C Surendra Hegde @ C.S. Hegde Vs the State of Karnataka

C. SURENDRA HEGDE @ C.S. HEGDE S/O KRISHNAIAH SHETTY AGED ABOUT 48 YEARS R/AT CHERKADDY VILLAGE, BHARMAVARA TALUK, UDUPI DISTRICT, SOUTH CANARA, KARNATAKA.

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Digitally signed by MALATESH K C

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Location: HIGH COURT OF KARNATAKA

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SMT. VIJAYALAKSHMI, W/O C. SURENDRA HEGDE, AGED ABOUT 40 YEARS, OCC: HOUSE WIFE, R/AT CHERKADDY VILLAGE, BHARMAVARA TALUK, UDUPI DISTRICT, SOUTH CANARA, KARNATAKA.

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…APPELLANTS

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(BY SRI. DINESH KUMAR K RAO, ADVOCATE FOR A1; SMT. POOJA KATTIMANI, ADVOCATE FOR A2)

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AND:

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THE STATE OF KARNATAKA BY INSPECTOR OF POLICE, CBI/ACB, BANGALORE

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…RESPONDENT

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(BY SRI. P. PRASANNA KUMAR, ADVOCATE FOR R/CBI)

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THIS CRIMINAL APPEAL IS FILED U/S.374(2) OF CR.P.C PRAYING TO SET ASIDE THE CONVICTION AND SENTENCE DATED 08.06.2012 PASSED BY THE XXXII ADDL. CITY CIVIL & SESSIONS JUDGE & SPL. JUDGE FOR CBI CASES, BANGALORE IN SPL. C.C.NO.67/2010 - CONVICTING THE APPELLANTS/ CCUSED FOR THE OFFENCE P/U/S 120 (B), 468, 471,409,420 OF IPC. BESIDES APPELLANT/ACCUSED NO.1 IS FOUND GUILTY FOR THE OFFENCE P/U/S 13(1)(D) R/W 13(2) OF PREVENTION OF CORRUPTION ACT, 1988.

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IN CRL.A NO. 676/2013

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BETWEEN:

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STATE BY INSPECTOR OF POLICE, CENTRAL BUREAU OF INVESTIGATION, ANTI CORRUPTION BRANCH, NO.35, BELLARY ROAD, GANGANAGAR, BANGALORE-560 032

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...APPELLANT

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(BY SRI. PRASANNA KUMAR P., ADVOCATE)

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AND:

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C. SURENDRA HEGDE @ C S HEGDE, S/O. KRISHNAIAH SHETTY, AGED ABOUT 48 YEARS, OCCUPATION: BRANCH MANAGER, M/S PRAGATHI GRAMINA BANK, HOLEHONNUR BRANCH, DISTRICT SHIMOGA-577 201, KARNATAKA,

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PRESENT ADDRESS DISHA, NO.5152/1A, 4^TH MAIN ROAD, 5^TH CROSS, S.S. LAYOUT, 'B' BLOCK, DIST. DAVANAGERE-577 001, KARNATAKA. PERMANENT ADDRESS CHERKADDY VILLAGE BHRAMAVARA, TALUK UDUPI -576 101, DISTRICT SOUTH CANARA, KARNATAKA.

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SMT. VIJAYALAKSHMI W/O C. SURENDRA HEGDE, AGED ABOUT 39 YEARS, HOUSE WIFE. PRESENT ADDRESS DISHA NO. 5152/A, 4^TH MAIN ROAD, 5^TH CROSS, DIST. DAVANAGERE-577 001, KARNATAKA.

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PERMANENT ADDRESS CHERKADDY VILLAGE, BHRAMAVARA TALUK UDUPI-576 101, DISTRICT SOUTH CANARA, KARNATAKA.

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...RESPONDENTS

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(BY SRI. DINESH KUMAR K RAO, ADVOCATE FOR R1; SMT. POOJA KATTIMANI, ADVOCATE FOR R2)

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THIS CRIMINAL APPEAL IS FILED U/S.377(2) OF CR.P.C PRAYING TO MODIFY THE INADEQUATE SENTENCE DATED 08.06.2012 PASSED BY THE XXXII ADDL. CITY CIVIL & SESSIONS JUDGE & SPL. JUDGE FOR CBI CASES, BANGALORE IN SPL. C.C.NO.67/2010 AND AWARD ADEQUATE SENTENCE ON THE RESPONDENTS/ ACCUSED FOR THE OFFENCE P/U/S 468,471,409,420 OF IPC AND SEC. 13(1)(D) R/W 13(2) OF PREVENTION OF CORRUPTION ACT, 1988.

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THESE APPEALS, COMING ON FOR FURTHER HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: HON'BLE MR JUSTICE V SRISHANANDA

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ORAL JUDGMENT

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Heard Sri. Dinesh Kumar K. Rao, learned counsel for appellant No.1 and Smt. Pooja Kattimani, learned counsel for appellant No.2 in Crl.A.No.696/2012 and respondents in Crl.A.No.676/2013 and Sri. Prasanna Kumar, learned counsel for the respondent/CBI in Crl.A.No.696/2012 and appellant in Crl.A.No.676/2013.

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Accused Nos.1 and 2 who suffered an order of

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conviction in Special C.C.No.67/2010, on the file of the XXXII Addl. City Civil and Sessions Judge and Special Judge for CBI Cases, Bengaluru (CCH-34) and sentenced as under, have preferred the present appeal:

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1) The accused No.1 and 2 are convicted and sentenced to undergo simple imprisonment for one year for the offence punishable U/s 120B of IPC.

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2) The accused No.1 and 2 are convicted and sentenced to undergo SI for one year for the offence punishable U/s 468 IPC and shall pay fine of Rs.10,000/- each and in default of fine,

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they shall under go simple imprisonment for 6 months.

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3) The accused No.1 and 2 are convicted and sentenced to undergo SI for one year for the offence punishable U/s 471 IPC and shall pay fine of Rs.10,000/- each and in default of fine, they shall under go simple imprisonment for 6 months.

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4) The accused No.1 and 2 are convicted and sentenced to undergo SI for one year for the offence punishable U/s 409 IPC and shall pay fine of Rs.10,000/- each and in default of fine, they shall under go simple imprisonment for 6 months.

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5) The accused No.1 and 2 are convicted and sentenced to undergo SI for one year for the offence punishable U/s 420 IPC and shall pay fine of Rs.10,000/- each and in default of fine, they shall under go simple imprisonment for 6 months.

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6) For the offence punishable U/s 13(2) r/w 13(1)(d) of Prevention of Corruption Act 1988, the accused No.1 shall undergo SI for 1 year and shall also pay fine of Rs.10,000/- and in default of payment of fine, he shall undergo imprisonment for 6 months.

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Facts in the nutshell for disposal of the present

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appeal are as under:

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3.1. CBI filed charge sheet against the appellants

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herein for the offences punishable under Sections 120B, 468, 471, 409 and 420 of IPC and under Sections 13(2)

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read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 ('the PC Act' for short) against accused No.1 only.

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3.2. Material facts which ultimately culminated in

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filing the charge sheet by CBI against the appellants are as under:

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Accused No.1 being the Branch Manager of M/s. Pragathi Gramina Bank, Harihara, during 16.06.2004 to 06.07.2007 and at Holehonnur, during 07.07.2007 to 31.05.2008, entered into a criminal conspiracy with his wife accused No.2, whereby they caused wrongful loss to the Pragathi Gramina Bank and corresponding wrongful

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gain to them by forging the documents and making use of the forged documents as genuine documents to the tune of Rs.1,45,12,326/-.

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3.3. The details of amounts siphoned by the illegal

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acts of accused No.1 in the account of his wife accused No.2 are as under:

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Sl. No.	Nature of the deposit and A/c No.	Date	Amount
1	Recurring Deposit A/c No.824/2004	25.6.2004	8,00,000
2	Fixed Deposit A/c No.51/2004	17.9.2004	10,00,000
3	Fixed Deposit A/c No.122/2005	15.4.2005	20,00,000
4	Recurring Deposit A/c No.839/2005	2.6.2005	20,00,000

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3.4. Accused No.1 also sanctioned following loans in

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the name of accused No.2 in furtherance of their conspiracy:

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Sl. No.	Loan A/c No.	Date of Sanction	Amount (in Rs.)	Term Deposit A/c. No.	Detai enhance lim	ls of ment of its
					Date	Amount (in Rs.)
1	VSL OD A/c	28.6.04	500,000	RD A/c No.824/04	5.8.04	100,000
	No.1/04			(renewed RD	17.9.04	100,000
				No.14/200 6)	23.10.04	100,000
					9.8.06	500,000
					18.12.06	949,000
					20.2.07	400,000

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2	VSL A/c No.60/05	28.12.0 5	250,000	RD A/c No.863/20	13.1.06	301,000
				05	27.01.06	145,000
3	VSL A/c No.1056	23.2.06	1,500,0 00	RD A/c No.858/05	N.A.	N.A.
4	VSL A/c No.1093	31.3.06	1,400,0 00	RD A/c. No.862/05 RD A/c. No.863/05	N.A.	N.A.
5	VSL A/c No.1129	29.4.06	450,000	RD A/c No.863/05	8.5.06	100,000
					17.5.06	450,000
					20.5.06	1,300,00 0
6	VSL OD A/c NO.2237	31.7.06	3,980,0 00	RD A/c No.7/06
				RD A/c No.9/06	N.A.	N.A.
				RD A/c No.14/06
				RD A/c No.17/06

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3.5. Those loans were not applied by the concerned

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lonees, but the applications and other necessary documents

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were forged by accused No.1. Accused No.1 further fraudulently and dishonestly forged the documents for obtaining a Savings Bank Account bearing No.6335 in the name of Rajeshwari by affixing the photograph of some other lady.

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Likewise, two cheques were issued in a sum of Rs.13.5 lakhs favouring account No.496013 which is in the name of accused No.2 Smt. Vijayalakshmi. An intra-bank advice was also raised in a sum of Rs.23,33,760/- to close the account which was existing in the name of his wife by accused No.1. Further, accused No.1 granted loan of Rs.2.5 lakhs in VSL account No.60/05 dated 20.08.2005 against the RD account No.863/05 to enhance two times raising the limits to Rs.6.96 lakhs, for routing the said amount through SB A/c No.6335 and to close the account on 23.03.2006 by bringing Rs.7,01,280/- from VSL A/c No.1056 for sanctioning VSL loan of Rs.15 lakhs in VSL A/c No.1056 on 23.02.2006 against RD A/c No.858/05 to transfer Rs.7,98,720/- to SB A/c No.6335 through the cheque bearing No.825001 dated 23.02.2006 and said amount was transferred to the Trading A/c of accused No.2. Accused No.2 thereafter encashed 11 cheques to the tune of Rs.17,88,688/-.

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3.6. Further, one B. Mallikarjuna had invested a sum of

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Rs.20 lakhs in RD A/c No.840/05 and Rs.10.5 lakhs in RD A/c No.13/06. Accused No.1 renewed them periodically and fraudulently sanctioned the following loans:

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Sl. No.	Loan A/c No.	Date of Sanction	Amount (in Rs.)	Term Deposit	Details o o	f enhancement f limits
				A/c No.	Date	Amount (in Rs.)
1	VSL A/c No. 1092	31.03.06	1,400,00 0	RD A/c No. 857/05	20.07.0 6	1,141,000
2	VSL A/c No. 1155	23.05.06	1,300,00 0	Nil	Nil	Nil
3	VSL OD A/c No. 2239	01.08.06	2,378,00 0	RD A/c No. 8/06 RD A/c No.13/0 6	NA	NA

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3.7. B. Mallikarjuna held SB A/c No.32333, but accused No.1 routed the loan proceeds to the above account by forging his signature and consequently closed the account on 01.08.2006 by bringing Rs.10,58,581/- and created documents in that regard.

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3.8. He further created documents in the name of

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B.Mallikarjuna and forged the loan documents and sanctioned the following two loans:

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Sl. No.	Loan A/c No.	Date of Sanction	Amount (in Rs.)	Term Deposit	Details of o	enhancement f limits
				A/c No.	Date	Amount (in Rs.)
1	VSL A/c No. 181	13.04.05	200,000	RD A/c No.	18.05.0 5	25,000
				829/04	23.05.0 5	125,000
					17.06.0 5	100,000
					24.06.0 5	230,000

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					12.08.0 5	125,000
					22.11.0 5	170,000
2	VSL A/c No. 1517	05.04.07	855,300	RD A/c No.30/0 6	Nil	Nil

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3.9. Yet another allegation found against accused No.1 is

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that he opened a SB account in the name of K.A.Sharief by forging the documents and through that account also, he made fraudulent transactions.

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3.10. Sri. L. Kumar invested a sum of Rs.2 lakhs in Kamadhenu Deposit KDR A/c No.560/05 on 23.03.2005 and a sum for Rs.3 lakhs in KDR A/c No.597/05 dated 06.06.2005. Even in respect of these two deposits, accused No.1 created fraudulent documents and sanctioned VSL loan and misappropriated the proceeds thereof. Similar fraudulent acts were also noticed in respect of account holders by name Lakshmi, Ansar Khan and Afroz Khan.

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3.11. Accused No.1 is said to have disbursed Rs.46,85,000/- from VSL-OD A/c No.2431 as against the sanctioned limit of Rs.42 lakhs and keeping an outstanding of

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Rs.1,44,12,326/- in respect of 12 loan accounts as per the following details:

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Sl. No.	Loan A/c No.	Name of the A/c Holder	Outstanding amount as on 28.2.2009 (in Rs.)
1.	VSL No.2480	Sri.B.Mallikarjuna	648,277
2.	VSL No.2508	-do-	2,400,000
3.	VSL No.2509	-do-	2,325,000
4.	VSL No.2531	-do-	3,006,425
5.	VSL No.2439	Sri.K.A.Sheriff	2,544,318
6.	VSL No.2440	Sri.L.Kumar	350,000
7.	PL No.2571	Sri.Ansar Khan	443,055
8.	PL No.2594	Sri.Irfan Khan	113,838
9.	PL No.2626	-do-	500,000
10.	KOD No.2739	Sri. Ansar Khan	181,423
11.	PL No.2715	Sri. Afroz Khan	1,000,000
12.	PL No.2742	Sri. Imtiaz Khan	1,000,000
	Total		14,512,326

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3.12. Accused No.2 in entering into criminal conspiracy with accused No.1, helped accused No.1 in all these activities.

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3.13. When these illegalities came to light, a complaint was filed to the CBI and case came to be registered. After thorough investigation, CBI filed charge sheet against the appellants for the aforesaid offences.

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Learned Special Judge took cognizance of the offences alleged in the charge sheet and thereafter secured the

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presence of the appellants and on compliance of Section 207 of Cr.P.C., framed the charges for the aforesaid offences.

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Appellants/accused pleaded not guilty, therefore

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trial was held.

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In order to bring home the guilt of the accused, prosecution proceeded to examine 55 witnesses as PW-1 to PW-55 comprising of Bank officials, account holders namely Sherif, Kumar, Ansar Khan, Irfan Khan, Imthiaz, Mallikarjuna, sanctioning authority – Basavaraj. Prosecution also placed on record voluminous documentary evidence, which were exhibited and marked as Exs.P1 to P989, comprising of relevant debit and credit slips, bank vouchers, intra-bank credit slips, original fixed deposit held by Mallikarjuna and others as referred to supra , facilities sanctioned in their names by forging necessary applications, creating transfer slips by forging signatures of the deposit holders, handwriting expert reports.

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On behalf of the defence, three witnesses by name T. Mudalagiriyappa, S. Bhaskar and S. Vittal Rao were examined as DW-1 to DW-3. On behalf of the defence, 43 documents were marked as Exs.D1 to D43.

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On conclusion of recording of prosecution evidence, learned Sessions Judge proceeded to record the accused statement as is contemplated under Section 313 of the Cr.P.C., wherein the accused denied all the incriminatory circumstances put to them which were found in the case of the prosecution and they have examined the witnesses on their behalf as aforesaid.

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Subsequent thereto, learned Trial Judge heard the arguments of the parties in detail and on cumulative consideration of the oral and documentary evidence placed on record by the prosecution in a cumulative manner, convicted accused Nos.1 and 2 and sentenced as referred to supra.

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Being aggrieved by the same, accused Nos.1 and 2 are before this Court in Crl.A.No.696/2012 and the CBI has sought for enhancement of the sentence by filing a separate appeal in Crl.A.No.676/2013.

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Sri. Dinesh Kumar K. Rao and Smt. Pooja Kattimani, learned counsel representing the appellants 1 and 2 in Crl.A.No.696/2012, reiterated the grounds urged in the appeal and contended that the learned Trial Judge failed to

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notice that majority of the transactions were within the powers of the appellant No.1 being the Manager of Pragathi Gramina Bank at Harihara and Holehonnur, which, at best, can be traced as an irregularity and not an illegality.

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Sri. Dinesh Kumar Rao further contended that there

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is no pecuniary loss that has occurred to the Bank inasmuch as the entire amount has been repaid to the Bank.

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It is also his case that the transactions as is noticed by the prosecution in the form of collection of documentary evidence, majority of it are generated in the usual banking transactions and PW-54, Balasami, who is the handwriting expert, has given a report with regard to the disputed documents that some of the signatures are tallying and some of them are not tallying. Therefore, the material evidence on record are not sufficient to conclusively hold that it is the appellant No.1 or appellant No.2 who have forged the disputed signatures.

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Therefore, the finding recorded by the learned Trial Judge that by using the forged documents, appellant No.1 has siphoned away the money from the accounts of the aforesaid

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account holders into the account of accused No.2 and thus, the impugned judgment is suffering from legal infirmities and perversity and thus calls for interference and sought for allowing the appeal.

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Sri. Dinesh Kumar Rao would also contend that to establish that the accused No.1 is responsible for transferring the proceeds to different VSL accounts with an intention to cheat the bank, no material is available, which has been ignored by the learned Trial Judge while passing the impugned judgment and sought for allowing the appeal.

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Smt. Pooja Kattimani, adopting the arguments of accused No.1, contended that the only fact that the Trial Judge has taken into consideration is, accused No.2 is the wife of accused No.1 and there is no other material on record to convict accused No.2 for the offences as alleged against her.

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She would further point out that to prove the offence of conspiracy, no positive material is placed on record. Just because accused No.2 is the wife of accused No.1 and she had an account in the very same bank, would not ipso facto

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make out a case of criminal conspiracy and thus sought for allowing the appeal.

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Alternatively, both the appellants submitted that in

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the event of this Court upholding the order of conviction, this Court may consider the question of setting aside the imprisonment as ordered by the learned Trial Judge.

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In that regard, appellant No.1 being the public servant, has also filed an affidavit, which reads as under:

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"Herein, I, Surendra Hegde @ C.S.Hegde, S/o Krishnaiah Shetty, aged about 63 years, R/at cherkady village, Bharmavara Taluk, Udupi district, South canara, 576213 Karnataka today at Bengaluru do hereby solemnly affirm and state on oath as follows:

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1. I state that I am the appellant no.1/ respondent no.1 in the above appeals. I know the facts of this case hence, I am swearing to this affidavit.

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2. I state that as appellant no.1 I had challenged the judgment and order dated 8/6/2012 passed by the XXXII Additional City Civil and Sessions Judge and special judge for CBI cases, Bengaluru (CCH-34) in SPL.CC.NO.67/2010 convicting me for offences punishable under sections 120B, 468, 471, 409, 420 of IPC and under sections 13(2) R/W 13 (1) (d) of PC Act and sentences accordingly.

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3. I state that I will not claim any past service benefits from the date of my dismissal from service till date. I state that this Hon'ble High Court may be pleased to consider the same in the facts and circumstances of the case.

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4. This is my name and signature and contents stated above are true to the best of my knowledge, information and belief and I believe them to be true and correct."

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Per contra, Sri. Prasanna Kumar, learned counsel for the respondent/CBI in Crl.A.No.696/2012 and appellant in Crl.A.No.676/2013 contended that the material evidence placed on record is sufficient enough to maintain the order of conviction. He contended further that in fact, learned Trial Judge after holding that the appellants are guilty of the aforesaid offences, has not granted proper sentence for the proved offences resulting in miscarriage of justice and therefore sought for enhanced punishment for the proved offences by allowing the appeal of the CBI.

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He would further contend that, admittedly, appellant No.2 is a house-wife and there is no material on record to establish and to sustain the deposits made into her SB account. What is the source of income for appellant No.2 to maintain such huge balance in her account and later on

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withdrawal of the same, is not even whispered by the appellants at the time of recording the accused statement.

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He would also contend that mere examination of DW-1 to DW-3 was not sufficient enough to establish that appellant No.1 did not make any fraudulent entries and transferred the amount to the account of accused No.2.

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Therefore, Sri. Prasanna Kumar would contend that the appeal of the accused is to be dismissed and the appeal of CBI must be allowed by enhancing the jail sentence as well as fine amount.

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

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(i) Whether the material evidence placed on record would be sufficient enough to maintain the conviction of the appellants for the offence punishable under Sections 120B, 46, 471, 409 and 420 of IPC and insofar as appellant No.1 is concerned, for the offence under Section 13(1)(d) r/w Section 13(2) of the PC Act?

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(ii) Whether the accused/appellants make out a case of legal infirmity and perversity in the findings recorded by the learned Trial Judge in convicting the

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appellants for the aforesaid offence and thus calls for interference?

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(iii) Whether the appellants in both the appeals would make out a case that the sentence needs modification?

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(iv) What Order?

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REGARDING POINT NOS.1 AND 2: In the cases on

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hand, accused No.1 being the Manager of Pragathi Gramina Bank, Harihara and Holehonnur at relevant point of time, is not in dispute and therefore, he being a public servant, is not in dispute. Having held the post of Branch Manager of the said Bank, there was automatic entrustment of the assets of the Bank to appellant No.1. Appellant No.2 being the wife of appellant No.1 is not in dispute, so also she obtaining an account in the said Bank, is not in dispute.

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PW-4 Smt. Rajeshwari having an account in the very same bank, so also Sri. Mallikarjuna, Imthiyaz, Irfan Khan, Ansar Khan, having fixed deposits in the said Bank, is not in dispute.

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The core allegations as could be seen from the charge sheet material is that accused No.1 taking advantage of

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his position as the Manager, created false documents as against the real deposits which were existing in the Bank and drew money as against those accounts as loans and proceeds thereof were transferred to the account of his wife and thereafter the amounts were withdrawn from his wife's account and misutilized the same.

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To substantiate those allegations, not only necessary documents were seized by the CBI, but also recorded the statement of real account holders as to whether they had made any such loan against the deposits made by them. The statements of the real account holders recorded by the CBI did not tally with the documentary evidence collected by the CBI where under, admittedly, loans were drawn on the strength of the fixed deposits. Then, the fraud came into light as to who must have been responsible for creating such documents.

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No doubt, PW-54 Balasami, who is the handwriting expert who compared the admitted signatures of the appellant No.1 and the other account holders, gave an opinion that the signatures of the appellant No.1 is tallying as the Branch Manager on the disputed documents, but the signatures of the

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account holders did not tally with the supporting vouchers for creating the advances and loans.

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Accused No.1 being the Manager, was therefore responsible for not verifying the signatures of the account holders. If he had entertained any doubt about the genuineness of those documents, he should have summoned the account holders and got verified and then disbursed the amount of the Bank as loans referred to supra in the tabular columns.

¶170

No such effort is made by appellant No.1. Therefore, even though there is some force in the arguments put forth on behalf of the appellants that by the evidence of PW-54, it cannot be conclusively held that it is the appellant No.1 who forged the necessary applications in the name of the account holders to raise the loan as against the fixed deposits, as a Manager of the Bank, there was dereliction of duty on his part in not properly verifying and lending the loans.

¶171

Material documents also would establish that there is siphoning away of the proceeds of the loan into the account of accused No.2. On that score, necessary documentary

¶172

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evidence is placed on record, for which, no explanation is forthcoming on record and even for the prosecution witnesses, there is no suggestions made on behalf of the accused that accused No.1 had no role in it. More so, when accused No.2 is only a housewife and did not have any independent source of income.

¶175

Therefore, the mere suggestions that accused No.1 is no way responsible for such siphoning away of the funds of the Bank in the account of accused No.2, which have been denied. The material on record, especially documentary evidence, therefore, predominantly establishes that there is siphoning away of the money by accused No.1 into the account of accused No.2, who is none other than his wife.

¶176

Admittedly, accused No.2 being a house-wife, did not have source of money for her to get so much deposited in her account. There is no whisper by accused No.2 while recording the accused statement in this regard.

¶177

DW-1 T. Mudalagiriyappa is examined on behalf of accused Nos.1 and 2, who deposed before the Court that he was working as Income Tax Officer, Ward No.1, Davanagere.

¶178

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¶180

He has been asked to produce the income-tax returns of PW-5 Mallikarjuna and accordingly, he produced the same. The income tax returns for the years 2004-05, 2005-06 and 200607 were placed before the Court and marked as Ex.D1 to D4. In his cross-examination on behalf of the prosecution, he admits that he had no personal acquaintance with Mallikarjuna and he has answered that he do not know for what purpose Ex.D1 to D4 are placed before the Court.

¶181

DW-2 S. Bhaskar, yet another Income Tax Officer who has also produced the income tax returns of PW-4 Rajeshwari, which were marked as Ex.D5 to D7. Similar answers are elicited in his cross-examination also.

¶182

DW-3 S. Vittal Rao, Chief Public Information Officer, Pragathi Gramina Bank deposed before the Court that he was required to produce the copy of the inspection report, Dual Custody Registers, external audit reports and inspection reports which were produced and marked as Ex.D8 to D41. He further deposed that the departmental enquiry proceedings against B.S.Naik was produced and marked as Ex.D42. In his crossexamination, he admits that he does not know the relevancy of producing those documents.

¶183

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¶185

The prosecution evidence in comparison with the evidence placed on record through DW-1 to DW-3 would only establish that Mallikarjuna was filing the income tax returns regularly. So also Rajeshwari.

¶186

DW-3 being the Chief Public Information Officer, Pragathi Gramina Bank, has produced documents which would establish that not only accused No.1 was the person who was required to have the entries passed in the relevant books, but also there were others. Ex.D42 is the departmental enquiry report of the co-employee of Pragathi Gramina Bank.

¶187

On perusal of the prosecution evidence, vis-à-vis the documents placed on record through DW-1 to DW-3, accused No.1 wanted to establish that he was not the whole and sole insofar as Pragathi Gramina Bank in handling the accounts of the said Bank, but there were also other employees. In other words, the line of defence that has been taken and tried to be canvassed before the court below was to the effect that for all the fraudulent transactions that are attributed to him by the CBI, he is not the person responsible for the same.

¶188

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¶189

Had that been so, accused No.1 being the Branch Manager should have taken necessary care and caution while passing the sanction orders for the loans against fixed deposits. What are the precautions he has taken while processing such applications is not even whispered by accused No.1 while recording the accused statement.

¶190

Crowning all these things, the beneficiary of the misdeeds being the accused No.2, the entire line of defence that had been sought to be canvassed before the trial court that he is no way responsible for the alleged fraud, cannot be countenanced in law. More so, when accused No.2 is a housewife.

¶191

Further, there are withdrawals from the account of accused No.2 in the form of cheques and where that money has gone is to be explained by accused Nos.1 and 2.

¶192

The next limb of argument that has been put forward on behalf of the appellants is that there is no actual loss caused to the Bank and therefore, the element of lawful loss caused to the Bank and wrongful gain to the accused is not at all present in the case on hand.

¶193

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¶195

To buttress this argument, Sri. Dinesh Kumar Rao contends that neither Mallikarjuna nor Rajeshwari or for that matter, any other account holder complained to the Bank that there were loss caused to their account.

¶196

But, mere repayment of the money into the respective accounts itself would not efface the criminal liability as is held in the case of GIAN SINGH VS. STATE OF PUNJAB¹ . Further, the very fact that the amount of the Bank has been siphoned away to the account of accused No.2 by active conspiracy existed between accused Nos.1 and 2, would complete the offence under Section 409 of the IPC in as much as a temporary misappropriation is equivalent to the misappropriation. Therefore, contentions urged on behalf of the appellants that there was no financial loss caused to the Bank, cannot also be countenanced in law.

¶197

Further, use of the money that has been transferred to the accused No.2 by fraudulent method for which accused No.1 is responsible, itself would complete the necessary ingredients for the offence under Section 420 of IPC, even

¶198

1 (2012) 10 SCC 303

¶199

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¶200

though the same is repaid over a period of time. Necessarily, documents are being created to transfer the proceeds into the name of accused No.2 by passing fraudulent/false vouchers and intra-bank credit vouchers, would complete the ingredients of the offence under Section 468 and 471 of IPC.

¶201

Thus, from the material on record, it is crystal clear that the material evidence would be sufficient enough to uphold the conviction of the appellants for the offence under Section 120B, 468, 471, 409 and 420 of IPC insofar as the accused No.1 is concerned. Since the offence under Section 120B of IPC is established on account of transfer of money to account of accused No.2, needless to emphasize that conviction of the accused No.2 is also to be maintained, insofar as aforesaid offence is concerned.

¶202

This would take this Court to the question of, whether the offence under Section 13(1)(d) r/w 13(2) of the PC Act is to be maintained based on the material evidence on record. There is no doubt that accused No.1 was a public servant. Only on the ground that he is a public servant ipso facto would not attract the offence under Section 13(1)(d) punishable under Section 13(2) of the PC Act. Prosecution has

¶203

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to place such material evidence on record to maintain the conviction of accused No.1 for the offence under Section 13(1)(d) punishable under Section 13(2) of the PC Act.

¶206

The material evidence in this regard is not so clear so as to establish that there was a pecuniary gain to the accused No.1. What is that pecuniary gain which he made by transferring the money, is not even spoken to by the prosecution witnesses. No doubt money has been transferred to the account of accused No.2. Accused Nos.1 and 2 being convicted for the offence under Section 120B of IPC, that itself cannot be treated as a pecuniary advantage gained by accused No.1, especially in the absence of any other beneficiary, other than his own wife.

¶207

Therefore, the pecuniary advantage, if any, that has been obtained by accused No.1, is in the form of the amount that has been transferred to accused No.2 for which this Court has already taken into consideration the offence under Section 120B, 420 and 409 of IPC. Therefore, separate conviction for the offence under Section 13(1)(d) r/w 13(2) of the PC Act cannot be sustained. Therefore, conviction of accused No.1 for

¶208

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the offence under Section 13(1)(d) r/w 13(2) of the PC Act need to be set aside.

¶211

In view of the foregoing discussion, point No.1 and 2 are answered partly in the affirmative .

¶212

REG. POINT NO.3: Learned counsel for the appellants made an alternate submission taking note of the fact that accused No.1 has been removed from the service of the Bank and accused No.2 being the housewife and only lent her money for the misdeeds committed by accused No.1 and accused No.2 being a lady and both the appellants are first time offenders, this Court may consider setting aside the imprisonment ordered by the learned Trial Judge for the aforesaid offences, as referred to supra, by enhancing the fine amount reasonably.

¶213

CBI, on the contrary, has sought for enhanced sentence to be awarded for the proved offences.

¶214

What is an appropriate punishment in a given case, is always a moot question to be decided based on the dependent facts and circumstances of the case.

¶215

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¶217

CBI also expressed their apprehension that if this Court having acquitted the accused for the offence under Section 13(1)(d) r/w 13(2) of the PC Act, appellant No.1 may make a claim for payment of the arrears of salary and future benefits pertaining to his job by filing separate proceedings and therefore, this Court may clarify with regard to the disqualification of the appellant No.1 laying such a claim.

¶218

To quell such an apprehension of the prosecution, appellant No.1 has filed an affidavit referred to supra . On close reading of the contents of the affidavit, it is crystal clear that the apprehensions of the prosecution with regard to monetary benefits that the appellant No.1 may claim, gets quelled.

¶219

Taking note of the fact that appellant No.1 is now aged 63 years and appellant No.2 is aged 55 years and being a lady, this Court is of the considered opinion that the sentence of imprisonment is modified by directing them to undergo simple imprisonment for a day till the raising of the Court, by enhancing the fine amount in a sum of Rs.1,00,000/- each, would meet the ends of justice, in the facts and circumstances of the case on hand.

¶220

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¶221

In view of the discussion made above, the appeal

¶222

made by the CBI seeking enhancement of the sentence would no longer be available for further consideration. Accordingly, point No.3 is answered partly in the affirmative in favour of accused Nos1 and 2.

¶223

REG. POINT NO.4: In view of the findings of this

¶224

Court on point Nos.1 to 3 as above, I proceed to pass the following:

¶225

ORDER

¶226

i) Crl.A.No.696/2012 filed by the accused is allowed in part ;

¶227

ii) Crl.A.No.676/2013 filed by the CBI is hereby dismissed .

¶228

iii) Appellant No.1 in Crl.A.No.696/2012 (accused No.1) is acquitted for the offence under Section 13(1)(d) r/w 13(2) of the PC Act. Conviction of both the appellants in Crl.A.No.696/2012 for the offence punishable under Sections 120B, 468, 471, 409 and 420 of IPC is maintained and sentence ordered by the learned Trial Judge is modified as under:

¶229

Appellants 1 and 2 (accused Nos.1 and 2) are directed to undergo simple

¶230

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imprisonment for the day, till the raising of the Court, and to pay enhanced fine of Rs.1,00,000/- each, on or before 15.03.2025, before the trial court, failing which, they shall undergo simple imprisonment for one year for the aforesaid offences.

¶232

Office is directed to return the Trial Court records with a copy of this judgment, for passing the modified conviction warrant, forthwith.

¶233

Ordered accordingly.

¶234

Sd/(V SRISHANANDA) JUDGE

¶235

KA/RD

C Surendra Hegde @ C.S. Hegde v. the State of Karnataka

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C Surendra Hegde @ C.S. Hegde v. the State of Karnataka

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