CRLP/8877/2023 of Dr.V.Raja Gopal Reddy Vs State of Telangana on 17 September 2026

ORDER

This Criminal Petition is filed under Section 482 of the Code of Crimrnal Procedure Code. .1973 (Cr P C ) seeking quashment of the proceedrngs agarnst the pettttoner rn C.C No 16 oI 2014 pendrng on the file of the learned Princrpal Special Judge for CBI Cases, Hyderabad

The petitioner is arrayed as Accused No. 7 in the aforesaid Calendar Case, facing accusations for the offences punrshable under Sections 120-B read with Sections 420. 409, 467, 468 471 ol lhe lndran Penal Code, 1860' 42O.4Og ofthe lndian Penal Code 1860 (lPC) Secttons 13(1Xd) 13(2) read wrth Section 13(1)(d) of the Prevention of Corruption Act, 1988 (PC Act)

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Heard Mr Raja Sripathi Rao learned Senror C:unsel argued on behalf of Mr G.Aditya Goud, learned counsel for the petilioner, Mr Snnivas Kapatia, learned Special Public Prosecutor for Centrai Bureau of lnvestigation (CBl) representing respondent No 1-CBI and Mr Hemanth Kumar Vemuri, learned counsel, argued on behalf of Mr Srinivas Survr. learned counsel for respondent No.2-lndian Bank/de factc complarnant Factual matrix: 4 1 The prosecution case, in brief. is that Accused No 1, K Suresh Kumar, the Proprietor of M/s PDM lndustries, rn consprracy with the other accused. including the petitioner/Accused No 7. alleged y obtained various credit facilrties from Respondent No.2-lndian Bank Ctsmangunj Branch, Hyderabad by submrtting fake and forged trtle deeds, frrancial statements invoices, net-worth certifrcates and other documents Thr: accused allegedly obtained an Overdraft Cash Credit/Open Cash Credit (OCC) facility for [\//s PDM lndustries up to a limit of Rs 4 50 Crores, a Housing Loan of Rs 40 Lakhs, an lndustrial [t/lortgage/Term Loan of Rs 50 Lakhs and Term Loans in favour of M/s P S Educational Society aggregating to Rs 2.25 Crores The rnvestigation further revealed that the sanctioned amounts were wrthdrawn and transferred to other accounts and were subsequently utrlised for purposes other than those for whrch the facilitres had been sanctroned Certain non-existing firms were allegedly utrlised for routing funds and creating artlficial business turnover (.fl.P. .\t, tli - a! :(): ) 4.2 lt rs further alleged that several title deeds offered as collateral security were forged. Out of the 17 property documents examrned during the investigation, 11 were found to be fake/forged The petitioner/Accused No 7 and Accused No 6 who were Bank officrals, allegedly failed to properly verify the trtle documents. business transactrons. stock position, end-use of funds and complrance wrth the condltlons attached to the sanctlons, thereby facrlitating the sanction and disbursement of the loan facilities in furtherance of the alleged conspiracy lt is further alleged that the Housing Loan of Rs.40 Lakhs was released wrthout proper stte verification and wlthout compliance with the prescribed conditions. and that the funds were subsequently diverted for other purposes. The accounts were thereafter classrfied as Non-Performrng Assets (NPAs) ' on 31 03 2010 Followrng adlu stm e nt/recove ry through SARFAESI proceedings, the total alleged outstanding wrongful loss suffered by lndian Bank was calculated at approximately Rs 7,17,96,5551 On the basis of the investigatron, the CBI concluded that Accused Nos.1 to B had prima facre conspired to cheat lndran Bank by resorting to forged documents, fraudulent loan transactions, misuse/diversion of sanctioned funds and abuse of official position, thereby causrng an alleged wrongful loss of approximately Rs.7 1B Crores to the Bank

The prosecution specrfically alleges that the petitioner/Accused No 7' while servrng as Branch Manager of lndian Bank, osmangunj Branch,

-.1 \/ti/ ( r.i'. \,,. ,\',1 ,, lol ) Hyderabad, acted in conspiracy with the other accused and facilitated the fraudulent Ioan transactions. According to the prosecut on, the petitloner failed to properly verify the title deeds, financial statemelts, statements of assets and Iiabilities. invoices and other documents submitted by the borrowers, notwithstanding that several documents offered as security were subsequently found to be forged lt rs further alleged that the petrtioner farled to ensure that the loan amounts were utilised for the purposes for which they had been sanctioned The prosecution. therefore. crontends that the petitioner failed to exercise the degree of diligence elpected of a Bank official and that such acts and omissions enabled the alleged fraudulent transactions and contributed to the wrongful loss caused to lndian Bank Pleadings of the Petitioner: 5..1 Learned Senior counsel appearing for the petitioner submitted that the petitioner/Accused No.7 served as Branch Manager of lndian Bank Osmangunj Branch, Hyderabad, from27 07 2001 to 16 i)7 2006 During his tenure, credrt facilities were extended to M/s. sirish Trad:rs/PDI\/ Industries. The petitioner personally sanctioned the initial occ limil of Rs 15 Lakhs on 12Og 2OO1 Thereafter the OCC limit was enhanced to Rs 40 Lakhs, Rs 70 Lakhs and Rs.150 Lakhs respectively by the circle officr-., Hyderabad since the enhanced lrmits were beyond the delegated powers of the petitioner lt was submitted that the loan proposals were prepared by the credrt officer and were supported by legal opinions valuation reports and other requisite \ i R.i Cr/.p. Xa tE7: ol :02 J documents. According to the petttioner, his role was confined to forwarding the proposals to the crrcle off rce for conslderatron and sanctron. insofar as the enhanced limits were concerned lt was further submitted that the Housing Loan of Rs 40 Lakhs was sanctioned by the circle office and not by the petitroner 5.2. lt is the further case of the petitioner that subsequent audits and tnspections conducted in relation to the concerned accounts did not disclose any trregulaflty, diversron or stphontng of funds attributable to him The stock Audit, Branch lnspections, statutory audrts and staff Accountability Studies allegedly did not fasten any accountabilrty upon the petitioner, and the staff accountability was recorded as 'Nil" T6e petrttoner was relieved from the Branch rn July, 2006. Even thereafter the circle offrce continued to deal with the accounts and the credit facilities and subsequently enhanced the OCC limit to Rs 300 Lakhs rn 2OO7 and to Rs.450 Lakhs in 2009 The accounts ultimately became NPAs only rn the year 2010, several years after the petitioner had ceased to function as the Branch Manager of the said Branch lt is further pleaded that the record rndicates that the Bank's Panel Advocates had certtfted the genurneness of the title documents relating to the securities offered The petitioner also relies upon the fact that the Bank subsequentlyrecoveredsubstantialamountsthroughoneTimeSettlement (oTS),saleofpropertiesandrepaymentoftheloanSltiSalsostatedthat proceedings against the co-accused. namely Accused Nos 6 and B' were .\

\ l'R. / (.r-r./). \'2. 8E- tl l0l ) quashed by this Court, while proceedings against Accused Nos.3 and 4 were quashed by the Hon'ble Supreme Court 5.3. The petitioner relies upon the aforesaid circumstarces to contend that the mater al on record does not disclose any specific act on his part, beyond the sanction of the initral OCC facility of Rs 15 Lakhs within the scope of his delegated authority and the foruuarding of the subsequent proposals to the competent Circle Office, which could establish his crininal culpability in respect of the alleged transactions. According to the petrtioner, the material relied upon by the prosecution does not attribute to him any specific act of forgery, fraudulent representation, diversion or siphoning of funds, or any other overt act demonstrating his participation in the allel;ed conspiracy. His contention is that his official role in processing or forwarding the loan proposals, without more, cannot constitute sufficient material to establish crimrnal culpability 5.4. ln support of his submissions, learned Senior Courrsel placed reliance upon Susanta Kumar Dalei @ Susantha Kumar Dalai y Stale of Odisha (Vigilance), 2026 INSC 510 to contend that general, vague and omnibus allegations, without identification of a specific role or overl act attributable to an individual accused cannot, by themselves, justify the continuation of criminal proceedings against such accused. lt is submitted that, at the stage of discharge or quashing, the Court is not required to undertake a detailed

,\/t{/ Lr/.1'. .\0. 88-- ol ?02) appreciation of the evidence, so as to determine whether the prosecution will ultimately succeed at tnal Rather the cou( is required to examine whether the matenal on record dtscloses sufficlent materlal or grave suspicion connecting the partrcular accused with the alleged offences. Applying the said principle, learned Senior Counsel contends that the petitioner's mere status as Branch Manager and his role in forwarding proposals cannot constitute sufficient material establishing criminal culpability in the absence of specific matelal demonstrating knowledge, dishonest intention, forgery or partrcrpatron tn the alleged consplracy Reliance is also placed upon Vijay Kumar Kela and another v' Central Bureau of lnvestigation and another,202-6 INSC 588, to contend that' where a bankrng transactton has been substantrally completed or settled pursuant to approved terms and the Bank has received the settlement amount, the continuation of crrminal proceedrngs may, in appropriate circumstances, be examined from the perspecttve of abuse of the process of law, particularly where the possrbrlity of quashrng the proceedings has otherwrse become remote. Learned Sentor Counsel, therefore. submits that, since the amounts were recovered by the Bank pursuant to the oTS, full satisfaction was recorded before the DRT. and the basic ingredrents of the alleged offences are not made out against the petitioner, continuation of the criminal proceedings against him would amount to an abuse of the process of law'

\//(/ (.; .rr .\zr. i',\ --,/ lrl-' j Learned Senior Counsel further placed reliance upon K Bharathi Devi and another v Slale of Telangana and another, (2024) SCC 3g4, which arose out of the very same Calendar Case, namely C.C No.16 of 2014. lt is submitted that, in the said proceedings, the Hon,b e Supreme Court considered the allegations against the concerned accrrsed and ultimately quashed the proceedings against Accused Nos.3 and.l inter alia. on the ground that the material on record did not attribut€ any specific and independent culpable role to them According to the petitroner. the said decrsion assL mes significance rn the present case because, simrlarly. no specifrc act of forgery, fraudulent representatron, diversron of funds or participation in the alleged conspiracy has been attributed to the petitioner His role, accordrng to the petitioner, is essentrally stated to have been confined to process nll and/or forwardrng proposals to the competent authority. 5.5 On the strength of the aforesard facts and crrcrmstances. learned Senior counsel appearing for the petitroner contends that the prosecutron has failed to place any sustainable material connec;ting the petitioner individually with the alleged offences According to the petitioner, the materral on record, at its highest, demonstrates hrs offrcral rnvolvement rn the processrng and fonrvarding of bankrng proposals, wher'-as the substantial sanctions were made by the circle office and the sup,porting documents I .\I( / (.ri.l)..\0.8t'- ol )t)2 ) were scrutinrsed by the concerned officers and professional experts lt is further submitted that the subsequent audits and tnspectrons did not attribute any accountabllity to the petitioner and that the subsequent deterioratron of the accounts occurred several years after he had ceased to be the Branch Manager of the concerned Branch The petrtioner. therefore, contends that, in the absence of spectfic and legally sustainable material disclostng his individual rnvolvement, knowledge, dishonest intention or participation in the alleged consprracy. conttnuatton of the crimtnal proceedings agarnst him would amount to an abuse of the process of law Accordtngly, learned Senior counsel seeks quashing of the proceedings against the petitioner in the Calendar Case. Pleadings of the Respondent No.1-CBl: 61 ln contrast, learned Special Public Prosecutor appearing for Respondent No 1 CBI opposed the petitron and submitted that the petitioner cannot be portrayed as a mere forwardrng officer. According to the learned Special Public Prosecutor, the material collected during the investigation, coupled with the evrdence already adduced before the trial court, discloses the petitroner's acttve tnvolvement rn the processlng, recommendatlon and sanction of the credit facilities extended to M/s. Sirish Traders/PDM lndustries lt is submitted that, during the petitioner's tenure as Branch lVlanager of lndian Bank. Osmangunl Branch, Hyderabad, he was directly involved rn the processrng of credrt facrlitles aggregatlng to approxrmately l0 .\ i R,/ (.r. i 'j. \a. li,\-- ,t, l0l ) Rs 3 05 Crores, compnsrng the OCC facility of Rs 15 Lakhs sancttoned in 2001, the enhanced limit of Rs40 Lakhs in 2002, Rs TO Lakhs in 2004 and Rs.l 50 Crores in 2005. as well as a Housing Loan of Rs 40 Lakhs sanctioned rn 2003. According to the CBl, merely ber;ause some of the enhanced limrts were ulttmately sanctroned by the Crrcle Office the petitioner cannot thereby completely dissociate rimself from the transactions particularly when his role in processing and recommending the proposals is specifically alleged by the prosecution 6 2 Learned Special Public Prosecutor further submrtted that the loans were processed and recommended on the strength of trile deeds and other documents which were subsequently iound to a substantial extent. to be vague, forged and unreliable. According to the proser:ution, several tifle documents furnished as collateral security were not genu ne and some of the documents were also found to have been deposrted witr other Banks lt js contended that, being the Branch Manager, the petitioner was under an obligation to exercrse due diligence and to ensure verification of the genuineness and validity of the securrties offered before recommending the credit facilities and their subsequent enhancements The CBI submits that the relevant question is not merely whether the petitioner possessed formal authority to sanction a particular credrt limit. but whether notwithstanding the limits of his delegated powers, he knowingly or neglig -.nily facititated the processlng and recommendation of credit facilities on the basis of allegedly ll ,\ I R./ (.r/.1). \0.88-- ol l0l ) forged and unreliable documents. lt is further submitted that the petitioner failed to rndependently venfy the trtle deeds and did not ensure compliance with the prescribed banking procedure relating to verification of the securities Particular emphasis is placed upon the manner in which the legal oprnions were allegedly obtained Accordrng to the CBl, lnstead of the Branch Manager forwarding the orlginal tltle documents through the prescribed procedure to the Bank's Panel Advocate for independent scrutrny. the borrower hrmself approached the Panel Advocate with photocopies of the documents and obtarned the legal opinion The CBI contends that such deviation from the prescribed procedure constitutes a materral circumstance, which requires consideration while examining the petitioner s conduct and the allegatron that he failed to exercise the requislte degree of care and diligence expected of a Branch Manager while deaiing with substantial public funds 6 3 lt rs further contended that, while enhancing the OCC facility from Rs.70 Lakhs to Rs.1.50 Crores, the petitioner allegedly recommended the enhancement wrthout disclosing or verifying that the properties offered as secunty had already been mortgaged Accordlng to Respondent No '1 -CBl, the alleged suppression of, or fatlure to verify, the existence of prior mortgages, when consrdered cumulatively with the other circumstances concerntng the tttle documents and the manner rn whlch the credit faciltties were processed, constitutes material which requires adiudication at trial and .\ ltt,/ (.r.1'. \o EE--,t l())) cannot be brushed aside at the stage of exercistng the nherent jurisdrctron of this Court lt is also contended that the petttioner failed to ensure compliance with the conditions governing the sanction a1d disbursement of the credit facilities Such conditions allegedly included verification of the tiUe deeds by the approved Advocate, valuatton of the secur€)d properties by the Panel Engineer, conftrmation that the borrowers had not availed OCC facilitres from other Banks and verification of the utilisaticn of the sanctioned funds for the purposes for which the facilrties had been granted The CBI submits that these safeguards were intended to protecl the Bank against inter alia, the creation of multiple charges over the same properties and misuse of the sanctioned funds The alleged farlure rtn the part of the petitioner to ensure compliance with these condrtions according to the prosecution, constitutes relevant material for assessrng his role and conduct in the tra nsactrons. 6 4 lt is further submitted that the allegations are rot confined to the material contained in the charge sheet but are also supported by evtdence, which has already been recorded by the trial Court Learned Special publrc Prosecutor submitted that PW-2 deposed that, out of the 14 documents examined 11 were fake and only three were genuine According to the prosecution this evidence is corroborated by the testirlony of pW-3 and officiais of the Registration Department Learned specra publrc prosecutor submits that the allegation concerntng the forged t tle documents rs, li therefore, not founded merely upon the assertions contained in the charge sheet but is supported by oral and documentary evidence. which is presently berng tested before the trial Court. The prosecution accordingly contends that the genurneness of the title deeds, the manner in which they were produced and relred upon, complrance wrth the prescribed banking procedures, and the petitioner's conduct and knowledge are all matters requirrng apprecratton of evidence and ought not to be conclusively determrned in proceedings seeking quashing of the criminal case 6 5 lt is further submitted that, when the acts and omissions attributed to the petitroner are constdered cumulatrvely the conduct of the borrower and the other accused, along wtth the surioundrng circumstances. discloses materral suggesting hrs particrpation rn the alleged criminal conspiracy Accordrng to the prosecution, the allegations raise questions as to whether the petrtioner possessed knowledge of the fraudulent nature of the documents, whether he acted with dishonest intention. and whether his conduct formed part of the concerted course of action allegedly undertaken by the borrowers and the other accused These questrons. according to the learned special Publrc Prosecutor, are required to be assessed on the basis of the entire evrdence and cannot appropriately be determined at the present stage lt is further submitted that the trial has already substantially progressed. out of 98 witnesses cited by the prosecution, 42 witnesses have been examrned and 387 documents have already been marked. According ,\ I R,/ Lrl.P..\0.8877 ol 20? )

ll \ i t(. / (.rr1)..\a. 56 01 !02 i to the learned Special Public Prosecutor, interference by this Court at such an advanced stage would unnecessarily interrupt the trral Any assessment of the evidence for the purpose of determining the truth or otherwrse of the allegations, it is contended, would travel beyond the pernissible scope of the present proceedings and would amount to an exercis,3 falling within the domain of the trial Court 6.6 Learned Special Public Prosecutor also opposad the petitioner's reliance upon the One Time Settlement (OTS) subseql ent recoveries and the alleged satisfaction of the Bank's dues. lt is submitteC that settlement of the Bank's monetary claims or recovery of amounts due does not, by itself, automatically extrnguish criminal liability arising from allegations of conspiracy, cheating, forgery, criminal breach of trust and criminal misconduct According to the learned Special Public Prcsecutor, the Bank received Rs.3.80 Crores under the OTS against alleged total dues of approximately Rs 16 35 Crores and the settlement cor sequently nvolved an alleged loss of approximately Rs 12 56 Crores. lt is, tl erefore, contended that the OTS cannot be treated as wiping out the allegr:d criminality or as converting the allegedly fraudulent transactions into a purely civ Idispute 6.7 In support of the aforesaid contentions, learned Specral Public Prosecutor placed reliance upon CBI v. Sarvodaya Hiqhways Ltd, 2025 SCC OnLine SC 2598 and submrtted that, rn cases rnvoivrng serious t5 \l R./ Cri.l). \r,. 88-' ot )02 ) economrc offences, fraudulent banking transactions and allegations concerning forged or fabricated documents, mere settlement of the monetary claims of the financial institution does not, by itself, extrnguish the criminal proceedjngs. lt rs contended that the present case does not relate merely to recovery of a debt, but lnvolves allegations of fraudulent conduct on the part of the petitioner, misuse of the banking system and involvement of public funds Therefore, according to the prosecution. settlement of the financial lrability cannot constitute a ground. by rtself for quashing the criminal proceedrngs. Learned Specral Public Prosecutor further placed relaance upon Anil Bhavarlal Jain v Slate o/ Maharashtia, 2024 SCC Online SC 3823, wherern, accordrng to the submisslon, the Hon'ble Supreme Court held that economrc offences havtng a serlous lmpact upon the publtc at large are required to be constdered rndependently of the settlement of financial liabilrty lt was further submitted that allegations rnvolving corruption, abuse of bankrng transactions, cheating and other criminal offences cannot ordinarrly be reduced to a dispute of a purely pnvate nature merely because the financial instrtution has accepted settlement of its monetary claims 6.8. Further, referring to the order passed in Crrmrnal Petition No'5778 of 2016 concerning Accused Nos 1 to 5 in the same C C No 16 of 2014' learned Special Public Prosecutor submitted that those accused had also I6 \/li/ ( ,.i, \,, ,!,\'- a -'rl_"' sought quashing of the proceedings by relying upon the C)TS and setflement of the Bank s dues, but the proceedings were not quashed According to the CBl, the satd decision demonstrates that tn the contex: of the very same prosecution, the existence of an OTS cannot, by itse f, be regarded as sufficrent to terminate criminal proceedings where the allegations concern fake or forged documents and other acts constituting alk:ged crimrnality. As regards the relief granted to the co-accused and the ple€ of parity raised by the petitioner. learned special Public prosecutor submittec that the petitioner cannot claim panty as an automatic or absolute right lt is contended that the orders relating to Accused Nos 3 and 4 and the proc(redrngs concern ng Accused Nos.6 and B, were based upon the specific records and material applicable to those accused. According to the prosecut on, the material in the present case establishes that the petitioner had a definite role rn the processing and recommendatton of the credit facilities lt rs, therefore, submitted that the petitioner cannot derive an automat c benefit from the orders passed in favour of the other accused, partlcularly when the nature and extent of the material and allegattons agatnst each arccused have to be examined independently 6.9. Learned Special Public Prosecutor appearing for Respondent No 1 accordingly submits that the charge-sheet material collected during the investigatron. together with the evidence already recorced before the trial Court, drscloses sufficient materral connecting the petrtroner with the alleged l1 \11(./ a, l' \, ^',!--,r -'l./-')' offences lt is, therefore, pleaded that the petitioner has failed to demonstrate that the allegations against him are inherently improbable or that the prosecutlon case is manifestly groundless, so as to warrant exercise of the extraordinary/inherent lurrsdrction of this Court. Learned Special Public Prosecutor accordrngly prayed for dismissal of the petition and for permitting the trial Court to proceed wtth the trial ln accordance with law Pleadings of the Respondent No.2-lndian Bank: 7 1 Learned counsel appearing for Respondent No 2-lndian Bank, while opposing the petttton. submttted that the petitioner was working as Branch Manager during the relevant pertod and was involved in sanctioning and/or recommending various credtt facrlities in'favour of M/s Sirish Traders/PDM lndustries. including OCC limits and a Housing Loan The concerned loan accounts were subsequently classifred as Non-Performtng Assets in the year 2010. lt is further submitted that, durlng the course of recovery proceedings inrtiated under the SARFAESI Act, the Bank discovered that eleven (11) documents relattng to five properttes offered as securlty were allegedly fake or fabricated and that third-party claims were found to exist in respect of the said properties. According to Respondent No.2-Bank, the documents in question had been deposited with the Bank during the tenure of the petitioner and the petttloner had sanctroned and/or recommended credlt facilities relyrng upon the sard documents. lt is. therefore, contended that the petitioner cannot now contend that his role was confined merely to llt \ i /i. / ( ,:. /r. \ a. ,l,i - - ,,, -'r-' i fonvarding the proposals According to the Bank, as Branch Manager he was responsible for exercising due diligence rn relation to the borrowers, verifying the title documents and securities offered, and ensuring the genuineness and validity of the propertres furntshed as co lateral securlty. 7 2 lt rs further submitted that in respect of the initral OCC facility of Rs 15 Lakhs the petitroner allegedly failed to obtarn the Banl, s legal oprnron rn accordance with the prescribed procedure lt is alleged that rn relation to the title documents, the borrower himself approached the Panel Advocate with photocopies of the documents and obtained the legal opinion The Bank contends that such a procedure was contrary to the applicable banking procedure With regard to the Housing Loan, the Bank further contends that the petitroner allegedly recommended the facrlity aga ns,t a property which had already been mortgaged to the Bank 7 3 lt is further alleged that the petitioner failed to ccnduct the requisite srte verification and that the loan amount was released in four stages without obtaining the necessary work-completion certificah:s. According to Respondent No.2-Bank, these circumstances drsclose deviations from the prescribed procedure and are relevant to determrnrng the petrtioner's role and responsibrlrty in the alleged transactions lt is furtht:r pleaded that, by virtue of his position as Branch Manager, the petiti,tner had a direct responsibrlity to verify and ascertain the credentials of the borrower, the I (.) .\ / R./ (.r/.1'. ]ro. 88-- a1 )0| ) genuineness of the title documents, the authority and validity of the sanctions, and the securities offered as collateral lt is, therefore, contended that the petitioner cannot avoid such responsibility merely by asserting that the authority to accord final sanction for the enhanced credit limits did not vest in him The Bank further submits that the petitioner's conduct in processing scrutrnising and recommending the proposals on the basis of the documents and securitres furnished by the borrowers is relevant for assessing his role and responsibility in the alleged transactions 7 4 lt is also submrtted that the record discloses allegations relating to the loan documents and the alleged acceptance of fake and fabricated documents as security, the alleged farlire to follow the prescribed banking procedure, the failure to obtarn the requisite legal opinron, the failure to verify the properties offered as security, and the failure to ascertarn the existence of any prior mortgage. According to Respondent No.2-Bank, the petitioner's criminal liability in respect of these allegations involves disputed questions of fact and apprecration of evidence, which cannot appropriately be determined in proceedings seekrng quashing of the criminal proceedrngs, particularly when charges have already been framed and the trial is substantially underway. 7 5 Learned counsel for Respondent No.2-Bank also disputed the contention that the subsequent OTS and recovery proceedings have the t0 \lR./ ( ril /). .\ r. 3,1-- nt l0l ) effect of extinguishing the alleged criminal liability lt is submitted that the settlement involved an alleged loss of approximately Rs 1,256 Lakhs and that the settlement, by itself, does not nullify the allegations relating to fraudulent abuse of the banking process or criminal conspiracy On the aforesaid grounds, Respondent No 2-lndian Bank prayed fcr dismissal of the petition Analysis and Conclusion:

8. Having heard the rival submissions and upon consideration of the material placed on record, the following points arise for consideration A. Whether the materral placed on record prima fzrcie discloses the essential ingredients of the offencls alleged against the petitioner? B Whether there is specific material connecting the petitioner with the alleged criminal consPiracy? C. Whether criminal liability can be fastened upon the: petltioner merely on account of his position as the Bank Officer who authorised, processed or forwarded the loan proposals? D Whether continuation of the criminal proceedings against the petitioner would amount to an abuse of the process of law? 9' At the outset, it is necessary to bear in mind that th': Jurisdiction under Section 482 Cr.P.C. is required to be exercised sparingtly, cautiously and with circumspection At the same time, the inherent juriscliction of thts Court

ll \ 1tt./ (r/.1>. \,t. illl::01 :0') is intended to prevent abuse of the process of law and to secure the ends of Justice. Ordtnarily, while conslderlng a petltlon seeklng quashlng of criminal proceedrngs, this Court would not undertake a meticulous appreciation of evidence or conduct a mini-trlal. lt is, however, equally well settled that where the allegations and the material placed on record, even if taken at their face value and accepted rn their entirety, do not constitute the essential ingredients of the alleged offences, or where the material does not disclose the necessary nexus between the accused and the alleged criminallty contrnuatron of the proceedrngs cannot be permitted merely because a charge sheet has been filed or the trial has commenced The exercise of inherent lurisdiction. therefore. necessarily requires the court to examine whether the prosecutron materral drsclobes the foundational ingredients of the offences and whether there is sufficient material connecting the particular accused with the alleged criminal acts. 1 0 ln the instant case, the petttioner was admrttedly working as Branch Manager of lndian Bank, Osmangunj Branch, Hyderabad, from 2001 to 2006. The material placed before this court indicates that the petitioner rnitrally sanctroned an OCC facrlrty of Rs '1 5 Lakhs on 12 09 200'1 The subsequent enhancements to Rs.40 Lakhs, Rs 70 Lakhs and Rs 1'50 crores were beyond the petitioner's delegated powers and were sanctioned by the circle offrce, Hyderabad The proposals for the satd facllrtles were' prepared by the Credtt Offrcer/PW-4 and the petrtioner's case that he -)l \lll./ t.rll). .\r ,\8--,,i -'1)l r' forwarded the proposals to the competent authority frndt; support from the matenal referred to before this Court. The Housing Loan of Rs.40 Lakhs was also sanctroned by the Circle Office In this context. the (listinction between an Officer who processes, scrutrnrses or forwards a proposal and the competent authority empowered to accord the final sanctron assumes significance. The petitioner cannot be attributed criminal liability merely by reason of the office held by him as Branch [Vlanager To sustain allegations of conspiracy, cheating, criminal breach of trust, forgr:ry, use of forged documents or cnminal misconduct, there must be mate'ial connecting the petitioner with the essential elements of the respectrve c ffences The mere fact that the petitioner processed or forwarded proposals, which were subsequently considered and sanctioned by the competert authorrty cannot, in the absence of further material, by itself be construec as participation in the alleged fraudulent transactions The prosecution case: substantially rests upon the allegation that certain documents furnished as; collateral security were fake or forged. The mere fact that some documents were subsequently found to be forged cannot. by itself. constitute a circumslance against every person, who dealt with the transactron unless there rs material to show that such person fabricated the documents intentionally used them as genuine. or consciously relied upon them with knowledge of their alleged fraudulent character.

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11. The crucial question, therefore, in the case of the present petltioner ls whether there is any material to show that Accused No.7 either fabricated the documents. partrcipated in their preparation, delrberately facilrtated their use, or entered rnto an agreement wlth the other accused for obtaining the loan facilities by fraudulent means. Upon examinatron of the material placed before thrs court, no specific nexus between the petitioner and the alleged fraudulent acts has been demonstrated There ts no matertal polnted out to show that the petitroner fabricated or caused the fabrication of any title document. IVlore importantly, there is no material on record demonstrating that, at the relevant time, the pettttoner was aware that the documents were forged or that the securittes allegedly offered to the Bank were based upon fabricated documents. The mere fact that the Securtties were subsequently found to be defective or fabricated cannot, by itself, establish that the petitioner possessed knowledge of such forgery or acted wlth dishonest intention at the time when the loan proposals were processed and forwarded for consideratron along with the legal optnion.

12. The prosecution alleges that the petitloner approached the Panel Advocate with photocopies of the documents and obtained a legal opinion without furntshing the orrginal documents The petitioner, however, points out that the crrcular relred upon by the prosecutron was lssued only in 2003 and, therefore, could not have been retrospectively applied to the transactions in question, so as to characterise the petitioner's conduct as a deviation from .1 .,, /' \., ,fJ'--rrl!-'J the banking procedure prescribed at the relevant time Even assuming that there was a deviation from the prescribed procedure, such devtation in the absence of material demonstrating that the petitioner consctously adopted the procedure knowing that the documents were forged or with an intention to facilitate cheating, would not by itself, constitute th,r offences alleged against hrm. A mere procedural lapse or devratron, wrthout the requisrte criminal intent and without a demonstrable nexus with th€ alleged fraudulent acts, cannot, by itself, be converted into an offence of cheatrng, forgery or conspiracy

13. ln the rnstant Calendar Case, the statements of the witnesses referred to above. at their highest, dlsclose a devration frcm the prescribed procedure ln the absence of any other materral establishrng a nexus between such deviation and the alleged fraudulent acts, drawrng an inference of a deliberate design or criminal intent on the part of the petitioner would not be justified. Similarly, the allegation concerntng the enhancement of the OCC facrlity beyond Rs 15 Lakhs, by rtself , cannot establish the existence of a criminal conspiracy on the part of tre petitioner The enhanced facilities were admittedly beyond the pet tioner's delegated powers and were sanctioned by the Circle Office lf th3 petrtioner merely fonrtrarded the proposals to the competent authority, the s_rbsequent decision or action of the Circle Office cannot retrospectively be attributed to him in the absence of materral demonstrating that he deliberatr:ly partjcipated tn l5 .\ I l(. / (.r/. P. .\tt. 8 ll- - oi )E ) facilitated or was otherwise knowingly connected with the alleged fraudulent actrvities

14. The allegations concerning the genuineness of the documents also require consideration ln thrs context, the prosecution relies upon the depositions of PWs 2 and 3 and the officials of the Registration Department. who stated that, out of fourteen (14) documents examined, eleven (1'1 ) were fake and only three (3) were genuine. There can be no dispute that the creation or fabrication of forged documents may give rise to criminal lrability on the part of the persons responsrble for therr creatton or use, subJect to the ingredients of the relevant offences being established. However, the mere fact that certain documents were subseq'uently found to be forged does not, in the absence of further materral establish that every officer, who processed or dealt with the loan transaction necessanly had knowledge of the forgery or shared the dishonest intention behind it. Knowledge and dishonest intention cannot be attributed generally or merely by virtue of an offrcial designatron They must be established, on the material available, against the partrcular accused. Criminal liability cannot be imposed merely by reason of a person's designation, office or supervisory posrtion.

15. The prosecution has also relied upon the responsibilities attached to the petitioneis position as Branch Manager. lt is undoubtedly true thsl's Branch [\,4anager is required to exercise due care and drligence in

\ I tt. / r , /) \,/ l,t-- /rr:/l-, j accordance with the applicable banking norms and proceJures However, a mere lapse in the discharge of official duties, in the at sence of material establishing the requisite mens rea and the necessary nexus with the alleged criminal acts, cannot, by itself, establrsh the ngredients of the offences alleged against the petitioner. The distinction between negligence, procedural irregularity and intentional participation in e criminal scheme assumes particular importance in the present case. The extstence of a duty of care does not. by itself. establish that the petitioner possessed knowledge of the alleged fraud or shared the dishonest intentior of the principal accused.

16. ln particular, Section 471 of lhe IPC requires knowledge or reason to believe that the document in question is forged Section 420 of the IPC requires the essential elements of deception and d shonest intention. Section 120-B of the IPC requires an agreement betv;een two or more persons to commit an illegal act or to commit a lawful act by illegal means. Similarly Section 13(1)(d) of the Prevention of Corrup:ion Act. 1988, as applicable to the relevant period requires the obtainin'3 or attemptlng to obtain for oneself or for any other person any valuable thing or pecuniary advantage by corrupt or illegal means or by abusing cne's posltion as a public servant.

\ l ti, / ( rll). \r. l,l-- or l0ll 17 No specrfrc material demonstrating the aforesaid requirements has been brought to the nottce of thts Court insofar as the petitioner is concerned. The subsequent conduct of the Bank also assumes some relevance, though rt cannot, by itself, determine the question of criminal liability The matenal placed before thrs Court indicates that Stock Audits, Branch lnspections, Statutory Audits and Staff Accountability Studtes did not attnbute any specific accountability to the petitioner, and the Stafi Accountabrlity was recorded as "Nii" lt is further not in dispute that after the petitioner ceased to be the Branch Manager in July, 2006, the Circle Office substantially enhanced the OCC timrts rn 2OQ7 and 2009, and the accounts were classified as Non-Performing Assets only in 2010 These crrcumstances do not, by themselves, cbnclusrvely establlsh the petitioner's innocence. Nevertheless, they constitute relevant surrounding circumstances when the Court examines whether there is sufficient materlal to demonstrate that, during hts tenure, the pettttoner rntentionally partrcipated ln the alleged fraudulent scheme 18 The petitioner's reliance upon the legal opinions, valuation reports and the rnstitutional mechanism through which the credit proposals were processed cannot also be completely disregarded. The credit proposals were processed through a mechanism involving the Credit Officer, Panel Advocates. valuatton reports and the competent sanctroning authorlty "flle mere fact that the documents were subsequently found to be false does not

t8 .\'fl{,/ ()/1) \a. E8-- o 2al) necessarily establish that every officer associated with the processing of the proposals had knowledge of their falsity ln the absence of material demonstrating that the petitioner had actual knowledge of the alleged fraud, or that he deliberately ignored facts withrn his knowledg€r n furtherance of the alleged consprracy, the Court rs requtred to dtsttnguts 1 between a mere instance of negligence or procedural irregularity and conscious criminal participation 19 As regards the OTS and subsequent recovery. thrs Court is conscious that settlement of a banking dispute does not rnvariably -.xtinguish criminal Irability. particularly where senous offences such as forcrery cheatrng and conspiracy are alleged The OTS therefore, cannot ce treated as an independent or automatic ground for quashing the crirrinal proceedings Nevertheless, the OTS. the substantral amounts recovered by the Bank and the subsequent satisfactron recorded rn the recovery pror;eedtngs constrtute surrounding circumstances, which may be taken into consideration along with the absence of specific material connecting the cetitioner with the alleged criminal acts The decrsive factor in the present case rs not the OTS by itself Rather it is the absence of sufficient matertal establtshtng the petitioner's conscious participation in the alleged fraudulent transactions and consprracy.

9l

20. The principle laid down by the Hon'ble Supreme Court in K. Bharati Devr (supra) assumes partrcular significance since the said proceedings arose out of the same Calendar Case While considering the role attributed to the accused therein, the Hon'ble Supreme Court examined whether the charge sheet drsclosed a specific and independent culpable role against them and ultimately quashed the proceedrngs. The said judgment cannot, however, be understood as laying down that an OTS or settlement of the Bank's dues, by itself, is sufficrent to quash criminal proceedings arising out of the underlying transactions. lts relevance to the present case lies in the principle that individual criminal culpability must be discernible from the material available agarnst the partlcular accused. Likewise, Susanta Kumar Dalel (supra) is relevant to the extent t6at criminal proceedings cannot be sustained on the basis of general, vague or omnibus allegations where the material does not disclose the specific role of the accused or a sufficient nexus between the accused and the alleged offences. 21 At this stage, this Court is not required to determine whether the petitioner is ultimately innocent. The limited questron is whether the prosecution material is suffrcient to justify the continuation of criminal proceedings against him The fact that the trial has progressed and several witnesses have already been examined also deserves consideratton. Ordinarily, this Court would be stow to interfere with crlmlnal proceedings at an advanced stage of trial. However, mere progress of the trial cannot, by \'/1{./ (.r/.P. .\,,. ti9'- ai )D )

l() \ /l(.i (.rll) \,r. tt.- tl l0l) itself, denude this Court of its jurisdiction under Section 482 Cr P C Where the foundational material against a particular accused do,:s not disclose the essential ingredients of the offences alleged, continuation of the proceedings cannot be justified solely on the ground that evidence has already been recorded. The inherent jurisdiction is rntended, inter a ia, to prevent the criminal process from being permrtted to continue in circurlstances where its continuation, in the facts of the particular case, would result in an abuse of the process of law.

22. ln the ultimate analysis, the material placed before this Court establishes that the petitioner was the Branch Manager Juring the relevant period and was associated wrth the processing of the loan proposals However, mere association with the banking transactions cannot, by itself, be equated with participation in the alleged criminai conspiracy The enhanced credit facilrties were beyond the petitioner's delegated sanctioning powers and were sanctioned by the Crrcle Office. Tl- e proposals were prepared by the Credit Officer and were supported by legal opinions and valuation reports, which formed part of the relevant records. No material has been brought to the notice of this Court to establish that the petitioner fabricated any title document, procured the forged dlcuments, or had knowledge that the documents were forged and nevertheless intentionally used them as genuine. There is also no material demcnstrating that the petitioner deliberately suppressed the alleged prior mortg age tn furtherance 3l ,\l R./ (.r/ l). ,\0. E8-' ol ?02 J of the conspiracy or entered into any agreement wlth the borrowers or the other accused to cheat the Bank Equally. there is no specific material demonstrating that the petitroner possessed dishonest intention, misappropnated any property or forged any document entrusted to hrm, so as to attract Sectron 409 of the lPC. Lrkewise, there is no material to show that, by abusing his position as a public servant, the petitioner obtained or attempted to obtain for himself or for any other person any valuable thing or pecunrary advantage by corrupt or illegal means. so as to satisfy the ingredients of the applicable provision of the Prevention of Corruption Act The material relied upon by the prosecution may, at the highest grve rise to a questron concerntng the adequacy of the petitioner's supervlsion or the manner rn which he discharged his'official duties. However' criminal prosecution cannot be sustained merely on the basis of such supervisory lapses. particularly in the absence of material establishing the requisite knowledge, dishonest intention or conscious participation in the alleged conspiracy. 23 This Court is, therefore. of the considered view that, insofar as Accused No.7 is concerned, the prosecution has failed to demonstrate sufficient material establishing a specific nexus betvveen the petitioner and the alleged forged documents or the alleged conspiracy The allegations and the material, even when considered cumulatively. do not disclose the essentral ingredients of the offences alleged against the petitioner ln the ( | /) \,,. ,\,1- ,,r-'/l-'j absence of material establishing his knowledge of the alleged forgery, dishonest intention, conscious use of forged documents. ()r an agreement or concert with the princrpal accused to commit the allegec offences. ln such circumstances, permitting the prosecutron to continue agarnst the petitioner would amount to subjecting him to criminal proceecrngs without the foundational material necessary to establish indrvrdual ()riminal culpability. The petitioner is, therefore, entr ed to rnvoke the inheren: lurisdictron of thrs court under sectron 482 cr.p.c. to prevent abuse of the orocess of raw and to secure the ends of justice

Accordrngly, thrs Criminal petitron rs allowed Consequen y the proceedings in C. C No 1 6 of 2014, pending on the ,.ile of the learned Principal Special Judge for cBr cases, Hyderabad, rnsofirr as they rerate to the petitioner/Accused No 7, are hereby quashed It is made clear that the observations made in this order are confined exclusively to the case of the petitioner/Accused No 7 and shall not be construed as an expression of opinion on the merits of the case agatnst the other accused. The triar court shaI proceed agarnst ther other accused rf any, in accordance with raw and uninfruenced by any cf the observations made herein. Pending miscellaneous applications, if any, :;hall stand closed. SD/- P.PONNA KRISHNA ASS,tsrANr yGtsrRAR ri lRuE (c.ty tt sEcfldifr_FFtcER one Fair copy to,l!: I.1,fl" Sri Justice N. TUKARAMJI (For His Lordships firJ p"rr"rU To,

The Principat Special Judge ror Cat Cases]dderabad

2. 11 LR CoPies

3. The Under Secretary, Union of lndia Ministry of law, Justice and Company Affairs, New Delhi

4. The Secretary Telangana Advocates Association, Library, High Court Buildings Hyderabad

5. The Stition House Officer, CBl, EOW, Police Station, Chennai

6. Two CCs to the special Public Prosecutor for cBl, High court for the State of Telangana at HYderabad. [OUT]

7. One CC to Sri G Aditya Goud, Advocate [OPUC] B. One CC to Sri Srinivas Survi, Advocate IOPUC]

9. Two CD CoPies AW S'BA

HIGH COURT DATED: 1710912026

ORDER

CRLP.No.8877 of 2023 \1 5tq s ! utst +,-=i::i1 6"i T A ::t*_ E or\ {s- t)o\) ALLOWING THE CRIMINAL PETITION au Ca' ,\ L c\ \2