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K.C. Mahesh Kumar and Others Vs. State by CBI ACB - Court Judgment

LegalCrystal Citation
CourtKarnataka High Court
Decided On
Case NumberCriminal Appeal Nos. 1107 to 1125, 1163 & 1164 of 2010
Judge
AppellantK.C. Mahesh Kumar and Others
RespondentState by CBI ACB
Excerpt:
.....against which loan is granted, is to be inspected by field officer and field officer in his evidence, has stated that he along with first accused had visited warehouse, where coffee stocks are kept before pre-verification of sanction of loan and that on such inspection, document is prepared to indicate that stocks are in order it is on basis of such verification that loan had been sanctioned when there is default in repayment, inspection is carried out of very warehouse and it is found that stocks are well in tact entire evidence of this witness has been completely overlooked by court below second accused will stand more or less on same footing as first accused, as there is no irregularity in respect of stocks, against which loan is released in absence of any sentence..........circumstance which has come to light in the course of evidence of the prosecution, namely, the sanctioning authority who had granted prior sanction for prosecution of the appellant was examined as pw.9 and in his evidence, he has candidly stated that on going through the documents supplied by the central bureau of investigation (cbi), in order to consider the grant of sanction, he was not satisfied that there were any incriminating material against the said appellant and that he had also felt that it was not a fit case where sanction could be accorded. it was thereafter that he was called upon by the cbi officer at bangalore along with the chief vigilance officer (cvo) of the corporation bank for a discussion and again, it was expressed that the sanction could not be granted in the.....
Judgment:

(Prayer: This Criminal Appeal filed under Section 374(2) of the code of Criminal Procedure, 1973, by the advocate for the appellant/accused no.1 praying to set aside the order dated 12.10.2010 passed by the XXXII Additional City Civil and Sessions Judge and Special Judge for CBI Cases, Bangalore and Spl.C.C.No.76/2006- convicting the appellant/accused for the offence punishable under Section 120(b) read with 467, 468, 471 and 420 of IPC and under Section 13(1)(d) read with 13(2) of Prevention of Corruption Act 1988 and etc;)

1. Heard the learned Senior Advocate Shri C.V.Nagesh, appearing for the Counsel for the appellant in Crl.A.1164/2010 and Shri Ganesh Shenoy, learned Counsel appearing for the appellant in Crl.A.1163/2010 and Shri Kiran S Javali, learned Counsel appearing for the appellants in the other connected appeals.

2. These appeals are disposed of by this common judgment as the appellants have challenged the very same judgment.

3. The facts of the case are as follows:

It was alleged that accused nos.6 to 21 were said to have been granted credit facility, through the bank represented by accused nos.1 and 2, who are the appellants in case Nos.Crl.A.1164/2010 and Crl.A.1163/2010, respectively, to the extent of a sum of Rs.5,00,000/- under the head of account Ware-house Receipt Loan . However, the appellant in Crl.A.1164/2010, who is arraigned as accused no.1 was working as the Senior Manager in the Hassan Branch of Corporation Bank and it is alleged that he had entered into conspiracy with the borrowers and had disbursed loan amount within the sanctioned limit, without ascertaining the fact as to whether the goods that were hypothecated in favour of the bank by way of security was, in fact, available in the ware-house or not and thereby he had committed offences punishable under sections 467, 468, 471, 420 and 120-B of the Indian Penal Code, 1860 (Hereinafter referred to as the IPC , for brevity) and Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988 (Hereinafter referred to as the PC Act , for brevity).

The accused, including accused no.22, which was a company incorporated under the Companies Act, 1956, had entered appearance and pleaded not guilty to the charges levelled against them and stood trial. The prosecution had tendered evidence of 15 witnesses and had got marked several documents and exhibits in support of the charges. The accused had, in turn, got marked documents in support of their defence as Exhibits D.1 to D.29. It is on the basis of the said evidence and on recording the statements of the accused under Section 313 of the Code of Criminal Procedure, 1973 (Hereinafter referred to as the CrPC , for brevity), the court below had framed the following points for consideration:-

1. Whether the prosecution proves the valid sanctioned to prosecute the A1?

2. Whether the prosecution proves that A1 and A2 being public servants in the capacity of Managers, Corporation bank, Hassan during 13.5.1999 to 25.5.2001 entered into the criminal conspiracy with A.3 to A.22 agreed to do and caused to be done illegal act of forging warehouse receipts, stock certificate, letter regarding the availability of coffee at the warehouse, making use of such forged documents as genuine, there by causing loss to the bank and wrongfully gain to themselves and to cheat the bank?

3. Whether the prosecution further proves that A1 and A2 being public servants in the capacity of Managers, Corporation Bank, Hassan during 13.5.1999 to 25.5.2001 entered into the criminal conspiracy with A.3 to A.22, in furtherance of criminal conspiracy fraudulently and dishonestly forged warehouse receipts, stock certificate the letter regarding the availability of the stock with an intention to cheat the Corporation bank?

4. Whether the prosecution further proves that A1 and A2 being public servants in the capacity of Managers, Corporation bank, Hassan during 13.5.1999 to 25.5.2001 entered into the criminal conspiracy with A.3 to A.22, in furtherance of the criminal conspiracy with accused No.3 to A.22 by forging the above documents made their use as genuine?

5. Whether the prosecution further proves that A1 and A2 being public servants in the capacity of Managers, Corporation bank, Hassan during 13.5.1999 to 25.5.2001 entered into the criminal conspiracy with A.3 to A.22, in furtherance of the criminal conspiracy by forging the documents stated in charge No.2, made use as stated in charge No.3 thereby allowed the A.6 to A.21 to avail the loans of Rs.75.60 lakhs and there by cheated the bank?

6. Whether the prosecution further proves that the A.1 and A.2 being public servants in the capacity of Managers, Corporation Bank, Hassana during 13.5.1999 to 25.5.2001 by corrupt and illegal means obtained pecuniary advantages by misconducting and abusing their position as public servants, caused loss of Rs.75.60 lakhs to the bank and misconduct themselves?

7. Whether the prosecution further proves the guilt against the accused beyond all reasonable grounds?

The court below had then answered the above points in the affirmative and has convicted the accused, while failing to pass any sentence insofar as accused no.22 was concerned and has convicted accused nos.3 to 21 and imposed a punishment of simple imprisonment for 2 years for an offence under Section 120-B of the IPC and for offences under Sections 467, 468, 471 of the IPC, each of the accused were sentenced to undergo simple imprisonment for 2 years and to pay a fine of Rs.15,000/-. Accused nos.1 and 2 were convicted and sentenced to undergo simple imprisonment for 2 years and to pay a fine of Rs.15,000/- for offences punishable under Sections 13(1)(d) read with section 13(2) of the PC Act. It is this which is under challenge in the present appeal.

4. The learned Senior Advocate Shri C.V.Nagesh, appearing for the counsel for the appellant in Cr.A.1164/2016 would, at the outset, point out that there is a serious circumstance which has come to light in the course of evidence of the prosecution, namely, the sanctioning authority who had granted prior sanction for prosecution of the appellant was examined as PW.9 and in his evidence, he has candidly stated that on going through the documents supplied by the Central Bureau of Investigation (CBI), in order to consider the grant of sanction, he was not satisfied that there were any incriminating material against the said appellant and that he had also felt that it was not a fit case where sanction could be accorded. It was thereafter that he was called upon by the CBI Officer at Bangalore along with the Chief Vigilance Officer (CVO) of the Corporation Bank for a discussion and again, it was expressed that the sanction could not be granted in the case on hand. It was thereafter said to have been referred to the Chief Vigilance Commission (CVC). The said witness and the CVO were called to New Delhi and there was a discussion held with the Chief Vigilance Commissioner at New Delhi. In the said discussion, it was again reiterated by the said witness that it was not a fit case where sanction could be accorded. But however, since the Chief Vigilance Commissioner insisted that sanction be accorded, the witness has claimed that he was left with no alternative, but to grant such sanction against his will; And this, he has reiterated in his cross-examination, as well.

The learned Senior Advocate would draw attention to a decision of the Supreme Court in the case of Mansukhlal Vithaldas Chauhan vs. State of Gujarat, AIR 1997 SC 3400, wherein the Supreme Court has held as follows:-

19. Since the validity of Sanction depends on the application of mind by the sanctioning authority to the facts of the case as also the material and evidence collected during investigation, it necessarily follows that the sanctioning authority has to apply its own independent mind for the generation of genuine satisfaction whether prosecution has to be sanctioned or not. The mind of the sanctioning authority should not be under pressure from any quarter nor should any external force be acting upon it to take a decision one way or the other. Since the discretion to grant or not to grant sanction vests absolutely in the sanctioning authority, its discretion should be shown to have not been affected by any extraneous consideration. If it is shown that the sanctioning authority was unable to apply its independent mind for any reason whatsoever or was under an obligation or compulsion or constraint to grant the sanction, the order will be and for the reason that the discretion of the authority not to sanction was taken away and it was compelled to act mechanically to sanction the prosecution.

The learned Senior Advocate would submit that in the light of the above dictum of the Supreme Court, the sanction in the present case on hand being granted against the will of the competent authority, which is candidly admitted by the said authority, would vitiate the entire proceedings, as without a valid sanction, the case could not have been proceeded at all.

The learned Senior Advocate would further emphasize that though there are authorities which have laid down that the irregularity, if any, in the sanction order could not be questioned in appeal or revision upon the accused having suffered conviction, would not apply to the case on hand, for the reason that the appellant was never aware that the sanctioning authority was under undue pressure to grant sanction and he was never willing to grant such sanction and it is only upon evidence having been tendered in this regard by the very competent authority that it has come to light and therefore the appellant cannot be precluded from raising this ground in appeal.

Further, it is pointed out that even assuming that the validity of the sanction could not be tested at this point of time, it is highlighted that even on facts, the glaring circumstance that the court below has completely overlooked the documents filed in support of the defence, is yet another circumstance which would indicate a total non-application of mind of the court below. This can be said without any room for contradiction in the light of other glaring circumstances, such as the evidence of the witnesses themselves. In that, of the witnesses examined for the prosecution, the relevant evidence would be that of PWs.1,6 and 11. A bare perusal of the evidence of those witnesses, particularly of PW.11, it would be apparent that the stocks, against which the loan was granted, was to be inspected by the Field Officer PW.11 and PW.11, in his evidence, has candidly stated that he along with accused no.1 had visited the warehouse, where the coffee stocks were kept before pre-verification of sanction of loan and that on such inspection, a document at Ex.D.19 was prepared to indicate that the stocks were in order. It is on the basis of such verification that the loan had been sanctioned. Thereafter, when there was default in repayment, inspection was carried out of the very warehouse and it was found that stocks were well in tact. This is supported by an exhibit at D.4. Therefore, the contention that the loan had been granted even without the security being available is incorrect and is a glaring circumstance. The entire evidence of this witness has been completely overlooked by the court below. There is not even a passing reference to the said evidence.

It is further pointed out that accused no.1 had inspected the warehouse along with the Field Officer PW.11 at the time of the pre-sanction verification and thereafter he was not even with the branch since he had got transferred. Therefore, the question of having sanctioned the loan or conspired with the other accused, is a circumstance which is not established by the evidence. On the other hand, the evidence on record would completely dislodge the case of the prosecution and hence the accused should be honourably acquitted and possibly awarded compensation on account of such prosecution, since his entire career has been destroyed on account of these criminal proceedings.

5. Insofar as the other accused are concerned, accused no.2 represented by Shri Ganesh Shenoy would stand more or less on the same footing as accused no.1, as there was no irregularity in respect of stocks, against which the loan was released.

Further, pursuant to the alleged default, several suits had been instituted by the bank apart from criminal proceedings and the entire loan amount with interest has been recovered by the sale of the very security that was alleged to be non-existing and therefore it is contended that accused no.2 also would have to be absolved of all guilt.

6. In so far as accused nos.3, 4 and 5 are concerned, are Directors of a company, accused no.22. It is pointed out by Shri Kiran S Javali, the counsel appearing for appellants that the company having been arraigned as an accused could not be convicted and sentenced to imprisonment. However, a sentence of fine could have been imposed. In the absence of any sentence being imposed, since it is a company, which is the main accused, represented by its Directors, namely, accused no.3, 4 and 5, it is incongruous to convict them while not thinking it fit to impose even a fine against the company which they represent. To that extent, he would submit that the judgment would reflect a total non-application of mind of the court below in having overlooked the glaring evidence which would absolve the accused of any guilt.

Insofar as other accused are concerned, they are all coffee growers who have gone by the instructions of the bank. In that, they were instructed that the coffee grown by them was deposited with the warehouse named by the bank, as it was a certified warehouse, with which they could store their coffee and an appropriate receipts were obtained, to enable them to secure loans. It is in this vein that they have deposited the coffee grown by them in the warehouse. It is contended that the entire allegations are without any foundation as found in retrospect and as could be seen from the material on record produced by the prosecution itself and hence the accused would have to be honourably acquitted.

7. The learned Special Public Prosecutor appearing for the CBI would make a lame attempt to justify the judgment and seeks to place reliance on a decision of the Supreme Court in Central Bureau of Investigation vs. V.K.Sehgal, 1999 (8) SCC 501, wherein the Supreme Court has reiterated that a Court of appeal or revision is debarred from reversing a finding or even an order of conviction and sentence on account of any error or irregularity in the sanction for the prosecution, unless failure of justice had occasioned on account of such error or irregularity. It is on this theme that the Supreme Court has expressed its view.

Reliance is also placed on a judgment in Nanjappa vs. State of Karnataka, (2015) 14 SCC 186, wherein the Supreme Court has referred to the case of State of Goa vs. Babu Thomas, (2005) 8 SCC 130, wherein, the Supreme Court had, after holding the order of sanction to be invalid, relegated the parties to a position where the competent authority could issue a proper order sanctioning prosecution, having regard to the nature of the allegations made against the accused in that case. The learned Special Public Prosecutor therefore seeks to justify the judgment of the court below.

However, when pressed further, to give an explanation as to the candid evidence of PWs.1, 6 and 11, the learned Prosecutor would submit that the evidence would speak for itself.

8. Therefore, given the above circumstances, as rightly contended by the learned Counsel for the appellants and insofar as the legal position is concerned, though an attempt is made to contend that invalid or irregular order of sanction cannot be reversed or found fault with, it is to be noticed that the Supreme Court, has qualified its dictum and has laid down that if there is failure of justice, it would be another matter. Therefore, in the present case on hand, the invalidity or sanction having been obtained under duress, being candidly stated by the competent authority and that having come to light only at the stage of the trial would not enable the appellants to have raised this before the court below. Therefore, the said judgment would not preclude the appellants from raising that contention before this court.

Further, it is noticed that in Nanjappa s case, supra, the Supreme Court has again referred to State of Karnataka vs. Nagarajaswamy, (2005)8 SCC 370, wherein it was expressed by the Supreme Court that even if cognizance of the offence is taken erroneously, and the same comes to the court s notice at a later stage, a finding to that effect is permissible. Even such a plea can be taken for the first time before an appellate court.

Consequently, given the above circumstances and the infirmities that are glaring and which have gone unnoticed by the trial court, the judgment of the court below is set aside. The accused are acquitted. The fine amount, if any, shall be refunded to the appellants. The bail bonds stand cancelled.

It is indeed unfortunate that accused no.1, who was at the peak of his career had lost all future prospects and had to face the ignominy of trial, which was baseless. And to add insult to injury, it is found that there was a departmental inquiry in respect of the same facts and circumstances and there was a minor penalty imposed on him. However, by virtue of the criminal proceedings that was the subject matter of these appeals having been initiated, he was unceremoniously dismissed from service. It transpires that he has still not attained the age of superannuation and would still have six months of service, if he had continued to be in service. Therefore, if the accused no.1 should make a representation to the management, it should be considered sympathetically, as it is apparent that he has been unfairly framed in the present case. This court is even inclined to consider grant of compensation in a large sum of money, which certainly would be challenged, as is the usual response to such a situation. But however, this court is confident that better sense would prevail on the management in considering the case of the accused no.1 in all fairness.

Insofar as accused no.2 is concerned, he is said to have attained the age of superannuation and he is no longer in service. If the management should also consider his case for extending retiral benefits, it would be a saving grace and would afford some relief to the said accused.

The petitions are allowed in terms as above.


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