ORDER :

1. This appeal is directed against the judgment and order passed by the High Court of Karnataka in Criminal Appeal No. 2702 of 2006, dated 14.12.2007 whereby and whereunder the High Court has upheld the order of conviction but modified the order of sentence passed by the Trial Court in Spl. C.C. No. 72 of 2002, dated 02.12.2006.

2. The prosecution's case is as follows :

The appellant (accused No. 1 before the Trial Court) was employed as the Senior Branch Manager of Vijaya Bank, Vanivilas Road Branch, Bangalore and was empowered with the discretionary power of granting loans, including overdraft facilities to the extent of Rs.50,000/-. Accused No. 2 was a first class Civil Contractor and had applied for credit facilities to the said branch of Vijaya Bank in relation to a contract for the construction of a parallel taxi-track and Apron-1 at HAL Airport, Bangalore awarded by the National Building Construction Corporation Ltd., Bangalore (for short, "the Corporation"). It is alleged by the prosecution that the two accused entered into a criminal conspiracy with the object of cheating Vijaya Bank. In furtherance of the said conspiracy, accused No. 2 applied for credit facility of Rs.1,25,00,000/- to the said bank and the appellant, in his capacity as Senior Bank Manager, recommended that accused No. 2 be given overdraft facility to the extent of Rs.50,00,000/- as well as another overdraft facility under the SBP scheme to the extent of Rs.50,00,000/- and a bank guarantee of Rs.25,00,000/-. Based on the appellant's recommendations, the Head Office of the said Bank sanctioned the loan in favour of accused No. 2, subject to certain terms and conditions.

3. It is alleged by the prosecution that, in pursuance of the said criminal conspiracy, the appellant permitted accused No. 2 to violate the terms and conditions imposed by the bank. Accused No. 2 exceeded the limits imposed by the bank on the overdraft facilities, to the extent of Rs.7,28,057/- in the first case and Rs.11,53,877/- in the second case. Further, one of the conditions imposed by the bank was that the appellant would obtain from accused No. 2 a power of attorney executed in favour of the bank, authorizing the bank to receive the bill amount payable to accused No. 2 from the Corporation so as to enable the bank to receive payments directly from the said Corporation in order to appropriate the same towards the amount due to the bank from time to time. However, it is alleged by the prosecution that though the appellant received the said power of attorney from accused No. 2, he did not get the same registered with the Corporation as a result of which the bank was unable to lay claim to the bill amount due to accused No. 2. It was further stipulated in the terms and conditions of the loan that, before the entire permitted amount was released in favour of accused No. 2, his performance would be scrutinized for a period of six months. However, as alleged by the prosecution, the appellant permitted accused No. 2 to utilize the full overdraft facility without conducting any such scrutiny. Further, though the overdraft facility was permitted to be used only for the purpose for which the loan had been obtained, the appellant permitted accused No. 2 to divert funds to the extent of Rs.23,60,000/- to his father-in-law Sadananda Shetty (DW-1), as a result of which accused No. 2 was unable to complete the construction work within the stipulated time and consequently, the contract between accused No. 2 and the Corporation was rescinded. It is alleged by the prosecution that, as a result of the above acts done by the appellant in collusion with accused No. 2, the bank sustained loss of Rs.1,29,00,000/-, excluding interest.

4. On the bank becoming aware of the above facts, a Departmental Inquiry was conducted in the year 1991 against the appellant by the bank as a result of which, the appellant's services were terminated. Subsequently, by notification dated 10.07.2001, the Karnataka Stat