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HIGH COURT OF JUDICATURE AT MADRAS
G. JAYACHANDRAN, J.
Anand Rao - Appellant
Versus
State The Inspector of Police, Chennai - Respondent
Criminal Appeal No. 712 of 2013
Decided On : 23-03-2023
Criminal Misconduct - Syndicate Bank Fraud - Section 120-B r/w 409, 420 IPC and Section 13(2) r/w, 13(1) (c) & (d) of PC Act, 1988 - Summary of Acts and Sections: The court discussed the charges under Section 120-B r/w 409, 420 IPC and Section 13(2) r/w, 13(1) (c) & (d) of PC Act, 1988 against the appellant and another accused. The judgment highlighted the fraudulent loan sanctioning process, diversion of funds, and subsequent recovery through ECGC, emphasizing the lack of malafide intent and conspiracy by the appellant.
Fact of the Case:
The appellant, a public servant, and another accused were charged with criminal conspiracy to cheat Syndicate Bank, resulting in a loss of Rs. 9,73,29,000. The charges included fraudulent loan sanctioning, misappropriation, and cheating the bank through diversion of funds.
Finding of the Court:
The Trial Court convicted the appellant based on the prosecution's case, rejecting the appellant's defense that he sanctioned the loan in good faith based on the branch manager's recommendation and scrutiny by a committee. The Court found the appellant guilty despite the recovery of the due amount through ECGC and the absence of malafide intent.
Issues: The key issue revolved around whether the appellant sanctioned the loan in good faith or was involved in a conspiracy with the branch manager and the co-accused. The defense argued that the branch manager was responsible for scrutinizing the loan and monitoring its disbursement.
Ratio Decidendi: The Court failed to consider the evidence in its entirety and held the appellant guilty based on selective portions of the evidence. The appellant successfully established the absence of malafide intent and conspiracy, leading to the Court's decision to set aside the judgment and acquit the appellant.
Final Decision: The Criminal Appeal was allowed, the Trial Court's judgment was set aside, and the appellant was acquitted. Any fine paid by the appellant was to be refunded, and any bail bond executed was discharged.
JUDGMENT
(Prayer: Criminal Appeal is filed under Section 374 (2) r/w.382 of Cr.P.C., praying to admit this Criminal Appeal on file, call for the records in C.C.No.5 of 2006 on the file of the learned XI Additional City Civil and Sessions Judge [CBI Cases Relating To Banks And Financial Institutions, Chennai-1, set aside the finding and sentence passed in the said case, acquit this appellant of the charges from the said case.)
1. The appellant herein is the 1st accused in C.C.No.5 of 2006 on the file of XI Additional City Civil and Sessions Judge [CBI Cases Relating To Banks And Financial Institutions, Chennai-1.
2. The appellant (A1) along with one Balakrishnan (A2), proprietor of M/s.Bala International, Karur were tried by the Trial Court for the following charges:-
(i) Under Section 120-B r/w 409, 420 IPC and substantive offences of 420 IPC and Section 13(2) r/w, 13(1) (c) & (d) of PC Act, 1988 against A1 and A2.
(ii) Under Section 420 IPC against A1.
(iii) Under Section 409 IPC against A1
(iv) Section 13(2) r/w, 13(1) (c) & (d) of PC Act, 1988 against A1
(v) Under Section 420 IPC against A1
(vi) Under Section 420 IPC against A2
3. Since the charges framed provides a fair idea about the case of the prosecution, the same is extracted below:
Firstly, that you A-1 while functioning as Public Servant in your capacity as Dy. General Manager, Syndicate Bank, Zonal Office, Chennai and you A-2 as proprietor, M/s.Bala International, Karur were parties to a criminal conspiracy hatched at Chennai, during the period 1999 to 2001, to cheat the Syndicate Bank, Karur Branch, to the tune of Rs.9,73,29,000/- by committing Criminal misconduct and criminal breach of trust and thereby made wrongful loss to the above said sum to the bank and corresponding wrongful gain to you and for others. Thereby you A-1 and A-2 have committed the offence punishable u/s 120 B r/w 409 and 420 of IPC & Sec. 13 (2) r/w 13(1) (c) & (d) of PC Act, 1988 and within my cognizance.
Secondly, that in pursuance of the criminal conspiracy stated in charge No.1, you A-1 along with A-2 cheated the bank to the tune of Rs.9,73,29,000/- in the following manner. That you Al, Sanctioned Packing Credit limit of 125 lakhs, FDBP limit of Rs 125 lakhs and Adhoc PCI/FDBP limit of Rs. 200 lakhs on 28.10.2000 based on dishonest and fraudulent recommendation made by Shri G.D.Raj and disregarding the diminishing turn over reported in the audited Balance Sheets of M/s. Bala International submitted to the branch for the period ending 31.03.1998, 31.03.1999 and 31.03.2000, renewal of the existing Packing Credit limits of Rs. 125 lakhs and FDBP limit of Rs. 125 lakhs, thereby you A-I have committed the offence punishable u/s 420 IPC and within my cognizance.
Thirdly, that in pursuance of the criminal conspiracy stated in charge No.1, you A-1 along with A-2 cheated the bank to the tune of Rs.9,73,29,000/- in the manner stated in the charge No-2 you have dishonestly and fraudulently misappropriated the above said amount which was entrusted to you or you had dominion over that bank funds in your capacity as Public Servants and thereby you A-1 have committed the offence punishable u/s 409 IPC and within my cognizance.
Fourthly, that in pursuance of the criminal conspiracy stated in charge No.1. you A-1 along with A-2 cheated the bank to the tune of Rs.9,73,29,000/- in the manner stated in the charge No-2. By abusing your official position you have made wrongful loss to the bank for the above said sum and corresponding wrongful gain to you or for others. Thereby you A-1 have committed the offence punishable under Sec. 13 (2) r/w 13(1) (c) & (d) of PC-Act, 1988 and within my cognizance.
Fifthly, that in pursuance
AI
The judgment established the importance of considering the entirety of evidence and the burden of proof in cases of criminal conspiracy and fraudulent activities.
The conduct of the appellants constituted a criminal conspiracy and cheating, supported by substantial evidence of fraudulent loan disbursement and failure to comply with banking regulations.
The case establishes that bank officials can be charged with conspiracy and cheating for failing to adhere to loan granting procedures, leading to significant financial losses to the institution.
The court found the accused guilty of criminal conspiracy, cheating, and abuse of official position under the Prevention of Corruption Act, 1988 and the Indian Penal Code.
The main legal point established in the judgment is the requirement of sufficient evidence to prove dishonesty and overestimation of property value in cases of conspiracy to cheat a bank.
The validity of sanction for prosecution is crucial, requiring the sanctioning authority to independently assess allegations and evidence, failing which proceedings are deemed null.
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