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IN THE HIGH COURT OF BOMBAY
(O.O.C.J.)
S.N. Variava, J.
Central Bureau of Investigation..... Appellant.
Versus
Mulangi Krishnaswamy Ashok Kumar others ..... Respondents.
Special Case No. 7 of 1994 CBI Case No. RC. 5/BSC/93/Bombay, decided on 6/7/13 14-8-1998.
Advocates appeared :
V.C. Gupte with R.B. Thakare, Spl. P.P., for the prosecution.
H.J. Thakkar with K.D. Shah with Mrs. Maya Sarkar i/b Madhukar Munim Co., for accused No. 1.
Girish Kulkarni, for accused No. 2.
S. Mohan, accused No. 3 in person.
R.D. Ovalekar with M.P. Rao i/b Purnanand Co., for accused No. 4.
Section 9(4)-Powers of Court.- The Court, under Section 9(4) of Act is competent to suspend sentence of imprisonment.
Transfer of Property Act, 1882
Section 6(d) read with Section 10 - Owners right-Restriction on enjoyment-Transfer for limited period prohibited-Section 10 is not applicable-Restriction on such transfer is valid.-As the units are non-transferable it is clear that they could not have been purchased. Such a purchase is, therefore, contrary to the provisions of Section 6(d) of the Transfer of Property Act. Section 6(d) of the Transfer of Property Act provides that an interest in property restricted in its enjoyment to the owner personally cannot be transferred by him. In this case the lock in period is one year and they are non-transferable. Thus the enjoyment of these CANCIGO units, is restricted to the owner personally. This, therefore, is a case which falls squarely under Section 6(d) of the Transfer of Property Act. The person who has subscribed to these CANCIGO units must hold the same for minimum of 1 year and there can be no transfer by him.
The letter of officer Ex-M as well as the CANCIGO certificates make it very clear that the v are not transfereble. Such a submission is also against categoric evidence in this case. As pointed out above a number of witnesses, not just from CANFINA but also from Canbank Mutual Find and Reserve Bank of India have given categoric evidence that the CANCIGO units are not transferable. Once the enjoyment is restricted in its use to the owner a transfer would be prohibited under Section 6(d) of the Transfer of Property Act. The transfer would, therefore, be illegal. It would be a transfer which is prohibited by law. Even otherwise it would be illegal because it is something which is bound to give rise to a civil action. There is no evidence, oral or documentary, to show that in spite of such a categoric condition CANCIGOs could be traded.
S.N. VARIAVA, J.:---This Court was established because large amounts were siphoned out from Banks and Financial Institutions into private pockets. The manner by which monies have been siphoned out are many. This case indicates how the broker and the officer, who is a public servant and whose duty it should have been to protect public monies, have conspired to misuse public position to enable the broker to siphon out monies on a large scale.
2. Accused No. 1 was at the relevant time the Executive Vice President of Canbank Financial Services Limited (hereinafter called ""CANFINA""). Accused No. 1 was the Chief Dealer of CANFINA. Accused Nos. 2 and 3 were at the relevant time Assist. Vice Presidents of CANFINA. Accused No. 3 was, at the relevant time, also a dealer of CANFINA. Accused No. 4 was and is a Share and Securities Broker.
3. The case of the prosecution is as follows:
Sometime in September, 1991 one Canbank Mutal Fund had taken out an Issue of Units called CANCIGO Units. It is the case of the prosecution that Accused No. 4 got Andhra Bank to subscribe for the CANCIGO Units F.V. Rs. 11 crores. It is the case of the prosecution that Accused No. 4 got Andhra Bank Financial Services Limited to subscribe for the CANCIGO Units F.V Rs 22 Crores. It is the case of the prosecution that CANCIGO Units F.V. Rs. 11 crores were thus purchased in the name of Andhra Bank and CANCIGO Units F.V. of Rs. 22 crores were purchased in the name of Andhra Bank Financial Services Limited. It is the case of the prosecution that Accused No. 4 paid for the CANCIGO Units F.V. Rs. 33 crores. It is the case of the prosecution that the CANCIGO Units on the face of them, showed that they were not transferable. It is also the case of the prosecution that as these stood in the names of Andhra Bank and Andhra Bank Financial Services Limited Accused No. 4 could not have dealt with them without the consent of and authorization from Andhra Bank and Andhra Bank Financial Services Limited.
4. It is the case of the prosecution that on 20th January, 1992 Accused No. 4 had owed monies to CANFINA in the following transactions:
1. 7.00 crore 13% HPF @ 97.5 for a
total consideration of Rs. 7,25,63,150.68
2. 10.9365 crore 13% NPC @ 97.5 for
a total consideration of Rs. 11,11,88,249.48
3. 1.75 crore 13% HPF @ 97.5 for a
total consideration of Rs. 1,81,40,787.67
4. 4.93 crore 13% ITI @ 97.5 for a
total consideration of Rs. 4,84,18,678.60
5. 6.00 crore 13% NPC @ 97.5 for Rs. 6.09,78,904.11
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Total Rs. 31,13,07,328.93
It is the case of the prosecution that against the aforesaid amount of Rs. 31,13,07,328.93 CANFINA received Rs. 25,77,28,453.83 only i.e. Rs. 5,35,78,875/- short.
5. It is case of the prosecution that on 6th February, 1992, Accused No. 1 had finalised following transactions of sale of securities with Accused No. 2 through Citibank without collecting Contract Note/Delivery Order.
1. 14% Godrej Soaps f.v. 5 crores @ 95.67
total consideration of Rs. 4,85,25,410.96
2. 14% Insilco f.v. 10.30 crores @ 99.3214
total consideration of Rs. 10,73,57,876.71
3. 13% CIL f.v.40 crores @ 99.4665 total
consideration of Rs. 42,27,97,506.85
4. 13% CIL f.v. 15 crores @ 99.5733 total
consideration of Rs. 15,85,49,041.10
5. 14% Haryana Petro f.v. 5 crores @ 99.3364
total consideration of Rs. 5,21,22,994.52
6. 15% Indian Rayon f.v. 3.53 crores @ 105.6598
total consideration of Rs. 3,91,54,012.58
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Total Rs. 82,85,06,842.72
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CANFINA received payment of Rs. 59,90,51,739.72 from one C. Mackertich, Broker, thus receiving Rs. 22,94,55,103/- short. CANFINA also received Rs. 3,28,66,849/- from one R.K. Tandon, Broker at Kanpur, through State Bank of Travancore. Balance was receivable from Accused No. 4
6. Thus as on 6.2.92 the
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