Askari Vs. C.B.I.  INSC 1414 (7 August 2009)
SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO. 1477
OF 2004 Mir Nagvi Askari ...Appellant Versus C.B.I. ...Respondent WITH
CRIMINAL APPEAL NOs. 1525, 1526 OF 2004, 5 AND 121 OF 2005
SINHA, J :
five appeals, arising out of a judgment and order dated 19/10/2004 passed by
the Special Court constituted under the Special Court (Trial and Offences
related to Securities) Act, 1992 (for short "the Act"), were taken up
for hearing together and are being disposed of by this common judgment.
Bank is a Scheduled Nationalised Bank. It has a branch at Mumbai known as the
Fort Branch. Out of five appellants before us, Accused Nos. 1, 2, 4 and 5 were
officers of the said Branch of the Andhra Bank. Accused No. 1 was the Manager
of Funds, Accused Nos. 2 and 4 were Junior Management Officers of the Funds
Department, and Accused No. 5 was the Assistant Manager, Debit Section. Accused
No.3, Hiten Dalal, was at all relevant times and still is a broker and, inter
alia, deals in securities.
Nos. 1, 2, 4 and 5, in their capacity as public servants, were working in the
Fort Branch of Andhra Bank.
charged with abuse of their position and acting dishonestly and fraudulently,
as a result whereof undue pecuniary advantage is said to have been procured by
Accused No. 3 by way of crediting bankers' cheques without them having been
presented or sent for clearance and, thus, cheating Andhra Bank and dishonestly
permitting substantial withdrawals from his current account by the Accused No.
3. They are said to have prepared false documents and used them as genuine
ones, with the intention to defraud and falsify entries in the books of
accounts of the Bank. They are also charged with entering into the criminal
conspiracy, as they, having been entrusted 2 with the property of the Andhra
Bank, prepared credit and debit vouchers in favour of Accused No. 3 authorizing
credit of amounts of various cheques to the account of Accused No. 3 without
having actually received any bankers' cheques.
the Reserve Bank of India appointed a Committee known as the Jankiraman
Committee whence the alleged security scam came to light. It submitted a
report, a portion of which was marked as Exhibit 334 before the learned Special
Judge wherein certain irregularities in the functions of Andhra Bank were
pointed out, the relevant portion whereof reads as under :
It was observed on a scrutiny of the current account of H.P. Dalal that the
branch has accommodated the broker by affording credit of some of the banker's
cheques received from other banks to his account one working day prior to the
day on which the instruments were sent for clearing, with a view to avoiding
overdrawings in the account on these days. The funds so credited have been
utilized by the broker either for purchase of securities or making some other
payments. Instances noticed are given in the annexure. It will be seen
therefrom that in the case of item No. (i) the branch had afforded the credit
even before the actual date of the instrument."
added) 3 It was also pointed out how Accused No.3 had received financial
benefit out of the said transactions.
INFORMATION REPORT Relying on, or on the basis of, the Jankiraman Committee
Report, a First Information Report was lodged by PW-25 Sitaram Premaram Paladia
on or about 02/06/1993 (Exhibit 333), initially against the accused Nos. 1, 2
further preliminary inquiry was conducted before lodging the said First
Information Report. Ten instances of grant of credit to Accused No. 3 were
detailed therein, in respect of the cheques received or those yet to be
received from four banks, namely Bank of Karad, ANZ Grindlays Bank, Canara Bank
and Standard Chartered Bank (hereinafter referred to as "the drawer
banks"), without presenting or sending them for clearance.
Waydande while making investigation into the said offence, allegedly found
involvement of Accused Nos. 4 and 5 as well, who had prepared debit and credit
vouchers, and made entries in the transfer scroll, BCR Registers, Cheque
Clearing and Receiving Registers, etc. They were thereafter made accused in the
CASE The prosecution contends that the appellants herein entered into a
conspiracy with each other with the object of giving undue pecuniary advantage
to Accused No. 3, and for the said purpose, the bank officers had misused their
position as public servants, forged documents and used them as genuine ones for
the purpose of falsification of accounts.
prosecution case is that such credits should not have been given until the
amount of the cheques was realized. It was furthermore alleged that credit had
been given even though the said cheques had not actually been received in the
Fort Branch of Andhra Bank. The aforementioned acts on the part of the officers
of Andhra Bank constituted criminal breach of trust and forgery, as well as
offences under the Prevention of Corruption Act, 1981.
BEFORE THE SPECIAL COURT As many as ten transactions were in question before
the learned judge.
charges were framed in respect of each of the aforementioned ten transactions.
Before the learned Special Court, 26 witnesses were examined by the
5 PWs 1
to 10 were employees/officers working in the drawer bank along with four
officers from the Funds and Investment Department.
PWs 11 to
19 and 22 to 24 were working in the Andhra Bank. PW-11 Hemlala G. Nair and
PW-12 Rajinderkumar and one Rane, were working as clerks in the Funds and
Investment Department, Andhra Bank. Rane died in 1993 and thus, could not be
examined as a witness. PW-13 Sunil Pore and PW-14 Dilip Gursahani were working
as typist and Clerk-cum-Cashier respectively in the Clearing Department, Andhra
Bank. PW-17 Katta Hari Babu and PW-18 Ramesh G. Ramteke were officers in the
Current Account Department, Andhra Bank. PW-19 S. Ganavinayagam was the Manager
(Operational) in the Current Account Department and PW-22 J.S. Sastry was
working as Chief Officer, at the Head Office of Andhra Bank, Hyderabad.
G.D. Bhalla was working as Chief Manager in Fort Branch, Andhra Bank, Mumbai.
PW-24 C. Raja Rao was working as General Manager (Personnel) at the Head
Office, Andhra Bank, Hyderabad. PW - 20 Anand Sinha and PW-21 M. Mahajan were
officers working in the Reserve Bank of India.
respect of transaction no. 1, the Special Court noted that the account of A3
was credited on 18/05/1991, whereas the cheque is dated 20/05/1991. As Accused
No.1 and 2 authorized the credit vouchers to the Current Accounts Department,
allowing it to credit an amount of Rs.2 crores indicated therein to the account
of Accused 3, without having in their possession the cheque for the said
amount, A1 and A2 were guilty of criminal breach of trust as also for creating
respect of transactions no. 2 and 3, the Special Court held that though the
cheque dated 05/07/1991 was received on 06/07/1991, the credit therefor had
been given on 05/07/1991; the cheque amount was realized only on 06/07/1991. As
A1 and A2 prepared debit and credit vouchers and ensured credit to the account
of A3, even without having in their possession the corresponding cheque and,
thus, they were guilty of criminal breach of trust and also falsifying
respect of transaction No. 4, the Special Court held that though the cheque
dated 17/09/1991 was received on 18/09/1991, the credit was given one day prior
thereto, i.e., on 17/09/1991 and the cheque amount was realized only on
18/09/1991. Hence, on the day on which the credit was 7 given, the cheque was
not in possession of the A1 and A2, and, thus, by issuing credit voucher on
17/09/1991, A1 and A2 committed criminal breach of trust and falsification of
respect of transactions no. 5 and 6, it was held by the Special Court that the
cheque dated 06/11/1991 was supposed to have received on 06/11/1991, but credit
thereof was availed by him on 06/11/1991 although the cheque was realized on
08/11/1991; 07/11/1991 being a holiday. Hence, on the day on which the credit
was given, the cheque was not in the hands of the A2 and A4; and by issuing the
credit voucher on 06/11/91, they have committed the offence of criminal breach
of trust as also falsification of documents.
also held in respect of transaction no. 7, that the cheque dated 13/11/1991 was
received on that date and the credit was given on 13/11/1991, although the
cheque amount was realized only on 14/11/1991.
cheque was not sent for clearing on 13/11/1991 and therefore, by issuing credit
voucher on that day, A1, A2 and A4 had committed criminal breach of trust and
were also guilty of preparing false documents.
So far as
transaction No.8 is concerned, the Special Court held that the cheque dated
04/12/1991 was received on 05/12/1991 and the credit was 8 given on 04/12/1991,
despite the amount was realized only on 05/12/1991.
on record has clearly proved that the cheque in question was not received in
the Funds Department on 04/12/1991, although A1 and A5 authorised crediting the
cheque amount into A3's account on that day and therefore A1 and A5 were guilty
of criminal breach of trust as also making of false documents in respect of the
respect of transaction no. 9, it was held by the Special Court that the cheque
dated 16/12/1991 was received on 16/12/1991, the credit is given and availed on
16/12/1991 and the cheque was actually realized only on 17/12/1991. The cheque
was not sent for clearing on 16/12/1991 and therefore, by issuing credit
voucher on that day, A1 and A2 were guilty of criminal breach of trust and of
making of false documents in furtherance thereof.
respect of transaction no. 10, the Special Court held that the cheque dated
07/04/1992 was received on 08/04/1992, and the credit was given on 07/04/1992
even though the cheque was realized only on 08/04/1992. As on the day on which
the credit was given, the cheque was not in the hands of A2, by issuing the
credit voucher on 07/04/1992, A2 was guilty of criminal 9 breach of trust and also
guilty of making false documents in furtherance of this transaction.
also recorded by the Special Court that the pecuniary advantage had illegally
been given to A3, and thereby A2 and A4 have committed an offence under Section
13 (2) read with 13 (1) (c) and 13 (1) (d) of the Prevention of Corruption Act.
It was also held that since the credit was illegally given to A3, they have
committed criminal breach of trust, and that by issuing a credit voucher
without the cheque having been realized, A2 and A4 have prepared false
documents and thereby committed forgery. It was also held that A2 and A4
entered into criminal conspiracy with A3 and other accused persons for the
purpose of giving illegal credit to A3 and thus securing a pecuniary advantage
adverting to the rival contentions raised before us by the parties, we may, at
the outset, notice the following:
the cheques involved are banker's cheques.
Payments under the banker's cheques are guaranteed.
1 0 (iii)
Cheques received by the Bank are dealt with by the Funds Department, Current
Account Department, Clearing Department and Day Book Department.
Current Account, Clearing and Day Book Departments operate under the Operation
Department of the Fort Branch, Andhra Bank (v) In addition thereto, there is a
service centre of the Bank which is situated in separate premises. It is
responsible for sending the banker's cheques to the Reserve Bank of India for
was not proved that the bank officers received any pecuniary advantages for
themselves but by their action pecuniary advantages were received by Accused
Whereas there are no guidelines for operation of the Funds Department,
guidelines have been issued by the Andhra Bank for other connected departments,
viz., Current Account Department, Clearing Department and Day Book Department.
is also not in dispute that a machine known as Advance Ledger Posting Machine
(ALPM) was installed in the Current Account 1 1 Department which was possible
to be operated manually. We will highlight the operational details of the said
machine at an appropriate stage.
OF LEARNED SENIOR COUNSEL.
Naphade, Mr. C. Mukund and Mr. Das, learned counsel appearing on behalf of the
accused nos. 1, 2, 4 and 5 urged :
the First Information Report was lodged only on the basis of the report of the
Jankiraman Committee without any further preliminary enquiry, the entire
proceeding is vitiated in law.
Jankiraman Committee having only pointed out irregularities committed both by
the Current as well as the Clearing Department, appellants cannot be said to
have been involved in commission of any offence, as alleged or at all.
There is no evidence to show that the appellants had any dominion over the
property of the bank at any point of time, and/ or they were ultimately
responsible for the disposal thereof in violation of any direction of law.
1 2 (iv)
Since the purported guidelines [Exhibit 322] have no force of law, no offence
of criminal breach of trust can be said to have been committed in terms of
Section 405, read with Section 43 of the Indian Penal Code.
Further, the guidelines purportedly issued by the Bank, in any event, have no
nexus with the functioning of the Funds Department being applicable in respect
of securities transactions; the impugned judgment of the Special Court is
Appellants, having scrupulously followed the prevailing bank practices and
furthermore having complied with all the procedures laid down therefor, cannot
be said to have committed any offence.
job of the Funds Department was only to prepare credit and debit vouchers on
receipt of the Banker's Cheque and to forward the same to the Current Accounts
Department and it was the officers of the Current Accounts Departrment have
both a duty, as well as the authority to scrutinize, verify and process these
vouchers resulting in ultimate clearance thereof and in that view of the
matter, no offence can be said to have been committed by the appellants alone.
(viii) Even assuming that the appellants are party to any conspiracy but the
same by itself cannot yield any result, viz., ultimate benefit to the Accused
No. 3, as the clearance of the cheques was in the hands of some other officers
and as such the impugned judgment is liable to be set aside.
Since the banking practice in regard to grant of instant credit to the holder
of a negotiable instrument is an accepted one, meant for the benefit of the
customers, there can be no rationale that such benefits though required to be
given to the customers, would be withheld unless the actual fund is received
from the drawer bank.
there existed guidelines only for the Current Account and other Departments,
there existed no guidelines as regards the grant of instant credit which had
come to be established based on the internal practice followed by the banks.
Accordingly, no case for the commission of an offence of criminal breach of
trust had been made out.
being not the case of the prosecution that the procedures in respect of the
said transactions were totally disregarded and only because the scam broke out,
faults were sought to be found without 1 4 rectifying the said procedure and in
that view of the matter, the functionings of the appellants could not have been
(xi) The veracity
or the existence of the documents being not disputed, the judgment of the
Special Court as regards actual date of receipt of the cheques were wholly
unjustified, particularly in view of the statements made by the witnesses
examined on behalf of the drawer banks who had categorically stated that no
cheque was ante-dated.
Andhra Bank not being involved in the security transactions wherein only the
drawer banks were involved, the Special Court had no jurisdiction to try the
Even if the findings of the Special Court that some documents did not contain
all the details is held to be correct, all the officers concerned, from
receiving the cheque to clearance thereof (including the clearance of the Funds
Department) should be held to be liable therefor and not the appellants alone.
view of the pressure of work on all the employees being admitted, and as all
entries in the registers were required to be 1 5 done on the same day which
having substantially been complied with, inadvertent errors on the part of
employees cannot be considered to be acts of illegality.
Since the current account credit vouchers were released by the accused persons
in discharge of their official duties, the allegation that they had prepared
any false document and, thus, committed acts of forgery, must fail.
banker's cheques having been admittedly 100% guaranteed and the bank having not
suffered any monetory loss and having also not filed any complaint, the
impugned judgment cannot be sustained.
Appellants having followed the established and longstanding banking practices,
deviation therefrom would only amount to misconduct, as no mens rea can be
attributed to them.
transactions in question being exceptional in nature, which according to PW-17,
Katta Hari Babu, would mean "it involves large credits and large
debits"; some priority was required to be given thereto 1 6 (xix) When
cheques are posted (which means the amount is credited into the account), the
customer becomes entitled to utilize the same, which is not subject to the
clearance of the banker's cheque wherewith the accused had no role to play; and
hence the impugned judgment is wholly unsustainable.
view of the fact that Sh. Ramesh G. Ramteke, PW-18, both had the authority to
verify the transaction, as well as discovered discrepancies in the date of the
cheque and/or the credit and the debit voucher for which he went back to the
Funds Department, but no action was taken therefor would clearly go to show
that he satisfied himself that only a wrong date has been mentioned, which was
Appellants not being the authorized officers of the bank, could not be said to
have any dominion over the property of the bank and thus no offence can be said
to have been committed.
PW-19, S. Ganavinayagam having testified that accused No.3, Hiten Dalal used to
receive preferential treatment and for whom only the guidelines Ex.322 had been
issued, any action taken pursuant thereto or in furtherance thereof must be
held to be legal 1 7 and within the framework of law particularly when in
relation to bankers' cheques, as was admitted by PW-20,. Anand Sinha, an
officer of the Reserve Bank of India that no guidelines had been issued therefor.
the deposition of prosecution witnesses, particularly those who are high
ranking officers including PW-23, Sh. G. Bhalla, Chief Manger of Andhra Bank,
it would be evident that the appellants had followed the usual banking
practice. It has also been admitted that any transaction carried out was
subject to scrutiny, as the Funds Department used to send a daily report to
Accused No.5 having been shown to be involved in respect of only two
transactions, namely transaction Nos. 8 and 9, and as in respect transaction of
No.9, he had not been found guilty, for the self-same reasons he should have
been found to be not involved in respect of transaction No.8 as well.
There being no independent material on record to show conspiracy between A-1,
A-2, A4 and A-5 on the one hand and A-3 on the other the appellants could not
have been convicted for commission 1 8 of an offence under Sections 120-A and
120-B of the Indian Penal Code 1860.
conspiracy is a separate and distinct offence under the Indian Penal Code, and
the original agreement between the accused is a sine qua non there for, mere
knowledge of conspiracy by itself cannot be said to be sufficient in arriving
at a finding of guilt in respect thereof.
Lalit, learned senior counsel appearing on behalf of accused No.3 would
(i) As no
material of either any meeting or any conversation having been brought on
record, the question of holding him guilty of commission of an offence of
conspiracy does not arise.
bankers' cheques having been issued by the banks for utilization of the amounts
thereof by accused No.3 and he being beneficiary thereof, there was no question
of his being benefited by entering into any conspiracy with anyone.
Charges alleged made by the prosecution being confined to non realization of
the bankers cheques from the Reserve Bank of India at 1 9 the end of the day,
although credit thereof had been given in the account of accused No.3, the
irregularity in respect thereof was to be dealt with by different branches of
the banks wherewith accused No.3 was not concerned and, thus, he cannot be said
to have committed any offence.
assuming that irregularity had been committed in the matter of realization of
the amount under the bankers' cheques from the Reserve Bank of India, the same
by itself would not lead to an inference of commission of an illegal act and
consequently, an offence of conspiracy.
Mariarputham, learned counsel appearing on behalf of the Central Bureau of
Investigation, on the other hand, submitted :
Although there is no direct evidence of conspiracy, in view of the materials
brought on record by the prosecution, accused Nos. 1, 2, 4 and 5, who
authorized crediting of the amounts of the bankers' cheques for the benefit of
accused No.3 must be held to have misused their position so as to cause
wrongful loss to the bank and wrongful gain to accused No.3, and, thus, have
clearly committed the offence of 2 0 criminal breach of trust within the meaning
of Section 405 of the Indian
Penal Code 1860.
Circular dated 5th December, 1990 issued by the Andhra Bank (Ext. 322)
specifically providing that the transaction may be carried out in the case of
Hiten Dalal (accused No.3) and the commission to be charged therefor having
been prescribed and, thus, no exception having been made granting him the
facility of over draft, charging of interest on any advance or over draft etc.,
the officers of the banks having not taken the requisite precautions by them in
regard to receipt of any cheque and, thus, have violated the directions as the
account of accused No.3 was credited much before the Bank received credit in
respect of the said cheques in the account maintained with the Reserve Bank of
cheques/transactions would fall into three categories, namely - (1) post dated
cheques and credit given therefor earlier ; (2) cheques although not in
physical possession of Andhra Bank, but credit was still given to the account
of accused No.3; and (3) cheques presented for clearance the next day, but
account of accused No.3 was credited the previous day, all of which were wholly
2 1 (iv)
From a bare perusal of the findings of the learned Special Court it would
appear that in regard to transactions 1, 2, 3, 4, 7, 8 and 10 the cheques were
not in physical possession of Andhra Bank at the time when the account of
accused No.3 was credited, although in respect of transaction No.1 the cheque
might have been with the Andhra Bank and, thus, the charge against the
appellant must be held to have been established.
so far as the first transaction is concerned, account of accused No.3 was
credited on 18th May, 1991 but the cheque was dated 20th May, 1991 which
clearly shows the intention on the part of the appellants to confer an illegal
benefit to accused No.3, to which he was not otherwise entitled to.
respect of transaction No.10, although the account of accused No.3 was credited
on 7th April, 1992 for an amount of Rs. 4 crores, the materials on record
clearly show that although the cheque was dated 7th April, 1992, it was
issued/forwarded only on 8th April, 1992 which is clearly demonstrative of the
fact that the accused had dealt with the said cheque without there any
forwarding letter having been issued by the transferee bank stating that
accused No.3 was the beneficiary 2 2 thereof, the criminal misconduct on the
part of the accused must be informed.
far as transaction Nos. 2, 3, 4, 7 and 8 are concerned, it is borne out from
the record that the cheques had not been received by the Andhra Bank and in any
event the same having not been sent for clearance on the dates they were
purported to have been received, wherefor the bank did not receive any credit
from the Reserve Bank of India, the findings in the impugned judgment in this
behalf are unassailable.
far as transaction No.7 is concerned, it is established that a credit of Rs.1.5
crores had been given although the actual figure mentioned in the cheque was
Rs.2,37,29,750/- which is beyond anybody's comprehension as a partial credit is
not given in any banking transactions.
learned Special Judge having dealt with each of the transactions separately
showing in details as to how, and on what basis his conclusions were arrived at
in regard to the fact that the cheques involved in seven transactions were not
with Andhra Bank when the 2 3 account of accused No.3 was credited; the
impugned judgment should not be interfered with.
is clear from the findings of the learned Special Judge that but for the credit
given on the relevant dates, the account of accused No.3 would have been
overdrawn i.e. money in the account No.3 would not have been sufficient to
honour cheques issued by him and presented for payment on these days, and thus,
the appellants have rightly been found guilty for commission of the said
Even for a banking branch to grant immediate credit to the account of accused
No.3; as at least in respect of 5 cheques, the conditions required therefor,
namely the physical availability of bankers' cheques with the Andhra Bank,
having been found to be missing at the point of time when the credit was given
to the account of accused No.3, the appellants must be held to have committed
the offence under Section 409 read with Section 120-B of the Indian Penal Code.
When an account holder is permitted to draw money in excess of the amount in
his account, it would be an over-draft or an advance or loan from the bank to
the account holder, wherefor interest would become chargeable and as no
interest has been charged, the same would 2 4 amount to giving undue benefit to
the account holder, and loss to the bank, particularly when in the circular
letter (Ext. 322) there was no exception made in favour of accused No.3.
Accused No.3 had no overdraft facility or overdraft limit sanctioned to him, he
could not have indirectly obtained the facility at the behest of accused Nos.
1, 2, 4 and 5.
(xv) In a
situation of this nature, the Court is required to take a holistic view of the
mater and for the said purpose the materials brought on record to prove the
ingredients may have to be considered from different angles, namely - (a) if a
cheque had been received the entire procedure for grant of credit had been
rushed through beyond the normal banking hours so that credit may be given to
the account of accused No.3; (b) the cheques are of one date and the forwarding
letters of the next date, the credit and debit vouchers in the name of accused
No.3 could not have been prepared in absence of the forwarding letters; (c) the
requirements of accused No.3 must be held to be known to the officers of the
bank, as against the cheque amount of Rs.2,37,29,750/- credit for a sum of Rs.
1.5 crores could not have been granted, which clearly goes to show that even if
cheques were 2 5 received later the amounts were credited to the account of
accused No.3 so as to enable him to meet his other obligations and in the
process, money belonging to the bank was being used by Accused No.3 facilitated
by officers of the bank using their authority.
Appellants have not offered any explanation as to why details had not been
entered in such a large number of documents, although the register must show as
to who is the beneficiary of the cheques and the amount therefor, hence the
impugned judgment should not be interfered with.
Banking norms, for the purpose of attracting ingredients of Section 405 of the Indian Penal Code, are binding on its officers and for giving any undue
facility given to accused No.3, the appellants could be found guilty.
OF THE SPECIAL COURT It is well known that during the period for April 1992 to
June 1992, certain large scale irregularities and malpractices were detected in
certain security transactions which were alleged to have been carried on by
some prominent brokers in collusion with employees of various public sector 2 6
banks and financial institutions. To deal with the situation and to ensure the
speedy recovery of the huge amount involved, the Parliament enacted the Special
Court (Trial of offences relating to transaction in Securities) Act, 1992,
"the Act" establishing the Special Courts from whose judgment this
appeal comes before us.
question which now arises for our consideration is whether having regard to the
peculiar facts and circumstances of the case the Special Courts so constituted
had jurisdiction to try this matter.
Section 7, read with sub section 2 of Section 3 of the Special Courts Act,
limits the jurisdiction of Special Courts only to offences relating to
transactions in securities after the 1st day of April, 1991 and before 6 June
Section 8 provides that the special courts shall have jurisdiction to try any
person concerned for the offence referred to in sub section 2 of Section 3
either as a principal, conspirator or abettor and accused persons can be
jointly tried at one time, in accordance with CrPC.
have already dealt with the issue as to the ambit of jurisdiction of the
Special courts in R Venkatkrishnan v. Central Bureau of 2 7 Investigation
(Criminal Appeal No. 76 of 2004 decided today), it is not necessary to deal
with this aspect of the matter once again.
the jurisdiction of the Special Court is wide in nature.
provisions of the Act need to be interpreted keeping in mind its object and
purport. The Act being a special Act must be given its full effect.
bear repetition to state that A3 was one of the clients of Andhra Bank dealing
with the purchase and sale of securities through the Funds Department and that
he had a Current Account bearing No. 4819 mainly for the said purpose.
dealing with the securities transactions on behalf of A3, there used to be sale
as well as purchase of securities. In case of transaction of sale of
securities, Accused No. 3 used to receive his payments through Bankers Cheque
which were deposited with the Funds Department, and the amount of the Cheque in
relation to sale in securities. It is the undisputed position that the Funds
Department of the Andhra Bank was the only branch exclusively dealing with
Furthermore it must be noted in this respect, that Exhibit 322 Notification of
the Andhra Bank dated 5.12.1990 authorized the Fort Branch of Andhra Bank to
deal with A3 in regard to securities transactions.
as we have already noted, there is ample evidence of the officers and the staff
members working in the Bank of Karad, Standard Chartered Bank, Canara Bank and
ANZ Grindleys Bank that they had issued these Bankers Cheque in regard to
security transactions, especially in respect of Mr AD Narottam, who was dealing
who are accused in the present case A1, A2, A4 and A5 are officers in the Funds
Department of the Andhra Bank at its Fort Branch. As stated earlier, the said
branch was the only one dealing with security transactions on behalf of the
entire Andhra Bank.
submission of the learned counsel for the appellants that the trial of offences
by the Special Court is without jurisdiction and without the authority of law
would, thus, have to be rejected and, in our opinion, the court rightly
exercised jurisdiction in the present matter. We affirm the findings of the
court in this regard.
FOLLOWED BY THE VARIOUS DEPARTMENTS 2 9 In order to appreciate the issues
involved in the present case it is necessary to set out in brief the working
modalities of the various departments of the Fort Branch of Andhra Bank, Mumbai
which were connected with transactions relating to bankers cheques. There are
four such departments to which we must pay special attention; namely Funds and
Investment Department (hereinafter "Funds Department"), Current
Account Department, the Clearing Department and lastly Day Book Department. It
is also to be noted that the Funds Department was an independent department
whereas the other departments namely Current Accounts Department, the Clearing
Department and the Day Book Department were under the Operations Department of
Fort Branch of Andhra Bank, Mumbai.
Department which was functioning at the Fort Branch was exclusive to the said
branch, and did not exist in any other branch of Andhra Bank throughout India.
This department was dealing in call money and securities transactions on behalf
of the bank as a whole. The functioning of the department was directly under
the supervision of the head office of the bank, situated at Hyderabad.
3 0 For a
proper analysis of the factual matrix of the case it would be essential to take
a close look at the procedure followed in the various departments of the Bank.
DEPARTMENT Bankers cheques used to first arrive at the Funds Department of the
Bank. These cheques which were received from the drawer bank were accompanied
with a forwarding letter indicating the nature of the beneficiary and the
amount of the Cheque. On receipt of the Cheque, an entry used to be made in the
Bankers Cheque Receivable Register [BCR Register]. The register contain all
necessary particulars with regard to the Cheque, the name of the drawer bank,
the number, the date and amount thereof as also to whom the amount of the
Cheque was to be credited.
entries used to be made in the transfer scroll, which contained credit as well
as debit vouchers. The details of the credit voucher are entered in the
transfer scroll on the credit side, and the details of the debit voucher are
entered on the debit side. The entries in the transfer scroll used to be made
on the same day on which the Cheque was received.
3 1 On
the credit side, the particulars of the person in favour of whom the Cheque was
received was entered, along with the amount of the cheque. On the debit side,
debit voucher entries were made by debiting the BCR account with the amount of
the cheque. Thereafter, the credit voucher used to be sent to the Current
Account Department for posting, i.e., giving credit equal to the amount of the
cheque directly to the account of the beneficiary. The debit voucher was
however retained in the Funds Department.
vouchers were required to be signed, which in effect authorizes the credit to
be given to the beneficiary of the cheque.
the procedure followed by the department, a consolidated credit voucher and a
consolidated debit voucher used to be prepared on the basis of the entries made
in the BCR Register by about 2.30 to 2.45 pm.
the voucher contained the total of all the cheques received until then.
consolidated credit voucher was prepared, along with a slip bearing the amounts
of all the cheques. The total of the vouchers and the total of all the cheques
given on the slip should tally with the total of the BCR Register.
Thereafter, the consolidated credit voucher so prepared along with the slip and
all the cheques used to be sent to the Clearing Department of the Bank, whereas
the consolidated debit voucher was sent directly to the Day Book Department.
ACCOUNT DEPARTMENT The Current Account Department as has already been noted
came under the Operations Department of Andhra Bank. The officers working in
the Current Account Department would check the credit vouchers received from
the Funds Department and then make posting on the computer which operated as
per the Advanced Ledger Posting Machine [ALPM] programme.
amount shown in the credit voucher would, through the posting, be credited to
the account of the client indicated on the credit voucher. At the end of the
day two lists used to be generated through the ALPM system from the computer.
The first list concerned Exceptional Transactions of the day which were
transactions involving amounts of more than one lakh. The second list, namely
the transaction listing, was for all the transactions handled by the Current
Account Department on that day.
DEPARTMENT 3 3 As has already been noted, the Clearing Department used to
receive the consolidated credit vouchers along with the slip bearing the
amounts of the various cheques, along with the cheques themselves from the
Funds Department. These cheques, thereafter, were bifurcated bank-wise and
accordingly a bank-wise slip, for the purpose of preparing the bank schedule,
was made. Mr Sarkar [PW 15] used to verify the entries made in the bank
schedule along with the cheques before sending them to the service centre for
clearing rubber stamp along with the date would be put on each Cheque as well
as the consolidated credit voucher. The date of the stamp would be the date on
which the Cheque was received in the Clearing Department and sent to the
service centre for realization. It was the job of the service centre to send
the cheques to the RBI where the amount of the cheque would be credited in the
account of Andhra Bank with RBI.
cheques would then go back to the drawer bank and the bank schedule would be
sent back to the service centre. In case a cheque was dishonored, it used to
come back to the Clearing Department through the service centre. If no Cheque
was received back by the Clearing Department 3 4 from the service centre by
4.00 pm, then it meant that all the cheques had been cleared.
the consolidated credit voucher would be sent from the clearing department to
the Day Book Department.
DEPARTMENT Day Book Department used to ultimately receive both the consolidated
credit voucher as well as the consolidated debit voucher.
used to receive the credit voucher from the Clearing Department, the debit
voucher used to be directly received by it from the Funds Departments. Since
both the vouchers were prepared from the BCR Register they would both tally
with each other. Accordingly it was in this department that all the
transactions of the day of Fort Branch of Andhra Bank used to be consolidated.
Mr Mukesh [PW 16] used to handle the consolidation.
his duty to consolidate the data in the Day Book Register. It must be noted
that a day book register is like a balance sheet showing the assets and
liabilities of the bank on that day. Accordingly a Bankers Cheque which
remained to be realized at the end of the day would be shown as an debit excess
under the head of `Bankers Cheque receivables' 3 5 A similar balance sheet
through the General Ledger Balance [GLB] used to be generated through the ALPM
system. This GLB gave a snapshot of the assets and liabilities on a particular
FOR BANKERS CHEQUES Let us now consider the relevant guidelines which relate to
the dealing of the Bankers Cheques.
Sastry, the Assistant General Manager and the Chief Officer in the Central
Accounts Department at the head office of Andhra Bank at Hyderabad, stated in
his testimony that the head office had issued guidelines for the operation of
securities transactions of constituents at Fort Branch , Bombay dated 5.12.1990
testimony, he further clarified that the intention behind issuing the
guidelines was to ensure that the purchase price for the transaction would be
made only after ensuring that the sale proceeds of the transaction are credited
in the RBI to Andhra Bank.
him, the Funds Department would receive the bankers cheques on account of sale
transactions of the clients and enter the particulars of 3 6 these instruments
and send them to the Service centre for being forwarded to the RBI for
crediting the amount to Andhra Bank's account.
12 of Exhibit 322 [Operations of Security Transactions for Constituents at Fort
Branch, Bombay] specifically provides:
ensure that all the cheques received towards sale transactions will be
presented in Special Clearing for interbank cheques and ensure that the credit
is afforded to our Bank with RBI on the same day."
also been vehemently submitted before the Special Court that the said
guidelines were not in respect of the Funds Department. It was furthermore
contended that guideline itself does not indicate that they were pertaining to
the Funds Department. The learned special judge rightly rejected the said
guidelines were issued by the Head Office. They were issued for the purpose of
operation of security transaction at Fort, Bombay Branch of Andhra Bank. The
guidelines moreover specify that permission had been granted to Hiten P Dalal
(A3) for the purpose of securities transactions.
these directions were obviously binding on the persons who were working in the
Funds Department. These guidelines were 3 7 exclusively meant for the Funds
Department for handling securities transactions, and there was no other
department or branch of Andhra Bank anywhere in India which was handling such
securities transactions. As such, they were binding on the accused persons.
PRESENT CASE In the aforementioned backdrop of events, let us now analyse the
transactions involved herein. Ten transactions relating to drawer's cheques are
in question, the details whereof are as under:
Date of Amt. Date of Actual Credited to realisation date of NO. Credit a/c of
A3 of cheque cheque 1 18.05.91 2 crore 20.05.91 20.05.91 2 05.07.91 29 lacs
06.07.91 05.07.91 3 05.07.91 71 lacs 06.07.91 05.07.91 4 17.09.91 61,84,925.59
18.09.91 17.09.91 5 06.11.91 86,62,500 08.11.91 06.11.91 6 06.11.91 75 lacs
08.11.91 06.11.91 7 13.11.91 1,50,00,000 14.11.91 13.11.91 8 04.12.91 7 crores
05.12.91 04.12.91 9 16.12.91 8,80,95,890 17.12.91 16.12.91 10 07.04.92 4 crore
08.04.92 07.04.92 Accused No.1 is involved in all the transactions ; Accused
No.2 is said to be involved in eight transactions, i.e., transaction Nos. 1 to
6, 9 and 10; while Accused No.4 is allegedly involved in four transactions, 3 8
transaction Nos.4 to 7. Accused Nos. 2 and 4 are jointly involved in
transaction Nos. 4 to 7.
No.5 has not authorised any payment. He is said to be involved in transaction
Nos.8 and 9 only. However, Accused No.5 has been given benefit of doubt in
respect of the 8th transaction. We are, therefore, concerned herein with his
involvements in the 8th transaction.
discussed the functioning of different departments at some length only to
highlight the submissions of learned counsel appearing on behalf of the
appellants that the prosecution has not been able to prove the charge of
conspiracy as without involvement of other departments, it was not possible for
accused No.3 to obtain any pecuniary gain out of the said transactions at all,
also notice that the functioning of the different departments has not been
functioning of the Funds Department has been proved by PW 2, Sampada S. Amre,
and the other departments' functionings by PW 11, Hemlata Nair. The same would
also be apparent from the entries made in the BCR register, marked as Ext.111.
So far as the functioning of the 3 9 Clearing Department is concerned, the same
has been proved by PW 13, Sunil Pore. Therein, cheques are segregated bank-wise
and amount wise.
appears to be some controversy as to at what time cheques are sent out for
clearance. According to the appellants, the Funds Department is bound to
receive cheques up to 3.00 p.m. However, according to the prosecution a
consolidated statement of the cheques received upto 2.30 p.m., after preparing bank
schedule by the Clearing Department are sent at about 2.45 p.m. to the service
centre and the R.B.I. Appellants contend that any cheque received after the
prescribed hours i.e. 2.30 - 2.45 p.m., is sent with a single voucher to
accepted by PW 13, Sunil Pore that any cheque received up to 3.00 p.m. is also
entertained wherefor a separate voucher is prepared, and the same is sent to
the Current Account Department. This voucher may not be sent on that date, but
must be sent on the day after.
also contended that in regard to the processing of the cheque for giving credit
or making entries, the Funds Department evidently had no access. It is also
admitted that the Funds Department personnel have no access to the ALPM
machine. It also appears from the evidence of PW-7, K. Hari Babu, that the
crucial function of operating the machine is of the 4 0 Current Account
Department. Before signing the document relating to the posting of the cheque,
an officer of the Current Department only would verify the entries made in the
computer on the basis of which a print out would be taken out which is
considered to be a document authorization in respect thereof.
witness further states that the credit granted are of two types, namely cleared
credits and uncleared credits. This would be known from the vouchers received
from the Funds Department.
us, the aforementioned procedural aspect is not at all in dispute. What is in
dispute is what is meant by authorisation.
attention has also been drawn to certain flaws in the system pertaining to the
working of the various departments but we are not much concerned with them
herein According to the prosecution, as instructions are received by the
Current Account Department from the Funds Department by way of credit vouchers,
signing of the same by the officer would itself amount to authorization whereas
according to the accused, posting of the vouchers for clearance would amount to
4 1 The
learned Special Judge in his judgment has dealt with each transaction in great
details. He has considered both the aspects of the matter in respect of each of
the transactions. The learned Judge, however, found that apart from three
transactions, being transaction Nos. 5, 6 and 9, physical possession of the
cheques might have been established, but in respect of other transactions
either vouchers had been prepared before receipt of the cheques, or post dated
cheques issued by the drawer banks have been entertained, in violation of the guidelines
issued by the Bank.
had been given on the basis of post dated cheques. Two cheques were not in the
physical possession of the Andhra Bank. Although the cheques were presented for
clearance on the next date, the account of Accused No.3 was credited on a
we have been taken through the depositions of all important witnesses, as
regards the functioning of the Bank, which includes not only the internal
functioning of its different departments but also the banking practice
developed over the years for grant of instant credit to its customers including
Accused No.3, it may not be necessary to delve thereto in details.
considered opinion, we may proceed on the assumption that the transactions in
question are exceptional transactions and a banking practice 4 2 had developed
for grant of advance credit to some of the customers of the Bank, including
It is not
in dispute that the guidelines issued by Andhra Bank (Ext. 322) do not relate
to Bankers Cheques. It is also not in dispute that the payment under the
Bankers Cheques is guaranteed. It is furthermore admitted that the Funds
Department used to receive cheques along with a forwarding letter mentioning in
whose account the same it is to be credited and upon verification thereof, it
would be sent to the Clearing Department.
cheques used to be received by the officer of the Funds Department and on the
instructions of these officers that the credit vouchers were to be prepared.
After preparation, the vouchers were to be handed over to the officers who, by
signing them, used to authorise the transaction.
As per PW
23, Mr. G.H Bhalla, the cheques used to be sent to the Clearing Department,
which in turn was responsible for sending them to the service centre.
according to PW 12, Mr. Rajinderkumar, the debit vouchers were retained in the
Funds Department and credit vouchers were sent to the Operational Department.
It was on the basis of credit vouchers that entries were made in the Current
Account of the Customer.
4 3 Mr.
Katta Hari Babu's (PW 17) responsibility was to verify the signature of the
officer on the credit vouchers after they were received by him whereafter he
used to give it to his operator with an instruction for posting.
proceedings, the Bank Schedules were made ready by 2.30 p.m everyday. Separate
vouchers were made for cheques that were received after the consolidated
voucher had been prepared.
banker's cheques, since they related to daily transactions would never be post
dated. No credit was to be given on the basis of post dated Cheque. Bankers
Cheques used to be accompanied by a Covering letter, which was in the form of a
letter of Authorization of the issuing bank containing details of the
beneficiary of the said cheques.
Mr. G.H. Bhalla, further elaborates that giving immediate credit meant
preparing the credit voucher on the receipt of the banker's cheque and sending
the said voucher to the Current Account department for posting credit to the
customer's account. However, customers who had deposited banker's cheques could
not demand the credit as a right on the same day before the realization. Since
Officers of the Funds Department had the ultimate responsibility to give
credit, they used to exercise considerable 4 4 discretion in the matter. It was
the concerned officers' responsibility to satisfy himself that the credit
should come on the same day.
further goes on to say that Accused No.3 had only a Current Account in the
Branch. He did not enjoy any overdraft facility. It was the Funds and
Investment Department's responsibility to carry out sale and purchase of
received banker's cheques on his behalf.
CONSPIRACY Appellants were charged for entering into a criminal conspiracy in
the matter of commission of several offences.
conspiracy, it must be noted in this regard, is an independent offence. It is
punishable separately. A criminal conspiracy must be put to action; for so long
as a crime is generated in the mind of the accused, the same does not become
punishable. Thoughts even criminal in character, often involuntary, are not
crimes but when they take a concrete shape of an agreement to do or caused to
be done an illegal act or an act which is not illegal, by illegal means then
even if nothing further is done, the agreement would give rise to a criminal
ingredients of the offence of criminal conspiracy are:
4 5 (i)
an agreement between two or more persons;
agreement must relate to doing or causing to be done either (a) an illegal act;
(b) an act which is not illegal in itself but is done by illegal means.
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 of two or more
persons for doing or causing to be done an illegal act or an act by illegal
courts, however, while drawing an inference from the materials brought on
record to arrive at a finding as to whether the charges of the criminal
conspiracy have been proved or not, must always bear in mind that a conspiracy
is hatched in secrecy and it is difficult, if not impossible, to obtain direct
evidence to establish the same. The manner and circumstances in which the
offences have been committed and the accused persons took part are relevant.
For the said purpose, it is necessary to prove that the propounders had expressly
agreed to it or caused it to be done, and it may also be proved by adduction of
circumstantial evidence and/ or by necessary 4 6 implication. [See Mohammad
Usman Mohammad Hussain Maniyar & Ors. v. State of Maharashtra (1981) 2 SCC
443] The following passage from Russell on Crimes (12th Edn. Vol 1) cited by
Jagannatha Shetty, J in Kehar Singh and Ors. v. State (Delhi Administration),
[1988 (3) SCC 609 at 731] brings out the legal position succinctly:
gist of the offence of conspiracy then lies, not in doing the act, or effecting
the purpose for which the conspiracy is formed, nor in attempting to do them,
nor in inciting others to do them, but in the forming of the scheme or
agreement between the parties. Agreement is essential. Mere knowledge, or even
discussion, of the plan is not, per se enough"
it was noted in Kehar Singh (supra) that to establish the offence of criminal
conspiracy `[i]t is not required that a single agreement should be entered into
by all the conspirators at one time. Each conspirator plays his separate part
in one integrated and united effort to achieve the common purpose. Each one is
aware that he has a part to play in a general conspiracy though he may not know
all its secrets or the means by which the common purpose is to be
accomplished.' 4 7 In some cases, intent of unlawful use being made of the
goods or services in question may be inferred from the knowledge itself.
Court in State of Maharashtra v. Som Nath Thapa [(1996) 4 SCC 659] opined that
it is necessary for the prosecution to establish that a particular unlawful use
was intended, so long as the goods or services in question could not be put to
any lawful use, stating:
The aforesaid decisions, weighty as they are, lead us to conclude that to
establish a charge of conspiracy knowledge about indulgence in either an
illegal act or a legal act by illegal means is necessary. In some cases, intent
of unlawful use being made of the goods or services in question may be inferred
from the knowledge itself. This apart, the prosecution has not to establish
that a particular unlawful use was intended, so long as the goods or service in
question could not be put to any lawful use. Finally, when the ultimate offence
consists of a chain of actions, it would not be necessary for the prosecution
to establish, to bring home the charge of conspiracy, that each of the
conspirators had the knowledge of what the collaborator would do, so long as it
is known that the collaborator would put the goods or service to an unlawful use."
K.R. Purushothaman v. State of Kerala (2005) 12 SCC 631] Since we have dealt
with the law with respect to criminal conspiracy in detail in R. Venkatkrishnan
v. Central Bureau of Investigation (Criminal 4 8 Appeal 76 of 2004 decided
today) we need not deal with it hereat once again.
however notice that this court most recently in Mohmed Amin @ Amin Choteli
Rahim Miyan Shaikh and Anr. v. C.B.I. through its Director, 2008 (14) SCALE 240
after taking recourse to law governing the field noted thus:
The principles which can be deduced from the above noted judgments are that for
proving a charge of conspiracy, it is not necessary that all the conspirators
know each and every details of the conspiracy so long as they are
co-participators in the main object of conspiracy. It is also not necessary
that all the conspirators should participate from the inception of conspiracy
to its end. If there is unity of object or purpose, all participating at
different stages of the crime will be guilty of conspiracy."
properly appreciate the prosecution's case, we must deal with all the ten
transactions in some details hereinafter.
4 9 The
first transaction relates to a bankers cheque bearing No. 56643 dated 20.05.1991
for a sum of Rs. 2 crores issued by the Bank of Karad in favour of Andhra Bank.
Admittedly, the account of Accused No. 3 was credited with the said amount on
18.05.1991 itself even though the Cheque bears the date the 20th, on the basis
of the credit voucher signed by Accused 1 and Accused 2.
credit voucher had been prepared by Kamble (PW 12). Mr Ramtake (PW 18) who at
the relevant time was working in the Current Account department had received
the said voucher on the 18th and had accordingly made the posting of Rs. 2
crore in the account of Accused 3.
appears that while making the posting in the current account of Accused No. 3,
PW 18 entertained a doubt. He verified from the Transfer Scroll and from the
consolidated credit voucher the dates of the bankers cheques, since though the
date on the bankers cheque was 20/05/1991 however the credit voucher had been
received on the 18th itself.
learned Special Judge in his impugned judgment opined that the cheque was not
in physical possession of Andhra Bank. Reference in this regard must also be
made to Exhibit 27 which was prepared in the Bank of Karad, which also goes to
show that the cheque was issued on 20/05/1991.
5 0 This
banker's cheque had been issued at the instance of A.D. Narottam and his
account was debited on 20/05/1991. If the Cheque had been issued by Andhra Bank
on the 20th, serious doubt arises as to how the credit voucher for the same
could have been prepared on 18/05/1991.
Sastry (PW 22) in his evidence categorically stated that the bankers' cheques
are never post-dated since they relate only to that particular days
transaction. The evidence of Mr. Bhalla (PW-23) is in the following terms:
dated banker's cheque cannot be issued as per the practice followed in the
(PW 12) in his evidence stated that neither in the BCR Register of 20/05/1991
nor in the Transfer Scroll of the said date, he found any entry made as regards
the aforementioned cheque for the credit or debit voucher for Rs. 2.00 crores.
In the transfer scroll of 20/05/1991 as also the debit voucher, details of the
said cheque were not found. They could be found only in the Transfer Scroll of
18/05/1991. The debit voucher also bore the same transfer scroll number being
the Transfer Scroll Register (Exhibit 140) as also the credit voucher, show
that the amount was to be credited to the account of 5 1 Accused No. 3. The
credit vouchers, therefore, were prepared on 18.05.1991 although it bore the
date 20.05.1991. Even the BCR Register for 20.05.1991 (Exhibit 139) does not
show receipt of the cheque.
however, contend that although the cheque was dated 20.05.1991, the same had
been received on 18.05.1991 on the basis of which the credit voucher was prepared
and sent for the purpose of posting, as per the practice of giving instant
credit which, in our opinion, is not worth any credence. It is not in dispute
that the normal banking practice is that an entry of each cheque would be made
immediately in the BCR Register.
thus, the cheque been received on 18.05.1991, mention of it should have been
found therein. There are no details in the entry as to whom the credit should
be given to or the name of the drawer bank, the cheque number or the date of
the cheque, which admittedly are required to be entered into the register on
receipt of a Bankers Cheque. Such details were furnished only in the BCR
Register dated 20.05.1991. The credit and debit vouchers, thus, should have
contained the details of the cheque. Credit Voucher (Exhibit 136) and Debit
Voucher (Exhibit 137), however, do not contain such details, and even the name
of the drawer bank does not find mention.
5 2 The
only thing which has been mentioned is that the amount of the bankers cheque is
to be credited to the account of Accused No. 3 Hiten P. Dalal.
(PW-3), who was heading the Securities Department in the Bank of Karad,
categorically stated that the cheque was issued on 20.05.1991, under his
signature. The credit voucher of Bank of Karad is also dated 20.05.1991.
Sampada Ambre (PW-2) in his evidence stated that the entry with regard to the
said cheque was made in the DD Sold Register only on 20.05.1991. Sarmalkar
(PW-5), who was also an officer of Bank of Karad, and who had made an entry as
regards the said cheque in the account of Mr. A.D. Narottam (Exhibit 73(1))
made a similar statement that his account had been debited for Rs. 2 crores on
attention, however, was drawn to a purported admission made by Mr. Raje that
sometimes, Mr. Narottam used to give post-dated cheques and the staff would
prepare the required documents on the next day. Mr.
has not been examined by the defence. As the witness categorically stated that
the said cheque was issued on 20.05.1991 itself, after making an entry in the
DD Sold Register and debiting it in the account of Mr. Narottam, the question
of issuance of the post dated cheque would 5 3 not arise. The said purported
admission does not relate to the cheque in question.
as indicated hereinbefore, the entries made in the BCR register, consolidated
credit voucher (Exhibit 132) are clear pointers to the fact that the cheque was
received by Andhra Bank only on 20.05.1991. The cheque for a sum of Rs. 2
crores of Bank of Karad also finds mention in the bank schedule dated
20.05.1991 and not in the Bank Schedule dated 18.05.1991. It would bear
repetition to state that PWs 22 and 23, furthermore stated that bankers cheques
are never post dated.
if an account is overdrawn, it amounts to an overdraft and for the same, the
account holder is liable to pay interest. No interest was charged from the
account of A 3 in this regard. Loss to the bank on account of interest was Rs.
20,274/- Therefore, we are of the opinion that the involvement of Accused Nos.
1, 2, and 3 as regards the said transaction has sufficiently been established
by the prosecution.
AND THIRD TRANSACTION
5 4 So
far as the 2nd and 3rd transactions are concerned they involve bankers cheques
bearing Nos. 664786 dated 5/7/1991 amounting to Rs.29 lac and 664785 dated
5/7/1991 for Rs. 71 lac issued by the Bank of Karad in favour of Andhra Bank.
a single credit voucher for Rs. 1 crore authorising the crediting of the said
amount into the account of accused No.3 was issued by accused No.2. The
corresponding debit voucher dated 05.07.1991 was also for Rs. 1 crore and it
was in the handwriting of Accussed No. 2 and signed by both accused No. 1 and
2. This transaction was also included in the list of exceptional transactions
for 05.07.1991. Therefore, it is clear that on 05.07.1991 Accused No. 2
authorised the current a/c department to give credit of the amount of Rs. 1
crore to the account of Accused No. 3.
finding of the learned Special Judge, relying on or on the basis of the
evidence of PW-2, Sampada S. Amre, that the said cheques were received on only
6/7/1991 in the clearing department and sent for clearance on that day, even
though the amount had been credited with A3 on the 5th itself, cannot be
question before the judge was whether the said Cheque had really been received
by the Funds department on the 07/07.1991. For this the 5 5 learned Special
Judge also found that in the BCR Register dated 5/7/1991 as also the transfer
scroll, no details of the said cheques had been given, although in the BCR
Register dated 6/7/1991 two separate entries of the cheques giving details like
name of the bank, cheque numbers, dates and amounts had been mentioned. The
forwarding letter of the drawer bank has not been exhibited. From the daily
register it appears that the cheque for Rs.
and 71 lacs appear as the last entries [Exts. 28(1) and 28(2)]. The transfer
scroll also show that the said banker cheques were sent at the end of the day.
They find mention in Exhibit 153 at the places marked Exts. 153(1) and 153(2).
Even in Ext. D-28 of Andhra Bank dated 5th July, 1991 they had been shown as
the last entries. From Exts. 153(1) and 153 (2) it further appears that the
transactions in relation to the said cheques were entered into on 5th July, 1991
as the last transactions of the day. They had been forwarded to the current
account department as has been mentioned earlier. The amount of both the
cheques were clubbed together to make it Rs. 1 crore in toto. From these
documents, it is evident that proceeds of the cheques were credited to the
account of accused No.3 on 5th July, 1991 itself. From Ext. A- 1(14), Current
A/c. Register, ALPM II, it would furthermore appear that posting of the cheques
was done by the Current Department at Sl. 179.
5 6 The
fact that the cheques were dated 5th July, 1991 is not in dispute. It is also
not disputed that the voucher Ext.151 was prepared on 5th July, 1991.
Ragvinder Sarkar, stated :- "Unless and until the cheque issued in favour
of Party are cleared, in clearing and the account of the drawee with the RBI is
credited to the account of that bank with RBI, credit of the amount of that
cheque is not given to the account of that party."
according to him, the said cheques were not sent for clearance on that date as
per the schedule, in his cross-examination he stated:- "20. [...] The
amount is credited to the account of the client by making entry in his current
We do not
maintain any Clearing Register in Clearing Department with regard to the
cheques received from the Funds and Investment Department. There was no
procedure to maintain such Register."
further accepted that there was no practice of issuing acknowledgement to the
Funds Department for receiving cheques from them or vice versa.
According to him the Clearing Department does not accept cheque from the Funds
Department once the bank schedule is sent to the Service Centre. He furthermore
stated :- "Functioning of the clearing department was to send for clearing
whatever cheques are received from the Funds and Investment Department or from
other department. No department can get the cheque cleared by sending them
directly to the service centre by-passing the Clearing Department."
Learned Special Judge should have given proper attention to the evidence of Mr
Kher (PW 1) an agent, Mr Raju (PW 3) who was working as the Manager, and
Sudhakar Ali (PW 4) the clerk working with the Bank of Karad which show that
both these cheques had been prepared and issued as per the instrctions of AD
Narottam on 05.05.1991. The learned Special Judge placed unnecessary reliance
on the entries in the BCR Register of Andhra Bank to prove the fact that the
cheques had not been received on 05.05.1991.
because the total amount of the cheques and the name of the drawer bank had
been entered without the cheque numbers, this by itself would not lead to the
conclusion that the cheques were not received on the 5 8 day as it has not been
disputed that the cheques used to be received by the Funds Department upto 3.00
p.m. The learned Special Judge in arriving at the said finding ignored the
working of the Current Account Department. It furthermore failed to make a
distinction between cleared credit and uncleared credit. Those credits which
come within the purview of cleared credit would be known only at the end of the
day as all transfers which come within the purview of the "exceptional
transactions" were known to the high ups of the bank. The practice of
instant credit stands accepted.
current account officers knew the distinction between cleared credit and
uncleared credit. If the credit was uncleared, it would be posted as such and
no withdrawal would be permitted unless there was authorization by officers and
managers of the operation. The funds department indisputably does not control
the posting of credit (both as cleared and uncleared credit) and also does not
control withdrawal against uncleared credit. These functions are discharged by
the Current Account Department.
of the appellants must be adjudged on the basis of all the materials brought on
record. The only lacunae which has been pointed out that the details of the
cheques had not been mentioned in the BCR Register and the amount of both the
cheques had been clubbed together.
5 9 PWs.
11 and 12 were the best persons to state before the Court as to whether the
said cheques were received on those days or not. PW-13, Sunil Pore, Clerk in
the Clearing Department and PW-15, Ragvinder Sarkar, Office in the Clearing
Department stated that they had no knowledge as to when the cheques were
received. The prosecution, thus, failed to bring on record any clinching
evidence to show that the cheques were received only on 6th July, 1991 and not
a date prior thereto.
We may at
this stage also notice the statement of PW-4, Sudhakar A.
Clerk in the Securities Department, Bank of Karad, which reads :-, "I do
not know when Mr. Raje handed over the cheque and the covering letter, Ex. 12
and 17 to Mr. Narotam. It is not correct to say that Mr. Raje used to comply
with the directions of Mr. Narotam giving go by to the Banking rules and
Rajendrakumar V. Kamble had made the said entry.
to him it came within the purview of the bank practice. He further stated that
as the Clearing Department refused to accept the cheques on 5th July, 1991 they
were returned to the Funds Department where they were separately recorded and a
separate BCR was prepared and sent to the Clearing Department. According to the
said witness it was a practice of the 6 0 bank to send refused cheque through a
separate voucher so as to make it distinct.
furthermore important to note that because of the urgency, details, such as the
cheque number, date and beneficiary remained to be entered in the BCR Register.
learned Special Judge has also ignored the documents on record which
demonstrate that in respect of several other transactions the authenticity and
bona fides of which are not in dispute, the details of the RBI cheque were not
to be found in the BCR Register. This is apparent from Exhibits [141, 154, 146]
and hence absence of certain details by itself may not give rise to an
inference that the cheque had not been received.
if mere absence of details in the current account credit voucher was enough to
give rise to an inference that the cheque in fact had not been received, the
officers of the current account department would have raised a query thereabout
and would not have authorized posting credit in the clients accounts.
opinion the learned judge erred in coming to the conclusion that the total
amount of the two cheques was written in the BCR Register and in 6 1 the
current account credit voucher and the two cheques were in fact not received on
05.07.1991. He ignored that some times, the total amount of the cheques was
written without specifying the amount of the individual cheque.
been ignored by the special judge that had the Funds Department sent the
current account credit voucher without there being a cheque, the same could
have been easily discovered as the cheque in question facilitated high value
transactions. In respect of high value cheques a separate record in the form of
"Exceptional transactions" is maintained.
Exceptional transactions are verified and signed by the Chief Manager, Bhalla
and also verified and signed by the Current Account officer. Had there been any
irregularity on the part of the Funds Department the same would have been noted
both by the current account officers and the Chief Manager, Bhalla and they
would obviously have raised an objection.
learned judge of the Special Court has wrongly not attached any importance to
the exceptional transactions record on the ground that there are too many
transactions and therefore officers concerned are not ecpected to scrutinize
the said list. This inference was against the evidence on record which show
that there used to be only a few exceptional transactions every 6 2 day (at the
most 7 to 8 in a day) and it is impossible that the officer signing the said
note would not note the transactions in question.
learned judge seems to have mixed the exceptional transactions with the
transaction listing, which contains all the transactions of the day sent to the
current account department. However exceptional transactions are very few in
number and the very purpose of maintaining separate vouchers for such
transactions is to bring to the attention of the superior officers for their
manual clearly requires the manager to scrutinize the exceptional transactions
to ensure that there has been no unauthorized use of discretionary power and to
sign the exceptional transactions list after proper scrutiny.
Court, in our opinion, committed an error in opining that the cheques were not
received on 5th July, 1991. Furthermore the Current Account Department, could
not have given credit for the two cheques since the computer system had an
inbuilt mechanism which would not allow credit therefor before the clearance.
It was, thus, for the Current Account Department to take necessary steps either
for obtaining proper authorisation or to deny mutual operation in respect
6 3 It
is, therefore, evident that the prosecution has merely shown some
irregularities. The learned Special Judge has drawn inference, although there
exists a missing link as regards the date of receipt of the cheques and the
date of preparation of the vouchers. It must be borne in mind that we are
dealing with a case where conspiracy is alleged.
no direct evidence of conspiracy, there are only circumstancial evidence. The
approach of this court for recording an order of guilt against an accused on
the basis of circumstantial evidence is well known.
Chenga Reddy v. State of A.P., [ (1996) 10 SCC 193 ], this Court held :-
"46. [...]In our opinion none of the circumstances relied upon by the
prosecution connect the appellants with the crime alleged against them.
circumstances have not been proved beyond a reasonable doubt and the
circumstances taken collectively cannot be said to be compatible only with the
hypothesis of the guilt of the appellants and totally incompatible with their
circumstances we are of the opinion that the prosecution has not established
the case against the appellants beyond a reasonable doubt. "
Court further held :- 6 4 "52. [...] There have been some irregularities
committed in the matter of allotment of work to the appellant or breach of
codal provisions, circulars and departmental instructions, for preparation of
estimates etc. and those irregularities give rise to a strong suspicion in
regard to the bona fides of the officials of the department and their link with
the appellant, but that suspicion cannot be a substitute of proof. The courts
below appear to have drawn inferences by placing the burden of proving
innocence on the appellant which is an impermissible course. In our opinion
none of the circumstances relied upon by the prosecution against the appellant
can be said to have been proved satisfactorily and all those circumstances,
which are not of any clinching nature, even if held to be proved do not
complete the chain of evidence so complete as to lead to an irresistible
conclusion consistent only with the hypothesis of the guilt of the appellant
and wholly inconsistent with his innocence. The prosecution has not established
the case against the appellant beyond a reasonable doubt."
the fact that the cheques were not received on 5th July, 1991 has not been
proved , there is no reason as to why benefit of doubt should not be given to
the accused herein.
in our opinion the practice of instant credit stands accepted.
practice has been established though the evidence of Sastry (PW 22) and of (PW
23) Bhalla. Thier evidence clearly shows that this practice 6 5 was known to
the head office and to all the superiors officers of the Bank. It is also not
in dispute that the payment against Bankers cheques is 100% guaranteed. The
accused have followed the practice that was in vogue for a long time.
learned Special Judge has ignored and has not taken into account the
documentary evidence on record, which shows that the cheques in respect of
transaction 2 and 3, were received on the dates on which the transaction was
made. We are therefore of the opinion of giving the benefit of doubt should be
given to all the accused as regards transaction Nos.2 and 3.
fourth transaction relates to bankers cheque No.078398 dated 17.09.1991
amounting to Rs.61,84,925.59 ps. which was issued by Canbank Financial Services
Limited, a sister concern of Canara Bank in favour of Andhra Bank. As per the
evidence of PW 10 Vernekar on 17.09.1991 Canbank Financial Services Limited of
Banglore purchased 11% Bihar Loan for a total amount of Rs. 6184925.59/- from
the Andhra Bank, Fort Branch, Mumbai. A 3 was the broker for this transaction.
CANFIN had issued 6 6 Bankers Cheque dated 17.09.1991 for the aforesaid amount
in favour of Andhra Bank; A3 being the beneficiary thereof.
credit voucher for the said sum for the purpose of crediting the amount in the
account of accused No.3 was signed by accused No.2. The amount was credited in
his account on the basis thereof. Bankers cheque, however, was received in the
Clearing Department on 18th September, 1991.
learned Special Judge noticed that there was no entry of the said cheque in the
Bank Schedule dated 17th September, 1991 and entry of the said account is
contained in Bank Schedule dated 18th September, 1991. On the basis of the said
purported irregularity it was found by the learned Special Judge that the
bankers cheque in question was not in physical possession of Andhra Bank.
however, notice that PW-11, Hemlata G. Nair, in her evidence categorically
stated that entries in respect of bankers cheques were made on that date and
the debit and credit vouchers are prepared and a consolidated debit voucher was
also prepared on that date. She further stated that entries were made in due
course of business on 17th September, 1991. Ext.163, the clearing schedule
which was prepared on 18th September, 1991 shows that the same was presented in
high value clearing at 12 noon.
6 7 The
Special Judge ignored the practice that in the event the cheque had not been
sent to the Service Centre for clearance the same used to be returned to the
Funds Department and used to be sent again on the next day with a separate
Register dated 17.09.1991 indicated that there was an entry with regard to the
said Cheque not only as to the amount of the Cheque but also of the Cheque
number, date and name of the A3 being the beneficiary thereof. Furthermore
there was no entry of the said Cheque on the 18.09.1991.
learned Special Judge could not have rejected the defence of the accused that
the Cheque had in fact been received very late on 17.09.1991 and was therefore
sent along with a single credit voucher to the clearing department but the
clearing department returned it and therefore it was sent on 18.09.1991 i.e on
the next day to the clearing department again with a single credit voucher. The
only ground on which the learned judge rejected the defence was that in the
normal course of the banking business the Cheque should have been included in
the very first consolidated credit voucher which was sent to the clearing
department on the 18.09.1991 but it 6 8 was sent along with a single credit
voucher which goes on to show that it had been received quite late on 18th
reasoning in our opinion is not acceptable.
learned judge has overlooked the fact that the said cheque was sent in high
value clearing i.e at 12 O'clock on 18.09.1991, i.e., before 2.45 pm. The
clearing schedule of the high value clearing is at [Exhibit 163].
with respect, the learned Judge wrongly held that the cheque dated 17.09.1991
was received on 18.09.1991 at 2.45 pm. The learned judge had also ignored the
material brought on record that on 18.09.1991 there was no entry of the said
cheque in the BCR Register, and therefore it stands established that the cheque
was sent to clearing department on 17.09.1991.
clearing department could not present the said cheque on 17.09.1991 but had
presented it on 18.09.1991 in the high value clearing. Hence, the single BCR
credit voucher was resubmitted on 18.09.1991 upon intimation by clearing
department of presentation of the said cheque in high value clearing.
noticed in some details hereto before the functionings of the departments of
the bank and the banking practice. on the basis thereof the 6 9 learned judge
should have given benefit of doubt to the accused with respect to this
transactions relate to the cheques for Rs. 75 lacs from the Bank of Karad and
Rs. 86,62,500/- from ANZ grindleys Bank. Both the said cheques are dated
6.11.1991. They were realized only on the 8.11.1991;
being a Bank holiday, PW2 Sampada Ambre states that the first bankers cheque
was issued on 6.11.1991 at the request of Sri AD Narottam by debiting his
account with Rs. 75 lacs as per his statement of account pertaining to the
similar effect is the evidence of Kanchan (PW 9) of the Standard Chartered Bank
which shows that the cheque for Rs.86,62,500/- was issued by the ANZ Grindlays
Bank in favour of Andhra Bank relating to the transaction of Mr BR Chhada who
had purchased five lacs equity shares of HCL limited from A3.
Register in this regard discloses all the requisite details including the
cheque number. The voucher made in regard to the said cheque 7 0 was signed by
accused No. 4. The debit voucher was signed by Accused Nos. 1 and 2.
not go into the details of the said transaction since the learned Special Judge
has already given the benefit of doubt to the accussed that the said cheques
had been received in the funds department on 06.11.1991 on the basis of clear
enteries made in the BCR Register and the transfer scroll giving the details of
the cheque. We do not find any reason to interfere with the said finding. We
agree with the observations of the Special Judge that all the evidence on
record would only go on to show that the cheques had in fact been received on
question which arises for our consideration is as to whether the said cheque
had been sent for the clearing department on the date of its receipt itself or
learned Special Judge in regard to the said question has clearly held that the
two cheques were sent to the clearing department on the 8th only and not on the
learned Special Judge, however, in our opinion, erroneously rejected the
argument advanced on behalf of the appellant that the said 7 1 cheques were
sent along with a single voucher but they were returned and therefore were
again sent back to the clearing department on 08.11.1991. As long as there is
the slightest opportunity of two views possible, in our opinion, the one in
favour of the accused must be adopted.
materials on record were required to be considered having regard to the fact
that 7.11.1991 was a bank holiday and accordingly the credit voucher could only
have been sent on the 8.11.1991 In our opinion, the learned Special Judge was,
with respect, wrong in concluding that even though the two cheques were
probably received on 06.11.1991, they were not sent for clearing on 06.11.1991.
considered opinion, despite evidence leading to the effect that cheques were
received on 06.11.1991, the finding to the contrary was clearly erroneous. We
are, therefore, of the opinion that the prosecution has not been successful in
establishing the involvement of the accused as regards these transactions.
So far as
the seventh transaction is concerned, a bankers cheque bearing No. 22687 dated
13.11.1991 for a sum of Rs. 2,37,29,750/- was 7 2 issued by the Standard
Chartered Bank in favour of Andhra Bank. Although a credit voucher for the
entire sum should have been prepared, a credit voucher only for a sum of Rs.
1.50 crores authorizing the amount to be credited in the account of Accused No.
3 was prepared. It was signed by Accused No. 4 Ramesh Vardraya Shenoy. The
Current Account of the Accused No. 3 was credited on the same day on the basis
of the said credit voucher. The said amount was duly credited in his account,
as would appear from Exhibit 195.
It is not
in dispute that the credit of Rs. 1.50 crores was given on an ad hoc basis. Had
such credit not been given, the account of Accused No.3 would have stood
overdrawn by Rs. 1,39,86,304/-. The amount of difference, viz., 87,29,750/,
however, was credited on the next day, i.e., on 14.11.1991. The credit voucher
was again signed by Accused No. 4.
the said bankers cheque was received on 14.11.1991 and sent for clearance on
the same day. No interest was charged thereupon. In the said transaction, bank
suffered a loss of Rs. 9,760.27 by way of interest.
of fact has been arrived at by the learned Special Judge that the bankers
cheque was not in physical possession of the officers of the Andhra Bank on
"58. From this evidence, it clearly appears that the Cheque / Pay Order
[Exhibit - 40] was not received in the Andhra Bank on 13.11.1991 and the same
was not forwarded to the Clearing Department for clearance i.e. for ensuring
the credit of that cheque. On 14.11.1991 there is entry in the B.C.R. Register
of the entire amount of the cheque i.e. Rs. 23729750/-. On that day credit
voucher [Exhibit - 78] was prepared for the amount of the difference between
the amount of the cheque and the amount of Rs. 1.5 crores which was credited on
13.11.1991 to the account of Hiten P. Dalal. The credit voucher, therefore, is
adequate or sufficient explanation in regard thereto was furnished by the
concerned appellants. Admittedly, there was no entry in the BCR register with
regard to the said cheque. There are no details in the Current Account Credit
been submitted by the learned counsel appearing on behalf of the appellants
that the cheque was received late on 13.11.1991 but was not sent for clearance.
It was furthermore submitted that the BCR Register was not exhibited in the
records as also the findings of the learned Special Judge, it is evident that
the cheque was not received in the Funds Department on 13.11.1991. The entry of
this cheque finds place as per Exhibit 77 only on 7 4 14.11.1991. The details
of the said transaction shows that the beneficiary thereof was the Accused No.
3 and other details have also been mentioned therein. The credit voucher,
according to Hemlata Nair (PW-11) was sent to the Current Account Department
under the signature of the Accused No. 4.
it should have contained the details, but, as noticed hereinbefore, it was only
for a sum of Rs. 1.50 crores. A debit voucher (Exhibit 75) was issued wherein
it was stated:
receive 1.50 crores cheque, but received cheque for Rs. 23929750 - erroneously
not presented in the clearing. Presented on 14.11.1991."
of both the credit and debit vouchers finds place in Scroll Register (Exhibits
76(1) and 76(2)). The Transfer Scroll entries (Exhibits 76(3) and 76(4)) also
show that the credit as against the cheque at Exhibit 40, that was given to the
account of Accused No. 3, was only Rs. 1.50 crores although the cheque was for
a sum of Rs. 2,37,29,750. Although the cheque was not sent to the clearing
department for clearance on 13.11.1991, a pay order/ cheque (Exhibit 82) was
issued in favour of Standard Chartered Bank for and on behalf of Accused No.3
upon debiting the amount mentioned therein.
7 5 In
the aforementioned state of affair, the learned Special Judge rightly arrived
at the conclusion that the cheque might not have been in the physical
possession of Andhra Bank on 13.11.1991. Even Sunil Pore (PW-13) in his
evidence categorically stated that the consolidated credit voucher was received
from the Funds Department on 13.11.1991 (Exhibit 128) in terms whereof 14
instruments had been received from the Funds Department. The bank schedule
which was marked as Exhibit 159 showed that the total amount of the said
transaction tallied with the consolidated credit voucher (Exhibit 128).
However, the bank schedule also did not include the amount of the cheque / pay
order of the Standard Chartered Bank.
difficult to conceive that such a transaction could be cleared by the Accused
bonafide. It was evidently done with an object of giving an ad hoc credit of
Rs. 1.50 crores to Accused No.3 which he must have badly needed on 13.11.1991.
Otherwise, as it would appear not only from the evidence of Ms. Hemlata Nair
(PW-11) but also from that of Mr. Ramteke (PW-18), that his account would have
been overdrawn on that day by Rs.
Mr. Bhalla (PW-23) in his evidence stated that no reference in relation to the
transaction was made to him. Mr. Sastry (PW-22) also in 7 6 his evidence
categorically stated that the amount was overdrawn, and therefore, it attracted
levy of interest.
voucher dated 13-11-1991 is for 1.5 crores and is signed by both A-1 and A-4.
It is not difficult to infer that A1 has also played an equally active role in
ensuring an ad-hoc credit of Rs. 1.5 Crore into the Account of Accused No. 3.
In her evidence, Ms. Hemlatha Nair has identified the signature of A1 in the debit
voucher (Ext. - 75). Therefore, it is not difficult to perceive that A-1 is
involved in this transaction.
learned counsel for the appellant would contend that the error was an
inadvertent one and as the said error was detected, it was re-submitted on the
next day. We do not think that the said explanation is sufficient. We,
therefore, are of the opinion that the involvement of the concerned appellants
- Accused No. 3 and 4 is established beyond any doubt with regard to the said
Eighth transaction pertains to Cheque No. 193889 dated 04-12- 1991 for Rs. 7
Crore issued by Bank of Karad, Fort Branch, Bombay.
PW2, Ms. Sampada Ambre, who was working in Bank of Karad 7 7 during the time of
the transaction, in her evidence, affirms that she had prepared the said Cheque
and that was signed by PW-5, Mr. Sarmalkar.
being claimed on behalf of the Petitioners that the said Cheque was received by
Andhra Bank on 04-12-1991.
of the record reveals that the Cheque was dated 04-12-1991.
amount for the same was credited to the Account of Accused on 04-12- 1991 but
the Cheque was presented for clearing only on 05-12-1991.
the irregularities in the records should have been subjected to close scrutiny
to determine collusion, if any, between the Accused persons for the purpose of
serving a common object.
deposition, Mrs. Hemalatha Nair, (PW-11) Clerk, Funds Department of Andhra
Bank, Fort Branch, states that she had prepared the Credit Voucher [Ext. 85]
dated 04-12-1991 for Rs. 7 Crore favoring C.D.
and the Debit Voucher [Ext. 86] dated 04-12-1991 for the same amount on being
instructed by her officer.
both the entries only mention of a Cheque received from Bank of Karad, without
any reference to its number or date. She also deposed that the vouchers were
scrolled at Scrl. No. 12 on Pg. No.90 of the 7 8 Transfer Scroll Register [Ext
88(1) and (2)] and authorized by Accused No.1.
Katta Hari Babu [PW-17], on the basis of the same credit voucher, he credited
to the account of Accused No.3, an amount of Rs.7 crores. The same is
corroborated by his Statement of Account of the same date. [Ext. 195 (11)]
However, according to Mr. Sunil Pore, PW-13, in the Bank Statement dated
04-12-1991, no entry of the said Cheque may be found. Similarly, a perusal of
the Cheque Clearance Register of Andhra Bank Dt. 04-12-1991 also reveals that
there is no mention of the Cheque issued by Bank of Karad in it.
in her deposition, Ms. Hemalatha Nair, (PW-11) states that the said Cheque was
received by Andhra Bank only on 05-12-1991 and that at Pg. 122 of the BCR
Register, dated 05-12-1991, an entry with all the details of the said Cheque
her evidence, on 05-12-1991, the consolidated Credit Voucher which included the
Cheque amount of 7 Crores was prepared by Shailendra Rane and was sent to the
Clearing Dept. for clearing. The BCR Register, dt. 05-12-1991, which tallied
with the Consolidated Credit Voucher prepared by Sri. Shailendra Rane on the
same day, was initialled by Accused No. 2.
7 9 She
deposed further that on 05-12-1991, as per the instructions of accused No. 2
and 5, she prepared the BCR Debit Voucher which does not include the Cheque
amount of Rs. 7 Crore. She identified the handwriting, signatures and initials
of herself, Accused No.1, 2 and 5.
said credit been not given, the account of the Accused No. 3 would have been
overdrawn by Rs.3,01,92,461.90. No interest was charged as a result whereof the
bank suffered a loss of Rs. 45,547.90.
is evident that the amount of the cheque was credited to the account of Accused
No.3 on 04-12-1991, even without having the same in the possession of the bank.
It is also clear from the perusal of the records that certain irregularities
are present in the records pertaining to the cheque which, undoubtedly involved
Accused No. 1 and 2. We are, thus, of the opinion that Accused No.1 and 2 have
undoubtedly assisted in ensuring the credit of Rs. 7 Crore in the account of
allegation against Accused No.5 is only regarding signing by him the
Consolidated Debit Voucher for a lesser amount even when it was not tallying
with the total amount of the cheques recorded in the BCR Register on
Accused No. 5, contended that he had done so because the amounts were not
tallying with and was less by seven Crores. His further contention was that the
Consolidated Credit Voucher was prepared by Ms. Hemalatha Nair and put up to
him for his signature, and he signed it keeping with the requirements of double
entry system and to avoid double debit as the same had already been debited on
also notice that accused No.5 was acquitted by the Trial Court in respect of
transaction dt. 16-12-1991 despite the Consolidated Debit Voucher not tallying
with the total as reflected in the BCR Register.
being only involved in these two transactions having similar facts, and being
acquitted in one, he is, in our view, entitled to the same benefit in the other
transaction too. Benefit of doubt given in respect of one transaction would
apply on all fours to the other, as both of them are of similar nature.
it also needs to be considered that the prosecution has not been able to
produce any evidence to prove Accused no.5's involvement in the conspiracy.
Therefore we are of the opinion that the learned Special Judge erred in holding
that accused no.5 was a party to the conspiracy with regard to the instant
8 1 It
related to a bankers cheque bearing No. 231381 dated 16.12.1991 for a sum of
Rs. 8,80,95,890.41 drawn on the Standard Chartered Bank in favour of Andhra
Bank. The entry in BCR Register of 16-12-1991 (Ext. 91) has an entry with full
details of the said cheque including the cheque number and the date. However,
the beneficiary is shown as "Current Account ABFS" instead of Accused
No.3. A credit voucher was prepared for the aforementioned sum which was signed
by Accused Nos. 1 and 2. Accused No. 3's account was credited on 16.12.1991.
The banker's cheque, however, was received in the Clearing Department on
17.12.1991 and sent for clearing on that day. Had the credit of Rs.
8,80,95,890.41 not been given, the Accused Nos. 3's account would have been
overdrawn by Rs. 3,88,54,765.49.
evidence brought on record clearly indicate that the cheque was received on
16.12.1991. It is possible that the cheque was received late and the same was
sent with a single credit voucher. As the Clearing Department refused to accept
the same, it was once again sent to the Clearing Department with the
consolidated voucher (Exhibit 122) on 17.12.1991.
learned Special Judge opined that if the cheque was received on 16.12.1991, the
same should have been sent to the Clearing Department for 8 2 clearance on the
same day and as such the learned Judge has inferred that the cheque must have
not been received before 3.00 p.m. Had the credit voucher been returned, as has
been contended, it was obligatory on the part of the concerned appellants to
intimate the Current Account Department so as to enable them to, through
posting of the credit voucher give credit to the account of the Accused No. 3.
It was evidently not done. In the said transaction, loss of interest to the
bank was for Rs. 57,324.
learned trial judge has rejected the contention of the accused that the cheque
was received late and it was sent to the clearing department with a single
credit voucher and since the clearing department refused to accept the same, it
was once again sent to the clearing department with a consolidated credit
voucher (Ext. - 122) on 17-12-1991 on the grounds that even if it was true, it
was the duty of the accused No. 1 and Accused No. 2 to immediately intimate the
Current Accounts department to withhold posting of the credit voucher for
giving credit in the Accused 3's account.
relation to this transaction also, it appears to us that the learned Special
Judge failed to consider the practice of "Clear" and "Unclear
we have already made reference hereinbefore and for the sake of brevity, we
restrain ourselves from elaborating thereon once again.
However, we are constrained to mention that is difficult to accept that a mere
failure to intimate the current accounts department to withhold posting when
there existed a mechanism of clear and unclear credits, would be sufficient to
establish conspiracy. We do not, therefore, agree with the learned special
judge's finding with respect to this transaction also and, therefore, of the
opinion that benefit of doubt should be given to all the accused herein.
transaction related to a banker's cheque bearing No. 102956 dated 7.04.1992 for
a sum of Rs. 4.00 crore drawn on Bank of Karad Ltd. in favour of Andhra Bank.
The credit voucher was prepared for the aforementioned sum which was signed by
the Accused No. 2. Accused No.
account was credited on 7.04.1992. The bankers cheque was received on 8.04.1992
in the Clearing Department and was sent for clearing on the same day. Had credit
of Rs. 4.00 crore not been given, Accused No. 3's account would have been
overdrawn by Rs. 2,77,95,280.95. Loss to the bank on account of interest was
8 4 The
finding arrived at by the learned Special Judge is that the cheque was issued
on 8.4.1992. It appears that on the day on which the cheque was issued, there
was no sufficient balance in the account of Shri A.D. Narottam.
account was debited only on 8.4.1992.
evidence of Mr. Raje (PW-3) is that he had signed the cheque on 7.4.1992. He
also signed the forwarding letter (which was marked as Exhibit 17) on the same
day. Credit voucher was, however, prepared by Sudhakar Ali (PW-4) on 8.4.1992.
It is not
in dispute that this transaction pertained to purchase of securities from Andhra
Bank for Mr. A.D. Narottam, who was a share broker. As would appear from the
evidence of Sudhakar Ali (PW-4), an inter-bank credit voucher was prepared on
the same day on which the cheque was issued.
evidence, Mr. Sarmalkar (PW-5) also stated that as Mr.
did not have sufficient amount in his credit, the cheque as also the forwarding
letter was actually issued on 8.4.1992 although they were bearing the date
8 5 The
BCR Register (Exhibit 105) also did not show that there was any entry in regard
to the said cheque on 7.4.1992. No such entry is found even on 8.04.1992. The
rubber stamp of Clearing Department, however, showed the date to be 8.04.1992.
The corresponding debit voucher (Exhibit 98) also provides the details of the
said cheque. The credit voucher (Exhibit 100) on the basis whereof the said sum
of Rs. 4.00 crores was credited to the account of Accused No. 3 on 7.04.1992,
however, did not mention the other details of the cheque of Bank of Karad. It
mentioned the name of the bank as Standard Chartered Bank which is evidently
not correct. The said credit voucher was signed by Accused No. 2. Therefore,
the basis on which the credit voucher was prepared on 7.04.1992 has not been
of the appellant that in the credit voucher, the name of the bank was wrongly
mentioned as the Standard Chartered Bank in stead and place of Bank of Karad
cannot be accepted. Even the BCR Register does not show that a cheque for the
aforementioned amount has been received.
schedule dated 7.04.1992 also does not indicate receipt of such a cheque from
either of the said banks on 7.04.1992. The consolidated credit voucher also
does not bear any entry. It, therefore, appears that the said credit voucher
was wrongly prepared for a sum of Rs. 4.00 crores 8 6 mentioning the name of
the drawer bank as Standard Chartered Bank. False entry was also made in the
Transfer Scroll (Exhibit 102) showing the name of the drawer bank as Reserve
Bank of India. Even in the BCR Register of 8.04.1992, no entry is found as
regards the said cheque (Exhibit 12). The amount of the said cheque was,
however, included in the consolidated voucher dated 8.04.1992 (exhibit 106)
which was sent to the Clearing Department. The bank schedule dated 8.04.1992 also
shows the receipt of the cheque which was forwarded for clearance on the same
therefore, evident that the concerned accused were not aware about exactly
where the money came from. It is wholly unlikely that the experienced bank
officers would make such a glaring mistake with regard to the name of the bank
as credit vouchers and debit vouchers are prepared only on the basis of the
cheque as also the forwarding letter.
Hari Babu (PW-17) in his deposition stated that had the said amount not been
credited, Accused No. 3's account would have been overdrawn by the amount of
is evident that Accused 2 prepared the credit voucher dated 07-04-1992 [Ext. -
100] for the purpose of giving credit to the account of 8 7 Accused 3 for the
furtherance of the objectives of the conspiracy between them.
OF THE PRINCIPLES OF CRIMINAL CONSPIRACY Applying the said principles to the
facts and circumstances of the present case it must be held that with respect
to the transactions involved in the present case, the ultimate beneficiary was
Hiten P. Dalal (Accused No.3). Amount received from different banks by the
Andhra Bank were credited to his account as a result whereof the cheques issued
by him in favour of third parties could be honoured. But for the said credits
made in his account, it would have been overdrawn on a few occasions.
nature of transactions, the manner in which the same had been dealt with, and
the fact that some of the officers of the Andhra Bank, employed in the Funds
Department and authorized to get the amounts in question credited to the
account of Hiten P. Dalal, had facilitated the same although the bankers'
cheques in question had in some cases not even been received by the Bank
clearly establish the factum of conspiracy.
officer of a bank holds a position of trust. Each one of them, keeping in view
the nature and extent of duties required to be performed, is 8 8 expected to do
so not only in terms of statutory directions, but as also the directions issued
by the Reserve Bank of India and his own employer.
for the purpose of giving credit in the account of a customer would
indisputably be required to be prepared on the basis of the cheque receipts. It
cannot be prepared in anticipation of receipt of a cheque; firstly, because the
amount of the cheque, the name of the drawee and other particulars would not be
known to them; secondly, the bank is required to maintain a large number of
registers to put in place a sound banking system.
precautions must be taken to prevent a fraud or deceit on the part of a
the fact that, credit and debit vouchers were prepared and other registers were
filled up, although the cheques were not in physical possession of the bank, in
our opinion, clearly establishes the existence of a criminal conspiracy between
the ultimate beneficiary, on the one hand, and some of the officers of the
bank, on the other.
or credit voucher furthermore is not prepared in piecemeal or in instalments.
Bank officers are not supposed to know the immediate requirement of an account
8 9 An
analysis of the facts of the case clearly demonstrates that a conspiracy had
been hatched between the accused 1,2, 3 and 4 its object being that accused
Nos.1, 2 and 4 who were the manager and officers working in the Funds
Department and had dominion over the funds of Andhra Bank connived with A3 to
prepare credit and debit vouchers authorising the Current Account department to
credit those cheques to the account of Accussed No.3 and, thus, affording him
to take pecuniary advantage of the public money of the Bank, without some of
the cheques in question having even been received by the bank and thus
dishonestly enabling A3 to make withdrawals from his account No.4819 against
the said credit afforded to his account. Such things would not have been
possible but for meeting of mind amongst the accused involved herein.
It is not
in dispute that A3 was a broker in securities transaction through the Funds and
Investment Department of Fort Branch, Andhra Bank. From these circumstances it
is clear that there existed a conspiracy between A1, A2 and A4 the object of
which was to obtain undue pecuniary advantage for A3. The said act of the
accused had been in violation of the guidelines issued by Andhra Bank.
9 0 As we
have noted hereinbefore on a thorough discussion, in relation to all the ten
transactions in detail we have not been able to find any conclusive evidence as
regards the involvement of Accused No. 5 in the offence of criminal conspiracy.
conduct of the accused, keeping in view the aforementioned finding of fact,
being clear and explicit; in our opinion, the ingredients of conspiracy as
enumerated under Section 120A of the Indian Penal Code must be
held to have been clearly established only against A 1, A2, A3 and A4.
OF CORRUPTION ACT
A1, A2, A4 and A5 have also been charged and convicted for the offence under s.
13(1)(c) and s. 13 (1) (d) of the Prevention of Corruption Act by the special
court below. It is undisputed that accused No.
working as Manager and others accused as officer in the Funds Department of the
Fort Branch. Andhra Bank is a Nationalised Bank and, therefore, they are
`Public servants' within the meaning of section 21 of the IPC.
9 1 The
Accused, particularly A1 and A2 had dominion over the funds of the Bank, and they
misappropriated the funds of Andhra Bank by issuing credit vouchers to the
current account department for getting the amounts credited to the account of
A3, in some cases when the cheques were not received or sent for clearance.
of Corruption Act, 1988 replaced the prevention of Corruption Act, 1947. The
new Act was enacted `to consolidate and amend the law relating to the
prevention of corruption and for matters connected there with. Relevant
portions of S. 13 which provide for Criminal Misconduct by a public servant
read as under:
Criminal misconduct by a public servant.
public servant is said to commit the offence of criminal misconduct, - [...]
(c) If he dishonestly or fraudulently misappropriates or otherwise converts for
his own use any property entrusted to him or under his control as a public
servant or allows any other person so to do; or (d) If he, -[...] (ii) By
abusing his position as a public servant, obtains for himself or for any other
person any valuable thing or pecuniary advantage; or 9 2 [...](2) Any public
servant who commits criminal misconduct shall be punishable with imprisonment
for a term which shall be not less than one year but which may extend to seven
years and shall also be liable to fine."
13 in general lays down that if a public servant obtain for himself or for any
other person, any valuable thing or pecuniary advantage he would be guilty of
criminal misconduct and sub-section (2) thereof prescribes of the punishment
for such misconduct.
ingredients of clause (c) of the said section are that the public servant must
dishonestly or fraudulently misappropriate or otherwise convert to his own use
or allow any other person to misappropriate or otherwise convert for his own
use any property. Such property must have been entrusted to such public servant
or must be in the alternative under his control as a public servant. Further
such conversion or misappropriation must be done with a dishonest or fraudulent
intention. If the said three conditions have been satisfied then the public
servant would be guilty of an offence under clause (c) of the section 13(1).
That is to say that if there is a dishonest or fraudulent intention on the part
of a public servant and he with that intention misappropriates or otherwise
converts for his own use or allows any one else to misappropriate or otherwise
convert for his own use, 9 3 any property which has been entrusted to him or is
under his control as a public servant.
clause (d) of the said section of which the accused herein have also been
charged deals with a similar kind of a situation. The public servant must in
this case by abusing his position as a public servant, obtain for himself or
for any other person any valuable thing or pecuniary advantage to be liable for
criminal misconduct under the section.
accused in the present case indisputably had dominion over the funds of the
bank. They through their acts facilitated misappropriation of the funds to the
account of A3. Without the assistance provided by the other accused, the main
accused herein A3 would not have been able to withdraw from his account amounts
of money to which he was not entitled to under law. The accused herein being
public servants had an additional responsibility of ensuring that the funds of
the public were not misappropriated in any manner or form, what so ever.
not have over draft facility or any overdraft limit sanctioned to him. A3 could
not have overdrawn his account . he was facilitated to do so by A1, A2 and A4.
9 4 Since
we have not been able to find adequate evidence of the involvement of A 5 in
the transactions we hereby acquit him of all charges under the Prevention of
therefore, beyond the purview of any doubt that A1, A2 and A4 being public
servants were guilty of offences under s. 13(1)(c) r/w 13(2) as also s. 13(1)
(d) r/w 13(2) of the said Act.
RELATING TO MAKING OF FALSE DOCUMENTS The learned special judge has also
charged all the accused A1, A2 , A4 and A5 for offences under s. 467, 471 and
477 A of the IPC. S. 467 deals with the forgery of valuable securities and
wills etc. and is reproduced below:
Forgery of valuable security, will, etc.-- Whoever forges a document which
purports to be a valuable security or a will, or an authority to adopt a son,
or which purports to give authority to any person to make or transfer any
valuable security, or to receive the principal, interest or dividends thereon,
or to receive or deliver any money, moveable property, or valuable security, or
any document purporting to be an acquittance or receipt acknowledging the
payment of money, or an acquittance or receipt for the delivery of any moveable
property or valuable security, shall be punished with imprisonment for life, or
with imprisonment of either description for a term 9 5 which may extend to ten
years, and shall also be liable to fine."
471 which deals with using as genuine a forged document has been reproduced
Using as genuine a forged document or electronic record--Whoever fraudulently
or dishonestly uses as genuine any document or electronic record which he knows
or has reason to believe to be a forged document or electronic record, shall be
punished in the same manner as if he had forged such document or electronic
477 A reads as under:
Falsification of accounts.--Whoever, being a clerk, officer or servant, or
employed or acting in the capacity of a clerk, officer or servant, willfully,
and with intent to defraud, destroys, alters, mutilates or falsifies any book,
electronic record, paper, writing], valuable security or account which belongs
to or is in the possession of his employer, or has been received by him for or
on behalf of his employer, or willfully, and with intent to defraud, makes or
abets the making of any false entry in, or omits or alters or abets the
omission or alteration of any material particular of any material particular
form or in, any such book, electronic record, paper, writing], valuable
security or account, shall be punished with imprisonment of either description
for a term which may extend to seven years, or with fine, or with both.
Explanation-It shall be sufficient in any charge under this section to allege a
general intent to defraud without naming any particular person intended to be
defraud without naming any particular person intended to be defrauded or
specifying any particular sum of money intended to be the subject of the fraud,
or any particular day on which the offence was committed."
three offences deal with substantially what is known as forgery, defined in
Section 463 or making of a false document which is provided under Section 464.
It is reproduced heretobelow:
464. Making a false document--A person is said to make a false document or
false electronic record- First-Who dishonestly or fraudulently- (a) Makes,
signs, seals or executes a document or part of a document;
or transmits any electronic record or part of any electronic record;
Affixes any digital signature on any electronic record;
any mark denoting the execution of a document or the authenticity of the
digital signature, With the intention of causing it to be believed that such
document or part of document, electronic record or digital signature was made,
signed, sealed, executed, transmitted or affixed by or by the authority of a
person by whom or by whose 9 7 authority he knows that it was not made, signed,
sealed, executed or affixed; or Secondly- Who, without lawful authority,
dishonestly or fraudulently, by cancellation or otherwise, alters a document or
an electronic record in any material part thereof, after it has been made,
executed or affixed with digital signature either by himself or by any other
person, whether such person be living or dead at the time of such alteration;
or Thirdly- Who dishonestly or fraudulently causes any person to sign, seal,
execute or alter a document or an electronic record or to affix his digital
signature on any electronic record knowing that such person by reason of
unsoundness of mind or intoxication cannot, or that by reason of deception
practised upon him, he does not know the contents of the document or electronic
record or the nature of the alterations.[...]"
is said to make a false document or record if he satisfies one of the three
conditions as noticed hereinbefore and provided for under the said section. The
first condition being that the document has been falsified with the intention
of causing it to be believed that such document has been made by a person, by
whom the person falsifying the document knows that it was not made. Clearly the
documents in question in the present case, even if it be assumed to have been
made dishonestly or fraudulently, had not been 9 8 made with the intention of
causing it to be believed that they were made by or under the authority of some
second criteria of the section deals with a case where a person without lawful
authority alters a document after it has been made. There has been no
allegation of alteration of the voucher in question after they have been made.
Therefore in our opinion the second criteria of the said section is also not
applicable to the present case.
and final condition of Section 464 deals with a document, signed by a person
who due to his mental capacity does not know the contents of the documents
which were made i.e because of intoxication or unsoundness of mind etc. Such is
also not the case before us. Indisputably therefore the accused before us could
not have been convicted with the making of a false document.
learned Special Judge, therefore, in our opinion, erred in holding that the
accused had prepared a false document, which clearly, having regard to the
provisions of the law, could not have been done.
Further the offence of forgery deals with making of a false document with the
specific intentions enumerated therein. The said section has been reproduced
Forgery.--Whoever makes any false documents or electronic record part of a
document or electronic record with, intent to cause damage or injury], to the
public or to any person, or to support any claim or title, or to cause any
person to part with property, or to enter into any express or implied contract,
or with intent to commit fraud or that fraud may be committed, commits
since we have already held that the commission of the said offence has not been
convincingly established, the accused could not have been convicted for the
offence of forgery. The definition of "false document" is a part of
the definition of "forgery". Both must be read together. [Dr. Vimla
v. Delhi Administration,  Supp 2 SCR 585] Accordingly, the accused could
not have been tried for offence under Section 467 which deals with forgery of
valuable securities, will etc. or Section 471, i.e., using as genuine a forged
document or Section 477-A, i.e, falsification of accounts. The conviction of
the accused for the said offences is accordingly set aside.
CRIMINAL BREACH OF TRUST The next charge we shall deal with is one arising
under Section 409 of the IPC with which the accused herein have also been
convicted of by the special judge. The punishment for criminal breach of trust
by a public servant is provided under Section 409. However we must herein make
reference of definition of criminal breach of trust simplicitor which reads as
under Section 405:
breach of trust.--Whoever, being in any manner entrusted with property, or with
any dominion over property, dishonestly misappropriates or converts to his own
use that property, or dishonestly uses or disposes of that property in
violation of any direction of law prescribing the mode in which such trust is
to be discharged, or of any legal contract, express or implied, which he has
made touching the discharge of such trust, or willfully suffers any other
person so to do, commits `criminal breach of trust'."
punishment for criminal breach of trust is provided in Section 406. Punishment
for aggravated forms of criminal breach of trust is provided in Section 407 to
1 0 The
terms of the section are very wide. It applies to one who is in any manner
entrusted with property or dominion over property. The section does not require
that the trust should be in furtherance of any lawful object. The section
provides inter alia, that if such a person dishonestly misappropriates or
converts to his own use property entrusted to him he commits criminal breach of
trust. There are separate offences by which criminal breach of trust may be
committed. This section requires :
Entrusting any person with property or with dominion over property.
person entrusted (a) dishonestly misappropriates or converting to his own use
that property; or (b) dishonestly using or disposing of that property or
willfully suffering any other person so to do in violation - (i) of any
direction of law prescribing the mode in which such trust is to be discharged,
or (ii) of any legal contract made touching the discharge of such trust.
Nath Mishra and Ors. vs. State (NCT of Delhi) and Anr., [(2008) 2 SCC 561] this
court noted that in the commission of the offence of criminal breach of trust,
two distinct parts are involved. The first consists of 1 0 the creation of an
obligation in relation to the property over which dominion or control is
acquired by the accused. The second is misappropriation or dealing with the
property dishonestly and contrary to the terms of the obligation created.
breach of trust by a public servant has been dealt with under Section 409 which
reads as under:
Criminal breach of trust by public servant, or by banker, merchant or agent.--
Whoever, being in any manner entrusted with property, or with any dominion over
property in his capacity of a public servant or in the way of his business as a
banker, merchant, factor, broker, attorney or agent, commits breach of trust in
respect of that property, shall be punished with 1[imprisonment for life], or
with imprisonment of either description for a term which may extend to ten
years, and shall also be liable to fine."
have dealt with the said issue in detail in K Venkatkrishnan v. Central Bureau
of Investigation (Criminal Appeal 76 of 2004 decided today), we need not deal
with it here again.
it is important to mention here that more recently this court in State of
Punjab v. Pritam Chand and Ors., 2009 (2) SCALE 457 opined:
"The ingredients of offence under Section 405 are (i) entrusting any
person with property or with dominion over the property, (ii) the person
entrusted (a) dishonestly misappropriated or converted to his own use the
property or (b) dishonestly used or disposed of the property or willfully
suffered any other person so to do in violation (i) of any direction of law
prescribing mode in which such mode is to be discharged or (ii) of any legal
contract made touching the discharge of trust."
more the court in Sharon Michael and Ors. v. State of Tamil Nadu and Anr., 2009
(1) SCALE 627 noted thus:
of Section 409 of IPC read as under:
accused must be a public servant;
must have been entrusted, in such capacity, with property.
must have committed breach of trust in respect of such property."
in view of the principles of law extracted above in our opinion there is no
doubt that the offences relating to criminal breach of trust stands established
against the accused. They were the officers in the Funds Department of Andhra
Bank. In the said capacity they had been entrusted with the funds of the Bank.
In that sense they had dominion over a thing.
which was transferred to the account of A3 was the money 1 0 belonging to the
Bank. Only the said accused had the power to transfer it to the account of A3.
present case, the same has been done dishonestly to cause wrongful gain to A3
and in the process wrongful loss has been caused to the Bank. The instruments
based on which the funds of Andhra Bank were transferred to the account of A3
were not physically available with Andhra Bank at the time the accused persons
authorized the transfer of the funds of Andhra Bank to the account of A3.
utilized the said credit given and accordingly even cheques issued by him were
honoured. Had it not been for the credits given on the relevant dates his
account would have been overdrawn. Interest was not charged from A3 and was not
debited from his account and loss was therefore caused to the bank.
it must be noted in this respect that Banking norms and established practices
and procedures would contain directions of law prescribing the mode in which
the trust is to be discharged. The expression direction of law in the context
of sections 405 and 409 would include not only legislations pure and simple but
also directions, instruments and circulars issued by an authority entitled
1 0 The
trust in this regard would therefore have to be discharged in terms of such
directions. Acting in violation thereof causing wrongful gain to A3 and loss to
the Bank would bring the action within Section 409 IPC.
banking norms are binding on an officer of the Bank in the matter of discharge
of the trust i.e. in dealing with the money entrusted to him. He is required to
follow the same and that would be an implied term of his contract of service as
an officer of the bank. The accused before us here acted in breach of the same.
therefore of the opinion that the prosecution has sufficiently been able to
prove the involvement of A1, A2 and A4 as regards the offence of criminal
breach of trust.
RELATING TO RECEIVING STOLEN PROPERTY The main accused herein, Hiten P Dalal,
has in addition also been convicted u/s 411 which deals with dishonestly
receiving stolen property.
section has been reproduced below:
Dishonestly receiving stolen property.-- Whoever dishonestly receives or
retains any stolen property, knowing or having reason to believe the same to be
stolen property, shall be punished with imprisonment of either description for
a term 1 0 which may extend to three years, or with fine, or with both.
as used in this section has been defined in section Section 410 :
Stolen Property.--Property, the possession whereof has been transferred by
theft, or by extortion, or by robbery, and property which has been criminally
misappropriated or in respect of which criminal breach of trust has been
committed, is designed as "stolen property", whether the transfer has
been made, or the misappropriation or breach of trust has been committed,
within or without India. But, if such property subsequently comes into the
possession of a person legally entitled to the possession thereof, it then
ceases to be stolen property."
410 accordingly defines stolen property. A property is stolen for the purpose
of this section when its possession is transferred by theft, extortion,
robbery, dacoity or criminal breach of trust or which was obtained under
misappropriation committed whether in India or outside.
extended meaning is given to the words `stolen property' which are used in the
four subsequent sections. Not only things which have been stolen, extorted or
robbed but also things which have been obtained by 10 criminal miss-appropriation
or criminal breach of trust are within the meaning assigned to these words.
not delve into this matter in detail because, as has already been noted,
Accused A1, A2 and A4 here, were involved in the offence of criminal breach of
trust and accordingly the funds which were transferred to the account of A3
falls within the definition of stolen property.
411 provides punishment to the person who dishonestly receives stolen property.
The person must have the knowledge that it is a stolen property.
bear in mind that A3 had entered into a criminal conspiracy with A1, A2 and A4.
He would in that respect be deemed to have known that the property in question
was stolen property.
section as also the succeeding sections are directed not against the principal
offender e.g. a thief, robber or misappropriate but against the class of
persons who trade in stolen articles and are receivers of stolen property.
Principal offenders are therefore outside the scope of this section.
the conviction of the principal offender is also not a prerequisite to the
conviction of the receiver of stolen property under this 1 0 section. However
in the present case the principal offender i.e. A1, A2 and A4 have been held
guilty of a `criminal breach of trust' therefore the conviction of A3 would be
even more clearly established from the facts and circumstances of the present
be noted in this respect that this section requires two essentials:
Dishonest receipt or retention of stolen property.
Knowledge or reason to believe at the time of receipt that the property was
obtained in the ways specified in the section The offence of dishonest
retention of property is almost contemporaneous with the offence of dishonestly
receiving stolen property.
who dishonestly receives property and retains it, must obviously continue to
It is the
duty of the prosecution in order to bring home the guilt of a person under
Section 411 to prove:
the stolen property was in the possession of the accused.
some person other than the accused had possession of the property before the accused
got possession of it and 1 0 (3) That the accused had knowledge that the
property was stolen.
therefore in our opinion been conclusively established by the prosecution that
the A3 was guilty of an offence under Section 411, since he had dishonestly
received stolen property.
AND CONCLUSION We may also place on record that as the CBI has not preferred
any appeal against the quantum of sentence, this Court cannot impose a higher
have acquitted accused No. 5 Mir Nagvi Askari of all the charges against him
the order of sentence passed against him is hereby quashed.
have acquitted all the accused of offences under Section 467 read with Sections
120, 471 read with Section 120B as well as section 477A read with 120-B of the Indian Penal Code, the sentence passed by the learned Special Judge against
all the accused as regards the said offences is hereby quashed.
1 1 The
Main accused herein A 3, Hiten P Dalal has been found guilty of offences
punishable under Section 120B and 411 read with Section 120B.
hereby sentenced to suffer rigorous imprisonment for 6 months and to pay a fine
of Rs. 50,000 and in default to suffer Rigorous imprisonment for one month.
So far as
the sentence for the offences punishable under s. 409 r/w section 109 of the Indian Penal Code and Section 13 (1) (c) and Section 13(1)(d) read with
13(2) of the Prevention of Corruption Act read with Section 109 of the Indian
Penal code is concerned, we agree with the conclusion arrived at by the learned
Judge that no special sentence needs be passed against him in this respect.
the sentence imposed by the learned Special Judge with regard to the offence
under the Prevention of Corruption Act.
1, Rachakonda Dhankumar, Accused 2, Suratkal Kamat, and Accused 4 Ramesh
Vardaya Shenoy are sentenced to suffer RI for one month each and to pay Rs.
1000/- in fine and in default to suffer RI for seven days each for the offences
punishable under Section 13(1)(c) read with Section 13(2) of the Prevention of
Corruption Act read with Section 120-B of the IPC.
Similarly, the accused are also sentenced to suffer RI for one month and to pay
a fine of Rs. 1000/- each in default to suffer RI for seven days each for
offences punishable under Section 13(1)(d) read with Section 13(2) of the
Prevention of Corruption Act read with Section 120B of the IPC.
Accused 1, Rachakonda Dhankumar, Accused 2, Suratkal Kamat, and Accused 4
Ramesh Vardaya Shenoy are sentenced to suffer RI for 6 months each and to pay
fine of Rs. 5000/- each , and in default to suffer RI for one month each for
offences punishable under Section 120B and Section 409 read with Section 120B
of the IPC.
substantive sentences are directed to run concurrently. Each accused should be
given the benefit of set off for the period for which he has already undergone
imprisonment in this case. So far as the payment of fine is concerned, a period
of 2 months time is given to all accused persons, to deposit the same.
.....................................J. [S.B. Sinha]
.....................................J. [Cyriac Joseph]
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