Back
SUPREME COURT OF INDIA
ABHAY S. OKA, UJJAL BHUYAN, JJ.
Central Bureau of Investigation – Appellant
Versus
Srinivas D. Sridhar – Respondent
Criminal Appeal No. 2891 of 2023
Decided On : 16-10-2024
Prevention of Corruption Act, 1988 – Section 13(2) read with 13(1)(d) – Indian Penal Code, 1860 – Sections 420, 468, 471 and 120-B [Bharatiya Nyaya Sanhita, 2023 – Sections 318(4), 336(3), 340(2) and 61(2)] – Criminal Procedure Code, 1973 – Section 227 [Bharatiya Nagarik Suraksha Sanhita, 2023 – Section 250] – Cheating, forgery and conspiracy – Discharge of accused-respondent by High Court – There are no allegations against respondent as regards sanction of Standby Letter of Credit SBLC – There is no material placed in charge-sheets to show that respondent has played any role in sanction of SBLC – Loan Advisory Committee's favourable recommendations regarding Company's proposal are also on record, apart from memorandum submitted to Management Committee – As far as respondent is concerned, considering his position and role ascribed to him in grant of sanction to loan proposal of Company, mere suspicion against him is not enough to frame charge against him – Proposal had passed through Loan Advisory Committee which recommended the same – Respondent's role was confined to signing memorandum prepared by senior officers and participating in Management Committee meeting which approved proposal – No material is placed on record to show that any of accused other than bank officials ever met respondent before sanction of proposal by Management Committee – Only because entire proposal was processed and cleared within a short span of time, no offence is made out against respondent – Taking material in charge-sheet as it is, complicity of respondent is not made out – No scope to interfere with impugned order. (Paras 9, 13, 14, 15 and 16)
Facts of the case:
Present appeal arises out of charge-sheet filed in First Information Report registered with Central Bureau of Investigation (CBI) (Bank Securities and Fraud Cell), Mumbai, for offences punishable under Sections 420, 468, 471 and 120-B of IPC and Section 13(2) read with 13(1)(d) of Prevention of Corruption Act, 1988. By impugned judgment, High Court has discharged respondent.
Findings of Court:
Court has examined charge-sheet only for that limited purpose (Role ascribed to respondent in the process of sanctioning the facilities to Company) . Any observation made in the judgment will not affect the trial against the other accused persons.
Result : Appeal dismissed.
JUDGMENT :
Abhay S. Oka, J.
FACTUAL ASPECTS
1. The present appeal arises out of a charge sheet filed in First Information Report bearing no. RC 7/E/2014 registered with the Central Bureau of Investigation (CBI) (Bank Securities and Fraud Cell), Mumbai, for the offences punishable under Sections 420, 468, 471 and 120-B of IPC and Section 13(2) read with 13(1)(d) of Prevention of Corruption Act, 1988 (for short, ‘the PC Act’). Charge sheet was filed for the said offences on 8th August 2014. A total of seven accused persons were chargesheeted, including the respondent herein, who was shown as accused no.7. At the relevant time, he was the Chairman and Managing Director of the Central Bank of India (for short “the Bank”). Accused no.1 was M/s Electrotherm (India) Limited (for short, “the Company”). Accused no.2-Mukesh Bhanwarlal Bhandari was the Chairman of the Company. Accused no.3- Shailesh Bhanwarlal Bhandari was the Managing Director of the Company. Accused no.4-Avinash Prakashchandra Bhandari was the Joint Managing Director of the Company. Accused no.5 was one Hector Keki Vesuna, who was, at the relevant time, the Chief General Manager (Credit) of the Bank. Accused no. 6 was Ramnath Pradeep, who was an Executive Director of the Bank at the relevant time.
2. During the years 2010-2011, the Bank sanctioned following three facilities to the Company: -
b. Letter of credit having a limit of Rs. 100 crores; and
c. Export Packing Credit (EPC) facilities of Rs.330 crores.
3. The Bank disbursed a sum of Rs. 247.50 crores against EPC on various dates. The Company claimed that it was awarded a contract by M/s Kamal Alloys Ltd., Tanzania, for the execution/setting up of a steel plant in Tanzania on a turnkey basis. Therefore, the EPC facility was granted for procurement of raw materials and components for the said project in Tanzania. The allegation is that instead of using the amount of Rs. 247.50 crores for procuring raw material for the project, the amounts were transferred by the Company to its accounts with various other Banks as well as to builders. The amounts were also used for payment of ECGC premium.
4. It was alleged that the Company requested Lal Darwaja Branch of the Bank at Ahmedabad, to open a Standby Letter of Credit (SBLC) for an amount of USD 15 million in favour of Apple Commodities Ltd in Hong Kong for the supply of coal. Under the said facility, while the Bank had to pay USD 15 million to the banker of Apple Commodities Ltd., the Company neither imported the coal to India nor was any payment arranged from the overseas buyer to whom the Company allegedly sold the coal. Similarly, the Company opened another SBLC for Euro 2.05 million in favour of Castleshine Pte. Ltd., Singapore, for the supply of a Continuous Hot Strip Mill for the proposed steel plant to be set up in Tanzania. The Bank had to pay Euro 2.05 million to the bank of M/s. Castleshine Pte. Ltd., though the Company did not procure any machinery. The allegation is that the Bank was put to an undue loss of Rs.436.74 crores, and there was a corresponding gain to the Company.
5. An application for discharge made by the respondent (accused no.7) was rejected by the learned Special Judge of C.B.I., Court. In a revision application filed by the respondent before the High Court, by the impugned judgment, the High Court has discharged the respondent. The Appellant-CBI, being aggrieved by the said judgment, is before this Court.
SUBMISSIONS
6. In support of the appeal, the learned Additional Solicitor General (ASG) submitted that though the conduct of a mini-trial was not contemplated at the stage of framing of the charge, the High Court has purported to conduct a mini-trial in this case. She submitted that to prove allegations of conspiracy, it is not necessary that all the co-conspirators must know every detail of the conspiracy, and it is not essential that every accused must participate in the conspiracy from its inception to the last. Sh
Cheating, forgery and conspiracy – Mere suspicion against accused is not enough to frame charge against him.
The validity of sanction for prosecution is crucial, requiring the sanctioning authority to independently assess allegations and evidence, failing which proceedings are deemed null.
The court emphasized the necessity for fair investigation and the importance of evidence in determining criminal liability in cases of alleged conspiracy and fraud in loan sanctioning processes.
The court affirmed that a director's criminal liability cannot be presumed without direct evidence of involvement in fraudulent activities; mere involvement in a company implicated in fraud is insuff....
Point of Law : custodial interrogation is also necessary not only for protecting the interests of the bank but in the interest of public at large who deposit their hard earned money in the banks.
Disciplinary actions must adhere to principles of natural justice, and failure to provide relevant evidence undermines the validity of proceedings.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
