To punish under Section 420 of I.P.C. Mens rea is necessary and without proof of mens rea, conviction under Section 420 of I.P.C cannot be sustained.

JUDGMENT

(Prayer in Crl.A.No.569 of 2013: Criminal Appeal has been filed under Section 374 r/w 386 of Cr.P.C., pleased to admit this Criminal Appeal on file, call for the records in C.C.No.15 of 2006 on the file of the Honourable 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.

in Crl.A.No.586 of 2013: Criminal Appeal has been filed under Section 374 r/w 386 of Cr.P.C., pleased to set aside the conviction and sentence of fine Rs.2000/- imposed by the Honourable XI Additional City Civil and Session Judge (CBI Cases relating to Banks and Financial Institutions), Chennai – 1 in C.C.No.15 of 2006, dated 30.07.2013 and acquit the appellant Company of the charges from the above said case.)

Common judgment:

1. Based on the source information received in the office of Superintendent of Police, CBI, ACB, Chennai, the Inspector of Police Mr.S.B.Sankar was instructed by the Superintendent of Police to register the case. Accordingly, on 29.10.2003 Sankar in R.C.No.48(A)/2003/CBI/ACB/ Chennai, under Section 120-B r/w 420 of I.P.C, 420 I.P.C, 13(2) r/w 13(1)(d) of P.C Act, 1988 against Shri.V.Arul Kumar, Regional Chief, HUDCO, Chennai and M/s.Arihant Foundations & Housing Ltd., Chennai. Search of the residential premises of Mr.V.Arul Kumar, Shri.Navarathan Lunavat, Managing Director of M/s.Arihant Foundations & Housing Ltd., Chennai and others were conducted. After completion of investigation final report was filed.

2. The gist of the final report:-

A1-V.Arul Kumar, the then Regional Chief, Housing and Urban Development Corporation (HUDCO), Chennai, entered into a criminal conspiracy with A-2 Company M/s.Arihant Foundations & Housing Ltd (AFHL) represented by Navaratan Lunavat (deceased) between 1997 and 2003, to cheat the Housing and Urban Development Corporation (HUDCO) in the matter of loan sanctioned in favour of A2 Company in a fraudulent manner by abusing and misusing the official position and by corrupt and illegal means by Al and in pursuant to which A2 submitted an application on 13.8.1997 to HUDCO, for a loan assistance of Rs.17 Crores, for the construction of “Arihant Majestic Towers” at Koyambedu, Chennai. The HUDCO had agreed in principal to clear the loan proposal on conditions. One among the condition is that, A2 has to open an escrow account with lien in favour of HUDCO. Thereafter the HUDCO had sanctioned a loan of Rs.17.30 crores and an agreement to this effect was entered into between the HUDCO and A2 represented by Navaratan Lunavat (since deceased on 16.10.1997) and a total of Rs.16.50 crores was disbursed. A2 Company not complied with the terms and conditions of the agreement even after rescheduling, the payment of instalment contrarily it went on selling the flats without getting NOC from HUDCO and instead of depositing the sale proceeds into the escrow account, A2 had deposited it into their accounts maintained with other banks. A-l inspite of the specific instructions from Head Office, HUDCO, to file a suit before DRT, sent a draft resolution package falsely projecting the payment by A2. Further, Al had sent a draft resolution vide letter dated 25.11.2002 for restructuring the loan recommending outstanding loan to be treated as fresh loan with additional repayment period for 3 years. Al misusing his official position wrote letters dated 27.02.2003, 30.05.2003 and 02.8.2003 had sought for restructuring of packages instead of taking legal action as suggested by the Head Office. As a consequence, A2 dishonestly and fraudulently, without obtaining NOC sold the flats and failed to deposit the proceeds into the escrow account at HUDCO. Further, A2 failed to create lien of the escrow account. Out of Rs.40,31,48,250/- realized