Delhi Admn.) reported in (1988) 3 SCC 609 .

¶370

Keeping the above principles of law in the background when the material evidence placed on record is analysed in the case on hand, accused Nos.1 to 3 have lent the loan beyond their capacity to Srirama and Gajananda. Why would a banker keep on lending the loan to a particular borrower even though such borrower is defaulter unless there is a corresponding favour received by a public servant is a question that needs to be considered by this Court, in the light of attendant facts and circumstances of the case.

¶371

Admittedly, Accused Nos.1 and 2 being the public servants, were required to deal with the funds of the bank more diligently as they were the trustees of the public fund and they were accountable for each and every penny of the public

¶372

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fund. Even though offence under Section 409 IPC is not alleged in the case on hand, the degree of responsibility to be exercised by accused Nos.1 and 2 while dealing with the public funds cannot be last sight of by this Court while appreciating the arguments of the parties.

¶375

On record no material is available so as to hold that accused Nos.1 and 2 did exercise such discretion in lending the money to Srirama and Gajananda.

¶376

However, to prove the offence under Section 13(1)(d), following the principles of law enunciated in Neeraj

¶377

Dutta Supra, it is necessary for the prosecution to establish demand and then payment by the bribe giver acceptance thereof would result in what is called obtainment. Such a degree of proof is not available in the case on hand even after making the inferential deduction.

¶378

Therefore, insofar as accused Nos. 1 and 2 are concerned, the material evidence on record is hardly sufficient to maintain the conviction of the offences under sections 13(1)(d) r/w section 13(2) of Prevention of Corruption Act.

¶379

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¶381

Having said thus, since mere repayment would not efface the criminal liability, and material documents also depict that there are entries which were passed by the accused Nos.1 and 2 in the books of UCO Bank, Davanagere which are per se incorrect, all ingredients to attract the offence punishable under Section 420 and 120-B, 468, 471 and 477A of IPC are to be maintained following the dictum of the Hon’ble Apex Court in the case of Gian Singh v. State of Punjab and Another reported in (2012) 10 Supreme Court Cases 303.

¶382

There cannot be any dispute in the principles of law enunciated in the judgments relied on by the learned Senior counsel appearing on behalf of the appellant Sri S.P.Kulkarni.

¶383

But, in the case on hand, the facts depict that even at the time of sanctioning the first loan itself, there were irregularities which ultimately affected the rights of the Bank, the material evidence on record would be sufficient enough to maintain the conviction for the offences under Section 120-B, 468, 471, 477A, 420 IPC. Each of the conspirator need not to know the entire design but for the active role played by the particular conspirator, if the act is not accomplished each one

¶384

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¶385

of the conspirator would be liable for the final act as is held in the case of Mohd. Khalid Supra.

¶386

Therefore, the decisions that has been placed on record by the appellant would be not of much away for interfering with the impugned judgment convicting the appellants for the aforesaid offences except offence under Section 13(1)(d) r/w Section 13(2) of Prevention of Corruption Act.

¶387

In view of the foregoing discussions, point Nos.1 and 2 are answered partly in the affirmative.

¶388

Regarding point No.3 : While accused Nos.1 and 2

¶389

have filed the affidavits foregoing the benefits in the event of recording an order of acquittal under Section 13(1)(d) r/w section 13(2) of the Prevention of Corruption Act referred to supra, the other appellants have also pleaded the age and contended that the incident is an isolated incident and there are no criminal antecedents.

¶390

Few of the appellants are also ladies viz., A10Radha Rani Behal, A11-Shallu Behal and A12-Sapna Behal.

¶391

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¶392

Some of the appellants are only employees of Srirama and Gajanand.

¶393

Taking note of the above aspects which are peculiar to the case on hand, upholding the sentence of imprisonment would act harsh so far as the appellants are concerned as they are all first time offenders and there is no compulsory imprisonment provided for the aforesaid offences under IPC

¶394

Accordingly, by enhancing the fine amount reasonably, taking note of the fact that the entire loan amount is now repaid to UCO Bank and there is no pecuniary loss that has occurred to UCO Bank, Davanagere Branch, setting aside the imprisonment would meet the ends of justice.

¶395

Enhanced fine amount of Rs.25,000/- (in addition to the fine amount already imposed and paid by the appellants) for all the offences put together would meet the ends of justice in the case on hand.

¶396

Accordingly, point No. 3 is answered partly in the

¶397

affirmative.

¶398

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73. Regarding point No.4 : In view of finding of this

¶401

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

¶402

ORDER

¶403

(i) Criminal Appeals are allowed in-part .

¶404

(ii) While maintaining the conviction of the appellants for the offences punishable under sections 120-B, 468, 471, 477A, 420 of IPC, accused Nos.1 and 2 are acquitted for the offences punishable under Section 13(1)(d) r/w Section 13(2) of Prevention of Corruption Act.

¶405

(iii) Consequently, the sentence ordered by the learned Trial Judge is modified as under:-

¶406

(iv) The order of imprisonment imposed on the appellants are hereby set aside and each of the appellants are directed to pay the enhanced fine of Rs.25,000/- (Rupees Twenty Five thousand only) for the aforesaid offences (put together fine amount already imposed and paid by the appellants) on or before 15^th of March, 2025 before the trial Court, failing which, they shall undergo Simple Imprisonment for a period of one year.

¶407

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¶409

(v) Office is directed to return the trial Court records with copy of this order forthwith.

¶410

Sd/(V SRISHANANDA) JUDGE

¶411

MR/PSJ

R Shivakumar v. the State of Karnataka

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R Shivakumar v. the State of Karnataka

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