IMPORTANT POINT
Bank officer abusing his position and violating banking norms with mala fide intention of enriching accused 3 rightly convicted.

JUDGMENT

N.V RAMANA, J.

This appeal is directed against the judgment dated 3rd December, 2004 of the Special Court (Trial of offences relating to transactions in Securities) at Bombay in Special Case No. 3 of 1995 whereby the Special Judge convicted and sentenced the appellant for the offences under Sections 409/120B, 403, 477-A/109, IPC and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988.

2. The prosecution story, briefly stated, is that during the year 1991, the appellant (accused No. 1) while he was working as Assistant Manager in the Securities Department of UCO Bank, Hamam Street Branch, Mumbai in connivance with a colleague of the Bank (accused No. 2) hatched a criminal conspiracy with the infamous share & stock broker of Bombay of those times, Harshad S. Mehta (accused No. 3) with the object of cheating the UCO Bank by causing wrongful loss to the Bank and effecting illegal gain to the accused No. 3 (Harshad Mehta). It is alleged that for achieving the object of conspiracy, the appellant despite being a public servant, committed criminal breach of trust and misappropriated the funds of Bank by manipulating the accounts to facilitate unlawful gains to Harshad S. Mehta (accused No. 3).

3. The background of the case as unfolded by the prosecution is that at the relevant time, UCO Bank had two Subsidiary General Ledger (SGL) accounts with the RBI. The SGL is a type of Securities Account floated by the Central Government. For making transactions in these Securities, Banks and financial institutions have to open the SGL account with the Public Debt Office of the Reserve Bank of India. UCO Bank has two such SGL accounts with the Reserve Bank of India. Out of the two SGL accounts owned by the UCO Bank, one account with the number 032 was meant for the Bank's Head Office's own transactions and the other SGL account No. 065 was maintained for the transactions done by constituents/brokers. When the Bank itself purchased/sold a Government Security, the respective entry was to be made in account No. 032 and if the Security was purchased/sold by a broker client of the UCO Bank, the entry was to be made in SGL account No. 065. As far as the entry in the books of RBI was concerned, it was made in a particular account according to the instructions given by UCO Bank for every transaction, as both the accounts stood in the name of UCO Bank.

4. On 22nd March, 1991 UCO Bank sold Securities namely, Government of India 11.5% 2009, worth Rs. 20 crores to Indian Bank (Ext. 250) from its SGL account No. 032 i.e. UCO Bank's own account. On the same day, UCO Bank purchased Securities namely, Government of India 11.5% 2006, worth Rs. 20 crores from Indian Bank (Ext. 425).

5. On 5th April, 1991 UCO Bank re-purchased the earlier sold GOI 11.5% 2009 Securities from Indian Bank and sold GOI 11.5% 2006 Securities purchased earlier to Indian Bank. In other words, UCO Bank reversed the earlier transactions. With the effect of repurchase of Securities by the UCO Bank, RBI should have made the entry crediting the worth of those securities in SGL Account No. 032 of the UCO Bank.

6. Whereas, due to a communication dated 13th April, 1991 (Ext. 300) signed by the appellant accused in his position as Assistant Accountant and the co-accused (not a party in the present appeal) requesting the RBI to make entry in SGL Account No. DV SL 065, the SGL Account No. 065 which was meant for the broker clients of the UCO Bank and which had no balance on that date, showed the balance of Securities worth Rs. 20 crores. At that point of time, the transactions of all other brokers stood squared off except in respect of accused No. 3 (Harshad Mehta). Taking this wrong entry to his advantage, accused No. 3 - Harshad S. Mehta, being the broker/client of the UCO Bank, sold GOI Securities 11.5% 2009, worth Rs. 15 crores (Ext. 413), which actually did not belong to him, and thereby wrongfully gained and the UCO Bank suffered the loss. It was none other but