Sri R R Koushik v. the State

Karnataka HC4 Apr 2025CRL.A/363/2013

Case brief

AI extract

What is this about?

Conspiracy; Section 120B IPC; vicarious liability of authorized signatory and manager; conviction of firm versus its agents; presumption in criminal cases; circumstantial evidence for conspiracy; meeting of minds; CBI/ACB bank fraud; State Bank of India V.V. Puram Branch; term loan and cash credit limit; Butter Sponge Bakery and Food House; acquittal in criminal appeal; Section 374(2) CrPC; abatement on death of accused; Karnataka High Court 2025; H.P. Sandesh; Spl.C.C.No.65/2002.

What did the court decide?

Both appeals allowed; conviction and sentence under Section 120B IPC set aside; accused Nos.5 and 6 (the appellants) acquitted; any fine deposited to be released to them on proper identification; bail bonds of accused Nos.5 and 6 cancelled. ¶order

Sri R R Koushik Vs the State — Corruption | Karnataka HC (2025)

What the court decided

AI extract

Outcome

¶order

Issue for consideration

Whether the Trial Court committed an error in convicting accused Nos.5 and 6 invoking Section 120B IPC, and whether exercise of appellate jurisdiction is required. +1 more

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Court's answer

No vicarious liability can be fixed on accused Nos.5 and 6 (authorized signatory and Manager) when the firm (accused No.7) and the partners (accused Nos.2 to 4) were left unconvicted; convicting the signatory and Manager while acquitting the firm and partners is not sustainable in the eye of law.

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Ratio / Principle

In a criminal case, conviction cannot rest on presumption; the Trial Court's observation that the alleged arrangement was 'only a presumable secret', inferring extraneous consideration from absence of explanation, is not a valid basis to convict.

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Key takeaways

There is no evidence that accused Nos.5 and 6 played a predominant role in obtaining the amount beyond signing the loan documents, and no material on record of conspiracy between them and accused No.1; the prosecution witnesses spoke only against the Bank Manager for violating bank norms.ratio¶27
Point No.(1) is answered in the affirmative: the Trial Court committed an error in convicting accused Nos.5 and 6 under Section 120B IPC.ratio¶27
As settled law (as discussed in the judgments referred by both sides), a charge of conspiracy must be proved by circumstantial evidence; direct evidence of conspiracy cannot be expected.

Detailed headnote1 paragraphs

Criminal Appeals Nos. 363 & 416 of 2013 (High Court of Karnataka, Bengaluru; decided 04-04-2025; H.P. Sandesh J.). Accused No.5 (authorized signatory) and Accused No.6 (Manager) of M/s. Butter Sponge Bakery and Food House appealed their convictions under S.120B IPC (three years' imprisonment and Rs.5,000/- fine each) imposed by the XLVI Addl. City Civil & Sessions Judge/Special Judge (CBI), Bengaluru, in Spl.C.C.No.65/2002 (judgment dt.13.02.2013), arising from a CBI case alleging conspiracy (1996-1998) with the Bank Manager of SBI, V.V. Puram Branch, in sanctioning/release of a 15-lakh term loan and Rs.5 lakh working capital. The Trial Court had acquitted all accused under Ss.420/468/471/477A IPC, acquitted the firm (Accused No.7) and partners (Nos.2-4), convicted Accused No.1 (Bank Manager; since deceased, case abated) under S.120B IPC and Ss.13(1)(d)/13(2) PC Act, and convicted the appellants under S.120B IPC on the basis that the excess release was 'presumably secret' and hence inferred extraneous consideration. Holding: (i) no vicarious liability on the signatory/manager where the firm and partners stand unconvicted; (ii) conviction cannot rest on presumption; (iii) no evidence of meeting of minds or conspiracy by Accused Nos.5 & 6 beyond signing loan documents - conspiracy requires circumstantial evidence, direct evidence not being expected. Result: appeals allowed; conviction and sentence set aside; Accused Nos.5 & 6 acquitted; fine, if deposited, refundable; bail bonds cancelled.

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NC: 2025:KHC:14493 CRL.A No. 363 of 2013 C/W CRL.A No. 416 of 2013

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 4^TH DAY OF APRIL, 2025

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BEFORE

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THE HON'BLE MR JUSTICE H.P.SANDESH

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CRIMINAL APPEAL NO.363 OF 2013 C/W CRIMINAL APPEAL NO.416 OF 2013

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IN CRL.A No.363/2013:

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BETWEEN:

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SRI. R.R. KOUSHIK, S/O LATE H.T.RAMASWAMY IYENGAR, AGED ABOUT 63 YEARS, MANAGER, M/S. BUTTER SPONGE BAKERY AND FOOD HOUSE, NO.35, VANIVILAS ROAD, BASAVANAGUDI, BENGALURU-560 004. R/O NO.8, SRINILAYA, SIRUR PARK ROAD, MALLESWARAM, BENGALURU - 560 003.

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Digitally signed by DEVIKA M Location: HIGH COURT OF KARNATAKA

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…APPELLANT

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(BY SRI. SANDESH J. CHOUTA, SENIOR COUNSEL FOR SRI. SAMPREET AND SRI. SANYA MALLI, ADVOCATES)

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AND:

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THE STATE BY CBI/ACB, BENGALURU, REPRESENTED BY STATE PUBLIC PROSECUTOR, HIGH COURT BUILDING, BENGALURU.

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…RESPONDENT

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(BY SRI. P. PRASANNA KUMAR, ADVOCATE)

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THIS CRIMINAL APPEAL IS FILED UNDER SECTION 374(2) OF CR.P.C PRAYING TO SET ASIDE THE ORDER DATED

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13.02.2013 PASSED BY THE XLVI ADDL. CITY CIVIL AND SESSIONS JUDGE AND SPL. JUDGE FOR CBI CASES, BENGALURU CITY IN SPL.C.C.NO.65/2002 - CONVICTING THE APPELLANT/ACCUSED FOR THE OFFENCE PUNISHABLE UNDER SECTION 120-B OF IPC.

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IN CRL.A NO.416/2013:

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BETWEEN:

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SRI. K.T.SRINIVAS, S/O LATE K.J.TIRUMALACHAR, AGED ABOUT 54 YEARS, THE AUTHORIZED SIGNATORY, M/S. BUTTER SPONGE BAKERY AND FOOD HOUSE, NO.35, VANIVILAS ROAD, BASAVANAGUDI BANGALORE - 560 004

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AND ALSO R/AT NO.56, GOVINDAPPA ROAD, BASAVANAGUDI, BENGALURU-560 004.

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...APPELLANT

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(BY SRI. RAMACHANDRA G. BHAT, ADVOCATE)

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AND:

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THE INSPECTOR OF POLICE, FOR C.B.I AND ACB, B.A.I.L. ROAD, GANGANAGARA, BENGALURU-560 032.

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...RESPONDENT

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(BY SRI. P. PRASANNA KUMAR, ADVOCATE)

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THIS CRIMINAL APPEAL IS FILED UNDER SECTION 374(2) OF CR.P.C PRAYING TO SET ASIDE THE JUDGMENT AND ORDER DATED 13.02.2013 PASSED BY THE XLVI ADDL. CITY CIVIL AND SESSIONS JUDGE AND SPL. JUDGE FOR CBI CASES, BENGALURU CITY IN SPL.C.C.NO.65/2002 - CONVICTING THE APPELLANT/ACCUSED FOR THE OFFENCE PUNISHABLE UNDER SECTION 120B OF IPC.

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THESE APPEALS COMING ON FOR FINAL ARGUMENTS THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE H.P.SANDESH

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ORAL JUDGMENT

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Heard the learned counsel for the appellants and the learned counsel for the respondent in Crl.A.No.363/2013 and 416/2013.

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Both the appeals are filed by accused Nos.6 and 5, respectively against the judgment of conviction and sentence dated 13.02.2013 passed in Special C.C.No.65/2002 sentencing both of them for three years imprisonment with fine of Rs.5,000/- for the offence punishable under Section 120B of IPC.

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The factual matrix of the case of the prosecution before the Trial Court is that accused No.1 was working as a Bank Manager of State Bank of India, V.V.Puram Branch, Bengaluru and accused No.5 is the authorized signatory on behalf of the firm i.e., accused No.7 and accused No.6 is the Manager of the very same firm. It is the charge against the accused persons in all that accused Nos.2 to 4 are the partners and accused Nos.5 and 6 are the respective husbands of accused Nos.2 and 3. It is the case of the

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prosecution that accused Nos.1 to 6 entered into a criminal conspiracy between 1996 to 1998 to cheat the State Bank of India, V.V. Puram Branch, Bengaluru, while sanctioning the

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term loan and credit facilities to M/s.Butter Sponge Bakery and food House, whereby accused No.1 being the public servant committed criminal misconduct, by corrupt or illegal means or by abusing his official position as public servant or he while holding office as public servant without any public interest, obtained for himself or for any other person any valuable thing or pecuniary advantage. Accused No.1 while releasing the term loan of 15 lakhs and working capital of Rs.5 lakhs, without obtaining proper and adequate security, stock statements and without ensuring recovery of the cash

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credit released and without ensuring the end use of the public funds released from the cash credit account and further by forging the branch clearing general account voucher for the purpose of cheating the bank. He further used such forged document as genuine and further falsified the books of accounts of the bank. He allowed accused Nos.2 to 6 to withdraw the sanctioned loan amount instead of issuing the cheque to the supplier directly and thus all the accused have committed the offences punishable under Sections 120B read

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with Sections 420, 468, 471, 477A of IPC and Section 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 1988 (‘PC Act’ for short).

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The case was registered and the matter was investigated by the CBI and the CBI after investigation filed the charge sheet and the Trial Court taken the cognizance and the accused were secured before the Court and they did not admit the charges levelled against them and they claimed trial. Hence, the prosecution relied upon the evidence of P.W.1 to P.W.13 and got marked the documents at Exs.P.1 to 251. The defence also got marked the documents at Exs.D.1 to 20. The Trial Court having considered both oral and documentary evidence placed on record i.e., exhibit ‘P’ series and ‘D’ series and oral evidence of P.W.1 to P.W.13, comes to the conclusion that the prosecution failed to prove the case against the accused for the offences punishable under Sections 420, 468, 471 and 477A of IPC and convicted accused No.1, who is the Branch Manager of the bank for the offence punishable under Section 120B of IPC and Section 13(1)(d) and 13(2) of PC Act and convicted accused Nos.5 and 6 for the offence punishable under Section 120B of IPC.

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Being aggrieved by the said judgment of

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conviction and sentence, accused Nos.5 and 6 have filed these appeals before this Court.

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The main contention of the learned counsel for accused No.5 before this Court is that once the Trial Court acquitted the accused for the offences punishable under Sections 420, 468, 471 and 477A of IPC, ought not to have invoked Section 120B of IPC. The learned counsel contend that in order to invoke Section 120B of IPC, there is no any material before the Court to show that there was a conspiracy between accused Nos.5 and 6 with accused No.1. The accused No.5 is only an authorised signatory of the firm and he had signed the documents while availing the loan. Accused No.7 is the firm and the Trial Court comes to the conclusion that the firm has not committed any offence and when the firm has not committed any offence, there cannot be any conviction against accused Nos.5 and 6 and ultimate beneficiary is the firm. Accused No.6 is the Manager and accused Nos.2 to 4 are the partners. The learned counsel brought to the notice of this Court paragraph No.92 of the judgment of the Trial Court. The learned counsel contend that proper security was given to the bank and property was

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also brought for sale and the amount was secured by conducting an auction and the same was surplus and the same is evident from the evidence of the prosecution witnesses and the Trial Court made an observation to that effect also. The learned counsel contend that additional security was also given and brought to the notice of this Court paragraph Nos.119 of the judgment of the Trial Court and contend that the Trial Court though comes to the conclusion that there was no any material against other accused persons, but erroneously comes to the conclusion that there are material against accused Nos.5 and 6 along with accused No.1 and the very approach is erroneous. The learned counsel brought to the notice of this Court that P.W.12 admits in paragraph No.12 of his evidence regarding recovery of the entire amount in favour of the bank, wherein P.W.12 admitted that he had stated before the Investigating Officer that the parties were called upon to repay the outstanding dues to which they agreed and the AGM vide letter dated 23.02.2000 referred to the discussions, if they are with the firm and asked for one time settlement of the dues. As on 03.03.2008, the

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dues were cleared by the parties. On 16.10.2008, a letter to that effect came to be issued by the Deputy General Manager.

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The learned counsel referring this admission would contend that when the amount was already recovered, the question of conspiracy does not arise. The learned counsel contend that there are no material to constitute an offence of conspiracy. The conspiracy could be proved only by placing on record circumstantial evidence and no such circumstantial evidence is placed before the Court.

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The learned counsel in support of his arguments relied upon the judgment of the Apex Court in the case of BABU v. STATE OF KERALA reported in (2010) 9 SCC 189

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and relied upon paragraph Nos.22, 23 and 26 to 28. The learned counsel relying upon the said judgment would contend that in order to invoke Section 120B of IPC, there must be a circumstantial evidence and in the absence of any circumstantial evidence before the Court to prove the conspiracy, there cannot be any conviction.

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The learned counsel also relied upon the judgment of the Apex Court in the case of K.R. PURUSHOTHAMAN v.

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STATE OF KERALA reported in 2005 CRI.L.J. 4648 and brought to the notice of this Court paragraph Nos.14, 15 and 21 and contend that the suspicion cannot take the place of a

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legal proof and the prosecution would be required to prove each and every circumstance in the chain of circumstances so as to complete the chain. In the absence of any complete chain, there cannot be any conviction and also the Court has to take note of the conduct of the parties must be conscious and clear enough to infer their concurrence as to the common design and its execution.

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The learned counsel also relied upon the judgment of the Apex Court in the case of CENTRAL BUREAU OF

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INVESTIGATION, ACB, MUMBAI v. NARENDRA LAL JAIN

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AND OTHERS reported in (2014) 5 SCC 364 and brought to the notice of this Court paragraph No.3 onwards, wherein the Apex Court referring the judgment in the case of GIAN SINGH v. STATE OF PUNJAB reported in (2012) 10 SCC 303 comes to the conclusion that when there was no any offence against the society at large, Section 482 of Cr.P.C. could be invoked for quashing of the proceedings.

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The learned counsel for the appellant/accused No.6 in Crl.A.No.363/2013 would contend that the appellant was working as a Manager and he was taking care of the affairs of the firm along with accused No.5. In order to

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convict the appellant under Section 120B of IPC, there is no material and the very Bank Manager, who made the payment in favour of the Bank is no more and in order to prove the conspiracy, there must be a circumstantial evidence and the Court cannot expect any direct evidence to prove the conspiracy. The learned counsel contend that though P.W.1 to P.W.13 have been examined before the Court, none of the witnesses speaks about the conspiracy and though gives an evidence against accused No.1 that he had exceeded his limit in releasing the amount, that cannot be a ground to convict accused Nos.5 and 6 that they have played conspiracy in getting the amount. The learned counsel brought to the notice of this Court paragraph Nos.125 and 126 of the judgment of the Trial Court, wherein observation is made for convicting the accused persons i.e., accused Nos.5 and 6 only on assumptions and presumptions and the same is erroneous. In paragraph No.125, an observation is made that it is crystal clear that accused No.1 allowed Rs.5 lakhs as working capital and later on reversed it to bring the term loan well within the sanction limit of Rs.15 lakhs as on 31.3.1998. Thus, accused No.1 was clear in his mind that his act in allowing more than Rs.15 lakhs in accused No.7 account was without sanction and

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accused Nos.5 and 6, who are the authorized signatories and beneficiary of accused No.7 and in charge of the affairs of accused No.7 must have had agreed for such an arrangement.

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The learned counsel brought to the notice of this Court the discussion made in paragraph No.126, wherein an observation is made that what exactly was the agreement among accused No.1 and accused Nos.5 and 6 is difficult to unearth, as such arrangement is presumably secret. In the absence of any proper explanation either by accused No.1 or accused Nos.5 and 6 as to such arrangement, the only inference one can draw is that there was an extraneous consideration for accused No.1 to transgress his limit in allowing such a facility to accused No.7 of which accused Nos.5 and 6 are beneficiaries, against all accepted banking norms. The learned counsel brought to the notice of this Court that only these two observations are made in paragraph Nos.125 and 126 of the judgment of the Trial Court and having considered the material on record, erroneously comes to the conclusion that it is presumably a secret and there cannot be any presumption in criminal cases for convicting an accused person.

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The learned counsel in support of his arguments relied upon the judgment of the Apex Court passed in Criminal Appeal No.1571/2021 arising out of SLP (Crl.) No.5438/2020 dated 07.12.2021 and brought to the notice of this Court paragraph No.12, wherein it is held that it is fairly well settled, to prove the charge of conspiracy, within the ambit of Section 120B, it is necessary to establish that there was an agreement between the parties for doing an unlawful act. At the same time, it is to be noted that it is difficult to establish conspiracy by direct evidence at all, but

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at the same time, in the absence of any evidence to show meeting of minds between the conspirators for the intended object of committing an illegal act, it is not safe to hold a person guilty for the offences under Section 120B of IPC.

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The learned counsel also relied upon the judgment of the Apex Court in the case of RAM SHARAN CHATURVEDI v. STATE OF MADHYA PRADESH reported in (2022) 16 SCC 166 and brought to the notice of this Court paragraph No.31 of the judgment, wherein it is held that it is not necessary that there must a clear, categorical and express agreement between the accused. However, an implied agreement must manifest upon relying on principles

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established in the cases of circumstantial evidence. The Apex

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Court also discussed the majority opinion of RAM NARAYAN

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POPLI v. CBI reported in (2003) 3 SCC 641, wherein in paragraph No.354 it is held that, for the offence of conspiracy some kind of physical manifestation of agreement is required

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to be established. The express agreement need not be proved. The evidence as to the transmission of thoughts sharing the unlawful act is not sufficient. The Apex Court in paragraph No.32 discussed in detail that there is no physical manifestation of such a concurrence extractable from surrounding circumstances, declarations, or the conduct of the appellant. The evidence is shorn of even a passive acknowledgment of conspiracy of the appellant with the accused, let alone heralding a clear and conscientious participation of the appellant in the conspiracy and also the Court has cautioned against replacing mere suspicion with the legal requirement of proof of agreement.

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The learned counsel referring this judgment would contend that in order to invoke Section 120B of IPC, there must be a circumstantial evidence. Though it is not possible to place on record the direct evidence, the principles laid

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down in the judgments are aptly applicable to the case on hand.

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Per contra, learned counsel for the respondentCBI would vehemently contend that Trial Court having taken note of material on record, though acquitted the accused persons for other offences and taking note of pecuniary advantage taken by accused Nos.5 and 6, who being the Authorized Signatory of the firm as well as Manager of the firm and they were in charge of affairs of the firm and knowing fully well that without giving any security for the loan amount, got the benefit at the instance of accused No.1. Hence, the Trial Court comes to the conclusion that pecuniary advantage is taken by accused Nos.5 and 6. Therefore, the Trial Court invoked Section 12B IPC. Learned counsel also brought to notice of this Court the evidence led by the prosecution with regard to pecuniary advantage taken by the firm and also brought to notice of this Court Ex.P246-Debit voucher for having availed benefit of Rs.54,49,970/- and cash credit is only upto Rs.15,00,000/-, but paid more and evidence of P.W.11 is very clear that accused No.1 took the file along with him to Bijapur when he was transferred and

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witness also categorically says that charge was not given in favour of this firm.

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Learned counsel would vehemently contend that additional security was taken by P.W.11 after transfer of accused No.1 to Bijapur and not earlier to that and even there was also no ratification by Higher Authorities. When pecuniary advantages were taken by accused Nos.5 and 6, the very contention of learned counsel for the appellant that there is no evidence with regard to the conspiracy is concerned cannot be accepted. Learned counsel would vehemently contend that Court cannot except direct evidence with regard to the conspiracy and the very conduct of accused Nos.5 and 6 which leads to availing of amount more than the limit which accused No.1 was having itself clearly shows the circumstances that they have got the benefit of pecuniary advantages.

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Learned counsel for the respondent in support of his argument, he relied upon the judgment in MIR NAGVI

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ASKARI VS. CENTRAL BUREAU OF INVESTIGATION

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reported in (2009) 15 SCC 643 and brought to notice of this Court paragraph No.60 to 62 and 146 wherein observation is

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made that condition precedent for holding the accused persons to be guilty of a charge of criminal conspiracy must, therefore, be considered on the anvil of the fact which must be established by the prosecution, viz., meeting of minds to two or more persons for doing or causing to be done an illegal act or an act by illegal means. 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.

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The counsel also relied upon the judgment in SUDHIR SHANTILAL MEHTA VS. CENTRAL BUREAU OF

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INVESTIGATION reported in (2009) 8 SCC 1 and brought

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to notice of this Court paragraph No.58, wherein an observation is made that having regard to the fact that Reserve Bank of India exercises control over the banking companies, we are of the opinion that the said circular letter

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was binding on the banking companies. The officials of UCO Bank were, therefore, bound by the said circular letter.

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The counsel also relied upon the judgment in R.

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VENKATKRISHNAN VS. CENTRAL BUREAU OF

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INVESTIGATION reported in (2009) 11 SCC 737 and brought to notice of this Court paragraph Nos.71 to 83, wherein discussion was made with regard to applying the principles of law to the facts of the present case, we may take note of certain broad features. Indisputably, maintaining of cash reserve ratio is a statutory requirement. All the scheduled banks are bound to carry on the statutory instructions issued by Reserve Bank of India in this behalf. It is for the maintenance of this cash reserve ratio that UCO Bank used to participate in call money transactions in the money market, decision in respect whereof used to be taken at its head officer at Kolkata. Each one of them played a specific role in diversion of funds from NHB to the account of Harshad Mehta, all ostensibly under a fall money transaction. Thereby in our opinion facilitated Harshad Mehta to pecuniary advantage within the meaning of the Section.

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The counsel also relied upon the judgment in

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CENTRAL BUREAU OF INVESTIGATION VS. HARI SINGH

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RANKA AND OTHERS reported in (2019) 16 SCC 687 and

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brought to notice of this Court paragraph No.19, wherein it is observed that civil statement 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. Learned counsel referring these judgments would vehemently contend that Court cannot expect direct evidence and circumstances clearly disclose that accused No.1 at the instance of accused Nos.5 and 6 exceeded its limit in releasing the amount in favour of the firm and though accused Nos.5 and 6 are not the direct

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beneficiaries and firm is the beneficiary, they were in charge of the firm, but Trial Court has not committed an error in passing such an order and it does not require any interference.

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Having heard learned Senior counsel for the

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appellant and learned counsel for the respondent as well as principles laid down in the judgments referred (supra) by learned counsel for respective parties, the points that would arise for consideration of this Court are:

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(1) Whether the Trial Court committed an error in convicting accused Nos.5 and 6 invoking Section 120B IPC and whether it requires exercising of appellate jurisdiction?

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(2) What order?

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Point No.(1)

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Having heard learned Senior counsel for the appellant and learned counsel for the respondent, it is not in dispute that respondent-CBI invoked Sections 120B read with Section 420, 468, 471, 477A IPC and Section 13(2) read with Section 13(1)(e) of Prevention of Corruption Act against accused No.1, who being the public servant, he contravened

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the very scope and ambit of his limit and no doubt, the Trial Court convicted the accused No.1 and accused Nos.5 and 6, now accused No.1 is no more and the case against accused No.1 is abated.

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Now the material before this Court is with regard

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to accused Nos.5 and 6 is concerned. It is not in dispute that accused No.5 is authorized signatory of the firm and accused No.6 was Manager of the firm and accused Nos.2 to 4 are partners of the firm and accused No.7 is the firm to which loan was sanctioned. The accused No.1 is the Bank Manager. It is the main contention of the respondent-CBI that accused No.1 exceeded the limit violating the banking norms and extended the benefit more than what was the limit and also indulged in creation of the document. The Trial Court given the finding that there was no material to invoke Section 420, 468, 477 and 477A IPC i.e., there is no material to come to a conclusion that at the inception of the transaction, there was any intention to cheat the bank and also with regard to creation of document and utilizing of the created document for advancing the loan also, the Trial Court comes to the conclusion that there is no material. However, the Trial Court while convicting accused Nos.5 and 6 i.e., authorized

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signatory of the firm as well as Manager of the firm, comes to the conclusion that benefit was extended in favour of accused Nos.5 and 6. Learned Senior counsel for the appellant i.e., accused No.5 in Crl.A.No.416/2013 brought to notice of this Court discussion made in paragraph No.119, wherein the Trial Court comes to the conclusion that material available on record would clearly establish that accused No.1 did not adhere to the conditions as is found in Ex.P10, he did not take proper documentation at the time of disbursing the loan. The fact of P.W.11 subsequently obtaining additional documents and securing the loan is not in dispute and same is spoken to by P.W.1 in his cross-examination.

¶118

The Trial Court also discussed in paragraph Nos.120 that accused Nos.5 and 6, who are the appellants herein, who took active role in affairs of accused No.7-firm and they knew what was exactly the financial aspects of the firm. They being the beneficiary of the misdeeds of the accused No.1-firm, cannot now turn around and pled ignorance about it. The attempt made by them to plead so could only be termed as escapist attitude at the least and making such observation and also considering the judgment of MOHD. KHALID VS. STATE OF WEST BENGAL reported

¶119

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¶120

in 2002 SCC (CRL) 1734, extracted paragraph Nos.17 to 28 of the said judgment and taking note of the principles laid down in the judgment, discussed the same in paragraph Nos.122 to 124 and in paragraph No.125 comes to the conclusion with regard to the extent of limit the accused No.1 was having capacity to lend the money and what is benefit derived by the accused No.1 favouring accused No.7-firm is no doubt available on record with cogent and convincing evidence. In paragraph No.126 comes to the conclusion that what exactly was the agreement among accused No.1 and accused Nos.5 and 6 is difficult to unearth, as such arrangement is presumably secret. However, comes to a conclusion that in the absence of any proper explanation either by accused No.1 or accused Nos.5 and 6 as to such arrangement, the only inference one can draw is that there was an extraneous consideration for accused No.1 to transgress his limit in allowing such a facility to accused No.7 of which accused Nos.5 and 6 are beneficiaries, against all accepted banking norms.

¶121

Having taken note of reasoning given by the Trial Court in paragraph Nos.119 and 120 as well as paragraph Nos.125 and 126, no doubt, there pecuniary advantage was

¶122

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¶123

given to accused No.7, it is important to note that accused Nos.5 and 6 are the signatory of the firm and Manager and though they were in the helm of affairs of the firm, but ultimate beneficiary is accused No.7-Firm and Trial Court acquitted accused No.7-Firm, but fixed liability on accused Nos.5 and 6 and as rightly pointed by learned Senior counsel for the appellant that there cannot be any vicarious liability and unless Firm is convicted, question of convicting accused Nos.5 and 6 does not arise and ultimately, beneficiary is Firm and leaving the Firm and partners accused Nos.2 to 4 and convicting accused Nos.5 and 6 is not sustainable in the eye of law. It is important to note that while coming to such a conclusion also, that too in a criminal case, while convicting an accused persons, the Court cannot make an observation that it is an agreement which is only a presumable secret and on presumption, there cannot be any conviction in a criminal case and there must a circumstances to show that accused Nos.5 and 6 also aided accused No.1 in lending more money as against the capacity which he was having. No doubt, they are the signatories to the document of availing loan, apart from that, it is also evident from the records that already the amount which was due in favour of the bank was repaid and

¶124

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¶125

settlement was arrived between the bank and borrowers and same is also evident from the evidence of P.W.12, wherein in paragraph No.12 deposed that entire amount was cleared and no doubt, the civil settlement cannot be a ground to come to a conclusion that there was no criminal liability as contended by the learned counsel for the respondent and principles laid down in the judgments referred (supra) and also it is settled law that in a case of conspiracy, there must be circumstantial evidence before the Court and Court also cannot expect direct evidence as discussed in the judgments referred (supra) by the learned Senior counsel for the appellant and learned counsel for the respondent.

¶126

It is not in dispute that in the judgments referred by the learned counsel for the respondent that in a criminal conspiracy, cannot Court expect direct evidence and only circumstantial evidence can be taken note. In the case on hand, no doubt, the amount was released more than the limit what accused No.1 was having and now the case is abated against accused No.1 and he is no more and the case remains only with regard to accused Nos.5 and 6 and accused Nos.5 and 6 are authorized signatory and Manager of the Firm, who acted upon on behalf of the Firm.

¶127

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¶128

I have already pointed out that unless the Firm is

¶129

convicted and no reasons are assigned for even acquitting the firm also. When such being the case, there cannot be any vicarious liability fixed on accused Nos.5 and 6, in the absence of conviction against the Firm as well as the partners, who are also responsible for the act and also the circumstances with regard to role played by accused Nos.5 and 6 in getting pecuniary advantage also, nothing is spoken by any of the witnesses, except the evidence given by the prosecution witnesses as against the Bank Manager that he violated the norms of the bank. When such evidence is available on record against accused No.1, in the absence of any evidence that accused No.5 and 6 played a predominant role in getting the amount, except signing of document and no material is placed on record with regard to the conspiracy of accused Nos.5 and 6 along with accused No.1, when such being the case, I do not find any force in the contention of the learned counsel for the respondent that Trial Court rightly considered the material on record and observation made in paragraph Nos.125 and 126 by the learned Trial Judge that presumably secret cannot be a ground to convict the accused persons. Hence, I answer point No.(1) as affirmative, in coming to the conclusion that

¶130

NC: 2025:KHC:14493 CRL.A No. 363 of 2013 C/W CRL.A No. 416 of 2013

¶131

26 -

¶132

Trial Court committed an error in convicting accused Nos.5 and 6.

¶133

Point No.(2)

¶134

In view of the discussion made above, I pass the

¶135

following:

¶136

ORDER

¶137

(i) The appeals are allowed.

¶138

(ii) The impugned judgment of the Trial Court is set aside. Consequently, accused Nos.5 and 6 are acquitted. If any fine amount is deposited by accused Nos.5 and 6, who are the appellants herein, the same is ordered to be released in their favour on proper identification.

¶139

(iii) The bail bond executed by appellantsaccused Nos.5 and 6, hereby stands cancelled.

¶140

Sd/(H.P.SANDESH) JUDGE

¶141

MD,ST List No.: 1 Sl No.: 54

Sri R R Koushik v. the State

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Sri R R Koushik v. the State

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