CRLP/6379/2008 of Kota Jaya Sankaram, Vs State CBI on 31 December 2009

COMMON ORDER:

These two criminal petitions are filed by the accused Nos.2 and1 respectively for quashing charge sheet in C.C. No.22 of 2005 on thefile of Special Judge for C.B.I cases, Hyderabad relating to offencespunishable under Sections 120-B, 420 I.P.C and Sections 13(2)/13(1)(d) of the Prevention of Corruption Act.

2) A-1 worked as Branch Manager in Andhra Bank, M.G.RoadBranch, Secunderabad. A-2 is Managing Director of M/s.Zental Drugs(P) Limited, Hyderabad. The respondent i.e., C.B.I filed charge sheetagainst A-1 to A-4 in Rc.37(A)/2003-Hyd, in the lower Court. A-2applied for loans from A-1’s bank under Open Cash Credit (O.C.C)limits and In-land Letter of Credit (I.L.C) for purpose of running hisfactory at Yellampet. It is alleged that A-1 as Chief Manager of theBank during the year 2000-01 conspired with A-2 to A-4 andsanctioned O.C.C of Rs.65,00,000/- and I.L.C of Rs.65,00,000/- toM/s.Zental Drugs(P) Limited for manufacturing of medicines andformulations, on the basis of equitable mortgage of fraudulentlyacquired property documents pertaining to house belonging to one ofthe co-obligants Arti Kashyap without her consent and knowledge andthat subsequently on advice of Zonal Office, credit limits were reducedto 50% and that on 31.03.2001 A-1 purchased three cheques worthRs.12.5 lakhs issued by M/s.Pharma Link, a fictitious firm in whosename account was opened by A-3 who was actually employee of A-2and that the said purchase of cheques was made even though theaccount was over drawn by Rs.1.77 lakhs by that time and that laterthose cheques were returned unpaid and that in February, 2001 A-1issued five I.L.Cs worth Rs.32.25 lakhs without ensuring genuinebusiness transactions and those I.L.Cs were later devolved on thebank as they were not honoured by A-2 and that the bank was put to wrongful loss of Rs.74.33 lakhs causing corresponding gain to theaccused. After investigation, C.B.I filed charge-sheet in the lowerCourt concluding that A-1 abused his official position and conspiredwith A-2 to A-4 and sanctioned and disbursed credit limits to A-2without proper post sanction inspection and without ensuring properend use of funds causing loss of Rs.74.33 lakhs to the bank and thatthe bank could not recover the loss since collateral security owned byArti Kashyap was fraudulently obtained by A-2. According to theprosecution, Arti Kashyap of Mumbai who is owner of collateralsecurity of plot No.1017, Survey No.403/1 (Old) and 120 and102/1(new), Jubilee Hills Co-operative House Building Society,Jubilee Hills, Hakeempet village, Hyderabad and who is notassociated with A-2’s company had no knowledge of creatingequitable mortgage of her property.

3) While so, on filing private complaint filed by Special Power ofAttorney holder of Arti Kashyap against A-1, A-2 and others, the XIMetropolitan Magistrate, Secunderabad referred the complaint toMahankali Police of Secunderabad for investigation under Section156(3) Cr.P.C. After investigation, the Sub Inspector of Police,Mahankali Police Station filed charge sheet in Crime No.32/2002against A-1, A-2 and others in the same Magistrate Court and it wasregistered as C.C. No.524/2003 for offences punishable underSections 419, 420, 468, 471, 474, 120-B, 506, 506/109 I.P.C. Averments in that case are to the affect that Jubilee Co-op HouseBuilding Society Limited executed sale deed in the year 1987 inrespect of the above plot No.1017 of Jubilee Hills in favour of ArtiKashyap and that some impostor got released the pending documentfrom the Sub-Registrar’s Office by paying requisite stamp duty and thatseveral banks including A-1’s bank sanctioned loans on the strength ofsecurity of the said registered document in favour of 3[rd] partiesincluding A-2’s company.

4) There is no dispute that in Lok Adalat conducted by the DistrictLegal Services Authority, C.C. No.524/2003 was compounded as ArtiKashyap received the documents. Consequently the XI AdditionalChief Metropolitan Magistrate, Secunderabad (after re-designation ofearlier XI Metropolitan Magistrate, Secunderabad) acquitted some ofthe accused who were parties to the said compounding, including A-1and A-2 herein.

5) It is contended by the senior counsel appearing for petitionersin both the petitions that in view of acquittal of the petitioners in C.C.No.524/2003, the present case in C.C. No.22/2005 on the file ofSpecial Judge for C.B.I cases, Hyderabad cannot go on against thepetitioners as it would amount to double jeopardy. On the other hand,it is contended for the respondent that in C.C. No.524/2003, C.B.I is nota party and that the offence of criminal misconduct under Section13(2)/13(1)(d) of the Prevention of Corruption Act is not subject mattertherein and that therefore, present C.C. No.22/2005 filed by C.B.Iagainst the petitioners and others is not hit by the doctrine of doublejeopardy.

6) In C.C. No.524/2003 the petitioners were not charged foroffence under Section 13(2)/13(1)(d) of the Prevention of CorruptionAct. Subject matter of C.C. No.524/2003 was only fraud played by animpostor in obtaining release of the pending document from the Sub-Registrar’s office standing in the name of Arti Kashyap of Mumbai andsubsequent creation of equitable mortgages using the saidfraudulently obtained document and obtaining loans by severalpersons including A-2’s company from several banks including A-1’s bank. Whereas,subject matter of C.C. No.22/2005 is the alleged conspiracy among A-1 to A-4 and A-1 sanctioning OCC and ILC loans to A-2’s company onthe strength of the said fraudulently obtained document and also A-1

fraudulently purchasing three cheques worth Rs.12.5 lakhs on behalfof A-2’s company which cheques were subsequently remainedunpaid, even though by the time of the said bills purchase there wasalready overdraft of Rs.1.77 lakhs by A-2’s company over and abovethe sanctioned limits. Further, it is alleged in C.C. No.22/2005 that A-1issued five ILCs worth Rs.32.25 lakhs without ensuring genuinebusiness transactions, which ILCs were subsequently devolved on thebank as they were not honoured by A-2. Total loss to the bank was tothe extent of Rs.74.33 lakhs from out of those transactions. Therespondent in charge sheet in C.C. No.22/2005 specifically stated thatsubject matter herein did not include subject matter in CrimeNo.32/2002 and C.C. No.524/2003 of XI Metropolitan Magistrate,Secunderabad for offences punishable under Sections 419, 420, 468,471, 474, 120-B, 506/109 I.P.C. Thus, primary subject matter in C.C.No.22/2005 is criminal misconduct on the part of A-1 in conspiracywith A-2 to A-4 punishable under Section 13(2)/13(1)(d) of thePrevention of Corruption Act and Section 120-B I.P.C. Neither offencepunishable under Section 120-B IPC nor offence punishable underSection 13(2)/13(1)(d) of the Prevention of Corruption Act is subjectmatter of previous case in C.C. No.524/2003. In so far as offencepunishable under Section 420 IPC is concerned, victim of fraud in C.C.No.22/2005 is Andhra Bank which is a Government of Indiaundertaking, whereas victim of fraud in C.C. No.524/2003 was ArtiKashyap. Therefore, it cannot be contended that Section 420 IPC iscommon in C.C. No.22/2005 and C.C. No.524/2003. In my opinion,subject matters in C.C. No.524/2003 and C.C. No.22/2005 are entirelydifferent and do not overlap each other. Therefore, it cannot be saidthat the petitioners are being jeopardised twice for the same offences.

7) In State of Madhya Pradesh V. Veereshwar Rao Agnihotri[[1]]after referring to an earlier decision in Parkash Gupta V. State of A.P[[2]]it was observed by the Supreme Court:

“the offence of criminal misconduct punishable under S.5(2)of the Prevention of Corruption Act II of 1947 is not identicalin essence, import and content with an offence under S.409of the Indian Penal Code. The offence of criminalmisconduct is a new offence created by that enactment andit does not repeal by implication or abrogate S.409 of theIndian Penal Code”.

8) In State of Bombay Vs. S.L. Apte[[3]]it was held by theSupreme Court that when the offences are distinct, there is no questionof Rule as to double jeopardy as embodied in Article 20 (ii) of theConstitution being applicable. In that reported decision afterexamining facts of that case, it was held that offences punishableunder Section 409 IPC and under Section 105 of the Insurance Act arenot one and the same and therefore, two trials are not barred.

9) In A.A Mulla V. State of Maharashtra[[4]]the accused who wereemployees of Customs Department from whom gold biscuits wererecovered, were tried for offence punishable under Section 409 IPCand were acquitted. Subsequently another prosecution was raid onthe same accused for offence punishable under provisions of theCustoms Act and the FERA. The Supreme Court of India held thatsubsequent prosecution of the same accused for offences punishableunder the FERA are not barred by double jeopardy under Section 300Cr.P.C as ingredients of offence punishable under Section 409 IPCare different from those offences.

10) Thus, both on facts as well as in law, contention of thepetitioners does not stand to scrutiny. I find that there is no legalimpediment for the respondent proceeding with prosecution in C.C.No.22/2005 on the file of Special Judge for C.B.I Cases, Hyderabadagainst the petitioners as the said case is not hit by doctrine of doublejeopardy.

11) In the result, both the petitions are dismissed.

December , 2009

Note: L.R.Copy to be marked

(B/o)KSH

[1]AIR 1957 SC 592[2]AIR 1957 SC 458[3]AIR 1961 Supreme Court 578[4]1997(2) ALD (Crl.) 386(SC)

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SAMUDRALA GOVINDARAJULU, J