CRLRC/1975/2012 of T.R.Rajagopalan, Vs The State of Andhra Pradesh, on 31 December 2012

ORDER:

This Criminal Revision Case is directed against the order, dated28.09.2012, passed in Crl.M.P.No.126 of 2011 in C.C.No.16 of 2008on the file of the Principal Special Judge for CBI Cases, Hyderabad,whereby and whereunder the learned Special Judge dismissed theapplication filed by the petitioner under Section 239 Cr.P.C. seekingdischarge.

2. Prosecution case in brief is:- M/s.Sarita Steels Mills PrivateLimited was promoted by G.Eswara Rao (A1) on 08.08.1990. It wasconverted into a limited company with effect from 12.05.1995 andchanged its name as M/s.Sarita Steels Mills Ltd. The name of thecompany was further changed to M/s.Sarita Steels and IndustriesLimited (for short, ‘M/s.S.S.I.L.’) with effect from 21.12.1998. The LocalBoard of State Bank of India, Local Head Office, Hyderabad,sanctioned term loans of Rs.350 lakhs and Rs.150 lakhs during theyear 1997 to M/s.S.S.I.L. The said amount was released to thecompany through State Bank of India, B.H.P.V. Branch, Visakhapatnam. The Local Board of S.B.I., sanctioned fund basedand non-fund based working capital limits aggregating to Rs.800 lakhsto M/s.S.S.I.L.. After sanction of the working capital limits, account ofM/s.S.S.I.L. maintained at S.B.I., B.H.P.V. Branch, Visakhapatnam wastransferred to S.B.I. Saifabad Branch, Hyderabad, under the order ofthe petitioenr/A7, the then General Manager (CB), State Bank of India,Local Head Office, Hyderabad, on 23.06.1998 on the request of A-1G.Eswar Rao despite the protest from the Branch Manager, BHPVBranch, Visakhapatnam. The working capital limits to M/s.S.S.I.L.were renewed by the Circle Credit Committee of S.B.I. Local HeadOffice on 31.3.2000 by sanctioning working capital demand loan ofRs.480 lakhs. Cash Credit Hypothecation loan of Rs.45 lakhs, CashCredit Book Debt loan of Rs.75 lakhs and Letters of Credit Limit ofRs.600 lakhs. The L.C. limit sanctioned to M/s.S.S.I.L. was for openingof Documentary Inland Letters of Credits for the procurement of rawmaterials such as steel blooms, billets etc., mainly from Rashtriya IspatNigam Limited (RINL). A1 G.Eswara Rao as Chairman and ChiefExecutive Officer of M/s.S.S.I.L.; A2 M.Kamaraju being the Vice-President (Finance) of GER Vasavi Group of Companies promoted byA1-G.Eswara Rao; A3 M.Subrahmaniam as Assistant GeneralManager (Finance) in the Corporate Office of M/s.S.S.I.L. atHyderabad; A4 V.Srinviasa Varaprasad as Computer Operator in theCorporate Office of M/s.S.S.I.L. at Hyderabad; A5 B.U.Chandrasekharas Assistant General Manager (Finance) in the Corporate Office ofGER Vasavi Group of Companies at Hyderabad and also asauthorised signatory of M/s.S.S.I.L.; A6 M/s.Sarita Steels andIndustries Ltd. being the company incorporated under the CompaniesAct; A7 T.R.Rajagopalan being the General Manager (CB) at StateBank of India, Local Head Office, Hyderabad; and A8 V.Veeraswamyas Assistant General Manager (Finance) of M/s.S.S.I.L. and as anauthorised signatory of the company, entered into a conspiracy tofabricate Letters of Credit and pursuant to the conspiracy, M/s.S.S.I.L.,

withdrew the amounts basing on the said fabricated Letters of Credit. After availing the benefits basing on the fabricated Letters of Credit, thecompany committed default in liquidating the liability under the saidfacility and thereby the Bank sustained huge loss to a tune of Rs.8.81Crores. The petitioner being the General Manager of the Bankshowed official favours to M/s.S.S.I.L. by waiving the conditionsstipulated by the sanctioned authority at the time of release of theamounts and authorised disbursement of Rs.99 lakhs in deviation ofthe terms and conditions stipulated by the sanctioning authority andreceived favours from A1-G.Eswara Rao such as his employment inM/s.E.Soft Consulting Limited promoted by A1 G.Eswara Rao and aflat in favour of his daughter by the wife of A1 G.Eswara Rao. TheC.B.I. after completing the investigation filed charge-sheet in the Courtof the Principal Special Judge for CBI Cases, Hyderbaad. Thelearned Special Judge took cognizance of the case and registered thecomplaint as C.C.No.16 of 2008. Hence, the petitioner-A7 filed apetition under Section 239 Cr.P.C. seeking his discharge. The learnedSpecial Judge, on considering the material brought on record and onhearing the counsel appearing for the parties, came to the conclusionthat there is sufficient material to proceed further against A7 andthereby dismissed the application of the petitioner, by order, dated28.09.2012. For better appreciation, I may refer the relevant portion ofthe said order, and it is thus:

“On a conspectus of the material available on record, this Court finds forcein the submission of learned public prosecutor. It is true that if the factum ofthe petitioner transferring the advances account of M/s.SSIL alone is taken intoconsideration, the petitioner may be right in saying that there is no material toframe charge against the petitioner. However, that is not the end of the matter. The submission of the prosecution is that the ordering of the transfer itself isfraught with malafides. In this context, when the statements of LW.27D.Subrahmanyam and LW.58 V.Kodanda Ramam are perused, they wouldreveal that the petitioner as GM (CB) permitted granting term loan of Rs.99lakhs to M/s.SSIL in deviation of sanction stipulations and the same has notgot ratification through circle credit committee. This was the alleged role of thepetitioner prior to the transfer of the advances account of SSIL. Of coursethese allegations are refuted by learned counsel for petitioner on the submissionthat they were not vividly mentioned in the charge-sheet and that there was nofault of the petitioner in that regard. Be that it may, the material presented before this Court shows the dubious role of the petitioner relating to theadvances accounts which he ordered for transfer at a later stage despite theprotest. Similarly, the events subsequent to the transfer would show that A1and other accused by presenting 40 LCs cheated the SBI, Saifabad Branch to atune of crores of rupees and during the relevant period only the petitioner joinedin the concern of A1 and also his daughter purchased a flat from the wife of A1.It must be said that whether the pre and post transfer incidents would shed lighton the alleged criminal conspiracy between the petitioner and other accused ornot can be decided only after trial but for the time being it must be said that thematerial on record is prima facie sufficient to frame charge against thepetitioner. Hence, the petitioner’s request for discharge him cannot beconsidered.”

3. Heard Sri C.Kodandaram, learned Senior Counsel representingSri Challa Gunaranjan, learned counsel appearing for the petitioner/A7and Sri P.Keshava Rao, learned Special Standing Counsel for CBIappearing for the respondent/State.

4. Sri C.Kodandaram, learned Senior Counsel contends that thelimits under various categories allowed to A6 M/s.S.S.I.L. have beenenhanced from time to time and that itself suggests the initial sanctionof limits were in order, in which case, the petitioner could not foundfault in authorising the Branch Manager, State Bank of India, BHPVBranch, Visakhapatnam, to release the amount under sanctionedlimits. It is also contended by the learned Senior Counsel that thepetitioner had not abused his position while being General Manager(CB) SBI, and that his employment after two years of his retirementcannot be said to be in contravention of any of the service conditions ofState Bank of India and acceptance of post retirement post in thecompany managed by A1 G.Eswara Rao is not an offence punishableunder any of the provisions of the Indian Penal Code. A furthercontention has been advanced by the learned Senior Counsel thatrelease of term loan of Rs.99 lakhs to A6 M/s.S.S.I.L. is not within thegamut of allegations made in the charge-sheet. With regard to thepurchase of flat from the wife of A1 by the daughter of the petitioner, itis contended by the learned Senior Counsel that the daughter of thepetitioner is a Chartered Accountant and housing loan has been availed by her from S.B.I., Yellareddyguda Branch. Therefore,purchase of flat by the daughter of the petitioner from the wife of A1G.Eswara Rao is in no way connected with the release of sanctionedlimits to A6 M/s.S.S.I.L. Irregularities in permitting to draw thesanctioned limits do not constitute the offence punishable under theprovisions of the Indian Penal Code or provisions of any other penalAct. In support of his contentions reliance has been placed on thejudgments of the Supreme Court in K.Ramakrishna & Ors. v. State ofBihar & Anr.,[[1]]and CBI, Hyderabad v. K.Narayana Rao[[2]].

5. i n CBI, Hyderabad v. K.Narayana Rao’s case (2 supra),theSupreme Court held that merely because the opinion of an Advocate isnot acceptable, he cannot be mulcted with criminal prosecution unlessthere is evidence connecting him with conspirators and that at the mostopining advocate can be held guilty of professional misconduct.

6. Sri P.Keshava Rao, learned Special Standing Counsel for CBIappearing for the respondent/State contends that the investigationrevealed of the active participation of the petitioner in sanctioning thelimits and allowing the limits to be utilized contrary to the sanctionedterms and conditions. He would further submit that the conduct ofpetitioner, while discharging his duties as General Manager inallowing A6 M/s.S.S.I.L. for availment of limits, transferring the accountfrom BHPV Branch, Visakhapatnam to Saifabad Branch, Hyderabadand taking up assignment in the company managed by A1 G.EswararaRao after retirement and purchasing a flat in the name of his daughterfrom the wife of the A1 suggests of his being a member in the criminalconspiracy, the object of which is to raise fake letters of credit and getthe amount released basing on the fabricated letters of credit. Hewould further submit that the evidence gathered against the petitionerduring the course of investigation is to be considered in-toto and notthe summary of investigation stated in the charge-sheet. According to him, roaming enquiry in pros and cons of the matter as well asweighing of evidence at the stage of considering the dischargeapplication is not permissible.

7. The discharge of the accused at the threshold is permissible ifupon consideration of the record and the documents thereon indicateof there being no sufficient grounds for proceeding against him. Inother words, the consideration of the records and the documents at thisstage is for the limited period of ascertaining whether or not thereexists sufficient ground for proceeding with the trial against theaccused. If the Court comes to the conclusion that there existssufficient ground to proceed, the Court will frame a charge, if not theCourt will discharge the accused. The scope and ambit of theconsideration by the trial Court at that stage is that the enquiry mustnecessarily be limited to deciding whether or not there exists sufficientground for framing the charge. If the facts emerging from the recordand documents constitute the offence with which the accused ischarged, the petition is liable to be dismissed. At the stage ofconsideration of discharge application, the Court may sift the evidencefor the limited purpose, but definitely marshalling of evidence with aview to separate the grain from the chaff is not required. All that theCourt is called upon to consider is whether there is sufficient ground toframe the charge and for limited purpose, the Court is not required tomarshal the evidence with a view to separate the grain from the chaff. At the stage of considering discharge application, the Court is notexpected to go deep into the probative value of the material on record.What needs to be considered is whether there is ground for presumingthat the offence has been committed and not a ground for convictingthe accused has been made out. I n State of Bihar v. RameshSingh[[3]], the Supreme Court observed that at the initial stage of theframing of charge, if there is a strong suspicious evidence which leadthe court to think that there is ground for presuming that the accused has committed an offence, then it is open to the Court to say that thereis a ground for presuming that the accused has committed an offence,then it is not open to the Court to say that there is no sufficient groundfor proceeding against the accused. The standard of test, proof andjudgment which is to be applied finally before finding the accusedguilty or otherwise is not exactly to be applied at the stage ofconsideration of the discharge application.

8. The accusation levelled against A1-G.Eswara Rao that he alongwith other accused conspired together to gain unlawful benefit bypressing into service fabricated letters of credit. Indisputably, thealleged fabricated letters of credit came to be pressed into servicebetween 07.01.2000 to 18.10.2000. Even the facility of letters of creditcame to be sanctioned to A6 M/s.S.S.I.L. after the retirement of thepetitioner, who has been arrayed as A7, from service. Threecircumstances have been brought against the petitioner to suggest thathe is the member of the criminal conspiracy of cheating the Bank bypressing into service the fabricated letters of credit. Firstly, that heaccorded permission for transfer of account relating to advancesavailed by A6 M/s.S.S.I.L. from SBI, BHPV Branch, Visakhapatnam toSBI, Saifabad Branch, Hyderabad. Secondly, his acceptance ofemployment in the companies owned by A1-G.Eswara Rao within twoyears of his retirement; Thirdly, purchase of the flat No.304-A,Ambience Avenue, Srinagar Colony, Hyderabad, by his daughterKrithika Rajagopalan from the wife of A1-G.Eswara Rao.

9. It is a matter of record that the account relate to advances availedby A6 M/s.S.S.I.L. came to be transferred to SBI, Saifabad Branch,Hyderabad from SBI, BHPV Branch, Visakhapatnam, by the petitioneron the request of A1-G.Eswara Rao and on the recommendations ofLW.9 K.Kamaraju, the then Asst. General Manager, Saifabad (SIB)Branch, Hyderabad. For better appreciation, I may refer the relevantportion of statement of LW.9 K.Kamaraju and it is thus:

“After my joining the Saifabad (SIB) Branch as Assistant General Manager,the advances accounts of Saritha Steel Mills Limited were transferred to ourBranch from BHPV Branch, Visakhapatnam by the General Manager (CB) atour LHO. The accounts were transferred to our branch on the request of Shri G.Eswara Rao, dated 05.06.1999, addressed to our General Manager,which is now shown to me. During May-June, 2000, I had asked Shri G.EswaraRao to get his company’s advances accounts transferred to our Saifabadbranch from our BHPV Branch, Visakhapatnam. Since I had initially canvassedhim for our BHPV Branch, he readily obliged to my request and gave letter toour General Manager requesting for transferring the advances accounts ofM/s.Saritha Steel Mills Ltd. from BHPV Branch to our Saifabad Branch. Irequested for the transfer of the accounts to Saifabad Branch, for meeting ourBranch targets on all heads without any difficulty. I had not done any favour toShri G.Eswara Rao or his company by gettting the accounts transferred to ourSaifabad Branch. Further, I was not the authority competent to transfer theaccounts from Vizag to Hyderabad.”

It is explicit from the statement of LW.9 K.Kamaraju that it was he whobrought the advances account of A6 M/s.S.S.I.L. to SBI, BHPV Branch,Visakhapatnam, while working there as Assistant General Managerand consequent on his transfer as Chief General Manager at SBI,Saifabad Branch, Hyderabad, he requested A1-G.Eswara Rao totransfer advances accounts of A6 M/s.S.S.I.L., which request wasreadily acceded to by A1-G.Eswara Rao by presenting anapplication to the General Manager (CB), SBI, seeking transfer ofadvances account of A6 M/s.S.S.I.L. It is not the case of theprosecution that the General Manager (CB), SBI, was not competent totransfer accounts from one Branch to the other Branch. The petitioneracted well within his powers as General Manager (CB), SBI, whiletransferring the advances account of A6 M/s.S.S.I.L. from SBI, BHPVBranch, Visakhapatnam to SBI, Saifabad Branch, Hyderabad.

10. With regard to his joining in the service of the company managedby A1-G.Eswara Rao within two years after his retirement from service,it may amounts to violation of service regulations. His acceptance ofassignment does not in any way relate to the sanction of letters ofcredit facility in the year 2000 to A6 M/s.S.S.I.L. By the date of grantingletters of credit facility to A6 M/s.S.S.I.L., the petitioner was not inservice and he was not responsible for granting letters of credit facility to A6 M/s.S.S.I.L. So also, purchase of flat by his daughter from thewife of A1-G.Eswara Rao is much later to his retirement. Purchase offlat by the daughter of the petitioner from the wife of A1-G.Eswara Raoin the year 2002 cannot be connected to availemnt of letters of creditfacility by A6 M/s.S.S.I.L. Such is the situation, I am of the view thatthere is no acceptable material to infer that the petitioenr/A7 is amember of the criminal conspiracy to defraud the Bank. The trial Courthas missed to note the material fact that letters of credit came to begranted to A6 M/s.S.S.I.L. much later to the petitioner retiring fromservice, thereby erred in dismissing the application filed by thepetitioner/A7 under Section 239 Cr.P.C. seeking discharge.

11. Accordingly, the Criminal Revision Case is allowed setting asidethe order, dated 28.09.2012, passed in Crl.M.P.No.126 of 2011 inC.C.No.16 of 2008 on the file of the Principal Special Judge for CBICases, Hyderabad, and consequently, Crl.M.P.No.126 of 2011 standsallowed discharging the petitioner/A7 for the offences with which hehas been accused of in C.C.No.16 of 2008.

Date:31[st] December, 2012.

______________________

B.SESHASAYANA REDDY, J.

cs

THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY

Criminal Revision Case No.1975 of 2012

Date:31stDecember, 2012

[1]AIR 2000 S.C. 330AIR 2000 S.C. 330

[2]2012 AIRSCW 51392012 AIRSCW 5139

[3](1978) 1 SCR 257(1978) 1 SCR 257