Revision by a chartered accountant, arraigned as fourth accused in a bank-fraud case, challenging the charge framed for conspiracy and cheating. The court held the material disclosed a prima facie case, but found the charge lacking particulars, and declined to set it aside, directing the trial court to revisit and rectify the charge.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON :24.04.2018
PRONOUNCED ON :03.05.2018
CORAM
THE HONOURABLE DR.JUSTICE G.JAYACHANDRAN
Crl.R.C.No.465 of 2018
and
Crl.M.P.Nos.5594 and 5595 of 2018
S.Muralidharan .. Petitioner/Accused No.4
/versus/
State by Inspector of Police,
CBI/BS & FC,
36, Bellary Road, Ganganagar,
Bangalore-560 032.
(Crime No.1 of 2017) ..Respondent/complainant
Criminal Revision Case is filed under Section 397 r/w 401 of Criminal Procedure Code, 1973 praying to call for the records pertaining to the charges framed in C.C.No.13 of 2018, dated 13.03.2018 on the file of the Chief Judicial Magistrate, Coimbatore and set aside the same.
For Petitioner :Mr.A.Ramesh, Sr.Counsel for Mr.K.R.Sankaran For Respondent :Mr.K.Srinivasan, Spl.P.P for CBI Cases
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O R D E R
The revision petitioner herein is a Chartered Accountant by profession. He is arrayed as fourth accused in C.C.No.13 of 2018 on the file of the Chief Judicial Magistrate, Coimbatore, along with the other accused and charged for offences under Sections 120B r/w 420 IPC, 468 and 471 IPC. The charge framed against him by the trial Court on 13.03.2018 is the subject matter of the present revision petition.
N.Balaji(A2) as its partners. This firm later converted into a Private Limited Company and got incorporated by name and style of M/s Lavanya Gold Jewels India Private Limited with N.Ashok(A1) and N.Balaji(A2) as its Promoter Directors.
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Private Limited initially had credit facility to the tune of Rs.30.00 crores with Indian overseas Bank, Coimbatore. Later, it shifted its banking transaction to State Bank of India, Commercial Branch, Coimbatore. Thereafter the State of India took over the credit facilities from Indian overseas Bank and enhanced the credit facility to the tune of Rs.40.00 crores. After converting the partnership firm into a Private limited Company on 01.04.2012, the credit facility had been gradually further increased to Rs.60.00 crores. For the purpose of availing enhanced credit facility in the State Bank of India, the accounts of M/s Lavanya Gold Jewels India Private Limited were judged. The balance sheets, profit and loss statements were certified by the petitioner for the financial year 20112012. The said M/s Lavanya Gold Jewels India Private Limited and its Promoter Directors have removed the stock in trade given as primary security for the loan and absconded. Later, during the investigation, it was
found that the Promoter Directors of M/s Lavanya Gold Jewels India Private Limited had submitted two sets of statements of account. One for the Income Tax Department purpose, indicating lesser turnover and income, and another for the State Bank of India to avail enhanced credit facility by inflating their income and stock in trade. The petitioner herein
had knowingly signed in two sets of contrary statements of accounts to
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facilitate the co-accused to cheat the State Bank of India using the false
statement as genuine for availing the loan.
the said criminal conspiracy. He as a reputed Auditor with 30 years standing in the profession had discharged his professional duty.
with the other accused submitted inflated balance sheet, inflated sundry debtor statement and inflated stock statement to the State Bank of India, Commercial Branch, Coimbatore, to facilitate M/s Lavanya Gold Jewels India Private Limited to obtain the credit facilities. The prosecution rely upon the financial statement of LW42, Partner of Jayachandran & Co., Chartered Accountant, Coimbatore, which was submitted to the Income
Tax Department and the statement certified by the petitioner herein.
Department prepared by Jayachandran and Co., Chartered Accountant and
the financial statements prepared by the petitioner herein for availing the loan, the trial Court has concluded that the financial statements submitted by the petitioner herein are inflated statements.
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concluded that the financial statement given by the petitioner herein is an inflated statement without basis. The petitioner had audited the financial statement presented to him, based on stock records and ledger accounts of the clients furnished by them. The State Bank of India, which has extended the loan, had its own mechanism to verify the stock and the accuracy of the statements. While LW38 Madhukar, who is the Chartered Accountant appointed by State Bank of India, had stated before the investigation agency that, he did not notice any discrepancies in the stock. He compared the records and submitted the statement, it is unimaginable to say, the Chartered Accountant, who had certified, based on the stock register, had conceived the conspiracy along with the co-accused to cheat the bank and in furtherance of that conspiracy, the documents were forged and used as genuine.
the petitioner is that, the ingredients for the alleged criminal conspiracy or for the substantive offences like Sections 420, 468 and 471 IPC are not whispered in the charge. Further, no specific charge framed for these substantive offences. When the charge as framed is misleading and
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defective without any ingredient to attract the offence mentioned in the charge, the said charge is liable to be set aside.
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Limited with inflated figures to enable the default borrower to avail enhanced credit facilities. The stock statements and balance sheets for the period of 31.03.2012 contains two different figures and both the documents were certified by the petitioner. One was submitted to the bank by the borrowers for availing higher loan based on the lesser account and another showing lesser turnover and income for payment of income
tax. 12. It is also submitted by the learned Senior Counsel appearing for the respondent/CBI is that from the statement of bank accounts maintained by the petitioner herein and the statement of LW41-Santhosh, it is found that the petitioner herein, pursuant to the conspiracy with the co-accused A1 and A2 the promoter Directos viz., M/s Lavanya Gold Jewels India Private limited had diverted the funds received from the State Bank of India into his account and later, transferred the money to the account of Promoter Directors. This would show that the petitioner has not stopped in rendering the professional service, but has participated in the crime of cheating and forging the documents.
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documents and certified both the sets though both are not identical. His lesser value certificate is used for income tax department. The higher
value certificate is given to the rank. The petitioner has allowed to use his bank account for improper transfer of fund from M/s Lavanya Gold Jewels India Private Limited account. Therefore, the petitioner plea that material placed by the prosecution does not make out a criminal case for to be
tried is not sustainable.
appearing for the petitioner would also submit that, the charge as framed by the trial Court is bereft of ingredient for the offence mentioned in the
charge and such a charge is non est in law and is to be set aside.
appearing for the petitioner had cited the following judgments:
(1)Darshan Singh Saini v. Sohan Singh and another
[(2015) 14 Supreme Court Cases 570];
(2)Jasvinder Saini and others v. State (Government of NCT of Delhi) [(2013) 7 Supreme Court Cases 256];
(3)State of Andhra Pradesh v. Kandimalla Subbaiah
and another [(1962) 1 SCR 194:AIR 1961 SC 1241:(1961) 2 Cri LJ 302];
(4)Nanak Chand v. State of Punjab[(1955) 1 SCR 1201:AIR 1955 SC 274: 1955 Cri LJ 721];
(5)Kishan Lal Gupta v. Emperor [1946 SCC Online
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Oudh 82];
(6)Sachin Kumar and Ors. v. The State[2015(4) JCC
2321];
(7)Ramai and another v. State of U.P. and another [2012ACR 2834];
(8)Smt.Manju Singh v. Tara Chand and Anr. [2011(1)ACR 1164];
(9)Vijayachandran K.K. & Anr. v. The Supdt.of Police & Anr. [2006 SCC Online Ker 242];
(10)Ramesan & Others v. State of Kerala [2006 SCC online Ker 519];
(11)Om Parkash and others v. State of Haryana[2006 SCC online P&H 878];
(12)Lalloo@ Nahar Singh son of Sri Charan Singh v. The State of U.P.and Ram Shankar Yadav son of Kishan Singh Yadav[2006 Cri LJ 1790];
(13)Imtiaz Ahamed v. State of Madhya Pradesh[1997(1) M.P.L.J];and
(14)State Through Central Bureau of Investigation v. Anup Kumar Srivastava[AIR 2017 SC 3698].
Senior Counsel appearing for the petitioner herein, it is necessary to refer the charge framed by the trial Court, which sought to be set aside:-
“That the accused N.Ashok (A1), s/o V.Nagendran
and N.Balaji(A2), S/o V.Nagendran were being the Directors of Lavanya Gold Jewels India Pvt.Ltd., situated at No.114, 11th Cross Street, Tatabad, Coimbatore 641 012 and A3 is the Company Lavanya Gold Jewels India Pvt. Ltd. Registered with the Registrar of Companies, Coimbatore, Tamil Nadu and its Corporate Identity Number
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is U51398TZ2012PTC018068 and S.Muralidharan(A4), S/o S.R.Srinivasan being the Chartered Accountant of the A3 Company, and the said Company was engaged in manufacture and sale of gold ornaments/antique jewellery to reputed clients like MMTC against hypothecation of gold and gold ornaments/ jewellery by way of enjoying credit facilities to the tune of Rs.40 crores from State Bank of India, Commercial Branch, Coimbatore. Before the said Company was convertered into a Private Company, it was functioning as a Partnership firm called Lavanya Jewels and the company was started its function 01.04.2012 and the credit facilities sanctioned to Lavanya jewels were transferred to the newly formed private limited company and the limit of its credit facilities were enhanced and total credit facilities sanctioned to the borrowers stood at Rs.60 crores. Based on the balance sheet for the year 20102011 and 2011-2012 and sundry debtors statement and stock statement prepared and certified by the 4th accused S.Muralidharan, Chartered Accountant, the State Bank of India had fixed the drawing power of M/s Lavanya Jewels and the credit facilities sanctioned. For the purpose of availing the credit facilities from State Bank of India, the partners A1 and A2 of the said Company and the Chartered Accountant (A4) of the said Company have submitted the inflated balance sheet, inflated sundry debtors statement and inflated stock statement to the State Bank of India, Commercial Branch, Coimbatore and the sanctioned credit facilities were not utilized for the specific purpose of doing their jewellery business, but the accused in contravent of the terms and conditions of the loan Sanction Order misused such money for other extraneous purposs in furtherance of criminal conspiracy to cause personal unlawful, wrongful gain to themselves
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and corresponding unlawful wrongful losses to the Central Government and State bank of India. Mid Corporate Group, Commercial Branch, Coimbatore. The accused persons have diverted the fund, which was obtained by way of credit facilities, to some other persons those who were actually not involved in their gold jewellery business such as Hariharasudan Finance, Premier Cotton Industries, R.V.Raja Auto Agencies, Dharmapuri for the purpose of Suzuki Motor Cycle by A2 Balaji etc., and Rs.37 lakhs was transferred into the Saving Bank account of A2 Balaji (ICICI Bank, Mill Road Branch, Coimbatore A/c No.605305049267) from the CC account held with State Bank of India, Commercial Branch, Coimbatore for the purpose of property admeasuring 21/160th share in 6159 sq.ft., located at Oppanakkara Street, Western Row in Block No.46, Old T.S.No.7/857 m New T.S.No.7/3941/1,2,3&4 Coimbatore Taluk in the name of A2 Balaji. The account was declared NPA on 23.08.2013 because the accused had used such dishonestly derived money amounting to Rs.60crores for extraneous purposes and failed to return it to the bank. That the aforesaid of commission and omission of the accused A1 to A4 that caused wrongful loss to State Bank of India to the extent of Rs.41.52 crores and corresponding wrongful gain to themselves constitutes offences punishable under Sections 120B r/w Section 420, 468, 471 of IPC and substantive offences thereof and within my cognizance.”
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Court has framed charge only for conspiracy and no separate charge has been framed for the substantive offences mentioned in the charge. Regarding framing of charge in respect of conspiracy, the Hon'ble Supreme Court in its judgment, dated 04.08.2017, State through Central Bureau of Investigation v. Anup Kumar Srivastava has discussed in para 18 and 19, which are extracted below:-
“18) Framing of charge is the first major step in a criminal trial where the court is expected to apply its mind to the entire record and documents placed therewith before the court. Taking cognizance of an offence has been stated to necessitate an application of mind by the court but framing of charge is a major event where the court considers the possibility of discharging the accused of the offence with which he is charged or requiring the accused to face trial. There are different categories of cases where the court may not proceed with the trial and may discharge the accused or pass such other orders as may be necessary keeping in view the facts of a given case. In a case where, upon considering the record of the case and documents submitted before it, the court finds that no offence is made out or there is a legal bar to such prosecution under the provisions of the Code or any other law for the time being in force and there exists no ground to proceed against the accused, the court may discharge the accused. There can be cases where such record reveals the matter to be so predominantly of a civil nature that it neither leaves any scope for an element of criminality nor does it satisfy the ingredients of a criminal offence with which the accused is charged. In such cases, the court may discharge him or quash the proceedings in exercise of its powers under the
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provisions.
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Lavanva Jewels as on 31.05.2011 which is certified by the petitioner herein
also enclosed.
audit from 11.10.2012 to 15.10.2012 in respect of M/s Lavanya Gold Jewels India Private Limited, Coimbatore and had submitted his report on 15.10.2012. The Income Tax Assessment order and the statement of accounts, pursuant to the accounts submitted by Jayachandran and Co, Chartered Accountant and by Muralidharan the petitioner herein on behalf of M/s Lavanya Gold Jewels along with the profit and loss accounts are at variance. The annexures to the final report filed by the Investigating officer has brought out, how the statement of account furnished by the petitioner herein is inflated and how a sum of Rs.69.00 lakhs was transferred from the cash credit account of M/s Lavanya Gold Jewels India Private Limited maintained with State Bank of India to the saving bank account of Shri.S.Muralidharan, the petitioner herein and later, transferred the money to the current account held in the name of M/s Lavanya Gold Jewels India Private Limited with Indian Overseas Bank. The annexure to the final report would also show that the petitioner herein was privy to the diversion of the fund. When there is a prima facie materials available to show that the petitioner herein as Chartered Accountant had knowingly
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inflated the financial statement of account to facilitate M/s Lavanya Gold Jewels India Private Limited and its Directors to avail enhanced cash credit
loan from State Bank of India and to facilitate the diversion of the fund obtained through enhanced loan facility, he had offered his bank account necessitate the trial Court to frame charge against the petitioner along with the other accused. The decision of the trial Court to frame charge against this petitioner and others is therefore proper and cannot be faulted with. However, the charge as framed undoubtedly lack adequate particulars, though available and found in the final report.
which creates the offence gives any specific name or if no specific name is given, the definition of the offence must be stated. The law and section against which the offence is said to have been committed to be mentioned in the charge. Wherever necessary, the time and place of offence and the
person against whom the offence committed should be mentioned. If necessary, the manner in which the offence committed should be mentioned. The Court while frame charge should take all endeavour that the accused against whom the charge is framed shall have sufficient notice of the matter with which he is charged. The charge so framed shall not mislead the accused. The omission or error in the content of the charge
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shall not be material, leading to failure of justice.
respondent would submit that even if the charge framed lack certain particulars, those particulars are not material omission. At the most, the charge framed by the trial Court needs only alteration. The omission in the
charge is a rectifiable defect under Sections 215 and 216 Cr.P.C. Therefore, there is no necessity to set aside the charge as prayed by the petitioner herein. Since the Court can alter the charge at any stage of the trial, the present petition is not warranted.
errors in the charge and power of the Court to alter the charge. This saving provision cannot be taken as a defence for improper framing of charge, when certain defects in the charge is pointed and if allowed to continue, it may even cause failure of justice. Therefore, it is essential to direct the Court below to adhere the principles laid down under Chapter XVII of the Criminal Procedure Code, more particularly, Sections, 211, 212 and 213 Cr.P.C., while framing the charge. At any cost, the charge should not mislead the accused for the omission or error in stating the offence or particulars of the offence.
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offences. However, the charge though refers about the overtact of the petitioner herein that he as a Chartered Accountant furnishing inflated stock statement, balance sheet, sundry debtor statement, etc., no separate charge for the substantive offence is framed against him. Even for the offence of criminal conspiracy, though the materials relied by the prosecution discloses informations about date and place of the conspiracy,
the trial Court has omitted to mention it in the charge.
observation of the Hon'ble Justice Mrs.K.Hema, Judge of Kerala High Court found in her judgment in Ramesan & Others v. State of Kerala reported in [(2007) 1 KLJ 369] also referred by the learned Senior Counsel appearing for the petitioner:
“9. Every criminal Court has the responsibility to
frame charge consistent with the legal requirements under the provisions contained in Chapter XVII of the Code. Every such Court shall pay personal attention while framing charge. A casual, perfunctory, haphazard manner of framing of charge will result in serious miscarriage of justice and it will deprive the accused of his valuable right to have a fair trial. It will also affect the prosecution adversely, since such defect in the charge alone could be a ground for acquittal. Unmerited
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acquittal founded on the mere illegality of framing charge will even tell upon the accountability of criminal justice delivery system and administration of justice. If the mere failure on the part of the Court in framing a proper charge were to be the reason for an acquittal, the Court alone has to bear the blame and hence every Court shall pay more serious personal attention to framing of charges. The duty and responsibility cast upon the Court in this regard is very high.”
when more than one accused is involved and more than one offences are made out from the materials placed by the prosecution, it should always avoid framing a common charge for all offenders or a single charge for all the offences. In Imtiaz Ahmed v. State of Madhya Pradesh reported in [ 1997 (1) MPLJ 683] at para 6 also cited by the learned Senior
Counsel appearing for the petitioner reads:
“6. As the tendency of framing 'common charges',
in a trial involving more than one accused, is on the increase, it is high time to check the above trend. An accused can be made to face trial on particular charge/charges only on the basis of the material available in the charge-sheet/complaint against that accused and not on the material available against his co-accused. It is, therefore, always incumbent on the trial Court, while considering the framing of charges against the accused persons in a trial, involving more than one accused, to evaluate the material, available against each and every accused, individually for ascertaining the culpability of
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each and every accused and then frame charge/charges against each and every accused accordingly.”
26 . Having observed that the charge as framed in this case qua the
materials placed by the prosecution is to be altered, whether the charge as framed is to be set aside is the next point which needs to be answered. While the reading of the charge though suffers some omission, it does not mislead the accused against whom the charge is framed. When there is no material to indicate the charge framed by the Court is misleading, the said charge need not be set aside in toto. Alteration or addition permissible in law is suffice to proceed further. Since statute provides to make alteration or addition to the existing charge, it is open to the trial Court to look into
the materials placed by the prosecution extensively and frame appropriate charges at the earliest.
Court had cautioned that petitions challenging the charge should be entertained in rare and rarest of case only to correct the pattern error of jurisdiction and not to re-appreciate the matter. Though the above
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judgment arise from a prosecution under Prevention of Corruption Act,
the said principle is applicable for all the criminal prosecution.
judgment o f Asian Resurfacing of Road Agency Pvt.Ltd and Anr. v. Central Bureau of Investigation reported in 2018 (5) Scale which
throw adequate light in this aspect.
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India[(1989) 4 SCC 90] Stree Atyachar Virodhi Parishad v. Dilip Nathumal Chordia [(1989) 1 SCC 715] State of M.P. v. Krishna Chandra Saksena[(1996) 11 SCC 439] and State of M.P. v. Mohanlal Soni [(2000) 6 SCC 338].
dismissed. The trial Court is directed to revisit the charge it has framed in
the light of the above observation and rectify the omission at the earliest.
Consequently, connected Miscellaneous Petitions are dismissed.
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03.05.2018
Index:Yes/No
Internet:Yes/No
Speaking order/Non-speaking order
ari
To
1.The Chief Judicial Magistrate, Coimbatore.
2.The Inspector of Police, CBI/BS & FC,
36, Bellary Road, Ganganagar,
Bangalore.
3.The Special Public Prosecutor of CBI Cases, High Court, Madras.
Dr.G.Jayachandran,J.
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ari
Pre-delivery Order made in
Crl.R.C.No.465 of 2018
03.05.2018
2 issues framed by the court
Whether the charge framed against the petitioner for criminal conspiracy and the substantive offences is defective for want of particulars and ingredients.
Whether a charge found deficient in particulars should be set aside in toto or can be rectified by alteration or addition.
Colour shows how this judgement treated each authority
State Through Central Bureau of Investigation v. Anup Kumar SrivastavaReferred¶17
State Through Central Bureau of Investigation v. Anup Kumar Srivastava[AIR 2017 SC 3698] · Who else cites this
Ramesan & Others v. State of KeralaRelied on¶24
Ramesan & Others v. State of Kerala [(2007) 1 KLJ 369]
Imtiaz Ahmed v. State of Madhya PradeshRelied on¶25
Imtiaz Ahmed v. State of Madhya Pradesh [1997 (1) MPLJ 683]
Asian Resurfacing of Road Agency Pvt.Ltd and Anr. v. Central Bureau of InvestigationRelied on¶27
Asian Resurfacing of Road Agency Pvt.Ltd and Anr. v. Central Bureau of Investigation 2018 (5) Scale
5 provisions across 3 enactments
S.Muralidharan
State by Inspector of Police, CBI/BS & FC, Bangalore
G.Jayachandran
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
