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2021 (12) TMI 1490 - SC - Indian LawsFraudulent and unlawful withdrawal from bank account - Unauthorised premature encashment of the two FDRs - whether a case is made out for interference by this Court in the concurrent findings of the Courts below? - whether conviction of the present Appellant for offences Under Sections 409, 420 and 477-A of the Indian Penal Code as well as Under Section 13(2) read with Section 13(1)(d) of the PC Act is sustainable? Fraudulent and unlawful withdrawal of Rs. 10 Lakhs from Account No. 282 in the year 1994 - HELD THAT - In order to substantiate the charge Under Section 477-A Indian Penal Code, the primary contention of the Prosecution is that despite passing the three cheques (Ex P25 to Ex P27), the Appellant did not make the relevant entries into the Current Account Ledger (Ex P23) of account No. 282. This was allegedly done to conceal the withdrawals as there were insufficient funds in the account of the Academy. We may note that the expression 'intent to defraud' as given Under Section of 477-A, contains two elements, deceit and injury. So far as the second element is concerned, it has already been noted that no financial injury was caused to the Bank. It is also alleged that the afore-said amount of Rs. 10 lakh was collected by the Appellant. The prosecution witnesses have deposed that the operating procedure at the Bank entailed that the signature of the person who received the cheque would be recorded on the back side of the cheque. Two incriminating circumstances have come on record in so far as this allegation is concerned. First, as deposed by PW-2, and corroborated by PW-10, the signature on the back of the cheque did not tally with that of Accused No. 3. Second, the signature of the wife of the Appellant- N. Lalitha, appears on the back of Ex. P25. Undoubtedly, this raises a suspicion. But as can also be seen from the record, there are contradictions on this point as well. PW-4 has acknowledged that the payment for the three cheques was received by the Appellant and he subsequently handed over the same to Accused No. 3, who at the relevant time, was waiting in the office room of the Appellant. Further, neither of the courts below have recorded a finding that the Appellant gained any pecuniary benefit nor is there any other adverse circumstance which may lead us to reach such a conclusion. Unauthorised premature encashment of the two FDRs belonging to B. Satyajit Reddy - HELD THAT - In the case in hand, the Appellant in his examination Under Section 313 Code of Criminal Procedure has neither disputed the factum of the premature withdrawal, nor of the subsequent transfer of the amount to account No. 282. On the contrary, he has specifically claimed that he only acted on the written request made by the customer. The Appellant has fortified his assertion by producing two letters (Ex P6 and Ex P7) statedly written by B. Satyajit Reddy and addressed to the Branch Manager. The deposition of the handwriting expert (PW-10) has given some credence to the Appellant's version as according to his opinion, both the letters bear the signature(s) of B. Satyajit Reddy. There is a serious dispute on the factum of whether or not B. Satyajit Reddy had sought the premature withdrawal and the subsequent transfer of the proceeds of FDRs to the account of Academy. The best person to clear the air and enlighten us would have been B. Satyajit Reddy himself, but neither was he associated during the course of inquiry/audit or the investigation nor was he examined as a prosecution witness in the trial - There was, thus, sufficient time to contact a valuable customer like B. Satyajit Reddy and enquire about the genuineness of those letters. The Chairman of the Bank (PW-1) in his complaint to CBI dated 27.11.1995 (Ex P1) did not make even a bald allegation about genuineness of these two letters which were already in his possession. Unfortunately, CBI too made no effort to contact B. Satyajit Reddy and ascertain the correct facts. There is indeed no quarrel that no financial loss was caused to B. Satyajit Reddy. The Prosecution has failed to establish the charge of criminal breach of trust against the Appellant beyond a reasonable doubt. We are inclined to agree with the learned Senior Counsel for the Appellant that the non-examination of B. Satyajit Reddy has been materially fatal to the case of the prosecution - in the absence of cogent and unimpeachable evidence to prove that the Appellant has misappropriated the funds of the Bank and/or of B. Satyajit Reddy, it would not be safe to convict him under the provisions of Section 409 Indian Penal Code. So far as the charge Under Section 420 Indian Penal Code is concerned, once again, the best and the only person who could throw light on whether or not he had voluntarily agreed to transfer his FDR amount in the account of the Academy or there was an element of inducement, cheating or a false promise, was B. Satyajit Reddy himself who has chosen not to enter the witness box. In the absence of even an ordinary complaint by B. Satyajit Reddy regarding misuse of his FDRs, it will be too far-fetched to hold that the Appellant had any mens rea to deceive or to misappropriate or destroy valuable property of B. Satyajit Reddy. Thus, to conclude, no financial loss was caused to the Bank - no pecuniary loss was caused to B. Satyajit Reddy or to any other customer of the Bank - the material does not disclose any conspiracy between the Accused persons. In the absence of any reliable evidence that could unfold a prior meeting of minds, the High Court erred in holding that Appellant and other Accused orchestrated the transactions in question to extend an undue benefit to Accused No. 3 - the Appellant committed gross misconduct by misusing his position as the Branch Manager. Notwithstanding the final outcome, the Appellant's abuse of powers clearly put the Bank at the risk of financial loss - despite dereliction of his duties, none of the acts proved against the Appellant constitute 'criminal misconduct' or fall under the ambit of Sections 409, 420 and 477-A Indian Penal Code. Thus, the prosecution has failed to prove the charges Under Sections 409, 420 and 477A Indian Penal Code against the Appellant beyond reasonable doubt. As a necessary corollary thereto, his conviction Under Section 13(2) read with Section 13(1)(d) of the PC Act can also not be sustained. However, the benefit of doubt being extended to him on account of a thin margin between 'strong suspicion' and 'conclusive proof', shall not entitle him to initiate a second round of lis to seek his reinstatement or to claim other service benefits from the Bank. Appeal disposed off.
Issues Involved:
1. Whether the appellant committed criminal breach of trust under Section 409 IPC. 2. Whether the appellant committed cheating under Section 420 IPC. 3. Whether the appellant falsified accounts under Section 477A IPC. 4. Whether the appellant committed criminal misconduct under Section 13(2) read with Section 13(1)(d) of the PC Act. Detailed Analysis: 1. Criminal Breach of Trust (Section 409 IPC): The prosecution must prove that the appellant, a public servant or banker, was entrusted with property and committed criminal breach of trust. The court held that the appellant, as Branch Manager, was entrusted with the bank's funds. However, the evidence did not conclusively prove that he misappropriated or dishonestly used the funds. The prosecution failed to establish that the appellant's actions caused financial loss to either the bank or the depositor, B. Satyajit Reddy. The non-examination of B. Satyajit Reddy was deemed materially fatal to the prosecution's case. Thus, the charge under Section 409 IPC was not sustained. 2. Cheating (Section 420 IPC): To establish cheating, the prosecution must prove deception and dishonest inducement to deliver property. The court found no evidence that the appellant deceived B. Satyajit Reddy or induced him to transfer his FDR amounts to the academy's account. The appellant produced letters purportedly from B. Satyajit Reddy authorizing the transactions, and the handwriting expert confirmed their authenticity. The absence of any complaint from B. Satyajit Reddy further weakened the prosecution's case. Consequently, the charge under Section 420 IPC was not substantiated. 3. Falsification of Accounts (Section 477A IPC): The prosecution alleged that the appellant falsified bank records to conceal unauthorized withdrawals. However, the court noted discrepancies in the prosecution's evidence. While the current account ledger did not reflect certain transactions, other ledgers maintained by the bank did. The prosecution's failure to produce these ledgers in court created a reasonable doubt. Additionally, the court found no evidence of deceit or intent to defraud. Therefore, the charge under Section 477A IPC was not proven. 4. Criminal Misconduct (Section 13(2) read with Section 13(1)(d) of the PC Act): The prosecution alleged that the appellant obtained pecuniary advantage through corrupt or illegal means. The court held that the appellant's actions, while constituting gross misconduct, did not amount to criminal misconduct under the PC Act. The evidence did not demonstrate that the appellant derived any personal benefit or caused financial loss to the bank. The court emphasized that suspicion, however strong, could not replace conclusive proof. As a result, the charge under the PC Act was not sustained. Conclusion: The court concluded that the prosecution failed to prove the charges under Sections 409, 420, and 477A IPC, as well as Section 13(2) read with Section 13(1)(d) of the PC Act, beyond a reasonable doubt. The appellant's conviction was overturned, and he was acquitted of all criminal charges. However, the court upheld the appellant's dismissal from service for gross departmental misconduct, emphasizing that the standard of proof in a domestic inquiry differs from that required for criminal conviction. The appeal was disposed of, and the appellant's bail bonds were discharged.
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