BOMBAY HIGH COURT
Dr. Shalini Phansalkar Joshi, J.
Central Bureau of Investigation —Complainant
versus
Coodli Ravikumar and Ors. —Accused
Special Case No.2 of 1994 in C.B.I. Case No.R.C.52/A/92-BOM
Decided on 25.11.2016

Headnote:(a) Indian Penal Code, 1860 – Section 120B – NHB authorised to deploy only their own surplus funds in the security transactions – NHB through Accused 1 and 2 selling securities of other Banks or Financial Institutions for purchase of securities from SBI – No physical securities or BRs exchanged between NHB an SBI – Further, Accused 1 and 2 selling non-existent securities – No purchase of securities from SBI established – Cheques issued to SBI actually issued for the purpose and use of Accused 4-HSM and not for the purchase of securities from SBI – Liability of Accused 1 for these structured or fake transactions with connivance of accused 2 held as proved. (Para 299, 303, 305, 317)

       (b) Indian Penal Code, 1860 – Section 120B – Accused 3 routing funds received in SBI account to account of accused 4-HSM – Plea of market practice rejected – Accused 3 crediting proceeds of cheques issued in favour of SBI directly to the account of Accused 4-HSM – Accused 3 held criminally liability of misappropriation of funds of the SBI received from NHB. (Para 311)

       AIR 2003 SC 2748; (2015) 2 SCC 553 – Relied upon

       (c) Indian Penal Code, 1860 – Section 120B r/w section 10, Indian Evidence Act, 1872 – Anything said, done or written by co-conspirator after the conspiracy was formed – Evidence against the other before he entered the field of conspiracy or after he left it – Divergence of funds of SBI to the tune of crores of rupees to accused 4-HSM – Could not be possible without connivance of accused 1, 2 and 3 – Held, all three accused working hand in gloves for benefit of accused 4-HSM – Criminal conspiracy established held proved. (Para 322, 324, 325, 328)

       AIR 2003 SC 2748; (1996) 4 SCC 659; (2009) 11 SC 737; (2005) 11 SCC 600 – Relied upon

       (d) Indian Penal Code, 1860 – Section 409 – Entrustment – May have different implications in different context – Accused 1, and 2 in connivance with Accused 3 allowing funds of the Bank on which they had dominion and entrustment to be used for benefit of Accused 4–HSM – Accused 4-HSM a private person, not expected to reap the fruits of Bank’s money allowed to retain the same, to make an unlawful gain therefrom – Held, offence of criminal breach of trust made out against all th three accused. (Para 331, 336)

       AIR 2003 SC 2748; AIR 1956 SC 575; AIR 2010 SC 1812 – Relied upon

       (e) Indian Penal Code, 1860 – Section 120B – Funds diverted b gross violation of various rules and guidelines – Mere making repayment of the amount that too under direction of RBI, under protest, does not dilute nature of the offence. (Para 338)

       (2015) 2 SCC 553 – Relied upon

       (f) Prevention of Corruption Act, 1988 – Section 13(1)(c) and (d) r/w section 13(2) – Criminal misconduct – Ingredients – Public servant – Indulging in some corrupt or illegal means or otherwise abusing his position as public servant – Instantly accused 1, 2 and 3 public servants – Playing specific roles in diverting funds of NHB misusing their positions as public servants to the account of accused 4-HSM – Thus facilitating accused 4-HSM to obtain pecuniary advantage – All three accused held guilty of criminal misconduct. (Para 343)

       (2009) 11 SC 737 – Relied upon

       (g) Prevention of Corruption Act, 1988 – Section 19 – Sanction for prosecution – Competency of authority – Already upheld by Supreme Court in (2009) 11 SC 737. (Para 344)

       (2009) 11 SC 737 – Relied upon

       (h) Administration of justice – Criminal action and departmental proceedings – Accused persons found guilty of offence u/s 13(1)(d), P. C. act, 1988 and section 120B, IPC and convicted accordingly – Amount involved repaid – Bank not taking any departmental action – Complaint not filed by any staff/officer of Bank – Contention that initiation of criminal proceedings and conviction not justified, rejected – Complaint petition not invariably required to be filed by banks and financial institutions, whose money had been the subject-matter of offence – Suffering of loss by banks and financial institutions is also not sine qua non for recording a judgment of conviction. (Para 350, 351)

       (2009) 11 SC 737 – Relied upon

       (i) Administration of justice – Amicable settlement and conviction – Money repaid by SBI to NHB under protest – Matter not settled amicably – Plea for quashing conviction and sentence – Finding of guilt and conviction of accused persons after trial – Prosecution proving its case – Plea not acceptable (Para 353, 354)

       (2014) 5 SCC 364 – Distinguished

       (j) Indian Penal Code, 1860 – Section 467 r/w 120B – Forgery – Falsification of documents like Investment Register, Deal Diary and vouchers by accused 2 and 2 by making entries therein in respect of the fake or structured transactions with intent to defraud NHB – Proved by prosecution – Conviction upheld. (Para 355)

       (k) Indian Penal Code, 1860 – Sections 120B – Accused 1, 2 and 3 found guilty of conspiracy to defraud banks to help accused 4-HSM – Accused 5, 6 and 7 being employees of HSM actively participating in falsification of documents and creation of contract notes for purchase/sale of securities – Accused 1, 2 and 3 could not be successful in their designs without active help of accused 5, 6 and 7 – Accused 5, 6 and 7 cannot escape from the criminal liability for the acts committed by them – Conviction of accused 5 and 6 upheld – Accused 7, however, acquitted giving benefit of doubt. (Para 357, 365, 366)

       AIR 1988 SC 1883; 2001 CRI.L.J. 102; AIR 2003 SC 2748; (2009) 11 SC 737 – Relied upon

       (l) Indian Evidence Act, 1872 – Section 65B r/w section 34 – Books of account – Computer print outs – These documents well supported by other independent evidence – Rightly relied upon for basing conviction of accused 1. (Para 374)

       1988 Cri.L.J. 480; (1967) 1 SCR 898 – Referred

       (m) Indian Penal Code, 1860 – Section 467 – Accused 9 opening account on 14th February 1992 with assistance of accused 3 – Utilizing the account for siphoning funds remitted by NHB to SBI – Using forged authorization for crediting such amount to his account – Withdrawing the amount for purchasing shares in his own name and in the names of firms owned by him – Closing the account on 19th June 1992 after getting the amount of cheque of even date in his account – Handwriting expert categorically opining the writing on the authorization, concerned cheques and pay-in-slips to be of accused 9 – Sufficient for convicting him u/s 467. (Para 382, 385)

       AIR 2003 SC 282; AIR 1980 SC 531 – Relied upon

       (n) Indian Evidence Act, 1872 – Section 62 – Pencil notes of handwriting expert for preparing final report – Held, not primary evidence. (Para 384)

       (o) Indian Penal Code, 1860 – Section 467 – Liability under Criminal Law – Different from civil liability – Denotification of accused 9 by custodian – No bearing or effect on criminal liability of accused 9 – Held, accused 1, 2, 3 and 9 liable for criminal action. (Para 394)

       (p) Indian Penal Code, 1860 – Section 467 – Forgery by accused 8 and 10 – No evidence other than that of handwriting expert available on record – Held entitled to benefit of doubt. (Para 396, 397)

       (q) Indian Penal Code, 1860 – Sections 109 and 120B – Accused 9 convicted u/s 109 and 120B – Provisions of Probation of Offenders Act cannot be invoked. (Para 418)

       (r)Indian Penal Code, 1860 – Section 409 r/w section 13(2), Prevention of Corruption Act, 1988 – Accused 1, 2 and 3 convicted u/s 409 and 13(2) – Except accused 1, none of the remaining accused had spent a single day in jail – Lenient view cannot be taken for sentencing – Appropriate punishment ordered. (7Para 419, 420)

       Result: Conviction of all accused except accused 8 and 10 upheld. Sentences ordered.