2003 (1) TMI 560 - SC - Companies Law

Criminal breach of trust by public servant, or by banker, merchant or agent, Criminal misconduct by a public servant, Criminal Conspiracy

Summary

Issues Involved:
1. Criminal conspiracy
2. Misappropriation of funds
3. Forgery and use of forged documents
4. Abuse of public office
5. Dishonest misappropriation of public funds

Detailed Analysis:

1. Criminal Conspiracy:
The prosecution alleged that A-1, A-2, A-3, A-4, and A-5 entered into a criminal conspiracy to siphon off funds from Maruti Udyog Limited (MUL) to A-5. The Special Court found that the conspiracy was hatched between April-May 1989, but the Supreme Court found this evidence unreliable. The prosecution's version of conspiracy from January 1991 to May 1991 was not proven, and there were no circumstances to infer conspiracy from the transactions. The evidence indicated that the transactions were part of a commercial practice adopted by banks and PSUs. Consequently, the charge of criminal conspiracy under Section 120B IPC was not established.

2. Misappropriation of Funds:
The prosecution argued that A-1 and A-2 misappropriated funds by making them available for A-5, violating MUL's policy of investing only with PSUs. The Supreme Court noted that the transactions were approved by the sub-committee and the Board of MUL, and there was no loss to MUL. The funds were invested through UCO Bank, and the interest rates were higher than usual, indicating a commercial transaction. The court found no evidence of dishonest misappropriation by A-1 and A-2.

3. Forgery and Use of Forged Documents:
A-3 was charged with forging documents, including letters and Bank Receipts (BRs), to facilitate the transactions. The Supreme Court found that the issuance of BRs was a common practice, and there was no evidence that BRs were issued without sufficient security. The letters written by A-3 did not indicate that UCO Bank was selling units to MUL. The court concluded that A-3 did not commit forgery as defined under IPC.

4. Abuse of Public Office:
A-1, A-2, A-3, and A-4 were charged under the Prevention of Corruption Act for abusing their positions to benefit A-5. The Supreme Court found no evidence that these officials gained personally from the transactions or that they acted with dishonest intent. The transactions were part of MUL's investment policy, and the officials acted within their authority.

5. Dishonest Misappropriation of Public Funds:
A-5 was accused of misappropriating funds by taking loans from MUL through UCO Bank. The Supreme Court found that A-5 repaid the loans with interest, and the transactions were backed by UTI units. There was no evidence of misappropriation or loss to MUL. The court held that A-5 did not commit the offense of dishonest misappropriation under Section 403 IPC.

Conclusion:
The Supreme Court acquitted A-1, A-3, and A-5 of all charges, finding no evidence of conspiracy, misappropriation, forgery, or abuse of public office. The transactions were deemed commercial practices, and there was no loss to MUL or UCO Bank. The appeal against A-2's acquittal was dismissed, and A-4 was also acquitted. The convictions of A-1, A-3, and A-5 were set aside, with A-1 and A-3's sentences reduced to the period already undergone.