The court reaffirmed that misappropriation of loan funds constitutes a criminal offense regardless of subsequent recovery through civil actions.

JUDGMENT :

A. BADHARUDEEN, J.

1. 2^nd accused in C.C.No.08/2003 on the files of the Special Judge (SPE/CBI)-I, Ernakulam, impugns the verdict dated 24.12.2009 in the said case, whereby the learned Special Judge tried the 2^nd accused along with the 1^st accused alleging commission of offence punishable under Section 120B r/w Section 409 of the INDIAN PENAL CODE (for short ‘the IPC’ hereinafter) as well as under Section 13 (1)(c) and (d) r/w (2) of the Prevention of Corruption Act, 1988 (for short, ‘the PC Act, 1988’ hereinafter) and recorded conviction and sentence against accused Nos.1 and 2 finding that both of them committed offences punishable under (1)(d) r/w (2) of the PC Act, 1988 as well as under Section 120B of the IPC.

2. Heard the learned counsel for the appellant/2^nd accused as well as the learned Special Public Prosecutor appearing for the CBI. Perused the verdict of the Special Court and the evidence available.

3. Here, the prosecution allegation is that, the 1^st accused, who worked as the Branch Manager of Canara Bank, Sulthan Bathery, Wayanad during March, 1999, conspired with the 2^nd accused, who is a builder and the 3^rd accused, who is the Assistant Engineer of the Panchayat, on the premise of misappropriating a sum of Rs.3 Lakh by granting a housing loan in the name of K.Raghavan, residing at Kuniyil Veedu, Chettimoola, Sulthan Bathery, and thereafter, without making any construction of the house, periodical loans were sanctioned to the tune of Rs.3 Lakh and the entire amount was encashed by the 2^nd accused through his agents.

4. The Special Court ventured the matter and recorded evidence. PW1 to PW21 were examined and Exts.P1 to P73 were marked on the side of the prosecution. On the side of the defence, Exts.D1 to D18 were marked.

5. On appreciation of the evidence, the learned Special Judge convicted and sentenced the accused for the offence under Section 13 (1)(d) r/w (2) of the PC Act, 1988 as well as under Section 120B of the IPC, and sentenced accused Nos.1 and 2 as under:

“………..A1 and A2 are sentenced to undergo Rigorous Imprisonment for three years each under Section 120 B of the INDIAN PENAL CODE r/w Section 13 (2) r/w (1) (d) of the Prevention of Corruption Act, 1988 and also sentenced to pay a fine of Rs.50,000/- each with default Simple Imprisonment for six months each. A1 is further sentenced to undergo Rigorous Imprisonment for three years under (2) r/w (1) (d) of the Prevention of Corruption Act, 1988 and further A1 shall pay a fine of Rs.50,000/- with default Simple Imprisonment for six months. The sentence will run concurrently.”

6. It is submitted by the learned counsel for the appellant/2^nd accused that after the verdict, the 1^st accused died. The learned counsel argued that the allegation of the prosecution was not proved by cogent and convincing evidence, and the versions of PW1 and PW15 - Geemol Chacko, in this regard is not convincing. Therefore, after acquitting the accused of the offences under Section 409 of the IPC as well as under Section 13 (1)(c) of the PC Act, 1988, the finding of the Special Court that the 2^nd accused committed offences under (1)(d) r/w (2) of the PC Act, 1988, as well as under Section 120B of the IPC, by the 2^nd accused, is liable to be set aside.

7. Opposing this contention, the learned Special Public Prosecutor would submit that, as evident from Exts.P34 to P41, Rs.3 Lakh was sanctioned as loan in the name of PW18, K. Raghavan, for construction of a house. PW18 deposed that although the 2^nd accused had assured that construction would be undertaken on availing the loan and had remitted amounts of Rs.20,000/- and Rs.17,000/-, no substantial construction was carried out only unloading of materials and some minor basement works were done, without doing any other works thereafter. According to the learned Special Public Prosecutor, as per the evidence of PW15 - Geemol Chacko and as evident from Exts.P2 to P6, cheques for Rs.75,000/-, Rs.50,000/-, Rs.1,