2024 (10) TMI 795 - SC - Indian Laws

Conspiracy and misconduct in sanctioning credit facilities - HELD THAT - Perhaps the only material that creates suspicion is the speed with which the proposal of the Company was sanctioned. As far as the respondent is concerned, considering his position and the role ascribed to him in the grant of sanction to the loan proposal of the Company, mere suspicion against him is not enough to frame a charge against him. The proposal had passed through the Loan Advisory Committee which recommended the same. The proposal was placed before the respondent on 10th August 2010. As the credit proposal was beyond the sanctioning authority of the respondent, it was directed to be placed before the Management Committee. Apart from the Loan Clearance Committee, the proposal was approved by the Bank's Chief General Manager (Credit). The respondent's role started with signing the Memorandum after it was approved by the Chief General Manager (Credit) and the Executive Director. A perusal of the Memorandum placed before the respondent for sanction showed that as many as 14 Public Sector Banks were lending to the Company apart from an international private sector bank - No material is placed on record to show that any of the accused other than bank officials ever met the respondent before the sanction of the proposal by the Management Committee. Only because the entire proposal was processed and cleared within a short span of time, no offence is made out against the respondent. Taking the material in the charge sheet as it is, complicity of the respondent is not made out. There are no scope to interfere with the impugned order - appeal dismissed.

Issues Involved:

1. Validity of the High Court's decision to discharge the respondent.
2. Allegations of conspiracy and misconduct in sanctioning credit facilities.
3. Role and complicity of the respondent in the alleged offenses.

Issue-wise Detailed Analysis:

1. Validity of the High Court's Decision to Discharge the Respondent:

The primary issue before the Supreme Court was whether the High Court was correct in discharging the respondent, accused no.7, from the charges framed against him. The High Court had discharged the respondent on the grounds that no case was made out to proceed against him based on the material in the charge sheets. The appellant, CBI, challenged this decision, arguing that the High Court conducted a "minitrial" at the stage of framing the charge, which was not permissible. The Supreme Court examined the charge sheet, witness statements, and other materials to determine if the High Court's decision was justified. Ultimately, the Supreme Court found no reason to interfere with the High Court's decision, as the material did not sufficiently implicate the respondent in the alleged conspiracy and misconduct.

2. Allegations of Conspiracy and Misconduct in Sanctioning Credit Facilities:

The allegations centered around the sanctioning of credit facilities by the Bank to the Company, which included a short-term loan, a letter of credit, and export packing credit facilities. It was alleged that the respondent, in conspiracy with other accused, facilitated the sanctioning of these facilities without proper appraisal and due diligence, leading to a significant financial loss to the Bank. The CBI argued that the respondent's actions amounted to criminal misconduct under Section 13(1)(d) of the Prevention of Corruption Act, 1988. However, the Supreme Court noted that the allegations against the respondent were primarily based on the speed of the sanctioning process and that mere suspicion was not enough to frame a charge against him. The proposal had passed through the Loan Advisory Committee and was approved by senior bank officials, which weakened the conspiracy allegations against the respondent.

3. Role and Complicity of the Respondent in the Alleged Offenses:

The Supreme Court scrutinized the role of the respondent, who was the Chairman and Managing Director of the Bank at the relevant time. The Court noted that the respondent's involvement was limited to signing the Memorandum after it was approved by the Chief General Manager (Credit) and the Executive Director. The respondent participated in the Management Committee meeting that approved the proposal, but there was no evidence that he had any prior meetings or interactions with the other accused. The Court emphasized that the mere fact that the proposal was processed quickly did not establish the respondent's complicity in any criminal activity. The Court concluded that the material on record did not make out a case against the respondent, and thus, the High Court's decision to discharge him was upheld.

In conclusion, the Supreme Court dismissed the appeal, affirming the High Court's decision to discharge the respondent, while clarifying that the judgment was limited to the respondent's role and did not affect the trial against the other accused persons.

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