2009 Supreme(SC) 956

2009(4) Supreme 399
SUPREME COURT OF INDIA
(From High Court of Andhra Pradesh)
S.B. Sinha and Dr. Mukundakam Sharma, JJ.
S.V.L. Murthy — Appellant
versus
State Rep. by CBI, Hyderabad — Respondent
Criminal Appeal No. 942 of 2009
[Arising out of SLP (Criminal) No. 7125 of 2007
with
Criminal Appeal No. 945 of 2009
[Arising out of SLP (Criminal) No. 7145 of 2007
Decided on : 06-05-2009

IMPORTANT POINT
In absence of any evidence of conspiracy or any wrongful gain, provisions of the Act are not attracted.
Abuse of prevalent banking practice by itself would not be sufficient to attract ingredients of cheating.

Headnote:(a) Indian Penal Code, 1860 – Section 415 – One of the ingredients of cheating is existence of a fraudulent or dishonest intention at the time of making initial promise or existence thereof from the very beginning of formation of contract. (Para 21)

        (2003) 5 SCC 257; (2006) 6 SCC 736 – Relied upon.

        (b) Indian Penal Code, 1860 – Section 420 – Ingredients are inducement on the part of the appellant and an intention to cheat the respondent from the very inception. (Para 21)

        (2007) 7 SCC 373; 2007(12) SCALE 391; 2008 (14) SCALE 85; 2009 (1) SCALE 627 – Relied upon.

        (c) Prevention of Corruption Act, 1947 – Section 13(1)(d) – In absence of any evidence of conspiracy or any wrongful gain, provisions of the Act are not attracted. (Para 23)

        (d) Indian Penal Code, 1860 – Section 409 – Ingredients of section 409 found by the courts below – However in absence of any allegation or charge thereagainst, no punishment can be imposed. (Para 24)

        (e) Indian Penal Code, 1860 – Section 415 – Abuse of prevalent banking practice by itself would not be sufficient to attract ingredients of cheating. (Para 27)

        (f) Constitution of India,1950 – Article 136 – Where there are infirmities in the judgment of the court below, Supreme Court can interfere. (Para 30)

        (1990) 2 SCC 113 – Relied upon.

       Facts of the case :

        1. Accused No. 4 - S.V.L. Murthy was the Branch Manager of Begum Bazar Branch of SBI. Accused No. 1 - Venugopal Loya was proprietor of some business concerns, namely, M/s Shobhachand Shivijiram (“SS”), M/s Sreeji Industries (“SI”) and M/s Harikrishan Roopchand (“HR”).

        2. Accused No. 2 - Gopaldas Dharak was a partner of M/s Gayatri Traders (“GT”). He used to operate current account in the same Branch. Accused No. 3 - Radheshyam Dharak, was an Accountant working in the firms of Accused No.1. Accused No. 5 - P. Jayakumar was the Accountant in the Begam Bazar Branch of the State Bank of India. Accused No. 6 - Y. Narahari Murthy was the Charge Branch Manager.

        3. SS opened current account with Begum Bazar Branch of the State Bank of India on or about 5.12.1979. Accused No. 1 opened Current Account with SBI on behalf of SI in his capacity as a Managing Partner on or about 10.5.1988. He was granted cheque discounting facility. For the said purpose, he deposited his title deeds on or about 6.9.1988

        4. Accused No. 4 - S.V.L. Murthy stopped this discounting facility with SS. However the same was made available with Accused No.1 upon obtaining sufficient collateral security, i.e., title deeds of moveable and immoveable properties of Accused No.1 worth Rs.1.09 lacs.

        5. The Bank allegedly sanctioned discounting facility to the extent of Rs.30 lacs on the basis of collateral securities furnished on or about 15.4.1989. However on ten cheques being returned unpaid from clearing house the Regional Office issued instructions for stopping cheque discounting facility without notice.

        6. On 21.6.1989, a criminal complaint was lodged by the Bank alleging that cheques issued to SI were fraudulently discounted and amounts were drawn.

        7. It is not in dispute that in the said complaint no allegation was made against the officers of the Bank.

        8. Disciplinary proceedings were initiated against the Accused No. 4, Accused No. 5 as also P.W. 20. Whereas P.W. 20 was censured, Accused No. 4 was inflicted with a punishment of stoppage of five increments. Some minor punishments were also imposed on the Accused No. 5.

        9. Following a vigilance enquiry a charge sheet was filed on or about 8.9.1993 under Sections 120B, 420 IPC read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 alleging inter alia that there was criminal conspiracy between the accused persons during 1988-89 to cheat SBI.

        10. Learned Special Judge for CBI Cases, Hyderabad convicted and sentenced the accused persons.

        11. The High Court dismissed the appeals of the appellants. However, accused No. 6 was acquitted.

       Finding of the Court :

        The judgment of conviction and sentence cannot be upheld.

       Result : Appeals allowed.