2003(2) Crimes 312 (SC)
Supreme Court of India
(From Special Court Trial of Offences ­relating in Securities)
M.B. Shah, B.N. Agrawal and Arijit Pasayat, JJ.
Ram Narain Poply - Appellant
versus
Central Bureau of Investigation - Respondent
Criminal Appeal No. 1097 of 1999
With
Criminal Appeal No. 1117 of 1999
With
Criminal Appeal No. 1141 of 1999
With
Criminal Appeal No. 1150 of 1999
And
Criminal Appeal No. 521 of 2000
Decided on 14-1-2003

Very important point
In this land mark judgment, the Apex Court has upheld the conviction of prominent financial broker Late Shri Harshad Mehta 1992 Securities Scam under various sections of Indian Penal Code by majority of 2 : 1 only.

Headnote:(i) Indian Penal Code, 1860 - Sections 120B, 420, 409, 467 and 471 - Offences of criminal conspiracy, cheating, criminal breach of trust, forgery by using forged documents - Prevention of Corrup­tion Act, 1988 - Sections 13(1)(c) read with 13(2) - Offence of abuse of public offices and dishonest misappropriation of the public funds - Five accused were tried by Special Court - (Trial of Offenc­es Relating to Transactions in Securities) Act, 1992 - Special Court acquitted A2 but convicted A1, A3, A4 and A5 - Appeal against acquittal of A2 by State, and appeals against convictions by A1, A3, A4 and A5 - A5 died but his appeal is also heard on merits on application of his wife - Five transactions entered into by Maruti Udyog Ltd. regarding units of UTI through UCO Bank who issued bank receipts in which A5 was payee - A1 and A2 were senior employ­ees of MUL and A3, A4 Bank officials and A5 was prominent finan­cial Broker (Shri Harshad Mehta) - Appeals were heard by three learned Judges - Justice Shah found entire investigation has been dishonest (See paras 33 to 37) PW 23 granted pardon who supported the alle­gations of A5 against Shri Narasimha Rao, the then Prime Minister - Prosecution failing to prove conspiracy (see paras 183 to 185) - Jurisdiction of Special Court under SCAM Act found - Limited only to two transactions (see para 189) - Majority of Pasayat and Agarwal, JJ. disagreeing to role of A1, A3 and A5 (see para 293) - Case law discussed.

       Held : Per M.B. Shah, J.

       There are several salient features of the instant prosecution which clearly show that the entire investigation has been dishonest. (Para 33)

       All the above circumstances reveal the non-application of mind which the investigating agency displayed in filing the FIR. (Para 37)

       In this set of circumstances, it would be difficult to hold that prosecution has proved the charge of criminal conspiracy under Section 120-B of IPC against the accused. (Para 183)

       Held consequently : Once we arrive at the conclusion that the prosecution has failed to prove the criminal conspiracy, the conviction of the accused under Section 120-B of IPC requires to be set aside. (Para 185)

       Held : Per Majority of Arijit Pasayat and B.N. Agrawal, JJ.

       Notwithstanding my great respect for learned Brother Shah's wisdom and erudition. I am unable to agree that some of the appellants i.e. A-1, A-3 and A-5 deserve to be acquitted. My reasons with which Brother Agrawal also agrees, are as follows. (Para 293)

       After appraisal of evidence and law held:–

       The conviction of accused 1, 3 and 5 are in order and are main­tained. (Para 399)

       We respectfully agree with conclusions of learned Brother Shah though not with the reasoning in their entirety regarding dismissal of the appeals against acquittal of A-2, and setting aside the conviction of A-4. (Paras 399)

       (ii) Indian Penal Code, 1860 - Sections 120B, 420, 409, 467 and 471 - Offences under - Prevention of Corruption Act, 1988 - Sections 13(1)(c) r/w 13(2) - Five accused tried by Special Court under Special Courts (Trial of Offences Relating to Transactions in Securities) Act, 1992 - A2 acquitted - Remaining four accused appealed to Supreme Court - A4 acquitted by ­Supreme Court - A1, A3 and A5’s conviction was found in order by Majority of 2 : 1 - Question of sentence - Whether be modified to the period already undergone? (Yes).

       Held : Per majority of Arijit Pasayat and B.N. Agarwal, JJ.

       The convictions of accused 1, 3 and 5 are in order and are maintained. A question about the sentence was raised. Normally, in cases involving offences which corrode the economic stability are to be dealt with sternly. It is, however, noticed that A-5 has died during the pendency of the appeal. A-1 and A-3 were small flies who appear to have been caught in the web of A-5's machinations. Apparent reason for their involvement is greed and avarice. There may be substance in the plea raised by the learned counsel for the accused-appellants that higher ups of MUL and Banks can not certainly be unaware of the goings on, and have not been proceeded with and given clear chit. Though this is certainly a matter of concern, yet that cannot be a ground for taking a sympathetic view of A-1 and A-3's conduct. Considering the fact that the occurrence took place a ­decade back, and the trial has spread over a few years, and the death of A-5, we feel ­custodial sentence for the period already ­undergone (which we are told was for a number of months) would meet the ends of the justice. While fixing the quantum of sentence, we have duly considered the fact that in the instant case the amounts have been paid back, which as noted above, learned counsel for the prosecution conceded was a factor for fixing the quantum of sentence. (Para 399)

       (iii) Indian Penal Code, 1860 - Sections 120B, 420, 409, 467 and 471 - Prevention of Corruption Act, 1908 - Section 13(1)(c) r/w 13(2) - Offences under - Five accused tried for securities scam of May 1992 involving Harshad Mehta - Special Court convicted A1, A3, A4, A5 but acquitted A2 - Five criminal appeals filed to Supreme Court - Three Judges Heard - State’s appeal against acquittal of A2 was dismissed by all, conviction of A4 Ram Narayan Poply set aside by all, but conviction of A1, A3 and A5 was upheld by Majority of 2 : 1 with modification in sentence - Ordered accordingly by the Court.

       Held as per order of the Court (M.B. Shah, B.N. Agarwal and Arijit Pasayat, JJ.)

       In the result it is held that:-

       (1) Criminal Appeal No. 521 of 2000 filed by the State against A2 Ambuj Sushil Kumar Jain is dismissed.

       (2) Criminal Appeal No. 1097 of 1999 filed by A-4 Ram Narayan Popli is allowed and he is acquitted of all the offences alleged against him.

       (3) Further, in view of the judgment rendered by the Majority, Criminal Appeal Nos. 1117 of 1999, 1141 of 1999 and 1150 of 1999 filed by A1 Pramod Kumar Pritam Lal Manocha, A-3 Vinayak Narayan Deosthali and deceased A-5 Harshad Shantilal Mehta respectively are partly allowed. The order of conviction awarded by the Special Court in respect of A1, A3 and A5 is confirmed. However, sentence of A1 and A3 is reduced to the period already undergone.

       Ordered accordingly. (Paras 400 and 401)