CRLRC/1868/2011 of Sri Ch. Laxminarayana, (A-1), Vs The State of Andhra Pradesh, on 30 December 2015

COMMON ORDER:

These three criminal revision cases are filed questioning thecorrectness of the orders impugned passed in discharge petitions filedby A1(Ch.Laxminarayana), A5(K.Ashok Kumar) & A7(C.C.MukundanNambiar) in C.C.No.23/2005 on the file of the III Additional SpecialJudge for CBI Cases, Hyderabad.

2. Crl.R.C.No.1868/2011 is filed questioning the correctness ofthe order dated 16.03.2011 in Crl.M.P.No.1834/2007 in CCNo.23/2005 on the file of the III Additional Special Judge for CBICases, Hyderabad, by and under which, the Court below dismissedthe petition filed by the petitioner/A1-Ch.Laxminarayuana undersection 239 Cr.P.C seeking to discharge him from the charges levelledagainst him.

3. Crl.R.C.No.1580/2012 is filed questioning the correctness ofthe order dated 27.08.2012 in Crl.M.P.No.34/2012 in CC No.23/2005on the file of the III Additional Special Judge for CBI Cases,Hyderabad, by and under which, the Court below dismissed thepetition filed by the petitioner/A5-K.Ashok Kumar under section 239Cr.P.C seeking to discharge him from the charges levelled againsthim.

4. Crl.R.C.No.1699/2012 is filed questioning the correctness ofthe order dated 27.08.2012 in Crl.M.P.No.1833/2007 in CCNo.23/2005 on the file of the III Additional Special Judge for CBICases, Hyderabad, by and under which, the Court below dismissedthe petition filed by the petitioner/A7-C.C.Mukundan Nambiar undersection 239 Cr.P.C seeking to discharge him from the charges levelledagainst him.

5. Heard the learned counsel appearing for the petitioners/A1,A5 & A7 and the learned Special Public Prosecutor, representing theCBI/State.

6. The case of the prosecution is that A1, during his tenure asChief Manager, SBI, Padmaraongar Branch, Hyderabad, criminallyconspired with other accused i.e. A2 to A7, with dishonest andfraudulent intention to cheat the Bank by abusing his official positionas public servant and sanctioned Bank Guarantees in favour of A2 toA6, without verifying the genuineness and correctness of theirrespective Firms, without conducting the pre-sanction inspection ofproperties, without verifying the genuineness of the sale deeds ofproperties and encumbrance certificates and without verifying the enduse of funds and disbursed the amounts and as a result, the Banksustained loss of Rs.70.50 lakhs since the amounts were notrecovered from A2 to A6. Therefore a case in RC No.11(A)/2003-CBI,HYD was registered against all the accused for the offences underSections 120-B, 420, 468 and 471 r/w.462 IPC and under Section13(2) r/w.13(1)(b) of Prevention of Corruption Act, 1988.

7. In so far as the petitioner/A1-Ch.Laxminarayana isconcerned, it is alleged that, he being the Chief Manager of State Bankof India, Padmarao Nagar Branch, Hyderabad, conspired with A2 toA7 to cheat the Bank by abusing his official capacity, and in thatprocess, basing on fake and forged documents furnished by A2 to A6,he issued the following Bank Guarantees in favour of National SmallScale Industries Corporation (NSIC) on behalf of A2 to A6 for availingraw material assistance by A2 to A6 from NSIC.

Basing on the above mentioned Bank Guarantees A2 to A6 availedthe financial assistance from NSIC by placing false and fake invoicesand withdrew the amounts and failed to repay the said amounts toNSIC, thereby, NSIC invoked the Bank Guarantees and hence theBank sustained loss of Rs.70.50 lakhs.

8. In so far as the petitioner/A5 is concerned, it is alleged that byproducing false and fake documents he availed Bank GuaranteeNo.23/97-98 dated 26.03.1998 for Rs.20 lakhs and failed to repay thesame, thereby cheated the Bank and misappropriated the amounts.

9. In so far as the petitioner/A7 is concerned, it is alleged that he isinstrumental in cheating the Bank by providing assistance to theprivate parties i.e., A2 to A6 in getting Bank Guarantees sanctioned onthe basis of fake and forged securities by influencing A1 and for whichhe received Rs.44,000/- as commission by way of two cheques fromA3.

10. The petitioners/A1, A5 & A7 filed petitions under Section 239Cr.P.C seeking discharge from the offences alleged against them. Thelearned trial Court having considered the submissions advanced oneither side, dismissed their petitions, observing that there are specificallegations and there is prima facie case to frame charges against thepetitioners/A1, A5 & A7.

11. It is the contention of the petitioner/A1 that A1 issued BankGuarantees as per norms and with permission from the concernedofficers and he had been falsely implicated by leaving the concernedofficers responsible for sanctioning the same, and that the allegationsmade against him are baseless.

12. It is the contention of the petitioner/A5 that he had notcommitted any offence alleged and more over, with the consent of CBI,the matter is compromised and he cleared off the loan and the SBIwithdrawn the case before Debt Recovery Tribunal, Hyderbad andthere is no loss sustained by the Bank as he discharged the entire loanamount, and therefore, he is entitled for discharge.

13. It is the contention of the petitioner/A7 that he never conspiredwith other accused and he has nothing to do with sanctioning of BankGuarantees by A1 and he rendered services in filling forms for whichhe received remuneration by way of two cheques and he is in no wayconnected to the crime.

14. The learned Special Public Prosecutor, representing CBI,submits that there is prima facie case against the petitioners/A1, A5 &A7 to proceed. He further submits that the investigating agencyexamined as many as 73 witnesses and placed on record voluminousdocumentary evidence, which clearly disclose the key roles played bythe petitioners/A1, A5 & A7 in the alleged conspiracy andmisappropriation of amounts.

15. The point for consideration is as to whether the petitioners/A1,A5 & A7 are entitled to be discharged under Section 239 Cr.P.C.

16. Both parties, to substantiate their respective contentions,relied upon the Authorities of the Apex Court. The learned SpecialPublic Prosecutor relied upon the following decisions in support of hiscontentions;

17. In State of Bihar v. Dhirendra Prasad Shrivastava and ors.[[1]]the Hon’ble Supreme court at paras-5 and 9 held as under:

“5. It is in the light of the aforesaid factsrevealed by the investigation carried out in respectof the offences alleged that the liability of theaccused Respondents to face a full-scale trial wasrequired to be determined by the High Court. Thecontours of the powers of the High Court to makesuch determination, at the stage when it was calledupon to do so, is well known and would not requirea reiteration. Such power Under Section 482of theCode of the High Court is severely circumscribed.The result and the findings of investigation willhave to be accepted as correct in their entirety andit is against such a backdrop that the necessity of aregular trial against the accused Respondents willhave to be determined. The truth or veracity of theallegations cannot be agitated or gone into at thatstage. If, judged by the aforesaid standard theculpability of the accused is, prima facie, made out,the High Court will have no jurisdiction to interdictthe proceedings.

9. The third principal ground on which the HighCourt thought it proper to grant relief to theRespondents accused is that in a departmentalproceeding instituted against the Respondents onthe same charges, the Respondents wereexonerated. Relying on a decision of this Court inP.S. Rajya v. State of Bihar: 1996 (3) R.C.R.(Criminal) 261 : (1996) 9 SCC 1, the High Courtconstrued the ratio of the aforesaid decision tomean that in a situation where a departmentalproceeding against an accused is launched and the accused is exonerated therein, the criminalproceeding on the same charges must necessarilyfail and, therefore, should be interdicted. Whilerelying on P.S. Rajya's case supra, the High courtfailed to notice a subsequent decision of this Courtin State v. M. Krishna Mohan: 2007 (4) R.C.R.(Criminal) 882 : 2007 (6) Recent Apex Judgments(R.A.J.) 96 : (2007) 14 SCC 667, where this Courthad taken the view that exoneration in adepartmental proceeding, ipso facto, would not leadto the acquittal of the accused in the criminal trial.Even otherwise, in a three judge Bench decision ofthis Court in State (NCT of Delhi) v. Ajay KumarTyagi: 2012 (4) R.C.R. (Criminal) 297 : 2012 (4)Recent Apex Judgments (R.A.J.) 415 : (2012) 9SCC 685, it has been explained that the decision inP.S. Rajya (supra) must be understood to havebeen rendered in the facts of the case. The aboveposition is clear from a reading of the report in P.S.Rajya (supra) itself. Furthermore in State (NCT ofDelhi) v. Ajay Kumar Tyagi (supra), the position hasbeen explained in the following manner:

"24. Therefore, in our opinion, the High courtquashed the prosecution on total misreadingof the judgment in the case of P.S. Rajya(Supra). In fact, there are precedents, to whichwe have referred to above, that speakeloquently a contrary view i.e. exoneration indepartmental proceeding ipso facto would notlead to exoneration or acquittal in a criminalcase. On principle also, this view commendsus. It is well settled that the standard of proofin department proceeding is lower than that ofcriminal prosecution. It is equally well settledthat the departmental proceeding or for thatmatter criminal cases have to be decided onlyon the basis of evidence adduced therein.Truthfulness of the evidence in the criminalcase can be judged only after the evidence isadduced therein and the criminal case can notbe rejected on the basis of the evidence in the departmental proceeding or the report of theInquiry Officer based on those evidence.

25. We are, therefore, of the opinion that theexoneration in the departmental proceedingipso facto would not result in the quashing ofthe criminal prosecution. We hasten to add,however, that if the prosecution against anaccused is solely based on a finding in aproceeding and that finding is set aside by thesuperior authority in the hierarchy, the veryfoundation goes and the prosecution may bequashed. But that principle will not apply inthe case of the departmental proceeding asthe criminal trial and the departmentalproceeding are held by two different entities.Further they are not in the same hierarchy."

18. In State of Maharashtra v. Vikram Anantrai Doshi[[2]], theHon’ble Supreme Court at paras 8, 9, 20 and 21 made the followingobservations:

“8. During the pendency of the case before thetrial court on 30[th] March 2009 the informant, Bankof Baroda, had transferred its debts to a trust IARC -BOB-01-07 under the control of Kotak MahindraBank. The accused, Vikram Doshi, settled thedisputes and paid Rs. 42 lacs for settling thedispute. On that basis, Kotak Mahindra Bank issueda "no due certificate" to M/s. Atcom TechnologyLimited stating that on receipt of Rs. 42 lacs, therewas no amount outstanding and payable by them inrespect of facility advanced by Bank of Baroda. Thesaid bank also confirmed that the guaranteesissued by Vikram Doshi stood discharged.

9. After the receipt of such "No dues certificate"

the Respondent preferred a petition UnderSection 482of the Code of Criminal Procedurebearing Criminal Application No. 2239 of 2009before the High Court of Judicature at Bombay and the learned Single Judge vide order dated24.2.2010 quashed the criminal proceedingspending before the learned Addl. MetropolitanMagistrate. The learned Single Judge referred toone of its earlier orders and came to hold asfollows:

Both the offices UnderSections 406and 420are compoundable with thepermission of the court. As already discussedhereinabove, the Bank has already given its NoDue Certificate to the borrower i.e. ATCOM. It canclearly be seen that even if the matter is permittedto go for trial, no fruitful purpose would be served,except burdening the criminal Courts which arealready overburdened.

20. The present obtaining factual score has tobe appreciated on the anvil of aforesaid authorities.On a studied scrutiny of the principles statedin Gain Singh(supra) it is limpid that the three-Judge Bench has ruled that proceeding in respectof heinous and serious offences and the offencesunder prevention of corruption Act and all otheroffences committed by public servants whileworking in that capacity are not to be quashed. Thatapart, the court has also emphasized on offenceshaving a serious impact on society. It has beenfurther laid down that criminal cases havingoverwhelmingly and predominantingly civil flavourstand on a different footing for the purposes ofquashing, particularly the offences arising fromcommercial, financial, mercantile, civil partnershipor such like transactions or the offences arising outof matrimony relating to dowry, etc. or the familydisputes where the wrong is basically private orpersonal in nature. In Narendra Lal Jain (supra)the three-Judge Bench quashed the proceeding asthe charges were famed UnderSection 120/420Indian Penal Code in respect ofthe private Respondents. In Gopakumar B.Nair's case the court distinguished the decisionin Narendra Lal Jain (supra) and opined that the accused had also been charged for the commissionof offence Under Section471of Indian Penal Codeand on that basis declined to interfere with the orderpassed by the High Court which had refused toquash the criminal proceeding.

21. In the case at hand, as per the chargesheetthe Respondents had got LCs issued from the bankin favour of fictitious companies propped up bythem and the fictitious beneficiary companies hadgot letters of credits discounted by attaching theirbogus bills. The names of 10 fictitious companieshave been mentioned in the chargesheet. Thus,allegation of forgery is very much there. As ismanifest from the impugned order, the learnedSingle Judge has not adverted to the same. It is nota simple case where an accused has borrowedmoney from the bank and diverted it somewhereelse and, thereafter, paid the amount. It does notfresco a situation where there is dealing between aprivate financial institution and an accused, andafter initiation of the criminal proceedings he paysthe sum and gets the controversy settled. Theexpose' of facts tells a different story. As submittedby the learned Counsel for CBI the manner in whichthe letters of credits were issued and the fundswere siphoned has a foundation in criminal law.Learned Counsel would submit that it does notdepict a case which has overwhelmingly andpredominantingly civil flavour. The intrinsiccharacter is different. Emphasis is laid on thecreation of fictitious companies.”

[3]19. In CBI v. Narendra Lal Jain, 3-Judges Bench of theHon’ble Supreme Court at paras 13 and 14 held as under:

“13. In the present case, as already seen, theoffence with which the accused-Respondents hadbeen charged are under Section 120B/420of theIndian Penal Code. The civil liability of theRespondents to pay the amount to the bank hasalready been settled amicably. The terms of such settlement have been extracted above. Nosubsisting grievance of the bank in this regard hasbeen brought to the notice of the Court. While theoffence under Section 420Indian Penal Code iscompoundable the offence under Section 120Bisnot. To the latter offence the ratio laid down in B.S.Joshi (supra) and Nikhil Merchant (supra) wouldapply if the facts of the given case would so justify.The observation in Gian Singh (supra) (para 61)will not be attracted in the present case in view ofthe offences alleged i.e. underSections420/120BIndian Penal Code. 14. In the present case, having regard to thefact that the liability to make good the monetary losssuffered by the bank had been mutually settledbetween the parties and the accused had acceptedthe liability in this regard, the High Court hadthought it fit to invoke its power underSection 482Code of Criminal Procedure. We donot see how such exercise of power can be faultedor held to be erroneous. Section 482of the Codeinheres in the High Court the power to make suchorder as may be considered necessary to, inter alia,prevent the abuse of the process of law or to servethe ends of justice. While it will be whollyunnecessary to revert or refer to the settled positionin law with regard to the contours of the poweravailable under Section 482Code of CriminalProcedure. It must be remembered that continuanceof a criminal proceeding which is likely to becomeoppressive or may partake the character of a lameprosecution would be good ground to invoke theextraordinary power under Section 482Code ofCriminal Procedure.”

20. In Gopakumar B.Nair v. CBI[[4]], 3-Judges Bench of the Hon’ble Supreme Court at paras-13 and 14 held as under:

“13. The decision in Gian Singh v. State ofPunjab {(2012) 10 SCC 303} holding the decisionrendered in Nikhil Merchant v. CBI {(2008) 9 SCC

677} and other cases to be correct is only anapproval of the principle of law enunciated in thesaid decisions i.e. that a non-compoundableoffence can also be quashed UnderSection 482Code of Criminal Procedure on theground of a settlement between the offender andthe victim. It is not an affirmation, for there can benone, that the facts in Nikhil Merchant (supra)justified/called for the due application of theaforesaid principle of law. Also, neither NikhilMerchant (supra) nor Gian Singh (supra) can beunderstood to mean that in a case where chargesare framed for commission of non-compoundableoffences or for criminal conspiracy to commitoffences under the PC Act, if the disputes betweenthe parties are settled by payment of the amountsdue, the criminal proceedings should invariably bequashed. What really follows from the decisionin Gian Singh (supra) is that though quashing anon-compoundable offence UnderSection 482Code of Criminal Procedure, followinga settlement between the parties, would not amountto circumvention of the provisions of Section 320ofthe Code the exercise of the power UnderSection 482will always depend on the facts ofeach case. Furthermore, in the exercise of suchpower, the note of caution sounded in GianSingh (supra) (para 61) must be kept in mind. This,in our view, is the correct ratio of the decisionin Gian Singh (supra).

14. The aforesaid principle of law may now beapplied to the facts of the present case. At the veryoutset a detailed narration of the charges againstthe accused-Appellant has been made. TheAppellant has been charged with the offence ofcriminal conspiracy to commit the offence UnderSection 13(1)(d). He is also substantively chargedUnder Section 420(compoundable with the leaveof the Court) and Section471(non-compoundable).A careful consideration of the facts of the casewould indicate that unlike in Nikhil Merchant (supra) no conclusion can be reachedthat the substratum of the charges against theaccused-Appellant in the present case is one ofcheating nor are the facts similar to those in CBI v.Narendra Lal Jain {(2014) 5 SCC 364} where theaccused was charged Under Section 120Breadwith Section 420Indian Penal Code only. Theoffences are certainly more serious; they are notprivate in nature. The charge of conspiracy is tocommit offences under the Prevention of CorruptionAct. The accused has also been charged forcommission of the substantive offence UnderSection 471Indian Penal Code. Though theamounts due have been paid the same is under aprivate settlement between the parties unlikein Nikhil Merchant (supra) and Narendra LalJain (supra) where the compromise was a part ofthe decree of the Court. There is noacknowledgement on the part of the bank of theexoneration of the criminal liability of the accused-Appellant unlike the terms of compromise decree inthe aforesaid two cases. In the totality of the factsstated above, if the High Court has taken the viewthat the exclusion spelt out in Gian Singh (supra)(para 61) applies to the present case and on thatbasis had come to the conclusion that the powerUnder Section 482Code of Criminal Procedureshould not be exercised to quash the criminal caseagainst the accused, we cannot find anyjustification to interfere with the said decision.”

21. In CBI v Jagjit Singh[[5]]the Hon’ble Supreme Court made the following observations at paras-13, 14, 15 and 16:

“13. The very same issue fell for considerationrecently before a three-Judge Bench of this Courtin Gian Singh v. State of Punjab and Anr.: 2012(10) SCC 303. In the said case, this Courtdiscussed the relative scope of inherent power ofthe High Court under Section482Code of CriminalProcedure to quash criminal proceedings involving

non-compoundable offences in view of compromisearrived at between the parties. That was a casewherein when the special leave petition came upfor hearing, a two-Judge Bench vide order reportedin Gian Singh v. State of Punjab and Anr.: (2010)15 SCC 118 doubted the correctness of thedecisions of this Court in B.S. Joshi and Ors. v.State of Haryana and Anr.: (2003) 4 SCC675,Nikhil Merchant v. Central Bureau ofInvestigation and Anr.: 2008 (9) SCC 677and Manoj Sharma v. State and Ors: (2008) 16SCC 1 and referred the matter to a larger Bench.Hence, the question before the Bench was withregard to the inherent power of the High Courtunder Section 482Code of Criminal Procedure inquashing the criminal proceedings against anoffender who has settled his dispute with the victimof the crime but the crime in which he was allegedlyinvolved was not compoundable underSection 320Code of Criminal Procedure.Discussing different provisions and taking intoconsideration the different decisions of this Court,the larger Bench in Gian Singh (supra) held asfollows:

61. The position that emerges from the abovediscussion can be summarised thus: thepower of the High Court in quashing acriminal proceeding or FIR or complaint inexercise of its inherent jurisdiction is distinctand different from the power given to acriminal court for compounding the offencesunder Section 320of the Code. Inherentpower is of wide plenitude with no statutorylimitation but it has to be exercised in accordwith the guideline engrafted in such powerviz.: (i) to secure the ends of justice, or (ii) toprevent abuse of the process of any court. Inwhat cases power to quash the criminalproceeding or complaint or FIR may beexercised where the offender and the victimhave settled their dispute would depend on the facts and circumstances of each case andno category can be prescribed. However,before exercise of such power, the High Courtmust have due regard to the nature andgravity of the crime. Heinous and seriousoffences of mental depravity or offences likemurder, rape, dacoity, etc. cannot be fittinglyquashed even though the victim or victim'sfamily and the offender have settled thedispute. Such offences are not private innature and have a serious impact on society.Similarly, any compromise between the victimand the offender in relation to the offencesunder special statutes like the Prevention ofCorruption Act or the offences committed bypublic servants while working in that capacity,etc.; cannot provide for any basis for quashingcriminal proceedings involving such offences.But the criminal cases having overwhelminglyand predominatingly civil flavour stand on adifferent footing for the purposes of quashing,particularly the offences arising fromcommercial, financial, mercantile, civil,partnership or such like transactions or theoffences arising out of matrimony relating todowry, etc. or the family disputes where thewrong is basically private or personal innature and the parties have resolved theirentire dispute. In this category of cases, theHigh Court may quash the criminalproceedings if in its view, because of thecompromise between the offender and thevictim, the possibility of conviction is remoteand bleak and continuation of the criminalcase would put the accused to greatoppression and prejudice and extremeinjustice would be caused to him by notquashing the criminal case despite full andcomplete settlement and compromise with thevictim. In other words, the High Court mustconsider whether it would be unfair or contrary

to the interest of justice to continue with thecriminal proceeding or continuation of thecriminal proceeding would tantamount toabuse of process of law despite settlementand compromise between the victim and thewrongdoer and whether to secure the ends ofjustice, it is appropriate that the criminal caseis put to an end and if the answer to the abovequestion(s) is in the affirmative, the High Courtshall be well within its jurisdiction to quash thecriminal proceeding.

14. In the present case, the specific allegationmade against the Respondent-accused is that heobtained the loan on the basis of forged documentwith the aid of officers of the Bank. On investigation,having found the ingredients of cheating anddishonestly inducing delivery of property of thebank (Section 420Indian Penal Code) anddishonestly using as genuine a forged document(Section471Indian Penal Code), charge sheet wassubmitted under Sections 420/471Indian PenalCode against the accused persons.

15. The debt which was due to the Bank wasrecovered by the Bank pursuant to an order passedby Debts Recovery Tribunal. Therefore, it cannot besaid that there is a compromise between theoffender and the victim. The offences whencommitted in relation with Banking activitiesincluding offences under Sections 420/471IndianPenal Code have harmful effect on the public andthreaten the well being of the society. Theseoffences fall under the category of offencesinvolving moral turpitude committed by publicservants while working in that capacity. Prima facie,one may state that the bank as the victim in suchcases but, in fact, the society in general, includingcustomers of the Bank is the sufferer. In the presentcase, there was neither an allegation regarding anyabuse of process of any Court nor anything onrecord to suggest that the offenders were entitled tosecure the order in the ends of justice.

In the instant case, the High Court has notconsidered the above factors while passing theimpugned order. Hence, we are of the opinion thatthe High Court erred in addressing the issue in rightperspective.

16. In such circumstances, we set aside theimpugned judgment and order dated 31[st] March,2010 passed by the High Court in CRR No. 719 of2010 and direct the trial court to proceed the matterin accordance with law and to conclude the trialexpeditiously. The appeal is allowed with theaforesaid observation.”

22. The learned counsel appearing for the petitioners in all threerevision cases relied upon the following decisions; In J.Sri Ram Surya Prakash Sharma v. State of Andhra Pradesh[[6]], a learned Single Judge of this Court at paras-8, 11 and 12held as under:

“8. Therefore, it is now fairly well settled that,while deciding a petition under Section 482Codeof Criminal Procedure, this Court should not act asa trial Court and appraise the evidence to beadduced by the parties to find out if ultimately theaccused would be convicted or acquitted, and thatthis Court has to go by the allegations in thecomplaint/charge sheet only and only if theallegations in the complaint/charge sheet, if takento be true, do not constitute an offence, the chargesheet can be quashed.

11. In his statement under Section164Code ofCriminal Procedure, the Chief Manager (VigilanceDepartment) of the Bank stated that as per theirinvestigation they have noticed some procedurallapses on the part of their staff. At the time of aboveloan, A-5 being the then Assistant GeneralManager has released the ad hoc limit withoutobtaining additional security, A-6 the then Chief Manager has not properly verified the title deedsand did not identify the guarantors which resultedimpersonation, and A-7 being the then ChiefManager debited the loan amount without debitingthe amount towards margin/commission for openingletter of credits though the account is irregular.

12. Having regard to the facts andcircumstances of the case, the observations madein the decisions cited supra and the statements ofthe second Respondent and the Chief Manager(Vigilance Department) recorded underSection 164Code of Criminal Procedure, I findforce in the contention of the learned SeniorCounsel appearing for the Petitioners that theallegations made against the Petitioners in thecomplaint as well as the charge sheet are onlyprocedural lapses in discharging their officialfunctions and so initiation of criminal proceedingsagainst them in the absence of any accusation orallegation of abetment on their part in commissionof offence is an abuse of process of law and that theaverments made against the Petitioners either inthe report or in the charge sheet, prima facie, do notconstitute any offence much less the chargesframed against them for the offences and if theproceedings against them are allowed to continue,it is nothing but harassment and even abuse ofprocess of law, and so the same are liable to bequashed. The case on hand clearly falls under theguideline Nos. 1, 3 and 5 extracted supra laid downby the Supreme Court in Bhajanlal's case (3 supra).I am also in agreement with the contention of thelearned Senior Counsel, relying upon theobservations made in C. Chenga Reddy's case (1supra), that violation of any circulars andinstructions and commission of administrativeirregularities cannot be said to have been done bythe official concerned with any corrupt or dishonestintention and such irregularities or administrativelapses could only have resulted in a departmentalaction against the officials but criminal prosecution

23. Learned counsel for the petitioners placed reliance on theunreported decisions of this court in Crl.P.No.1510 of 2009, dated16.10.2012, Crl.RC.No.1307 of 2011, dated 09.04.2013 andCrl.RC.No.805 of 2013, dated 29.09.2015, which judgments are basedon the decisions of the Hon’ble Supreme Court, referred to above andhence need not require detail reference thereto.

Crl.RC.No.1868 of 2011

24. This is a petition filed by A.1 in C.C.No.23 of 2005. Asnoticed above, he along with others has been charge-sheeted by theCBI alleging offences punishable under Sections 120-B, 420, 468, 471read with 462 I.P.C., and under Sections 13(2) read with 13(1)(b) of thePrevention of Corruption Act, 1988.

25. The petitioner/A.1 was working as Chief Manager of StateBank of India, Padmarao Nagar Branch, Hyderabad. He is alleged tohave conspired with other accused and by abusing his official position,issued seven bank guarantees in favour of National Small ScaleIndustries Corporation (NSIC) basing upon the fake and forgeddocuments furnished by the other accused. On the basis of such bankguarantees, A.2 to A.6 availed financial assistance from NSIC byplacing false and fake invoices and have withdrew the amounts butfailed to repay the said amounts to NSIC, due to which NSIC hadinvoked the bank guarantees and hence the bank is said to havesustained a loss of Rs.70.50 lacs.

26. The petitioner/A1 and others filed petition under Section239 Cr.P.C., for discharging them. The learned III-Additional SpecialJudge for CBI Cases, Hyderabad, dismissed the same holding thatprima facie there is material to proceed against the accused.

27. The contention of the petitioner/A.1 is that the bank

guarantees were sanctioned for 25% cash margin and 75% collateralsecurity after obtaining legal opinion and report of the approvedvaluer. The petitioner/A1 followed all the legal formalities and theController/Zonal Office was aware of the issuance of the bankguarantees. No objection was raised by the audit party during theperiodical audit about the issuance of the bank guarantees. It is notthe petitioner/A1 who has disbursed the amount covered by the bankguarantees in favour of NSIC. It is not the duty of the petitioner/A1being the Chief Manager to conduct any pre-sanction inspection ofproperties and verify the genuineness of the documents produced bythe parties. It is further contended that the entire material placed onrecord refer only to procedural lapses in discharging the official dutyand there is no allegation of abetment or the petitioner/A1 has any partin commission of the offences and hence he is entitled to bedischarged.

28. It is also the contention of the petitioner/A.1 that by the timethe amount was disbursed, it is L.W.5 – Y.Krishna Rao who wasincharge and it is the said Krishna Rao who himself stated in hisstatement that he detected the fraud played by the borrowers. In spiteof having detected the fraud, it is the said Krishna Rao – L.W.5 whodisbursed the bank guarantees instead of withholding the same. Insome of the bank guarantees, the first witness of the investigatingagency by name B.V.R.Chowdary, the Chief Manager(LW 4) is a co-signatory and it is the petitioner/A.1 alone who has been charge-sheeted by taking the other persons as witnesses. In other words, thecontention of the petitioner/A.1 is that the listed witnesses No.1 and 5are as much responsible as the petitioner/A.1 for the allegedirregularities or lapses, if any, on their part in issuing the bankguarantees based on the alleged fake and forged title deeds producedby the borrowers. It is also the contention of the petitioner/A.1 that theCBI also failed to take into account the fact that one of the borrowers viz., A5 has already paid the amount due to the bank and therefore thecase filed by the bank against the said borrower in Debt RecoveryTribunal, Hyderabad, has been withdrawn. It is also the contentionthat out of the total bank guarantees worth about Rs.94 lacs, a sum ofRs.25 lacs was recovered towards margin money, Rs.3 lacs towardsbank commission. It is further stated that for the sum of Rs.15,87 lacs,Rs.7.45 lacs and Rs.23.31 lacs, the bank has filed O.A.No.283 of 2001before the Debt Recovery Tribunal, Hyderabad, O.S.No.139 of 2001on the file of the I-Additional Senior Civil Judge, Ranga Reddy District,and O.S.No.838 of 2002 on the file of the District Judge, Ranga ReddyDistrict, respectively, and obtained the decrees. With regard to anotheramount of Rs.18 lacs, A.4 has repaid the same vide O.A.No.348 of2001 before the Debt Recovery Tribunal, Hyderabad. Insofar as theamount of Rs.15 lacs is concerned, a criminal case was filed againstthe petitioner/A.1 and others being C.C.No.1722 of 2003 in the Courtof the X-Additional Chief Metropolitan Magistrate, Secunderabad, butthe same has been withdrawn. Briefly stated, the contention of thepetitioner/A.1 is that out of a total bank guarantee of about Rs.94 lacs,the bank has already realized or is in a position to realize, inpursuance to the decrees, a sum of about Rs.1.07 crores which makesabout 13.64 lacs surplus. Therefore, there is no question of the banksustaining any financial loss as alleged by the CBI.

29. The other contention of the petitioner is that for the actsalleged against him, departmental enquiry was initiated against himand he has been punished departmentally by the orders of theDisciplinary Authority dated 09-02-2001 by imposing the punishmentof reduction in Time Scale by two stages for a period of two years withcumulative effect with a further direction that he will not earn anyincrements during the period of such reduction and it will have theeffect of postponing his future increments. The disciplinary authorityfurther directed that the petitioner/A.1 be re-instated by treating the period spent by him under suspension as on duty. It is submitted in thedetailed departmental enquiry what has been held to be proved is thatthe petitioner/A.1 being Chief Manager has committed lapses of aserious nature but there is no evidence of their being any mala fides onthe part of A.1 even though it is proved that he failed to exercise duecare and diligence and exhibited negligence in discharging his dutieswhich resulted in substantial loss to the bank.

30. The petitioner/A.1 further submits that the investigationcarried out and charge-sheet has filed is not by a competent Officer asper the provisions of the Delhi Special Police Establishment Act, theOfficer who filed the charge-sheet was on deputation from RailwayProtection Force to the CBI.

31. Learned Counsel appearing for the petitioner/A.1 furthersubmits that the petitioner/A.1 having born on 11-05-1948 and joinedthe bank as a Clerk on 28-10-1967 and while holding the post of ChiefManager at Padmarao Nagar Branch, he has been suspended on 02-11-1998. Departmental Enquiry was ordered on 10-11-1999. Charge-sheet is filed in the year 2005. The petitioner is now aged about 68years and has retired from service long back.

32. Learned Special Public Prosecutor appearing for CBIsubmits that at the stage of considering the material on record underSection 239 Cr.P.C., the contentions that are now urged by thepetitioner cannot be gone into and conducting a mini trial at thethreshold without giving an opportunity to the prosecution to producethe evidence on record is not what is contemplated by the procedure. What is all that is required to be seen at this stage is as to whetherthere is material sufficient on record to proceed with the trial of thecase and the culpability or otherwise of the petitioner in the charge ofcriminal conspiracy with other accused cannot be adjudicated unlessthe evidence is placed on record. Learned Special Judge hasconsidered the entire matter in proper perspective and being satisfied that there is sufficient material to proceed against the accused hasdismissed the petition and such an order which is based on materialon record cannot be said to be illegal or irregular warrantinginterference by the Court in its revisional jurisdiction.

33. The prosecution is intending to prove its case against thepetitioner/accused and as many as 73 witnesses are listed asproposed to be examined and about 353 documents are sought to berelied upon. At the stage of framing of the charge, the entire evidencethat is likely to be produced cannot be judged and its truthfulness orotherwise cannot be gone into at the initial stage of framing of thecharge. After a full-fledged trial, it will come out as to whether therewas any criminal conspiracy on the part of the petitioner/A.1 being theChief Manager at the time in sanctioning bank guarantees based onsureties that were furnished by the borrowers, which are alleged to befake and forged. The question as to whether it is the petitioner/A.1being the Chief Manager is in any way responsible with the said act orborrowers in defrauding the bank by producing the fake and forgeddocuments or whether other Officers of the bank such as theControllers, the approved valuer, the legal opinion and the person whodisbursed the bank guarantees are equally responsible with thepetitioner/A.1 is a larger question which cannot be adjudicated at thisstage. Prima facie the material on record shows that the petitionerbeing the Chief Manager of the bank has in contravention of the rulesof the bank has issued Bank Guarantees worth nearly about Rs.94lacs by taking a margin money of 25% and for the remaining 75% hasobtained collateral security from the borrowers who have furnished thetitle deeds of the properties which are alleged to be fake and forged.

34. The contention that Investigating Officer being notcompetent, he being on deputation from Railway Police Force, alsocannot be adjudicated at this stage. When the evidence of the saidInvestigating Officer comes on record, it has to be decided as to whether he is the person competent to file charge-sheet or not. Thescope of enquiry at this stage is limited to see as to whether thematerial on record is sufficient to proceed with the trial or whether theallegations per se do not constitute any offence.

35. Admittedly, even according to the petitioner/A.1, even adepartmental enquiry that was conducted after following the properprocedure and recording the evidence, the authorities found seriouslapses on the part of the petitioner/A.1 in sanctioning the bankguarantees and thereby imposed the punishment. Merely becauseminor punishments have been imposed by the disciplinary authority inthe departmental proceedings, the petitioner/A.1 cannot be heardsaying that the evidence that is proposed to be produced in a criminaltrial cannot be sufficient for convicting him of the criminal offence.

Crl.RC No.1699 of 2012:

36. The petitioner herein is A7 who is a retired Assistant GeneralManager who retired from the State Bank of India in the year 1988. Heis said to be acting as Consultant to the prospective applicants as aprofessional expert. He is only claiming charges for renderingprofessional service but he has nothing to do with the transactions assuch.

37. In the instant case, as noticed above, the allegation is thatA1 being Chief Manager of the Bank has conspired with A2 to A7 inissuing Bank Guarantees by obtaining collateral security of 75% ofBank Guarantee on the basis of sureties furnished by the borrowerswhich has ultimately proved to be fake and forged. The borrowershave offered fake and forged documents by way of security and it is theChief Manager and other Officers of the Bank who have accepted thesame and issued the Bank Guarantees which ultimately the Bank hadto honour resulting in loss to the Bank.

38. The petitioner/A7 do not deny that he has guided thepersons to obtain Bank Guarantees and other loans by filling up of

necessary forms and also advising them to present all the necessarydocuments for obtaining the loans. Whether the petitioner/A7 wasaware about the nature of the documents that have been furnished bythe persons seeking loans from the Bank was known to him or not isthe matter to be determined only after a trial. Admittedly, he hashelped the borrowers in doing the paper work, including furnishing therequisite documents and therefore, his culpability or otherwise in theoverall conspiracy involving A1 to A7 is a question which has to beadjudicated.

39. A perusal of the contents of the FIR and the charge sheetprima facie show that he has conspired with other accused with adishonest and fraudulent intention to cheat Bank by making the otheraccused to offer fake sale deeds as security in obtaining BankGuarantees and he also received amounts by way of cheques andtherefore, he was instrumental in the fraud. At this stage, on the basisof the material available on record, it cannot be said that the chargeagainst the petitioner/A7 is groundless, so as to discharge him. TheCourt below has properly appreciated the material on record anddismissed his petition to discharge under section 239 Cr.P.C.

40. Learned counsel for the petitioner/A7, however, submits thatthe petitioner/A7 retired from the Bank service in the year 1988 asAssistant General Manager and he is presently aged nearly 85 yearsand to prosecute him at this age, nearly 25 years after his retirement,may not be justified in the interests of justice.

Crl.RC.No.1580 of 2012:

41. The petitioner herein is A5 in the charge sheet. He isconcerned with the Bank Guarantee for about Rs.20 lakhs issued infavour of M/s.Suryodaya Hightech Engineers Private Limited. Thepetitioner/A5 while procuring the Bank Guarantee has deposited anamount of Rs.5 lakhs as margin money, apart from providing counter guarantee indemnifying to the Bank to the extent of Rs.20 lakhs in hispersonal capacity.

42. The case of the prosecution is that the documents that wereproduced by the petitioner and others by way of security for BankGuarantees obtained are fake and forged and thereby he obtainedBank Guarantees by criminally conspiring with the Manager of theBank and other accused. The contents of the FIR and the chargesheet shows that he criminally conspired with A1 with the dishonestand fraudulent intention to cheat the Bank by offering fake sale deedas security and obtained Bank Guarantee. The petitioner is accusedof the offences punishable under section 120-B r/w.Sections 420, 468and 471 IPC.

43. The contention of the petitioner/A5 is that even before thecase was registered, he was negotiating with the Bank to pay theamounts and as a matter of fact settled the amount and paid theamount outstanding and as a matter of fact the Bank which has filedcase before the Debt Recovery Tribunal has withdrawn the case andtherefore, he cannot be further prosecuted.

44. The material that was produced on behalf of thepetitioner/A5 no doubt shows that there was settlement in between thepetitioner/A5 and the Bank and during the pendencey of theproceedings before the Debt Recovery Tribunal and after obtainingpermission from CBI, the Bank has accepted the amount andwithdrawn the case filed against the petitioner/A5 in so far as the loanis concerned. The permission that is given by CBI to accept theoutstanding amount was subject to the condition that this will notabsolve the criminal liability of the petitioner/A5 and will not in any wayaffect the criminal prosecution. In its letter dated 25.10.2004addressed to the Bank, the Superintendent of Police, CBI, SPE,Hyderabad informed that it is at liberty to discharge the liability ofM/s.Suryodaya Hightech Engineers Private Limited, but, however, the criminal case registered by CBI will follow its normal course. Afterobtaining such letter from the CBI, the Bank has accepted the amountand withdrawn the case filed against the petitioner for the amount due.

45. The learned counsel for the petitioner/A5 submits that sincethe amount that was due and payable to the Bank has been fullydischarged, he is entitled to be discharged and to continue the criminalprosecution against him will be oppressive.

46. On the other hand, the learned Special Public Prosecutor forCBI by relying upon the Authorities, referred to above, submit thatmerely because the petitioner/A5 has entered into a compromise withthe Bank as one time settlement and paid the amount that does notdischarge the criminal liability of the petitioner/accused. The learnedSpecial Public Prosecutor submits that the facts of each case have tobe considered separately as has been consistently laid down by theseveral Authorities.

47. In the instant case, the specific allegation is that in theprocess of obtaining the Bank Guarantee or loan, the petitioner hassubmitted certain title documents which are found to be fake andforged. According to the prosecution, the petitioner/A5 is part of largeand deep-seated conspiracy and he along with active connivance ofthe Bank Officials have obtained the Bank Guarantees by submittingthe fake documents and thereby the Bank was cheated. Consideringthe nature of the allegations made against the petitioner, merelybecause he paid the amounts to the Bank and discharged the liabilitycannot be taken as valid ground for discharging the petitioner/accusedat the threshold.

48. What is required to be seen is as to whether thepetitioner/accused has any dishonest or fraudulent intention inobtaining the financial assistance from the Bank and in that processsubmitted certain documents which have ultimately turned out to befake and forged. In this back ground, merely because the borrower has settled the disputes with the Bank and paid the money cannot betaken as a valid ground for quashing all further proceedings in so faras the petitioner/A5 is concerned. May be Bank which is moreinterested in realizing the debt has done so, but that cannot exculpatethe liability of the petitioner/A5 to answer to the charge that he hadcommitted an act which is punishable under criminal jurisprudence.

49. At this stage, it is not possible to hold that the petitioner/A5has never intended to cause any loss to the Bank or had any intentionof defrauding for obtaining any pecuniary gain from the Bank. It is amatter of evidence and prima facie the material available on record issufficient for proceeding further with the trial in the case. The learnedSpecial Judge has properly appreciated the issue and dismissed thepetition to discharge the petitioner/A5.

50. As has been observed from the authorities cited above, theCourt at the stage of framing charges cannot decide about thetruthfulness or otherwise of the evidence proposed to be produced, itsvalidity or legality of the evidence, documentary or oral, proposed to beproduced during the course of trial. A mini trial at this stage is not whatis contemplated. A prima facie satisfaction of the Court, based on thematerial on record, is what is all that is required and unless it is shownthat the charges alleged are groundless, the accused cannot bedischarged. Voluminous oral and documentary evidence has beengathered by the investigating agency and on its basis, it cannot be saidthat there is absolutely no material, whatsoever, for proceeding againstthe petitioners in all these three revision cases.

51. For the foregoing observations and in view of the specificallegations, I have no hesitation to hold that the petitioners in thesethree revision cases, viz., A1, A5 & A7 are not entitled to bedischarged under section 239 Cr.P.C.

52. These three Criminal Revision Cases are accordinglydismissed.

However, taking into consideration the fact that thepetitioners/A1(Ch.Laxminarayana), A5(K.Ashok Kumar) &A7(C.C.Mukundan Nambiar) retired as Senior Officers of the Bank andare now aged about 68 years to 85 years respectively, the trial Court isdirected to dispose of the case as expeditiously as possible,uninfluenced by any of the observations made herein, without,however, insisting for the presence of thepetitioners/A1(Ch.Laxminarayana), A5(K.Ashok Kumar) &A7(C.C.Mukundan Nambiar) on each and every date of hearing unlesstheir presence is required for any specific purpose.

Pending miscellaneous applications, if any, shall stand closedin consequence.

__________________

M.S.K.JAISWAL,J

Date: 30.12.2015Dsr/Smr

[1]LAWS(SC)-2014-12-91LAWS(SC)-2014-12-91

[2]2015(1) ALT (Crl.) 319 (SC)2015(1) ALT (Crl.) 319 (SC)

[3](2014) 5 SCC 364(2014) 5 SCC 364

[4](2014) 5 SCC 800(2014) 5 SCC 800

[5](2013) 10 SCC 686(2013) 10 SCC 686

[6]2011(1) ALD (Crl.) 207 (AP)2011(1) ALD (Crl.) 207 (AP)