9911796707
TMI Blog2008 (5) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... with section 13(2) of the Prevention of Corruption Act. - CRL. APPEAL NO. 906 OF 1998 - - - Dated:- 16-5-2008 - K.G. BALAKRISHNAN, R.V. RAVEENDRAN AND J.M. PANCHAL, JJ. U.U. Lalit, Jatin Zaveri, Harish J. Jhaveri, Sunil S. Kale, Satyajit Saha, Prasenjit Keswani, Nitin Sangra and V.D. Khanna for the Appellant. A. Subba Rao for the Respondent. JUDGMENT K.G. Balakrishnan, CJI. - These two statutory appeals under section 10 of the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992 (for short the said Act ) are filed by Accused Nos. 3 and 4 in Special Case No. 7/1994 being aggrieved by the Judgment and Order dated 6/7/13/14-8-1998 convicting and sentencing them. 2. These two appellants were tried along with two other accused persons by the Special Court (Trial of Offences Relating to Transactions in Securities) at Bombay and by Judgment dated 14-8-1998, these appellants were found guilty of various offences. The appellant in Criminal Appeal No. 906 of 1998 (third accused - S. Mohan) was found guilty of offence punishable under section 409, IPC and was sentenced to undergo rigorous imprisonment for seven years and a fine o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng loss of Rs. 33 crores to Canara Bank and various other allegations were also made against these accused. Accused No. 1 was the Executive Vice President and Chief Dealer, Accused No. 2 was the Asstt. Vice President and Accused No. 3 was the Asstt. Vice President and Dealer, of Canbank Financial Services Ltd. at the relevant point of time. Accused No. 4 was a Share and Securities Broker. 4. Andhra Bank is a Nationalized Bank and Andhra Bank Financial Services Limited is a company wholly owned by the Andhra Bank. Canara Bank is also a Nationalized Bank and Canara Bank Mutual Fund (CBMF) is a Trust created by the Canara Bank. The Canara Bank was the chief trustee of the trust CBMF. Canbank Financial Services Limited ( CANFINA for short) is a subsidiary company of Canara Bank. The Chairman and the Managing Director of Canara Bank was also the Chairman of Canbank Financial Services Limited. The Managing Director of CANFINA was a person deputed by Canara Bank and the Executive Director also was appointed by Canara Bank. The trust, namely, Canbank Mutual Fund under a scheme prepared by it issued units known by the name CANCIGO in the shape of credit sheets which provided a fixed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 33 crores standing in the name of Andhra Bank and Andhra Bank Financial Services Limited though there was no letter of authority or consent for such sale from either Andhra Bank or Andhra Bank Financial Services Limited. The prosecution alleged that these transactions were entered into by accused 1 to 3 on behalf of CANFINA knowing fully well that these CANCIGO Units were not transferable and the appellant Hiten P. Dalal was not competent to deal with them. The prosecution alleged that after adjusting the amount due from the appellant Hiten P. Dalal, a cheque was issued for the balance amount of Rs. 7,98,32,871 drawn in the name of Andhra Bank with a letter to the Andhra Bank to credit the proceeds of the cheque to the account of Hiten P. Dalal. The prosecution alleged that by this method the appellant Hiten P. Dalal thus got his debt to the tune of Rs. 25,01,67,129 due to CANFINA wiped out and got a sum of Rs. 7,98,32,871 from CANFINA, even though CANCIGO Units were not transferable and could not be transferred to the name of CANFINA. 7. It is in this background all the four accused were charged with having entered into a criminal conspiracy for committing the offence of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Canbank Financial Services Ltd. s case ( supra ). 9. These two appellants were found guilty by the Special Court mainly on the ground that the CANCIGO Units issued by CBMF of the face value of Rs. 33 crores stood in the name of the Andhra Bank and Andhra Bank Financial Services Limited and the appellant Hiten P. Dalal was not entitled to get transfer of these CANCIGO Units and that the appellant S. Mohan (in Criminal Appeal No. 906 of 1998) was instrumental in such transaction and thus entered into a conspiracy with the accused No. 4. Both the appellants have been found guilty of offences punishable under section 406 namely, Criminal Breach of Trust. It is important to note that, in the instant case, there was no complaint either by the Andhra Bank or the Andhra Bank Financial Services Limited that these appellants committed any criminal breach of trust. Criminal Breach of Trust has been defined under section 405 of Indian Penal Code as under : " Criminal Breach of Trust. Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or dispose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d any complaint alleging that the appellant Hiten P. Dalal acted contrary to their directions. Nor did CANFINA complain that appellant S. Mohan had committed criminal breach of trust in regard to these transactions of CANCIGO Units. This Court in Canbank Financial Services Ltd. s case ( supra ) held (at paras 38, 39, 40 and 41) as follows : "38. The Rules and Regulations framed by Canbank Mutual Fund in relation to the issuance of CANCIGO certificates do not have any statutory backing. The CANCIGO s had a lock-in period of one year which means that the holder thereof must not encash the securities within the aforementioned period. The question as regards the non-transferability of the units will have to be construed upon reading the Scheme in its entirety and in particular Condition 22 thereof, in terms whereof the trustees were not required to maintain any register of CANCIGO-holders. In terms of Condition 24, the person whose name is shown in a CANCIGO certificate would be the only person to be recognized by the trustees as the holder of such CANCIGO and as having any right, title or interest in or to such securities. No trust created was also to be recognized. 39. Conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is clear for all practical purposes that the CANCIGO Units worth Rs. 33 crores were purchased by the appellant Hiten P. Dalal and he transferred these units to CANFINA and CBMF did not raise any objection in respect of transfer of the CANCIGO Units by the appellant Hiten P. Dalal. If at all, it was for the CBMF to raise any objection but they did not raise any objection for the transfer of the CANCIGO Units. It has been held by this Court in Canbank Financial Services Ltd. s case ( supra ) that the custodian was not entitled to get the value of the CANCIGO Units and that the CANFINA had a just right to possess the CANCIGO Units to the exclusion of Hiten P. Dalal. It is also not in dispute that CANFINA had succeeded in getting the proceeds of these CANCIGO Units. Therefore, no offence of Criminal Breach of Trust is committed by the appellant Hiten P. Dalal. He has not acted contrary to the direction of any person who has entrusted these units to him and it is proved that it was the appellant Hiten P. Dalal himself who was the apparent owner of these units. 12. As regards appellant S. Mohan who was one of the Asstt. Vice- Presidents of CANFINA, the prosecution case is that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ANFINA had initiated any disciplinary proceedings against him. They have also not disputed the genuineness of the CANCIGO Units which were got encashed by the appellant Hiten P. Dalal. 13. The Managing Director of CANFINA (K.N. Kamath) was examined as PW 16. He admitted that CANFINA did not file any complaint with CBI regarding purchase of CANCIGO Units of Rs. 33 crores; that according to CANFINA, the CANCIGO Units were purchased for valuable consider- ation in the normal course of business; that CANFINA stood by the transactions of purchase of CANCIGO Units of Rs. 33 crores; that CANFINA was not induced to purchase the CANCIGO Units of Rs. 33 crores by any false representation. 14. In the circumstances, no ingredient of criminal breach of trust is made out against either of the appellants. 15. The prosecution also could not prove any conspiracy by these accused persons to commit any criminal acts. So long as there was no such evidence, the offence of conspiracy is not proved against these appellants. 16. The appellant Hiten P. Dalal has been found guilty for the offence punishable under section 411 alleging that he dishonestly received the stolen property or retain ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
