Serious allegations of fraud and conspiracy warrant a trial, and the existence of a civil remedy does not preclude criminal prosecution.

ORDER:

This Criminal Petition is filed by the petitioner/accused No.1 (A.1) under Section 482 of the Code of Criminal Procedure, 1973 (for short ‘Cr.P.C.’) to quash the proceedings against him in C.C.No.7 of 2015 on the file of Principal Special Judge for CBI Cases, Hyderabad. The offences alleged against the petitioner are under Sections 120-B, 409, 420, 465, 471, 477-A of Indian Penal Code (for short ‘IPC’) and under Section 13 (2) r/w.13 (1) & (d) of the Prevention of Corruption Act, 1988.

2. The facts of the case are that the General Manager of the 2nd respondent-M/s.Mineral and Metal Trading Corporation (MMTC) who is the defacto complainant gave complaint alleging certain irregularities with regard to the gold transactions committed by the officials of MMTC in connivance with private persons causing wrongful loss to a tune of Rs.194.4 Crores to MMTC and alleged the following irregularities :

“(i) That the exposure started from September 2011. However, GM, MMTC Hyderabad, vide his message dt. 14.12.2011 informed for the first time a figure of Rs.43.44 crore as exposure on account of MBS Group. The actual position was concealed in his message since the exposure stood at Rs.72.68 crore on that date itself.

(ii) MMTC, Hyderabad did not collect the mandatory 5% extra additional security for keeping the forex open.

iii) MMTC Hyderabad continued to supply gold to M/s MBS Group against BGs and FDRs without covering the exposure by taking additional securities.

iv) Debit/credit notes of huge amounts were passed without any narration.

v) Vendor account and foreign currency loan account were falsely prepared/fudged to conceal the out standings pertaining to MBS.

vi) Laid down office procedure before issue of gold on loan, was not adhered to in majority of the cases.

vii) Bank statements giving details of buyer's credit liability and forward cover certificates from the banks were manipulated/fudged to conceal the actual liability against MBS and to get the accounts cleared by the statutory auditors on 31.03.2012.

vill) that officials of MMTC Hyderabad were communicating in parallel with MBS for recovery of outstanding dues. A mail dated 02.02.2012 sent to MBS Jewellers enclosing there with a statement showing Rs.181.39 crore as recoverable from the party is indicative of the fact that RO Hyderabad deliberately concealed this exposure from the CO. GM, Hyderabad, and DGM (Fin.) vide their letter dt. 23.02.2012, confirmed to Corporate Office that all loan transactions are fully covered and overall exposure is to the tune of Rs.43.44 crore, thereby again concealing the actual liability.

ix) A quantity of 500 kg gold was taken from Standard Chartered Bank, London as Supplier's Credit for 90 days and it was issued to MBS Group in Jan. 2012 and was duly priced/fixed upto 31.03.2012 with value/payment dates in April 2012. This position of outstanding liability was not revealed in the books of accounts as on 31.03.2012. To offset the liability against this transaction, MMTC Hyderabad made outright gold sales to other parties and the money so collected was utilized to repay the earlier outstanding loans of MBS. For which outright gold sales, buyer's credit was taken in MMTC'S account, thereby deferring the payment obligation.

x) MMTC's own funds amounting to Rs.37 crore was utilized, source of which could not be traced.

xi) In April 2012, it was agreed by Corporate Office to re-commence business with M/s MBS subject to their depositing Rs. 10 crore by 24.05.2012 and Rs.5 Crore by 31.05.2012 (total cash deposit of Rs.15 crore) besides MBS depositing jewellery to cover the outstanding dues of Rs.43.44 crore. Business was to commence with infusion of fresh funds by M/s MBS Group after the deposit of Rs 10 crore which was to be adjusted against the dues. Despite these clear instructions dt 24.05.2012 of Corporate Office, MMTC Hyderabad issued 35 Kgs gold adjusting Rs.10 crore deposited towards outstanding to MBS Group on 28th and 29th May, 2012 ignoring the CO