N.S. Suhas Vs the State of Karnataka

PASSED BY THE XXI ADDL.C.C. AND S.J. AND SPL.JUDGE FOR CBI CASES, BENGALURU IN SPL.C.C.NO.53/03 - CONVICTING THE APPELLANTS/ACCUSED FOR THE OFFENCE PUNISHABLE UNDER SECTION 120B R/W 420 OF IPC.

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THIS APPEAL HAVING BEEN RESERVED FOR ORDERS, COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT PRONOUNCED THE FOLLOWING:CORAM: HON'BLE MR JUSTICE V SRISHANANDA

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CAV JUDGMENT

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(PER: HON'BLE MR JUSTICE V SRISHANANDA)

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Heard Sri S.P.Kulkarni, learned Senior Advocate for Sri K.Srikanth Patil, learned counsel for the appellants and Sri P.Prasanna Kumar, learned counsel for the respondentCentral Bureau of Investigation.

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Present Criminal Appeal is filed by the accused Nos.2 and 3 in Spl. C.C. No.53/2003 challenging the judgment dated 29.01.2011 passed by the XXI Additional City Civil and Sessions Judge and Special Judge for CBI Cases, Bengaluru.

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Essential facts for the purpose of consideration of the appeal on merits found in the charge sheet material would reveal as under:

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Inspector of Police, Central Bureau of Investigation, Bengaluru, (hereinafter referred to as ‘CBI’) has charge sheeted accused Nos.1 to 3 for the offence punishable under Section 120B read with Section 420 of the Indian Penal Code and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988.

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Accused No.1-A.Sheshagiri Rao, during his tenure as Manager of Canara Bank, Basavanagudi Branch, Bengaluru, during the period 1998-2001, said to have conspired with accused No.2-N.S.Suhas and his father N.G.Subbaraya Setty-accused No.3 (hereinafter referred to as ‘appellants’) who are the proprietors of M/s Taranga Commercials of India (‘Taranga’ for short) and M/s N.G.Subbaraya Setty and Sons (‘NGSS’ for short) respectively. Pursuant to such conspiracy, various credit

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facilities were extended by Canara Bank resulting in wrongful loss to the tune of Rs.85,00,000/and corresponding gain to appellants and accused No.1. Details of such credit facilities are found from the charge sheet whereunder, on 11.01.2000 accused No.1 sanctioned working capital of Rs.8,00,000/- with 25% margin as against stipulated margin of 30% to Taranga under Traders Scheme for marketing Agarabatti, Soaps, Chemicals, etc.,

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Subsequently, accused No.1 enhanced the said limit to Rs.10,00,000/- on 02.05.2000, even though the cheques discounted earlier to said Taranga were returned unpaid and the outstanding balance in the account of Taranga exceeded the sanctioned limit. Accused No.1 further sanctioned working capital of Rs.7,00,000/- and term loan of Rs.3,00,000/- to NGSS and Sons on 11.07.2000 for manufacture of Agarbathis. It is found from records that said additional sanction was made even though account had the outstanding of Rs.19,93,932/- as

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against the sanctioned limit of Rs.10,00,000/- in the account of the firm. Again on 22.01.2001 accused No.1 enhanced the limit from Rs.7,00,000/- to Rs.15,00,000/to NGSS account when the outstanding amount was Rs.15,23,249/-.

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It is further alleged that accused NO.1 was aware that cheques which were presented by accused No.3 which were discounted by him stood returned unpaid. Despite such irregularity and outstanding in the accounts of accused Nos.2 and 3, accused No.1 fraudulently, in order to facilitate accused No.3 to misuse the credit facility provided by the bank went on further sanctioning the loan by ignoring the rules, regulations and norms of the Bank.

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Further, accused No.1 failed to report the Controlling Authority vide F-637 and obtained approval before 35 cheques presented by accused No.2 and 14 cheques presented by accused No.3. In other words, Controlling Authority was kept in dark about the transactions of

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accused Nos.2 and 3 with Canara Bank. It is also found from the charge sheet materials that all cheques discounted were returned unpaid. In fact, those cheque discounting facility extended by accused No.1 was intended to reduce the outstanding liability of accused Nos.2 and 3 temporarily.

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It is also found from the material collected in the form of documents by the CBI that accused No.1 debited the accounts of the firm on account of recovery of bounced discounted cheques instead of ensuring actual recovery and allowed the liability to increase day by day.

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Apart from extending the facility, accused No.2 was permitted to over draw from his firm account after 10.01.2001 i.e., date of expiry of the limit even though there was no request from the borrower for extension or renewal of the limit. This was done unilaterally by accused No.1 to depict that the accounts are regular.

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Further, material in the form of charge sheet would reveal that accused Nos.2 and 3 issued cheques on many occasions drawn in their special accounts in favor of third parties who were not at all connected to the business of Taranga or NGSS and the amounts were paid to them from the subject accounts.

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CBI collected such materials which would show that

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amounts spent in favour of third parties is towards repayment of hand loans taken by accused Nos.2 and 3. Though the same was in the knowledge of accused No.1 he did not object the same resulting in misusing of credit facility by accused Nos.2 and 3.

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Even after all these misuse has taken place, on 01.02.2001, again accused No.1 discounted six bills drawn by NGSS on M/s Sadguru Enterprises, Malkajgiri, Hyderabad under SDB and credited the proceeds of Rs.2,54,000/- in the account of accused No.3 after keeping 40% margin with the Bank. Accused No.1, thereafter,

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delayed sending of ‘Hundi’ to drawee bank. Because of such delay, M/s Sadguru Enterprises refused to accept the ‘Hundi’ and at last, goods were returned and were disposed off with the consent of the party in a sum of Rs.85,000/- and said amount was only adjusted in the bill discounting account leaving behind balance of Rs.1,85,734/- which was a loss to the bank.

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It is further found from the records that these overt acts committed by accused No.1 in conspiracy with accused Nos.2 and 3 resulted in huge wrongful loss to the bank as aforesaid and corresponding wrongful gain to the accused Nos.1 to 3 whereby they were charged for the offence punishable under Section 420 of the Indian Penal Code read with Section 13(2) and 13(1)(d) of the Prevention of Corruption Act, 1988.

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On receipt of the charge sheet, learned Special Judge took cognizance of the offences alleged against the appellants and accused No.1 and summoned them. After

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completion of necessary formalities. All accused persons pleaded not guilty and therefore, Trial was held.

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In order to bring home the guilt of the accused persons, prosecution in all examined 18 witnesses and as many as 97 documentary evidence were placed on record which were exhibited and marked as Exs.P.1 to P.97. During the course of evidence, defence relied on three documents which were exhibited and marked as Exs.D.1 to D.3. 16. Thereafter, accused statement as is contemplated under Section 313 of the Code of Criminal Procedure was recorded, wherein, accused have denied all the incriminatory circumstances and did not lead any defence evidence.

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Thereafter, learned Special Judge heard the parties in detail and on appreciation of the oral and documentary evidence placed on record in a cumulative manner,

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convicted all the accused persons and sentenced them as under:

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“For the offence under Section 120-B IPC Accused No.1 is convicted and sentenced to undergo SI for two years and shall pay a fine of Rs.25,000/- in default of payment of fine he shall undergo SI for six months.

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For the offence under Section 420 IPC Accused No.1 is convicted and sentenced to undergo SI for two years and shall pay fine of Rs.25,000/-; in default of payment of fine he shall undergo SI for six months.

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For the offence under Section 13(2) r/w 13(1)(d) of the Prevention of Corruption Act, 1988 Accused No.1 is convicted and sentenced to undergo SI for Two years and shall also pay a fine of Rs.30,000/-; in default of payment of fine he shall undergo SI for six months.

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For the offence under Section 120-B IPC Accused No.2.is convicted and sentenced to undergo SI for three years and shall pay a fine of Rs.25,000/ -; in default of payment of fine he shall undergo SI for six months.

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For the offence under Section 420 IPC Accused No.2 is convicted and sentenced to undergo SI for three years and shall pay a fine of Rs 25,000/ - in default of payment of fine he shall undergo SI for six months.

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For the offence under Section 120-B IPC Accused No.3 is convicted and sentenced to undergo SI for two years and shall pay fine of Rs.25,000/-; in default of payment of fine he shall undergo SI for six months

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For the offence under Section 420 IPC Accused No.3 is convicted and sentenced to undergo SI for two years and shall pay a fine of Rs.25,000/ -; in default of payment of fine he shall undergo SI for six months

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The substantive sentences shall run concurrently. Accused No.1 to 3 are also entitled to benefit of set off under Section 428 of Cr.P.C., and the period of detention in judicial custody if any, shall be given set off against the part of the sentence of imprisonment.

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Bail bonds executed by Accused No.1 to 3 stand cancelled.

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Office is directed to furnish a copy of this judgment free of cost to the accused immediately.”

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Being aggrieved by the same, appellants are before this Court on the following grounds:

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That the findings given, conclusion arrived at, decision taken and the very judgment/order of conviction and sentence passed by the Learned Sessions Judge, to the extent challenge herein are totally arbitrary, erroneous and opposed to law

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equity and justice and the same are liable to be set aside and limine

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That the Learned Sessions Judge has totally erred in not appreciating the oral and documentary evidence on record. The misinterpretation and misreading of evidence and record has resulted in erroneous conviction and sentence, by the Sessions Judge. Therefore the judgment of conviction and sentence are liable to be set aside on this ground alone.

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The Learned Sessions Judge has totally erred in not understanding and appreciating that the complaint has failed to establish the essential ingredients of Sec.420 and 120 B of the Indian Penal Code and as such the Judgment / Order of conviction and sentence passed by the Sessions Judge are liable to be set aside.

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That learned Sessions has not properly appreciated the material evidence on record and has totally gone wrong in holding that the offences are proved against the appellants.

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That in as much as it has been admitted by the complainant that sufficient financial security and surety were supplied by the appellants in time and that it could not have been the case of a fraud or cheating, the appellants ought to have been acquitted by the learned Sessions Judge,

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The essential element of criminal conspiracy contemplated under Sec.120B and dishonest intention to cheat or dishonest intention of inducing some other person to deliver the property contemplated under Section 420 of IPC have not been brought home by the complainant and therefore it is a case of clear acquittal which the Sessions Judge has failed to appreciate.

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In as much as all the financial status and property details, details of the loan accounts, the balance sheets of tax payments and also loss and profit accounts were placed before the Bank before the sanction of loan and because the said financial status was accepted for the purpose of grant of loan, the appellants cannot be held to have committed the said offences since it does not bring about the essential ingredients of dishonest intention right from inception. Therefore in view of the law laid down by the Hon'ble Supreme Court of India in the absence of dishonest intention at the inception, the order of conviction and sentence passed by the learned Sessions Judge are not sustainable in law and the same are liable to be set aside

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The learned Sessions judge has blindly held that the appellants have gone against, banking norms, circulars and also guidelines without actually referring to any particular guideline or a circular and

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therefore the conviction based on this is contrary to law

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The learned Sessions Judge has ignored number of vital admissions made by PW.3, 4 and 5 and even other witnesses which have given a clear go bye to the original case of the complainant.

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That the learned Sessions Judge has totally erred in holding that the discounting of the cheque by the second appellant under Ex.P7(c) to P7(t) of the same amounts to conspiracy between the accused persons.

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The Court below has totally erred in holding that a cheque for Rs.1,16,979/- was discounted and it was dishonored whereas no such cheque was either discounted or returned unpaid The Court also failed to note that a cheque for Rs,2,60,000/- was discounted on 6.2.2001 under LCDB 1752, that the said cheque was dishonored as per Ex.P7(k) on 9,2.2001 But it was represented for collection under LCDB 1769 on the very same day i.e., 9,2.2001 and it got encashed.

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That the learned Sessions Judge has totally ignored very important fact that large amounts are being credited by the appellants in the bank account, the appellants have been honest and loyal in their payments and above all no loss has occurred to the bank in the said transaction.

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That the evidence produced by the complainant Manager is totally opposed to the mandatory provisions of Banker's Book Evidence Act which the learned Sessions Judge has failed to appreciate.

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The Court below has failed to appreciate that out of 86 cheques/instruments discounted only 6 have been dishonored and later 2 of the said dishonored cheques have been honored later. Therefore the finding of the Sessions Judge that permitting discounting of cheques frequently in spite of dishonor shows complicity and meeting of minds is wholly illegal and perverse

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The Trial Court has failed to understand the difference between "discounting of a cheque" and "cheque given for collection in clearing" and has misdirected itself leading to the conviction of the accused.

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That vital contradictions in the depositions and statements of the prosecution have been brushed aside and ignored by the learned Sessions Judge and therefore the conviction and sentence are liable to be set aside even on this ground also.

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The Officer concerned/Senior Manager who has taken spot inspection of the loan application forms of the appellants has completely examined the state of affairs of the appellants with respect to the loans, drawings and repayments. The said officer has

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certified that the accounts are proper and he has also recommended for the grant of the loan. Therefore the appellants cannot be blamed for the same especially when their involvement in the same is not proved as per law

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That the learned Session Judge has totally erred in not noticing that the Manager who sanctioned and permitted the availing of the loan had the power limit upto Rs.25 Lakhs and that he has sanctioned only Rs.13,47,042/ -. This itself shows that the appellants have enriched themselves with exorbitant loan.

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The clear and vital admissions of the witnesses on the part of the Canara Bank that they are not able to say whether bank has suffered loss in the said transaction of grant of loan to the appellants, has been totally ignored by the learned Sessions Judge. It is submitted that even otherwise the allegation of loss even if proved cannot entitle the judge to run with idea that it is a case of cheating and criminal conspiracy. Therefore the finding of the judge requires to the set aside on this ground also.

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In as much as the security given by the appellants are intact and because they have deposited huge amounts on several occasions and because the transactions were homely and co-extensive, it cannot be a case of intention to cheat, which the

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learned Sessions judge has failed to appreciate. It has to be a case for noting that illegal diversion tunes to Rs.4 Lakhs whereas the deposit by the appellants is above Rs.19laks. Therefore the cheating by the appellants is beyond imagination.

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That the judgments and the decrees of the competent Civil Courts made in O.S.Nos.2832/2004, O.S.No.7018/2004 and O.S.No.495/2008 amply prove that the appellants are good customers and the bank itself owes certain amounts to the second appellant and that the entire transaction at best would go to make out a civil liability and that the complainant cannot knock the doors of the Criminal Courts in the said regard.

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That the learned Sessions Judge has gone into serious error in passing the order of conviction and sentence against the appellants, when the commission of the said offences by the appellants has not been proved beyond all the reasonable doubt by the prosecution.

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That the law laid down by this Hon'ble Court and also the Hon'ble Supreme Court of India on various important aspects touching the said offences, has been ignored and not followed by the learned Sessions Judge and therefore the judgment and order of conviction and sentence passed by the Spl.

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& Sessions Judge require to be set aside by this Hon'ble Court in the above appeal.”

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Sri S.P.Kulkarni, learned Senior Advocate

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representing the appellants contended that the material evidence on record is wrongly interpreted by the learned Special Judge in the impugned judgment while convicting the appellants, resulting in miscarriage of justice and sought for allowing the appeal.

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He further pointed out that valuable admissions elicited in the cross-examination of prosecution witnesses is totally ignored by the learned Special Judge while recording an order of conviction resulting in miscarriage of justice.

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He further argued that dishonest intention to commit the fraud must be available at the inception and from the material evidence on record prosecution has to establish the same. Unless such intention is established, there cannot be conviction either for the offences under the

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provisions of the Prevention of Corruption Act or for the offence punishable under Sections 120B and 420 of the Indian Penal Code. Therefore, the impugned judgment is based on surmises and conjectures and sought for allowing the appeal.

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He further pointed out that the suit filed by the appellants in O.S. No.495/2008 against the Bank got decreed which would establish that there was no cheating or misrepresentation committed by the appellants and thus sought for allowing the appeal.

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He further pointed out that prosecution witnesses categorically admitted that all the loans were secured and there was no loss caused to the Bank and, accused No.1 had the power to sanction the loan and as such, there is no material on record which would warrant recording an order of conviction and therefore, impugned judgment is bad in law.

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He also points out that even though there are allegations that sanctioned loan amounts were diverted, no such material evidence is placed on record and there is no document to show that there was a loss caused to the Bank to the tune of Rs.65,00,000/- and thus, the ingredients required to establish the offence punishable under Sections 120B and 420 of the Indian Penal Code are not proved by the prosecution and sought for allowing the appeal.

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Much emphasis was laid by the learned Senior Advocate on the material on record to establish that value of collateral security was more than the loan amount and the rules and regulations of the Bank having not been produced and marked, case of the prosecution ought to have been dismissed by the learned Special Judge and acquitted the appellants .

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In support of his arguments, learned Senior Advocate placed on record the following judgments, wherein, it has been held as under:

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Vesa Holdings (P) Ltd. v. State of Kerala, (2015) 8 SCC 293

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12. From the decisions cited by the appellant, the settled proposition of law is that every breach of contract would not give rise to an offence of cheating and only in those cases breach of contract would amount to cheating where there was any deception played at the very inception. If the intention to cheat has developed later on, the same cannot amount to cheating. In other words for the purpose of constituting an offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 of the Penal Code, 1860 can be said to have been made out.

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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 that the mental

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

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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

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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 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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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. P.W. 1 the Chief Zonal Manager has admitted at page 12 of his deposition that the primary concern of the bank while granting loans is the security. At page 13 of his deposition P.W. 1 has admitted that the loans issued in these cases were utilised for the purpose for which they were sanctioned although not properly utilised. He has also admitted that legal opinion had been taken beforehand. Going by the testimony of P.W. 23 the legal opinion will usually bear the same date as that of the loan application. Even P.W. 3 the Senior

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Officer from the Zonal Office who had conducted spot verification of Salim Agencies belonging to A2 (in C.C. 9 of 1993) had seen old and rusted furniture there. The specific case of the prosecution is that even the account in Dhanalakshmi Bank was opened by A3 in pursuance of the criminal conspiracy. But, going by the testimony of P.W. 9 the Clerk of Kollam Branch of Dhanalakshmi Bank the current account of M/s. Distributors Quilon represented by Rajeevan had been opened on 6-11989 which was long before the filing of loan application by A2. He has further stated that the said account of Distributors Quilon is a live account even now. Ext. P28 is the loan application dated 7- 10-1989 in C.C. 9 of 1993 requesting for aloan of Rs. 1,50,000/- for conducting the business of lending folding chairs and folding tables. Along with Ext. P28 A2 had produced Ext. P6 quotation from A3 who had agreed to supply chairs worth Rs. 60,000/- and tables worth Rs. 1,44,375/-. A2 had also produced Ext. P35 project report dated 15-091989. It is in evidence that it was P.W. 23 (Ayyappan) who was a Scale -1 officer incharge of the loans and advances who had recommended the loans. Similarly, it was P.W. 23 who admittedly had prepared the confidential reports (C.R.) in all the three cases. Ext. C1(a) office order dated 9-081989 will go to show that as per the delegation of powers it was for P.W. 23 to process the loan applications, conduct pre-sanction inspection, maintain the ledgers etc. and recommend to the Branch Manager (who was then A1) to sanction the loan. In Ext. P2(a) statement which P.W. 23 had given to P.W. 2 during the enquiry conducted by the latter, P.W. 23 had admitted his role in preparing the CRs. processing the loan applications and finally recommending the loans. This report

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was never revealed by P.W. 2 or P.W. 23 to the investigating officer. Nor was it shown as an item of evidence in the final report filed by P.W. 26. There was no direction from the Court either for the production of Ext. P2(a) statement. Ext. P2(a) statement given by P.W. 23 to P.W. 2 was flourished by P.W. 2 during his chief examination and was vigilantly got marked by the defence as Ext. P2(a). P.W. 2 has also confessed that all the loans were recommended by P.W. 23 who was the Scale I Officer in-charge of the loans and advances in the Kollam Branch of PNB.P.W. 2 has further admitted that P.W. 23 had prepared the CRs for each of the loans and had forwarded copies of the same to the Regional Office and no discrepancy was ever pointed out about these advances. It was further admitted by P.W. 2 that the details of the loan sanctioned every month Would be reported to the Regional Office during the next month for scrutiny and verification and to his knowledge no discrepancy was noted in those advances. P.W. 3 the Senior Manager who allegedly conducted the first enquiry confessed that he could not level any specific charge against A1 with regard to the sanctioning of loan to Salim Agencies belonging to A2 in C.C. 9 of 1993. The facts brought out in the cross-examination of P.W. 3 would clearly show that the inspection or enquiry allegedly conducted by him was only a mockery. It was without personally visiting the firms which were alleged to be non-existent that P.W. 3 gave Ext. P3 report in C.C. 9 of 1993, Ext. P7 report in C.C. 10 of 1993 and Ext. P12 report in C.C. 11 of 1993.

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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

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

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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

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

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

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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

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repossess the said autorickshaw at any cost. When it is 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 120B 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.

¶150

M. Ramalingam v. State, (2019) 9 SCC 421

¶151

15. At the same time so far as appellant M. Ramalingam (A-2 in CC No. 3 of 1995) and appellant N. Rajangam (A-2 in CC No. 5 of 1995) is concerned, there was no evidence on record which could at all connect them for the offences under Sections 120-B and 420 IPC (appellant M. Ramalingam) and Sections 120-B, 467, 467 read with 471 IPC (appellant N. Rajangam) and it was not the case of the prosecution that the loanee A-2 (N. Ramalingam and N. Rajangam) were ever aware of this fact that such a loan could be

¶152

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sanctioned only after a jewel being pledged. In all bona fides, it reveals from the record that applications were submitted by the loanee who are illiterate agriculturists and loan was got sanctioned by the appellant T. Maran (A-1, Bank Manager) with the connivance of Nagrajan (deceased) in violating the rules and regulations for their personal gains.

¶154

16. We are not able to trace out any evidence in respect of dishonesty/misuse in obtaining loan without furnishing any security. In our view the prosecution has failed to prove beyond reasonable doubt the charges levelled against the appellant (M. Ramalingam and N. Rajangam) in Criminal Appeals No. 1949 of 2009 and 347 of 2010 and, the conviction of appellant M. Ramalingam under Sections 120-B and 420 IPC and appellant N. Rajangam under Sections 120-B, 467 read with 471 IPC deserves to be set aside.

¶155

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

¶156

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.

¶157

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Kattemane Ganesha v. State of Karnataka, 2023 SCC OnLine Kar 1367

¶159

10. The main object of cross-examination is to find out the truth and detection of falsehood in human testimony. It is designed either to destroy or weaken the force of the evidence of a witness who has already given evidence in person or to elicit something in favour of the party which he has not stated or to discredit him by showing from his past history and present demeanour that he is unworthy of credit. It is the most efficacious test to discover the truth. It exposes bias, detects falsehood and shows mental and moral condition of the witnesses. It also exposes whether a witness is actuated by proper motive or by enmity towards his adversaries. Sometimes cross-examination assumes unnecessary length, then the Court has power to control it. The Court must also ensure that the cross-examination is not made a means of harassment or causing humiliation to the victim of crime.

¶160

11. The object of cross-examination is to elicit the truth and credit the witness produced. The Hon'ble Supreme Court, in the case of Sat Pal v. Delhi [(1976) 1 SCC 727.] , at paragraph 41, held as under:

¶161

“41. Unmindful of this substantial difference between the English law and the Indian law, on the subject, the Calcutta High Court in some of its earlier decisions, interpreted and applied Section 154 with reference to the meaning of the term “adverse” in the English statute as construed in some English decisions, and enunciated the proposition that where a party calling a witness requests

¶162

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the court to declare him “hostile”, and with the leave of the court, cross- examines the witness, the latter s evidence should be excluded altogether in criminal cases. This view proceeds on the doctrine enunciated by Campbell, C.J. in the English case, Faulkner v. Brine [(1858) 1 F&F 254] that the object of cross-examination of his own witness by a party is to discredit the witness in to to and to get rid of his testimony altogether. Some of these decisions in which this view was taken are: Luchiram Motilal v. Radhe Charan [AIR 1922 Cal 261 : (1921) 34 CU107]; E. v. Satyendra Kumar Dutt [AIR 1923 Cal 463 : 36 CLJ 173 : 24 Cri U193]; Surendra v. Ranee Dassi [AIR 1923 Cal 221 : ILR 47 Cal 1043 : 701C 687] Khijiruddin v. E. [AIR 1926 Cal 139 : 42 CLJ 506 : 27 Cri LJ 266] and Punchanan v. R. [AIR 1930 Cal 276 : ILR 57 Cal 1266 : 31 Cri LJ 1207 (DB)]

¶164

12. The Hon'ble Supreme Court, in the case of Sunil Mehta v. State of Gujarat [(2013) 9 SCC 209.] , held that setting aside the crossexamination or denying cross- examination would violate a person's life and liberty which are not only fundamental rights but also basic human rights. At paragraph 18, it is held as under:

¶165

“18. Secondly, because evidence under Chapter XIX(B) has to be recorded in the presence of the accused and if a right of cross-examination was not available to him, he would be no more than an idle spectator in the entire process. The whole object underlying recording of evidence under Section 244 after the accused has appeared

¶166

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is to ensure that not only does the accused have the opportunity to hear the evidence adduced against him, but also to defend himself by cross-examining the witnesses with a view to showing that the witness is either unreliable or that a statement made by him does not have any evidentiary value or that it does not incriminate him. Section 245 of the Code, as noticed earlier, empowers the Magistrate to discharge the accused if, upon taking of all the evidence referred to in Section 244, he considers that no case against the accused has been made out which may warrant his conviction. Whether or not a case is made out against him, can be decided only when the accused is allowed to cross-examine the witnesses for otherwise he may not be in a position to demonstrate that no case is made out against him and thereby claim a discharge under Section 245 of the.Code. It is elementary that the ultimate quest in any judicial determination is to arrive at the truth, which is not possible unless the deposition of witnesses goes through the fire of cross-examination. In a criminal case, using a statement of a witness at the trial, without affording to the accused an opportunity to cross- examine, is tantamount to condemning him unheard. Life and liberty of an individual recognised as the most valuable rights cannot be jeopardised leave alone taken away without conceding to the accused the right to question those deposing against him from the witness box.”

¶168

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18. It is well settled that, One is required to consider the entire evidence as a whole with the other evidence on record. Mere considering the examination-in-chief and not considering the crossexamination, cannot be considered as consideration of the evidence in its entirety.

¶170

R. Shivakumar v. State by Inspector of Police, Crl.A.No.731/2010 dated 25.09.2023

¶171

15. PW.1 has admitted in the cross examination that he has not produced the guidelines regarding mega cash loan or shelter loan to the CBI officials and learned counsel for the accused No.1 has suggested that accused No.1 followed all norms and guidelines while granting loan, but it was denied by PW.1 but has admitted that accused Nos.2 and 3 availed loan from Reddy Co-operative Bank and the said loan has been taken over by the UCO Bank. He further admits that the opinion of the Panel Advocate has been accompanied with the Encumbrance certificate of sale deed along with the affidavit of accused No.3 as the original document is not able to produce but the copy of the sale deed was produced. However, this witness denied there was no irregularities in sanctioning of loan.

¶172

25. The allegation against accused No.1 is that he has violated the guidelines of RBI and sanctioned the loan. The crucial documents of guidelines issued by RBI has not been produced by the prosecution and marked, in order to say specifically which guideline has been violated by accused No.1 while sanctioning loan. However, it is alleged by P.W.4-Investigation Officer and P.W.3Zonal Manager of UCO bank that, while sanctioning the loan, equitable mortgage has to be executed in favour of the Bank by accused Nos.2 and 3 which is

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based upon the certified copy of the sale deed, but not the original sale deed.

¶175

26. On perusal of the records, the allegation against accused No.1 and 2 was that accused No.1 sanctioned mega cash loan to accused Nos.2 and 3 for Rs.5.00 lakhs wherein accused No.2 produced fake salary certificate. Even though she was drawing salary of Rs.8,000/- per month, but she has falsely produced the document stating that she was earning salary of Rs.13,000/- p.m. and on the forged document, accused No.1 sanctioned the loan in conspiracy with accused No.2. Another contention was that instead of getting the original sale deed in respect of the property of accused Nos.2 and 3 for executing equitable mortgage, accused No.1 received certified copy of the sale deed, thereby, he has violated the guidelines of the Bank. As I stated above, in order to show that accused No.1 violated the guidelines of the Bank, the very guidelines were not produced and marked by the prosecution and which of the guidelines is violated is also not placed before the Court to prove that accused No.1 violated the guidelines of the bank while sanctioning loan to accused No.2.

¶176

33. Accused No.1 though he is a public servant and Bank Manager said to be violated the guidelines but the prosecution not produced any guidelines to show the violation and there is no evidence to show that he has conspired with accused Nos.2 and 3 for sanctioning of loan or creating the documents. On the other hand, the accused Nos.2 and 3 produced the documents along with the loan application that was referred to PW.2-a panel advocate and who gave opinion, thereafter loan was sanctioned. If the legal opinion is not given, sanction of loan by accused No.1 does

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not arise at all and there is no evidence to show that he has misused the official position in favour of the accused Nos.2 and 3 for any pecuniary advantage. Absolutely, there is no material to prove the guilt of the accused. Therefore, for the above said reasons, I am of the view, the prosecution able to prove the charges leveled against them beyond reasonable doubt. Therefore, the benefit of doubt is extended to the accused and they are entitled for the acquittal.

¶179

Lalita Kumari v. Govt. of U.P.

¶180

(2014) 2 SCC 1

¶181

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.

¶182

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 non-registration of FIRs and recommended that action should be taken against police officers who refuse to register such information. The Committee observed:

¶183

“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. Non-registration of cases is a serious complaint against the police. The National Police Commission in its 4th Report

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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.

¶186

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.

¶187

¶188

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

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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.

¶191

¶192

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 non-cognizable, 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.”

¶193

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.

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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, non-registration of such a large number of FIRs leads to a definite lawlessness in the society.

¶196

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.

¶197

Conclusion/Directions

¶198

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

¶199

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.

¶200

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.

¶201

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

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reasons in brief for closing the complaint and not proceeding further.

¶204

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.

¶205

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.

¶206

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:

¶207

( a ) Matrimonial disputes/family disputes

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( b ) Commercial offences

¶209

( c ) Medical negligence cases

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( d ) Corruption cases

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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.

¶212

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

¶213

120.7. While ensuring and protecting the rights of the accused and the complainant, a preliminary inquiry should be made time-bound

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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.

¶216

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.

¶217

Raja Ram v. State of M.P., (1994) 2 SCC 568

¶218

10. Ram Sahai (accused 4) has not filed any appeal against his conviction and sentence. However, we find that his case is identical to the case of the appellants and there is no distinguishing feature. In our opinion it is therefore appropriate that the benefit of our judgment should also be made available to Ram Sahai. His conviction is also altered from the one under Sections 302/149 IPC to one under Section 304 Part II read with Section 149 IPC. He is also sentenced to five years' rigorous imprisonment and to pay a fine of Rs 1000. In default of payment of fine, he shall suffer further rigorous imprisonment for one year. The fine when realised from Ram Sahai shall be paid to PW 7 Sahodara Bai.

¶219

Dandu Lakshmi Reddy v. State of A.P., (1999) 7 SCC 69

¶220

25. The mother of the appellant Narayanamma is languishing in jail at present pursuant to the conviction and sentence awarded to her in this

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case. Of course her conviction is not before us as she did not file any special leave petition. But this Court has set up a judicious precedent for the purpose of averting miscarriage of justice in similar situations. On the evaluation of a case, if this Court reaches the conclusion that no conviction of any accused is possible the benefit of that decision must be extended to his co-accused also though he has not challenged the order by means of an appeal petition to this Court (vide Raja Ram v. State of M.P. [(1994) 2 SCC 568 : 1994 SCC (Cri) 573] ).

¶223

Mohammed Ilias v. State of Karnataka, 2001 SCC OnLine Kar 260

¶224

4. In this regard, the Counsel relied upon the ruling of the Delhi High Court in Sunil Kumar v. State [2000 (1) Crimes 73 (Del.).] . In the said decision the ruling of the Supreme Court are also referred to and followed. In para 4 it is held thus:

¶225

“On perusal of the judgment of acquittal dated 19-1-1998, it appears that the deceased Balwan Singh met with a homicidal death owing to burn injuries sustained by him has not been disputed by the accused persons. The evidence against the accused persons mainly consists of the evidence of the eye-witnesses, namely, Karan Singh (P.W. 2) and Smt. Asha Rani (P.W. 5) (wife of the deceased Balwan Singh) besides the dying declaration (Ex. P.W. 13/A) of the deceased Balwan Singh. Both the said witnesses have not supported the prosecution case and so they have been declared hostile by the prosecution.

¶226

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Eliminating the evidence of the said eyewitnesses, there remains the dying declaration (Ex. P.W. 123/A) of the deceased Balwan Singh, which has been disbelieved by the learned Additional Sessions Judge. It would therefore appear that the accused persons, namely, Jangli Tyagi, Balbir Singh, Anil Kumar Tyagi and Sushil Kumar Tyagi were acquitted on the ground of insufficiency of evidence. Thus, the evidence adduced in the case against all the accused persons is inseparable and indivisible and that being so the petitioner cannot be treated differently on the basis of the said evidence. In this view of the matter, there is no prospect of the case ending in conviction against the petitioner and the valuable time of the Court would be wasted for holding trial only for the purpose of formally completing the procedure to pronounce the conclusion of on a future date. If the Court is almost certain that the trial only would be an exercise in futility or sheer wastage of time, it is advisable to truncate or ship the proceedings at stage of Section 227 of the Code itself”.

¶228

5. In the instant case also the full-fledged trial was held against accused 1 to 3 in respect of the same offence and they were acquitted. In the second round of trial against the petitioner, the evidence to be produced cannot be different from the one that was produced by the prosecution in the earlier case in SC No. 24 of 1998. Therefore, in that view of the matter the proceeding in CC No. 1104 of 1998 is quashed.

¶229

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Anil Rai v. State of Bihar, (2001) 7 SCC 318

¶231

34. As noticed earlier, the SLP filed by Satya Narain (A-7) was dismissed by this Court on account of his failure to produce the proof of surrender. It has been stated at the Bar and admitted by the learned counsel appearing for the State that the said accused surrendered thereafter and is presently undergoing the imprisonment awarded to him vide the judgment impugned. In view of the finding that A-3 to A-7 are not guilty of the offence under Section 302 read with Section 149 IPC, can any benefit of this judgment be given to Satya Narain (A-7)? This Court in Raja Ram v. State of M.P. [(1994) 2 SCC 568 : 1994 SCC (Cri) 573] considered the case of a nonappealing accused which was identical to the case of the appellants and held him entitled to the benefit of altered conviction and sentence. Again, in Dandu Lakshmi Reddy v. State of A.P. [(1999) 7 SCC 69 : 1999 SCC (Cri) 1176] this Court held: (SCC p. 76, para 25)

¶232

“ 25 . The mother of the appellant Narayanamma is languishing in jail at present pursuant to the conviction and sentence awarded to her in this case. Of course her conviction is not before us as she did not file any special leave petition. But this Court has set up a judicious precedent for the purpose of averting miscarriage of justice in similar situations. On the evaluation of a case, if this Court reaches the conclusion that no conviction of any accused is possible the benefit of that decision must be extended to his co-accused also though he has not challenged the order by means of an appeal petition to this Court (vide Raja

¶233

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Ram v. State of M.P. [(1994) 2 SCC 568 : 1994 SCC (Cri) 573] ).”

¶235

35. I am of the opinion that under the facts and circumstances of the case, A-7 is also entitled to the benefit of altered conviction and sentence.

¶236

Bijoy Singh v. State of Bihar, (2002) 9 SCC 147

¶237

12. Awadhesh Singh (A-11) who was also convicted with the aid of Section 149 IPC has not filed an appeal in this Court. In view of the judgments of this Court in Raja Ram v. State of M.P. [(1994) 2 SCC 568 : 1994 SCC (Cri) 573] , Dandu Lakshmi Reddy v. State of A.P. [(1999) 7 SCC 69 : 1999 SCC (Cri) 1176] and Anil Rai v. State of Bihar [(2001) 7 SCC 318 : 2001 SCC (Cri) 1009 : JT (2001) 6 SC 515] he is also entitled to the benefit of this judgment. This Court has set up a judicial precedent that where on evaluation of the case if the court reaches the conclusion that no conviction of any accused is possible, the benefit of that decision must be extended to the co-accused, similarly situated, though he has not challenged the order by way of an appeal.

¶238

13. Under the circumstances the appeals are partly allowed. The conviction and sentence awarded to Jawahar Singh (A-2) and Upender Singh (A-3) is upheld. Giving them the benefit of doubt, Ram Nandan Singh (A-1), Chulhan Singh @ Ramswarath Singh (A-4), Kamta Singh (A-5), Mahendra Singh (A-6), Ashok Singh (A-7), Navin Singh (A-8), Devendra Singh (A-9), Manoj Singh (A-10), Awadhesh Singh (A-11) and Vijay Singh (A-12) are acquitted. The acquitted persons shall

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be set at liberty forthwith unless required in some other case.

¶241

Pawan Kumar v. State of Haryana, (2003) 11 SCC 241

¶242

15. In the case of Raja Ram v. State of M.P. [(1994) 2 SCC 568 : 1994 SCC (Cri) 573] while altering the conviction of an accused in appeal preferred by him, this Court extended the same benefit to the non-appealing accused whose conviction was upheld by the High Court and the same attained finality, no appeal having been preferred against the same.

¶243

Suresh Chaudhary v. State of Bihar, (2003) 4 SCC 128

¶244

14. This leaves us to consider the case of one other accused, namely, Sona @ Sonwa Chaudhary who was one of the accused before the learned Sessions Judge who came to be convicted by him vide his judgment in Sessions Trial No. 417 of 1993. He along with other appellants herein had preferred the criminal appeal before the High Court of Patna which is Crl. A. No. 88 of 1995 which came to be dismissed by the impugned judgment. For some reason or the other he has not preferred any appeal and has accepted the judgments of the courts below. We, in these appeals, have come to the conclusion that the prosecution has failed to establish its case against the appellants which finding is applicable to all the accused. The question then arises whether the benefit of this judgment of ours should be extended to the nonappealing accused, namely, Sona @ Sonwa Chaudhary or not. This Court in a catena of cases has held where on the evaluation of a case this Court reaches the conclusion that no conviction of any accused is possible, the benefit of doubt must

¶245

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be extended to the co-accused similarly situated though he has not challenged the order of conviction by way of an appeal. (See Bijoy Singh v. State of Bihar [(2002) 9 SCC 147] .) This Court while rendering the above judgment has placed reliance on some other judgments of this Court in Raja Ram v. State of M.P. [(1994) 2 SCC 568 : 1994 SCC (Cri) 573] , Dandu Lakshmi Reddy v. State of A.P. [(1999) 7 SCC 69 : 1999 SCC (Cri) 1176] and Anil Rai v. State of Bihar [(2001) 7 SCC 318 : 2001 SCC (Cri) 1009] wherein this Court had taken a similar view. Following the above dictum of this Court in the judgments noticed by us hereinabove, we are of the opinion since we have come to the conclusion that no conviction of any accused is possible based on the prosecution case as presented, it becomes our duty to extend the benefit of acquittal in these appeals also to a non-appealing accused, therefore, Sona @ Sonwa Chaudhary who is the first accused before the Sessions Court in Sessions Trial No. 417 of 1993 and who was the first appellant before the High Court in Crl. A. No. 88 of 1995 will also be acquitted of all the charges of which he is found guilty by the two courts below.

¶247

CBI v. Akhilesh Singh, (2005) 1 SCC 478

¶248

5. The police recovered some bullets from the place of occurrence and also from the dead body of deceased Syed Modi. The police also recovered a .38 bore revolver pursuant to the confession made by Amar Bahadur Singh. A .9 mm pistol was recovered at the instance of accused Bhagwati Singh @ Pappu. On the basis of the material available with the investigating agency, they filed a charge-sheet against the respondent. It is interesting to note that the original accused Dr. Sanjay Singh and Mrs Amita Kulkarni were implicated as accused, but both of

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them were discharged by an order passed by the Sessions Judge and that order of discharge was challenged by the State before the High Court unsuccessfully. A special leave petition also was filed before this Court and that too ended in dismissal on 27-1-1994. Therefore, the very basis of the alleged conspiracy by the respondent with Dr. Sanjay Singh lost its substratum. Admittedly, the respondent was not present at Lucknow when the incident happened. The respondent was implicated in the case on the basis of the alleged conspiracy between himself and the original accused Dr. Sanjay Singh. There is no other material placed before the Court to prove the complicity of the respondent. Mr Ram Jethmalani, learned Senior Advocate appearing on behalf of the respondent drew our attention to the various reasons given by the learned Single Judge for passing the impugned order. There was no direct evidence to show that the respondent had supplied the weapons and rendered assistance to the assailants in carrying out the common object of killing Syed Modi. Had the conspiracy charge been established, at least some of the acts and conduct of the respondent could have been made admissible under the provisions of Section 10 of the Evidence Act. Once the main accused, who is alleged to have hatched the conspiracy and who had the motive to kill the deceased was discharged, and when that matter had attained finality, the learned Single Judge was fully justified in holding that no purpose would be served in further proceeding with the case against the respondent.

¶251

6. Another contention urged by the appellant was that the High Court exercised the jurisdiction under Section 482 of the Criminal Procedure Code after a long lapse of time. It is true that the respondent challenged the framing of charges against him after a considerable delay, but it seems that the order of discharge passed in favour of the main accused attained finality only in 1994 when

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this Court dismissed the special leave petition. It was thereafter only that the respondent approached the Court with an application under Section 482 of the Criminal Procedure Code and the learned Single Judge in those circumstances condoned the delay. We do not think that the power exercised by the High Court suffered from any illegality or perversity. Going by the facts and circumstances of the case, we do not think that this is a fit case where this Court can interfere. The appeal is dismissed accordingly.

¶254

State of Karnataka v. K.C. Narasegowda, 2005 SCC OnLine Kar 89

¶255

5. As is well settled from the catena of decisions of the Apex Court including Suresh Chaudhary v. State of Bihar [ ((2003 SCC (Cri) 801).] Bijoy Singh v. State of Bihar [ ((2002) 9 SCC 147).] , Raja Ram v. State of M.P. [ ((1994) 2 SCC 568).] , Anil Raj v. State of Bihar [ ((2001) 7 SCC 318).] and Pawan Kumar v. State of Hariyana [ (2004 SCC (Cri) 109).] , where on evaluation of a case, no conviction of any accused is possible, the benefit of doubt extended to the coaccused similarly situated is also available for the non-appealing accused. In the present case also, this Court has dealt in detail so far as the evidence against the accused Nos. 2 to 9 were concerned in the Cri. A. 225/98 and found that the prosecution has miserably failed to bring home the guilt against any of the accused. On going through the facts and circumstances as well as the reasoning of this Court, we also hold that as the entire material evidence of the prosecution is one and the same as against all the accused including the non-appealing accused No. 1 who is said to be absconding, there is no second opinion that he is also entitled for the same benefit of doubt as is extended to his co-

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assused in the light of the law laid down by the Hon'ble Supreme Court in the case of Suresh Chaudhary cases .

¶258

6. Hence, we deem it proper to set aside the judgement of conviction dated 26-2-98 passed by the learned Sessions Judge, Tumkur in S.C. No. 57/91 so far as the non-appealing accused-Sri K.C. Narasegowda S/o. Channegowda is concerned and acquit him giving benefit of doubt.

¶259

The reference is answered accordingly.

¶260

The office is directed to send a copy of the order to the learned Prl. Sessions Judge, Tumkur.

¶261

Deepak Rajak v. State of W.B., (2007) 15 SCC 305

¶262

5. The position in law as to what happens in case of acquittal of similarly placed co-accused on the same set of facts and on similar accusations has been considered by this Court in several cases.

¶263

6. A departure may be made in cases where the accused had not surrendered after the conviction in addition to not filing an appeal against the conviction. But as in the present case, after surrender, the benefit of acquittal in the case of coaccused on similar accusations can be extended.

¶264

Kaushal Verma v. State of Chhattisgarh, (2021) 2 SCC 665

¶265

9. With the assistance of the learned counsel, we have gone through the record and are satisfied that the role attributed to the present appellants was not in any way different from that attributed to the other four acquitted accused. We, therefore, see force in the submissions advanced on behalf of the appellants. While allowing this appeal, we set

¶266

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aside the conviction and sentence recorded against said Kaushal Verma, Gaya Ram Verma and Omkar Prasad and acquit them of the charges levelled against them. They be set at liberty unless their presence is required in connection with any other offence.

¶268

Per contra, Sri P.Prasanna Kumar, learned counsel representing CBI while supporting the impugned judgment contended that admittedly the loan account of the two firms viz., Taranga and NGSS of which accused Nos.2 and 3 would represent, was overdue. He would further argue that to cover the said outstanding loan amount, the limit was unilaterally extended by accused No.1 in the first instance upto Rs.8,00,000/- from Rs.7,00,000/- and thereafter, upto Rs.10,00,000/-.

¶269

He would further point out that in continuation of the active criminal conspiracy, accused No.1 went on granting other financial assistance to accused Nos.2 and 3 even though the outstanding amount in the loan accounts were not cleared. He further pointed out that bill discounting facility though was meant to regularize the account,

¶270

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accused No.1 in active conspiracy with accused Nos.2 and 3 deliberately delayed in sending the bill for encashment resulting in huge loss to the Bank and the same is established by the prosecution by placing cogent evidence on record.

¶272

He would further contend that needless to emphasis that beneficiary of such an action attributable to accused No.1 or the present appellants and suit filed by the appellants herein ultimately ended in favour of the Bank before the Hon’ble Apex Court and therefore, contentions urged on behalf of appellants that material evidence are not sufficient enough to conclude the upholding the Order of conviction for the offence punishable under Section 120B and 420 of the Indian Penal Code cannot be countenanced in law.

¶273

He would also argue that the material evidence placed on record categorically establishes with necessary documentary evidence placed on record the conspiracy

¶274

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existed between accused No.1 and present appellants in gone on extending the financial facilities to the appellants beyond the permissible limit of the Branch and in such circumstances, expecting the direct evidence to prove the conspiracy is impermissible and Courts are bound to infer from the set of circumstances about the existence of conspiracy and thus sought for dismissal of the appeal.

¶276

Sri P.Prasanna Kumar, learned counsel also contended that there cannot be any dispute as to the principles of law enunciated in the decisions placed and relied upon behalf of appellants. But in the case on hand, the facts and circumstances that ended in causing wrongful loss to the Bank to the extent of Rs.65,00,000/- has been established by placing material evidence on record and therefore, principles of law enunciated in the aforesaid decisions would not be of any avail in allowing the appeal.

¶277

Sri Prasanna Kumar, also contended that mere filing of the suit by the Bank and getting the decree thereof

¶278

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would not ipso facto efface the criminal liability of the appellants herein in view of the principles of law enunciated in the case of Gian Singh vs. State of Punjab reported in (2012) 10 SCC 303 and thus sought for dismissal of the appeal.

¶280

Further, Sri Prasanna Kumar, learned counsel relied on the following judgments, in support of his arguments:

¶281

Gurmail Singh v. State of U.P., (2022) 10 SCC 684

¶282

27. The term “abatement” or “abate” has not been defined in CrPC. In the said circumstances, its dictionary meaning has to be looked into. As relates criminal proceedings going by the meaning given in Black's Law Dictionary , 10th Edn., abatement means “the discontinuation of criminal proceedings before they are concluded in the normal course of litigation, as when the defendant dies”. Thus, it can be seen that the meaning of “abatement” can only be taken in criminal proceedings as “discontinuation of such proceedings owing to the death of the accused/convict pending such proceedings”. In short, it would reveal that an appeal against conviction (except an appeal from a sentence of fine) would abate on the death of the appellant as in such a situation, the sentence under appeal could no longer be executed.

¶283

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28. The abatement is certainly different from acquittal and a mere glance at the proviso to Section 394(2)CrPC, will make this position very clear. The said proviso reads thus:

¶285

“Provided that where the appeal is against a conviction and sentence of death or of imprisonment, and the appellant dies during the pendency of the appeal, any of his near relatives may, within thirty days of the death of the appellant, apply to the appellate court for leave to continue the appeal; and if leave is granted, the appeal shall not abate.”

¶286

29. The long and short of the aforesaid discussion is that the mere fact that seven out of the ten convicts died, either during the pendency of Criminal Appeal No. 1510 of 1992 before the High Court or during the pendency of this appeal, could not be a reason, by that itself, to canvass nonapplicability of the provision for constructive/vicarious liability, arising out of the achievement of the common object by the unlawful assembly.

¶287

Mir Nagvi Askari v. CBI, (2009) 15 SCC 643

¶288

62. The courts, however, while drawing an inference from the materials brought on record to arrive at a finding as to whether the charges of the criminal conspiracy have been proved or not, must always bear in mind that a conspiracy is hatched in secrecy and it is difficult, if not impossible, to obtain direct evidence to establish the same. The manner and circumstances in which the offences have been committed and the accused persons took part are relevant. For the said purpose, it is necessary to prove that the propounders had

¶289

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expressly agreed to it or caused it to be done, and it may also be proved by adduction of circumstantial evidence and/or by necessary implication. (See Mohd. Usman Mohammad Hussain Maniyar v. State of Maharashtra [(1981) 2 SCC 443 : 1981 SCC (Cri) 477] .)

¶291

63. The following passage from Russell on Crimes (12th Edn., Vol. 1) cited by Jagannatha Shetty, J. in Kehar Singh v. State (Delhi Admn.) [(1988) 3 SCC 609 : 1988 SCC (Cri) 711] (at SCC p. 731, para 271) brings out the legal position succinctly:

¶292

“ The gist of the offence of conspiracy then lies , not in doing the act, or effecting the purpose for which the conspiracy is formed, nor in attempting to do them, nor in inciting others to do them, but in the forming of the scheme or agreement between the parties. Agreement is essential . Mere knowledge, or even discussion, of the plan is not, per se, enough”.

¶293

(emphasis supplied)

¶294

Further it was noted in Kehar Singh [(1988) 3 SCC 609 : 1988 SCC (Cri) 711] that to establish the offence of criminal conspiracy “[i]t is not required that a single agreement should be entered into by all the conspirators at one time. Each conspirator plays his separate part in one integrated and united effort to achieve the common purpose. Each one is aware that he has a part to play in a general conspiracy though he may not know all its secrets or the means by which the common purpose is to be accomplished”.

¶295

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CBI v. Hari Singh Ranka, (2019) 16 SCC 687

¶297

19. ************ Civil settlement of the controversy would not suffice to wipe off the criminal liability. The case reflects fiscal impurity and, in a way, financial fraud. The modus operandi as narrated in the charge-sheet cannot be put in the compartment of an individual or personal wrong. It is a social wrong and it has immense societal impact. This Court has further observed that accepted principle of handling of finance that whenever there are manipulation and cleverly conceived contrivance to avail of this kind of benefits it cannot be regarded as a case having overwhelmingly and predominantly civil character. The gravity of the offence creates a dent in the economic spine of the nation. The quashing of the case was set aside as social interest would be in peril. **********

¶298

Vinayak Narayan Deosthali v. CBI, (2015) 2 SCC 553

¶299

15. ******** It was not necessary to prove that the accused had derived any benefit or caused any loss to the Bank. The fact remains that action of the appellant involved unauthorised conversion of public funds to private funds of an individual. Issuing of bank receipts for securities without existence of securities could not be justified except for illegal benefit to a private individual. Patent illegality cannot be defended in the name of practice or direction of higher authorities. Mens rea is established from the fact that false bank receipts were issued for non-existent securities.

¶300

Suresh Chandra Jana v. State of W.B., (2017) 16 SCC 466

¶301

15. ********* In our opinion, it is almost impossible to come across a single case where the

¶302

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investigation was completely flawless or absolutely foolproof. The function of the criminal court is to find out the truth and it is not the correct approach to simply pick up the minor lapses of the investigation and acquit the accused, particularly when the ring of truth is undisturbed.

¶304

16. It may be mentioned that it is not every doubt but only a reasonable doubt of which benefit can be given to the accused. A doubt of a timid mind which is afraid of logical consequences, cannot be said to be reasonable doubt. The experienced, able and astute defence lawyers do raise doubts and uncertainties in respect of evidence adduced against the accused by marshalling the evidence, but what is to be borne in mind is—whether testimony of the witnesses before the court is natural, truthful in substance or not. The accused is entitled to get benefit of only reasonable doubt i.e. the doubt which a rational thinking man would reasonably, honestly and conscientiously entertain and not the doubt of a vacillating mind that has no moral courage and prefers to take shelter itself in a vain and idle scepticism.**************

¶305

Bhagwan Jagannath Markad v. State of Maharashtra, (2016) 10 SCC 537

¶306

18. It is accepted principle of criminal jurisprudence that the burden of proof is always on the prosecution and the accused is presumed to be innocent unless proved guilty. The prosecution has to prove its case beyond reasonable doubt and the accused is entitled to the benefit of the reasonable doubt. The reasonable doubt is one which occurs to a prudent and reasonable man. Section 3 of the Evidence Act refers to two conditions—( i ) when a

¶307

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person feels absolutely certain of a fact—“believes it to exist”, and ( ii ) when he is not absolutely certain and thinks it so extremely probable that a prudent man would, under the circumstances, act on the assumption of its existence. The doubt which the law contemplates is not of a confused mind but of prudent man who is assumed to possess the capacity to “separate the chaff from the grain”. The degree of proof need not reach certainty but must carry a high degree of probability [ Vijayee Singh v. State of U.P. , (1990) 3 SCC 190, pp. 206-09 & 217-18, paras 18, 28-30 : 1990 SCC (Cri) 378] .

¶309

20. Exaggerated to the rule of benefit of doubt can result in miscarriage of justice. Letting the guilty escape is not doing justice. A Judge presides over the trial not only to ensure that no innocent is punished but also to see that guilty does not escape. [ Gangadhar Behera case , (2002) 8 SCC 381, p. 394, para 17]

¶310

This Court having heard the parties in detail, perused the material on record meticulously in the light of the rival contentions of the parties.

¶311

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

¶312

(i) Whether the material evidence placed on record on behalf of the prosecution would be sufficient enough to maintain the order

¶313

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of conviction of the appellants for the offence punishable under Sections 120B and 420 of the Indian Penal Code?

¶315

(ii) Whether the appellants make out a case that the impugned judgment of conviction and order of sentence is suffering from legal infirmity and perversity and thus calls for interference?

¶316

(iii) Whether the sentence needs modification?

¶317

(iv) What Order?

¶318

REGARDING POINT Nos.1 AND 2: In the case on hand, material evidence on record for re-appreciation are as under:

¶319

(i) P.W.1 is the complainant. He deposed about conducting regular inspection in the Canara Bank, Basavanagudi Branch. When such inspection was conducted, Inspector of the team noticed lot of irregularities in the said Branch which made him to hold a detailed enquiry through internal officers and report came to be filed.

¶320

Report revealed that accused No.1 violated the banking norms in permitting over drawing and permitting additional loan to the family members of

¶321

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accused No.3 sanctioning DPN and SDP LOANS despite the fact that the accounts of the appellants were not in order. Report also reveal that because of such irregularities committed by the accused No.1 Bank was put to loss to the tune of Rs.46,85,000/-.

¶323

In his cross-examination he has answered that accused No.1 permitted encashment of OCC limits to the extent of Rs.14,00,000/- despite repeated over drawings and non submission of prompt stock statement.

¶324

He has further answered that loan was secured only in part by way of immovable property. He admits that complaint came to be filed based on the investigation report and before filing such complaint accused No.1 was consulted by him by confronting the allegations found in the report and obtained the explanation in writing from accused No.1.

¶325

He further admits that the violations made by accused No.1 were against the circulars issued from time to time and it was also against the guidelines book called ‘Advances Manual’.

¶326

He admits that M/s Taranga Commercials of India had no current account in the bank and it was open for the first time in 2001 or 2002 vide Ex.D.1 bearing current account No.1993. He has answered

¶327

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that non-performing assets will not be allowed to transact the account until the account is regularized.

¶329

He has also answered that in respect of M/s Sandeep Traders he secured the documents from Canara Bank, Kalidasa Layout Branch.

¶330

(ii) The sanctioning authority of accused No.1 is P.W.2 and for the present purpose of the appeal his evidence is not much consequence as accused No.1 is no more and his appeal is abated.

¶331

(iii) Sri T.N.Bhat is examined on behalf of the prosecution as P.W.3. He deposed about working as Senior Manager in Canara Bank, Basavanagudi Branch and in August 2002 Basavanagudi branch was upgraded as very large bank. He has specifically deposed that the recommendations made by accused No.1 were beyond his powers. He further deposed about inspecting the premises of M/s Taranga Commercials of India with accused No.1 and C.W.3. But he did not visit the office of M/s Taranga Commercials of India.

¶332

He deposed about accused No.3 offering his property as collateral security and accused No.1 was very much aware of the credit worthiness of accused Nos.2 and 3. He also deposed that there was no substantial stocks to cover the advances or liability of accused Nos.2 and 3. He also deposed about the house property at Shankarapuram owned

¶333

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by accused No.3 had been offered as collateral security for loan account of M/s N.G.subbaraya Setty and Sons and M/s Taranga Commercials of India.

¶335

In his cross-examination, he admits that he had made pre-sanction visit and scrutinized the loan proposal papers and he made suitable recommendations. He has specifically answered that before the recommendation to sanction, he was not aware of M/s Taranga Commercials of India was already enjoying the limits of OCC in the bank. He reported about not being satisfied about the credit worthyness to his higher authorities.

¶336

He specifically answered that security which was offered was valued at Rs.35,00,000/-. He admitted that OCC up to Rs.25,00,000/- no ratification from higher authority is needed by the Bank Manager. But as per the circular No.149/99 dated 18.06.1999, credit limit was up to Rs.10,00,000/and the Branches need not insist for financial statement.

¶337

He admitted that he had reported the higher authority that there was no substantial stock to cover the advances and liability by accused Nos.2 and 3. He admits that his reports are not made as part of charge sheet papers.

¶338

He also admits that the Branch Manager is ultimately responsible for monitoring the loan

¶339

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transactions of accused Nos.2 and 3. He also admits that the Circle Office was aware of over drawn position of accounts of accused Nos.2 and 3 and Circle Office wrote the letter to regularize the accounts.

¶341

He admits that pendency of suit filed by the Bank before the Debt Recovery Tribunal in O.A. No.440/2002 in respect of outstanding amounts in the accounts of accused Nos.2 & 3.

¶342

He admits that M/s Taranga Commercials of India initially maintained a current account in 1993/96 and later on, it was converted into OCC account. He also answered that the stock books of accused No.2 were not made available to the Bank for appraisal of his request and in that regard, he had sent a notice to accused No.2 directing him to produce the stock book and stock statement.

¶343

(iv) Another Officer of Canara Bank, Basavanagudi Branch by name Sri K.S.Rao is examined as P.W.4. He deposed about accused No.3 approaching the bank seeking loan of working capital limit of Rs.7,00,000/- and work in progress and finished goods were offered as security.

¶344

He further answered that there was term loan for the accused No.2 in a sum of Rs.3,00,000/-. He having visited the factory premises and also the house of borrower and had seen the collateral

¶345

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security and then made necessary recommendations after inspection.

¶347

He has further deposed that accused No.2 had OD account and same was operated over and about the limit.

¶348

In his deposition, he stated that he discussed the said issue with accused No.1 who in turn told him that he had sought for necessary permission from the Circle Office with regard to over drawing of account by accused No.2.

¶349

He has also answered that common collateral security offered was valued at Rs.35,00,000/-.

¶350

In the cross-examination, he admits that collateral security offered was covering the transactions of accused No.2 and accused No.3 and his role was only to process the application and up necessary note.

¶351

He further answered that in the office of M/s Taranga Commercials of India, he had recorded that there was overdrawing of the account and monthly periodical review would be submitted to the Circle Office.

¶352

(v)Yet another Officer of the Canara Bank Sri H.P.Bhat is examined as P.W.5. He deposed of interviewing of accused No.2 and putting up office note as per Ex.P.4 which is the loan application of M/s Taranga Commercials of India. He further deposed stock in

¶353

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trade was the primary security for the working capital loan and house property of accused No.3 was taken as collateral security. The loan sanctioned to the tune of Rs.8,00,000/- was supposed to be used exclusively for trading purpose.

¶355

He further deposed about current account maintained by accused No.2 bearing No.1993 and accused No.2 had approached the bank seeking enhancement of loan in a sum of Rs.10,00,000/-. As on 29.04.2000, the liability of OD account of M/s Taranga Commercials of India was to the tune of Rs.8,70,343/- which was beyond the limit of Rs.8,00,000/-. He also deposed that on 03.05.2000, accused No.1 enhanced the limit up to Rs.10,00,000/- and the said amount was required to be utilized exclusively for trading purpose.

¶356

However, in the cross-examination, he admits that whatever accused No.1 had done till that date was well within his limits.

¶357

(vi) Sri U.R.G.Bhat- Divisional Manager, Circle Office, Canara Bank, is the next witness for prosecution who has been examined as P.W.6.

¶358

He has deposed in his evidence that if the instrument is more than Rs.10,000/- but the Branch has the sanctioning power, Branch Head has to send form F-637 to the Regional Office. If the value of the cheque discounted is beyond the sanctioning power,

¶359

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necessarily ratification needs to be sought for from the Regional Office along with a note. He further deposed that in Basavanagudi Branch, in respect of accounts of accused Nos.2 and 3, numerous cheques were discounted which remained unpaid and therefore liability mounted up. He also deposed that in all such cheque discount transactions, accused No.1 was the Senior Manager incharge of the Branch. He has further deposed that though the cheques which were discounted were well within the power of accused No.1, deliberately accused No.1 failed to furnish F-637 nor any ratification note was sent to the Controlling Office. He further deposed that in respect of high value cheques like Ex.P.6(a-13) and Ex.P.6(e), accused No.1 was bound to obtain the prior permission from the Controlling Office, but he failed to do so and as such, outstanding in the account of accused Nos.2 and 3 got mounted up.

¶361

In his cross-examination, he admits that accused No.1 had the competence to discount the cheques, but he stated that it should be after reporting to the Regional Office by sending F-637 which will have to be signed by the Branch Manager.

¶362

In his re-examination, he has answered that if accused No.1 had exceeded in his delegated power to discount the cheque, he had to report to the Controlling Office and get it ratified.

¶363

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(vii) P.W.7 is formal evidence which will be of not much relevance for discussion.

¶365

(viii) Likewise, P.W.8 is a stamp vendor. He has turned partly hostile to the case of the prosecution.

¶366

(ix) P.W.9 is one M.N.Ram Mohan who runs a stationary shop who deposed that he used to lend hand loan to accused No.3 and accused No.3 used to repay the money in cash and some time by cheques.

¶367

(x)In his cross-examination, he admits that accused Nos.2 and 3 were doing Agarabathi business and accused No.3 was taking loan for himself and for business purpose and he had not maintained any register for having lent the loan.

¶368

(xi) Smt.Radhamma, a retired clerk in High Court is examined as P.W.10. She was lending small amounts to accused Nos.2 and 3 which were being repaid by them either in cash or by cheques.

¶369

In her cross-examination admits that P.W.2 was a business man and loan was taking for business.

¶370

(xii) Sri S.G.Sanath Kumar-P.W.11 deposed that accused Nos.2 and 3 used to borrow the money for their Agarabathi business and they used to pay interest at 18% and accused No.3 used to give post dated cheques towards repayment.

¶371

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(xiii) Sri J.Janardhan, is the Manager at Uma Theatre. He has been examined as P.W.12. He also deposed about accused Nos.2 and 3 carrying on Agarabathi business and he had lent money for the said business and he issued cheques in the names of accused Nos.2 and 3.

¶373

(xiv) Sri N.S.Nagendra Gupat, is examined as P.W.13 who is the relative of accused Nos.2 and 3. He also deposed that he had lent money to accused No.3 for Agarabathi business and accused No.3 had issued few cheques towards repayment of loan in the name of the Firm. He did not support the case of the prosecution and turned partly hostile.

¶374

(xv) Senior Manager, Zonal Inspectorate, Canara Bank-M.Nagaraju, is examined as P.W.14. His evidence is of sufficient significance as he was deputed from the Controlling Office to inspect Basavanagudi Branch and while inspecting the said Branch he has noticed irregularities that has been committed by the accused No.1 in the accounts of M/s Subbaraya Setty and M/s Taranga Commercials of India and filed the reports vide Exs.P.58, 59 and 60. In those reports, he has specifically noted that on 15.01.2001 OD facility application was submitted by M/s Taranga Commercials of India in a sum of

¶375

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Rs.8,00,000/- whereas margin amount which was brought in is only 25%. In the appraisal memorandum, it has been noted that there was a current account opened in the year 1996. However, bank records did not show any current account being opened in the said Branch in the year 1996 in the name of M/s Taranga Commercials of India.

¶377

No preliminary inspection has been conducted by the loan department before sanctioning the loan to the existing unit and bank had to collect the previous year balance sheet and existing units which is a pre requisite for sanction of loan. He also noticed that on 26.04.2000 request letter sent by accused Nos.2 and 3 to enhance the OD facility from Rs.8,00,000/to Rs.10,00,000/- and accused No.1 enhanced the same on 03.05.2000 even though accounts were not satisfactory.

¶378

It is also noticed by him that after such facility has been granted, majority of the withdrawals were in the individual names of the parties and same should not have been allowed by the Bank.

¶379

It is also noticed by him that limit was up to 10.01.2001, but withdrawals were permitted even after 10.01.2001 that too in the absence of request from the account holder. Before and after sanctioning of the facilities, accused No.1 failed to furnish the necessary records to the Regional Office or Controlling Office. Sanctioning of the over

¶380

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drawing facility to father and son who are staying in the same house jointly was against the norms of the Bank.

¶382

He further noticed that as on 08.01.2001, liability in the OCC account of M/s Subbaraya Setty was to the tune of Rs.13,47,042/- as against the sanctioning limit of Rs.7,00,000/- which is almost double the sanctioned limit and which should have been allowed to exceed even by exercising the emergency power delegated to accused No.1 by the Bank.

¶383

He further noticed that on 23.08.2000, a sum of Rs.26,038/- was transferred from OCC account to M/s Subbaraya Setty to the DPN account of accused No.3 which is nothing but diversion of the funds resulting in illegality.

¶384

He also deposed about not having instructed Andhara Bank to release the bills without payment to M/s Sadguru Enterprises which is again a case of illegality. He further deposed that accused No.3 revealed that he used to discount the demand drafts received from his buyers through the current account No.2572 in the name of M/s Sandeep Traders which has again resulted in illegality.

¶385

This witness was cross-examined in detail by the defence wherein he has stated that apart from him, Ramachandra Rao and Anantha padmanabha were

¶386

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the members of inspection team. He admits that a document wherein it is shown that M/s Taranga Commercials of India had a current account in 1996 which is marked as Ex.D.1. He admits that he verified the delegation power book before furnishing the reports at Exs.P.58, 59 and 60.

¶388

He further admits that no action has been taken by Circle Office against other officials of Canara Bank, Basavanagudi Branch. He has answered that there is a circular in the Branch to the effect that the margin money should be at 30% and not 25%.

¶389

He further clarified that only in respect of tiny industry, margin money is 25%. He admits that OD facility to M/s Taranga Commercials of India was recommended by Officer-H.P.Bhat (P.W.5). He admits that DPN loan of Rs.3,00,000/- and OD facility to M/s Subbaraya Setty and Sons the loan applications were processed by the Senior ManageerSri T.N.Bhat (P.W.3).

¶390

He has admitted the suggestion that M/s Sadguru Traders is connected with M/s Subbaraya Setty but there is no document to establish the same. He admits the equitable mortgage created by accused No.3 furnishing his house as security. He further admits that OD facilities was sanctioned at the

¶391

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inception based on the financial statement in the beginning accused Nos.2 and 3.

¶393

He also admits that inspections were conducted in the absence of accused No.1. He further admits that debts incurred by accused Nos.2 and 3 were covered by security of landed property and therefore, they were recoverable debts.

¶394

(xvi) Next witness to the prosecution is N.V. Narayana Rao, Senior Manager of Canara Bank, Basavanagudi Branch who is examined as P.W.15. He deposed about sanctioning of loan to accused Nos.2 and 3 against the sanctioned limit which was not under the powers of accused No.1. He further deposed that since accused Nos.2 and 3 were different entities there was no bar to sanction the loan independently to father and son. He further deposed that Senior Manager can permit temporarily to withdraw to the extent of 25% of the sanctioning limit, but, if the withdrawal is more than 25%, necessary ratification must be obtained from the higher authorities by filing F-637. He has further deposed that in many cases accused No.1 did not obtain such ratification.

¶395

(xvii) P.W.16 is T.Subbalakshmi who is the neighbour of accused No.3 who deposed about Agarabathi business being carried on by accused No.3. Her evidence is formal in nature.

¶396

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(xviii) P.W.17 is the Investigation Officer who deposed about registering the case, collection of material documents and then obtaining the sanction order to prosecute the accused No.1 and filing charge sheet.

¶398

In his cross-examination he admits that he has not perused the internal audit report of Canara Bank, Basavanagudi Branch or Reserve Bank of India audit report. He has answered that on the basis of account sheet and outstanding balance towards the loan amount, he has calculated and estimated the loss suffered by the bank to the tune of Rs.46,85,000/-.

¶399

He has further answered that Exs.P.6 and 7 are not certified, but same is not required as per the Banker’s Book Evidence Act. He admits that he did not ascertain about pendency of civil suit in respect of the accounts of accused Nos.2 and 3. He further admits that he did not record the statements of accused Nos.2 and 3 at the time of investigation. He has further answered that he collected pass sheet pertaining to M/s Sandeep Traders at the time of investigation. But he did not deem it fit to include the same in the charge sheet papers. He admits that he did not seize the cheques belonging to accused Nos.2 and 3 which were credited to M/s Sandeep Traders.

¶400

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¶401

He also admits that he did not get clarified about the stock relating to accused Nos.2 and 3 and not seized the stock register extract.

¶402

(xix) Proprietor of M/s Sandeep Traders viz., Sri D.S.Rangaiah is the last witness who has been examined on behalf of the prosecution as P.W.18. He deposed that he was working in Biking Food Products and Bunty Food Products Pvt. Ltd. He further deposed that accused No.3 wanted an agency of the biscuit factory and as such he was deputed to enquire and report financial position of accused No.3. After verifying necessary details he reported that financial health of accused No.3 is not good and consequently, the factory refused to give agency to him.

¶403

He further admits that his wife and cousin sister became partners of M/s Subbaraya Setty and they were not working partners and were in the Firm only as sleeping partners to receive the profit.

¶404

He admits that M/s Subbaraya Setty had the Trade Mark by name ‘E Nadu’. He also deposed that he was appointed as an agent to M/s Subbaraya Setty for Tamil Nadu and he was employed as full time employee.

¶405

He has further deposed that it is accused Nos.2 and 3 who were dealing with banking aspects of the firm and bank loan raised by them were used for their personal purposes.

¶406

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¶407

In his cross-examination he admits that in the year 2000 he was doing the business in the name of M/s Sandeep Traders and had an account in Canara Bank, Kalidasa Layout Branch. He admits that he was signing as Manager of M/s Subbaraya Setty at the request of accused No.3. He further admits that on and from 17.11.2001 he seized to be an employee of M/s Subbaraya Setty he has been removed from the said firm.

¶408

He admits that Soujanya Agency belonging to K. Kasi Annapoorna who is his aunt’s daughter took agency of M/s Subbaraya Setty. He further admits that as per the oral instructions of accused No.3, Kerala, Nepal, Bhutan were added as authorized agencies. He admits the letters addressed to him by M/s Soujanya Agency which were marked as Exs.D.3 & 4. He admits the filing of private complaint in P.C.No.252/2002 by accused No.3. He admits that 10% of the cheques issued by accused No.3 were issued from his house and accused No.3 told him that he had taken Rs.7,00,000/- as loan.

¶409

On re-appreciation of the material evidence on record, in the light of the appeal grounds and the arguments that has been put forth on behalf of the appellants, Sri S.P.Kulkarni, learned Senior Advocate,

¶410

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¶411

keeping in mind the principles of law enunciated in the decisions relied on by the appellants, it is crystal clear that accused Nos.2 and 3 had accounts is Canara Bank, Basavanagudi Branch.

¶412

Though with regard to the current account possessed by Taranga was in dispute as per Exs.P.58, 59 and 60 and oral testimony of P.W.14, in view of Ex.D.1, current account bearing No.1993 which was in existence from the year 1996 is not in dispute. Inspection report marked at Exs.P.58, 59 and 60 is the basis for launching the criminal prosecution against accused Nos.1 to 3. There is no dispute that accused No.1 was the Manager of Canara Bank, Basavanagudi Branch at the relevant point of time.

¶413

Accused Nos.2 and 3 indulging in the business activities in manufacturing and dealing with Agarabathi and other allied business activities is established by placing necessary evidence on record. There were two separate accounts held by accused Nos.2 and 3. Needless to emphasize that appellant No.1 is the son of appellant No.2.

¶414

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¶415

There was collateral security of the house property belonging to accused No.3 in respect of both the accounts.

¶416

Material on record would establish that the collateral security was worth Rs.35,00,000/- which would have covered the outstanding loan amount. The fact remains that initially NGSS had the benefit of OD facility to the extent of Rs.7,00,000/which was enhanced to Rs.8,00,000/- and then to Rs.10,00,000/-.

¶417

Material evidence on record also depict that when the limit was Rs.7,00,000/-, outstanding amount in the account of accused No.2 was to the tune of Rs.13,00,000/and odd which was almost double the limit.

¶418

The prosecution witnesses who are the officials of Canara Bank have specifically deposed before the Court that accused No.1 did not possess the power to extend the facility beyond the limit available to the Branch even in the emergency situations beyond Rs.10,00,000/-. Admittedly,

¶419

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¶420

accused No.1 has lent more than the limit without ratification by sending the necessary particulars in F-637.

¶421

In a matter of this nature, when the case of the prosecution predominantly hinges on the documentary evidence, oral testimony of the prosecution witnesses are not of much significance except to explain the discrepancy if any in the documentary evidence. Cross-examination of the prosecution witnesses as discussed supra did not make out any such serious discrepancy in the documentary evidence.

¶422

On the contrary, the material witnesses of the prosecution have withstood the searching and detailed cross-examination on behalf of the accused and answers elicited in such cross-examination as discussed supra would go to show that action attributable to accused No.1 in extending the facility beyond his limit could not be termed as a mere irregularity but it was a clear case of illegality.

¶423

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¶424

Material evidence also discloses that the purpose for which loan is sanctioned or facility is extended is not achieved by accused Nos.2 and 3 and there is diversion of funds. Cheque discounting facility was also not properly done by accused No.1 inasmuch as he did not send the bill drawn on Andhra Bank in respect of M/s Sadguru Enterprises remains unpaid to major extent insofar as Canara Bank, Basavanagudi Branch is concerned even after sale of goods. There is a clear deficiency in discharging the responsibility by accused No.1 in this regard.

¶425

Further, the amounts sanctioned by the Branch for the purpose of Trading has not been utilized for said purpose by accused Nos.2 and 3; but the payments were made to individuals. No doubt, among P.Ws.7 to 13, P.W.8 and P.W.13 have turned partly hostile.

¶426

The fact remains that to the extent they supported the case of the prosecution a clear case of siphoning of the

¶427

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¶428

funds from the loan accounts of accused Nos.2 and 3 to different individuals is established by prosecution.

¶429

Needless to emphasize that it was the duty of accused No.1 to ensure that the funds have been utilized by accused Nos.2 and 3 for their business/trading purposes and not for paying individual debts, that too through the accounts of accused Nos.2 and 3.

¶430

After the money is transferred to the accounts of accused Nos.2 and 3, and after they draw the money, if the individual persons like P.Ws.7 to 13 are paid out their dues, then accused No.1 could not have been held responsible. There again the utilization certificate of the loan amount need to be issued by accused Nos.2 and 3 and periodical inspections are to be conducted by accused No.1 and his sub staff not only with regard to stock statement which has been given as security but also with other conditions of sanction.

¶431

82

¶432

Why would accused No.1 show extra interest to the loan account of accused Nos.2 and 3 is a question that needs to be looked into especially in the light of the charges leveled against all the three accused including offence under Section 120B of the Indian Penal Code.

¶433

It is settled principles of law and requires no emphasis that expecting the positive evidence to be placed to establish the ingredients to attract the offence under Section 120B of the Indian Penal Code is impermissible, inasmuch as such positive evidence is seldom available in a given case. It is equally settled principles of law that office under Section 120B of the Indian Penal Code can be established by inferential deduction from the facts and circumstances placed on record.

¶434

Since accused No.1 is no more and his appeal came to be abated, it is all the more necessary for this Court to find out whether such inferential deduction is permissible in the present case.

¶435

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¶436

In that regard, admittedly, materials on record would establish that accused No.1 being the whole and sole of Canara Bank, Basavanagudi Branch, has shown extra interest at every stage, to accused Nos.2 and 3.

¶437

Firstly, Rs.7,00,000/limit was enhanced to Rs.8,00,000/- and as on the date of enhancing limit outstanding was more than Rs.8,00,000/-. Later, further accumulation took place in the loan account of accused Nos.2 and 3 and instead of demanding the clearance of loan amount from accused Nos.2 and 3, accused No.1 again enhanced the limit to Rs.10,00,000/-.

¶438

Secondly, even as on the date of enhancing the limit to Rs.10,00,000/-, outstanding amount from accused Nos.2 and 3 was to the tune of Rs.13,00,000/- and odd. Thus, by misusing the official position, in the guise of discretionary powers accused No.1 went on processing the request made by accused Nos.2 and 3 by practically throwing all norms to wind.

¶439

84

¶440

In the absence of any secret understanding between accused No.1 to 3 why would accused No.1 show such an interest in the accounts of accused Nos.2 and 3 and not intimating the same to the higher authorities of Canara Bank and said conduct of accused No.1 got revealed only when inspection was conducted by P.W.14 along with Ramachandra Rao and Anantapadmanabha is a significant factor while inferring the existence of conspiracy among accused persons.

¶441

No explanation whatsoever is forthcoming on record either by accused No.1 or by other accused persons in this regard.

¶442

Suggestions put to the material witnesses of the prosecution that it was well within the powers of accused No.1 having been denied by the prosecution witnesses, it was incumbent on the part of accused No.1 to spell out that all his deeds were well within the norms of the bank

¶443

85

¶444

at least when incriminatory circumstances were put to him while recording the accused statement.

¶445

Sri S.P.Kulkarni, learned Senior Advocate , no doubt contended that based on the judgments referred to supra that in the absence of bank placing necessary circular the accused cannot be found guilty.

¶446

However, facts and circumstances in the said case are different than the facts and circumstances in the case on hand. In the present case, sanctioning authority has clearly opined that the acts of accused No.1 was not mere irregularity but it is illegality.

¶447

To record such a finding, overwhelming evidence is available on record in the form of inspection report and other material documents referred to supra collected and placed on record by the Investigation Officer. Practically every transaction of accused Nos.2 and 3, there is violation and it should be therefore inferred that those violations are pursuant to the criminal conspiracy entered into among

¶448

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¶449

the accused Nos.1 to 3. Therefore, the findings recorded by the learned Special Judge that there is element of wrongful loss caused to the bank and wrongful gain caused to accused Nos.1 to 3 is based on logical reasons.

¶450

No doubt, a suggestion is put to the Investigation Officer that he has estimated the loss to the bank to the tune of Rs.46,85,000/-. But the civil suits filed between the bank and accused Nos.2 and 3 would sufficiently establish the actual liability of the accused Nos.2 and 3.

¶451

Sri S.P.Kulkarni, however contended that O.S. No.495/2008 filed by the appellant have been decreed in their favour. Sri P.Prasanna Kumar, advocate for respondent while addressing his reply arguments contended that said judgment in favour of the appellants has been reversed by the Hon’ble Apex Court.

¶452

Reversal of the judgment is not disputed. Therefore, prosecution is successful in establishing the element of

¶453

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¶454

wrongful loss to the bank and wrongful gain to the accused Nos.1 to 3.

¶455

When Section 120B of the IPC is alleged, what exactly was the share that accused No.1 derived by him by showing the extra favour to accused Nos.2 and 3 is again needs to be inferred and it cannot be proved with mathematical precision inasmuch as nobody would receive the illegal gratification with acknowledgment.

¶456

Therefore, it was for the accused Nos.1 to 3 to establish that all transactions of accused Nos.2 and 3 with Canara Bank, Basavanagudi Branch was well within the four corners of the banking operations and thereby, there was no scope for any criminal conspiracy at all.

¶457

With regard to the principles that would govern the proof of criminal conspiracy, this Court would gainfully places reliance on the principles of law enunciated in the judgment of the Hon’ble Apex Court in the case of Mohd.Khalid vs. State of West Bengal reported in

¶458

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¶459

(2002)7 SCC 334 . Relevant portion of the said judgment is culled out hereunder for ready reference:

¶460

25. In Kehar Singh v. State (Delhi Admn.) [(1988) 3 SCC 609 : 1988 SCC (Cri) 711 : AIR 1988 SC 1883] (AIR at p. 1954) this Court observed : (SCC pp. 73233, para 275)

¶461

“275. Generally, a conspiracy is hatched in secrecy and it may be difficult to adduce direct evidence of the same. The prosecution will often rely on evidence of acts of various parties to infer that they were done in reference to their common intention. The prosecution will also more often rely upon circumstantial evidence. The conspiracy can be undoubtedly proved by such evidence direct or circumstantial. But the court must enquire whether the two persons are independently pursuing the same end or they have come together to the pursuit of the unlawful object. The former does not render them conspirators, but the latter does. It is, however, essential that the offence of conspiracy required some kind of physical manifestation of agreement. The express agreement, however, need not be proved. Nor actual meeting of the two persons is necessary. Nor is it necessary to prove the actual words of communication. The

¶462

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¶463

evidence as to transmission of thoughts sharing the unlawful design may be sufficient.”

¶464

Conspiracy can be proved by circumstances and other materials. (See State of Bihar v. Paramhans Yadav [1986 Pat LJR 688 (HC)] .)

¶465

To establish a charge of conspiracy knowledge about indulgence in either an illegal act or a legal act by illegal means is necessary. In some cases, intent of unlawful use being made of the goods or services in question may be inferred from the knowledge itself. This apart, the prosecution has not to establish that a particular unlawful use was intended, so long as the goods or service in question could not be put to any lawful use. Finally, when the ultimate offence consists of a chain of actions, it would not be necessary for the prosecution to establish, to bring home the charge of conspiracy, that each of the conspirators had the knowledge of what the collaborator would do, so long as it is known that the collaborator would put the goods or service to an unlawful use. (See State of Maharashtra v. Som Nath Thapa [(1996) 4 SCC 659 : 1996 SCC (Cri) 820 : JT (1996) 4 SC 615] , SCC p. 668, para 24.)

¶466

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¶467

Applying the principles of law enunciated in the aforesaid judgment to the case on hand, material evidence places on record in enhancing limits for Over Draft unilaterally without ratification from the higher authorities nor reporting the same under F-637 by accused No.1, and accused Nos.2 and 3 having mis-utilized said Over Draft by allowing the individual persons to draw the money when said money was supposed to be utilized for trading/business purpose would be sufficient enough to prove the element of existence of criminal conspiracy among accused Nos.1 to 3.

¶468

Insofar as principles of law enunciated in the decisions which have been relied on by the appellants are concerned, in the case of Vesa Holdings , Their Lordships of the Hon’ble Apex Court were of the opinion that mere breach of contract would not per se amount to cheating. In the case of hand, there is no contract at all for breach and material on record would suggest that there was deviation from the existing norms of the bank in lending

¶469

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¶470

the amount to accused Nos.2 and 3 and therefore, said decision is of no avail for the appellant to seek for an order of acquittal.

¶471

In the case of Sujit Biswas , the Hon’ble Apex Court held that prosecution has to travel a long distance between something that ‘may be proved’ and something that ‘will be proved’ and ‘actual proof’. It is also enunciated in the said decision that suspicion how so strong, would not take seat of proof. In the case on hand, material evidence placed on record is sufficient enough to hold that it is not mere suspicion in the case of prosecution but actual proof is made available.

¶472

Again, in the case of Ismail Khan Shah , what are the ingredients required to be establish for attracting the offence under Section 420 IPC has been enunciated by the Hon’ble Apex Court. In the case on hand, in view of the foregoing discussion where the proceeds has been utilized by accused Nos.2 and 3 not only in the over draft account

¶473

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¶474

but also in the bill discounting account and admittedly, those amounts were not paid and therefore, there is a wrongful loss to the bank and corresponding wrongful gain to the appellants and accused No.1. Therefore, said decision is of no avail.

¶475

In the case of Rajeevan Aswathy , the Hon’ble Apex court considered the question of mere inference would not be sufficient from the material evidence on record and the prosecution has to place necessary material evidence on record to complete the offence under Section 120B and 420 IPC. In the case on hand, overwhelming evidence is placed on record to establish the ingredients to attract the offence under Section 120B and 420 IPC. Therefore, facts of the present case are different from the facts involved in the case of Rajeevan Aswathy and as such, same is not applicable.

¶476

Again in the case of A.Ramanuja the Court did consider the principles of law in the case of Rajeevan

¶477

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¶478

Aswathy and therefore, same ratio will be applicable to A.Ramanuja and same is not of any assistance to accept the case of the appellants.

¶479

In the case of Sherimon Hon’ble Apex Court was dealing with a fact that mere outstanding in the account would not ipso facto result in criminal offence. In the case on hand, in view of the foregoing discussion, it is not the mere outstanding that was complained of against accused persons, but existence of conspiracy and furtherance of such conspiracy, illegal acts committed by the appellants has been discussed at length by this Court and therefore, principles Sherimon is not of any assistance in accepting the contentions urged on behalf of the appellants.

¶480

In the case of N.R.Bhat , learned single Judge of this Court took into consideration about the role played by bank officers and adverse inference under Section 114(g) of the Indian Evidence Act was pressed into service. Facts

¶481

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¶482

of the present case are altogether different and therefore, said decision is not applicable to the case on hand.

¶483

In the case Kattemane Ganesha again this Court took into consideration what is the purpose of crossexamination and answers elicited in the cross-examination cannot be ignored while adjudging the case of the parties in toto . In the case on hand, answers elicited in the crossexamination is not only discussed by the learned Trial Judge in the impugned judgment but this Court also reappreciated the same and therefore, Kattemane Ganesha is of no avail in accepting the contentions of the appellants.

¶484

In the case of R.Shivakumar there was an admission in the cross-examination of the witness on behalf of the prosecution that guidelines were not followed. In the case on hand, no such material is available.

¶485

The principles of law enunciated in the case of Lalita Kumari cannot be disputed. But how same is applicable

¶486

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¶487

to the case on hand is not forthcoming and therefore, Lalita Kumari is of no avail in accepting the case of the appellants.

¶488

In the additional list of citations, the principles of law enunciated in the case of Raja Ram is sought to be pressed into service. The offence alleged in the said case is under Section 302 r/w 149 IPC and therefore, same is of no avail to the case on hand.

¶489

In the cases of Dandu Lakshmi Reddy, Mohammed Ilias, Anil Rai, Bijoy Singh, Pawan Kumar, Suresh Chowdhary, K.C.Narasegowda, Deepak Rajak and Kaushal Verma, principles of law enunciated is that if a particular accused has not even appealed against the impugned judgment, would he also get the benefit of modification of the conviction and sentence by appealing accused. In the case on hand, same is sought to be pressed into service taking note of death of appellant. It is pertinent to note that no case is

¶490

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¶491

adjudicated on merits insofar as accused No.1 is concerned before appellate forum and therefore, principles of law enunciated in those decisions are not of any avail to the appellants in seeking for modification.

¶492

In other words, mere death of appellant and offence alleged against accused No.1 having been not further adjudicated on account of his appeal being abated, will not improve the case of the appellants in independently appraising the material and therefore, this Court is of the considered opinion that none of the decisions that have been cited on behalf of the appellants would be of any avail in upsetting the finding of guilt of appellants for the offence punishable under Sections 120B and 420 of IPC.

¶493

In view of the foregoing discussion even after reappreciation of the material evidence on record this Court is of the considered opinion that prosecution is successful in establishing necessary ingredients to attract the offence punishable under Sections 420 and 120B of the Indian

¶494

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¶495

Penal Code for which present appellants have been convicted.

¶496

Accordingly, point Nos.1 and 2 are answered in the affirmative and negative , respectively.

¶497

REGARDING POINT No.3: Appellants have been convicted for the aforesaid offences and have been ordered to undergo imprisonment as stated supra. Taking note of the fact that in respect of civil liability, the bank has already filed necessary civil proceedings and it is being recovered and accused No.1 having died and appeal against him came to be dismissed as abated, further taking note of the fact that appellant No.2 is aged about 74 years and appellant No.1 is aged 50 years and they are first time offenders and there is no minimum imprisonment period prescribed for the offence punishable under Sections 120B and 420 of the Indian Penal Code, the simple imprisonment ordered by the learned Trial Judge for the offences punishable under Sections 120B and 420 of the Indian Penal Code, if set-aside by enhancing fine

¶498

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¶499

amount in a sum of Rs.4,50,000/- (plus Rs.25,000/- each for offence under Sections 120B and 420 IPC), in all Rs.5,00,000/-) would meet the ends of justice. Accordingly, point No.3 is answered partly in the affirmative.

¶500

REGARDING POINT No.4: In view of the finding of this Court on point Nos.1 to 3, the following:

¶501

ORDER

¶502

(i) Criminal Appeal is allowed in part .

¶503

(ii) While maintaining the conviction of the appellants for the offences punishable under Sections 120B and 420 of the Indian Penal Code, sentence ordered by the learned Special Judge is modified as under:

¶504

(a) Simple imprisonment of 3 years and 2 years ordered for the offences punishable under Sections 120B and 420 of IPC respectively is hereby setaside by enhancing the fine amount in

¶505

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¶506

a sum of Rs.4,50,000/(plus Rs.25,000/- each for the offences punishable under Sections 120B and 420 IPC, in all Rs.5,00,000/-) payable by each of the appellants.

¶507

(b) Enhanced fine amount is to be paid on or before 15^th March 2025 failing which appellants shall undergo simple imprisonment as ordered by the learned Special Judge in the impugned judgment.

¶508

(iii) Office is directed to return the Trial Court Records with copy of this Order forthwith, for issuing modified conviction warrant.

¶509

Sd/- (V. SRISHANANDA) JUDGE

¶510

kcm

N.S. Suhas v. the State of Karnataka

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N.S. Suhas v. the State of Karnataka

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