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TMI Blog2009 (8) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... loss and suffering occasioned thereby was immeasurable. Thus to hold accused Nos. A1 to A3 and A6 guilty of criminal misconduct under section 13(1)(d)( iii) of the Prevention of Corruption Act. X X X X Extracts X X X X X X X X Extracts X X X X ..... e carried out in connivance with the officials of the Financial Institutions, Banks illegally as a result whereof late Harshad Mehta was allowed to obtain a sum of Rs. 40 crores which was actually 'Call Money' given as a loan by the National Housing Bank to the UCO Bank. 7. Similar illegal transactions relating to Government securities and other non-Governmental securities came to the notice of the Central Government. A Committee commonly known as 'Janakiraman Committee' was thereafter constituted, Shri R. Janakiraman, the then Deputy Governor of Reserve Bank of India was appointed as its Chairman. The Committee submitted its report between May, 1992 and April, 1993. On the basis of the report of the said Committee, Special Courts were constituted in terms of The Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1993. 8. Allegations against the appellants and late Harshad Mehta were as under :- On 6-4-1992 National Housing Bank lent a sum of Rs. 40 crores 'at call' to UCO Bank. However the said amount was credited to Harshad Mehta's account in UCO Bank, Hamam Street Branch, Mumbai. This was allegedly done under the instructions of the Head Office in C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sachdeva, Under Secretary in the Ministry of Finance in Banking Division 5.Shri Hiten D. Mehta, Employee of late Shri Harshad S. Mehta 6.Shri N.A. Shivraman, Assistant, Funds Department, National Housing Bank 7.Shri Sunil Pandurang Gondhale, Peon, National Housing Bank 8.Jeroo Dalal, Management Trainee, ANZ Grindlays Bank 9.Shri Satish D. Hosangadi, Chief General Manager, National Housing Bank. 10.Mrs. Jyoti R. Patankar, Officer, Reserve Bank of India Production Witness 11.Sujata Milind Nimbalkar, ANZ Grindlays Bank Production Witness 12.Shri Sunil Kakkar, Assistant Chief Officer, UCO Bank, Head Office, Kolkata. 13.Shri Chinmoykumar Mukherjee, Assistant Chief Officer, UCO Bank, Kolkata 14.Shri K. Vijayan, Manager, Accounts Department, D.N. Road Branch, UCO Bank 15.Shri Manohar C. Rupani, Assistant Manager, D.N. Road Branch, UCO Bank 16.Neelam P. Kini, Clerk, Hamam Street Branch, UCO Bank. 17.Shri K. Mallikarjunan, Officer, UCO Bank, Head Office, Kolkata 18.Shri Pradeep A. Karkhanis, Senior Manager, UCO Bank, Hamam Street Branch 19.Shri Sitaram Premaram Paladia, Supdt. of Police, C.B.I. 20.Shri P.K. Mankar, Dy. S.P., C.B.I. 12. For proving ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 6, C. Ravi Kumar, was a dealer with NHB. The prosecution relied upon the deposition of PW-3, Ravi Vira Gupta to prove the order of sanction, validity whereof is in question. The prosecution for proving charge against him relied upon the deposition of PW-5, Hiten D. Mehta, who was working with late Harshad Mehta. Reliance by the prosecution has also been placed on the evidence of PW-6, Shri N.A. Shivraman, who was working as Assistant, Funds Department, NHB from 27-1-1991 to 31-12-1991. Reliance has also been placed in this behalf on the deposition of PW-9, Shri Satish D. Hosangadi, who at the relevant time was the Chief General Manager of NHB. 16. For proving the charges against accused No. 7, the prosecution has relied upon the depositions of PW-6, Shri N.A. Shivraman and PW-9, Shri Satish D. Hosangadi. 17. Accused Nos. 1 to 3 and 6 and 7 were public servants. 18. Orders of sanction for their prosecution were passed by the competent authorities. Accused Nos. 6 and 7 challenged the validity of the said orders of sanction before the courts below. 19. All the accused persons had been charged for commission of offences punishable under section 120B read with section 409 and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mnathan came to the Hamam Street Branch and insisted on starting the transactions immediately. He also states that accused No. 3 said that he is saying so on instructions from accused No. 1. This shows that accused No. 3 knew that on that day N.H.B. was to route Rs. 40 crores to Harshad Mehta through the UCO Bank and he had gone to the UCO Bank Hamam Street Branch to see that the transaction goes through and that he did so on instruction from the accused No. 1, K. Margabandhu. The Supreme Court has clearly laid it down in the case of Somnath Thapa referred to above that for establishing conspiracy knowledge about indulgence in illegal act is necessary. So far as accused No. 1 is concerned, from the statements that he made in the meeting on 6-4-1992 it is clear that he knew about the transaction. (The dispute about the time of the meeting raised by accused No. 1 is really not relevant considering the means of communication available and the written submissions filed by him, where he says that this was a routine routing transaction). So far as accused No. 2 is concerned, it is he who authorized the call money transaction though the amount of Rs. 40 crores was not needed by the UCO Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said provisions have been proved. 20.7 The learned Special Court also negated the contention of accused Nos. 6 and 7 that the order of sanction passed against them are not valid. Submissions 21. The principal contentions raised on behalf of the appellants are :- (1)That the prosecution case even if taken to be correct in its entirety does not disclose any offence of conspiracy. (2)So far as accused Nos. 1 and 2 are concerned they were stationed at Kolkata. Only because they had held a meeting in the Chamber of accused No. 1 in presence of PWs 12 and 13, the same by itself does not prove that they were party to a larger conspiracy, namely use of call money for causing unlawful gain to late Harshad Mehta. (3)The charges of conspiracy vis-a-vis criminal breach of trust cannot be said to have been proved as even in terms of section 14 of the National Housing Bank Act, such a transaction was legally permissible. (4)Only because the accused No. 3 was present at the Bank and wrote a letter for reviving the account of Late Harshad Mehta, the same by itself does not prove that he was a party to the conspiracy. (5)If the prosecution case that there had been a larger conspiracy bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only because he had visited the banks and/or was in touch with some of their officers for the purpose of ascertaining the position of accounts of Mehta. (15)Accused No. 6 merely being signatory to the cheque of Rs. 40 crores issued in favour of UCO Bank which has been cleared by the Reserve Bank of India cannot be presumed to have any knowledge of diversion of the said amount by the officers of UCO Bank in the account of Late Harshad Mehta and the purported refund of the said amount with interest by him through ANZ Grindlays Bank, and as such he cannot be said to have committed the offence of conspiracy. (16)Accused No. 7 merely being an Assistant Manager and having discharged his functions acting under the directions of accused No. 6 and other higher officers cannot be said to have committed any offence as alleged or at all. (17)Departmental proceedings having not been initiated by the employers and neither the UCO Bank nor the NHB having suffered any loss, the judgment of conviction for criminal breach of trust is wholly unsustainable. (18)The learned Special Court having not assigned any reason and having not discussed the materials brought on record in details, must be hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 5 on the date of the said transaction. (5)Accused Nos. 6 and 7 had not only been a party to the entire transaction but also manipulated other documents, and in particular, the vouchers, which clearly show that they not only had the requisite knowledge that the amount of Rs. 40 crores had to be diverted to the account of Late Harshad Mehta but also the fact that the said amount would be returned with interest by him through ANZ Grindlays Bank. (6)The purported contradiction in regard to absence of accused No. 1 from the office of UCO Bank on 6-4-1992, and also the timing of meeting the same does not affect the prosecution case, namely the commission of offence of conspiracy by all of them, as it has been established that the cheque issued by the NHB was never intended to be utilised as call money. (7)Accused No. 2, in fact, in his written statement in unequivocal terms admitted before the Special Court that the transaction involved was a routing transaction, absolutely transparent and clear transaction in ordinary course of nature, stated that had the scam not been attributed to Harshad Mehta, nobody would have raised eye brows thereabout and, thus, admitted that the routing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty Manager/s 10.Assistant Manager UCO Bank 28. UCO Bank is a nationalized bank having been taken over in terms of the provisions of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. Its head office is at Calcutta. Amongst others it has two branches in Bombay - one at D.N. Road and other at Hamam Street. 29. Functions of the scheduled banks are governed by the provisions of the Banking Companies Act, 1936. UCO Bank is one of the fourteen banks which was nationalized. The administrative hierarchy of UCO Bank is as under: 1.Chairman & Managing Director 2.Executive Director 3.General Manager (Scale VII) 4.Dy. General Manager (Scale VI) 5.Asstt. General Manager (Scale V) 6.Officer in (Scale IV) 7.Officer in (Scale III) 8.Officer in (Scale II) 9.Officer in (Scale I) Call Money - The Legal History 30. The statute relating to business in Banking was the Bankers Book Evidence Act, 1891. In 1936 Banking Companies Act, 1936 was enacted which was also known as Indian Companies (Amendment) Act, 1936 wherein Part XA was inserted providing for far reaching effects on the banking legislations. Subsequently, the Banking Regulation Act, 1949 (1949 Act) was e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance with the Bank falls short of the prescribed minimum, and if during the next succeeding fortnight, such average daily balance is still below the prescribed minimum, the rates of penal interest shall be increased to a rate of five per cent, above the bank rate in respect of that fortnight and each subsequent fortnight during which the default continues on the amount by which such balance at the Bank falls short of the prescribed minimum." 32. Section 42 also provides for penalties. It is, thus, mandatory in character. 33. Maintenance of 'cash reserve ratio' is, therefore, a statutory requirement. The consequence of non-compliance thereof has been provided for in sub-section (3) and (3A) of section 42 which was brought into the statute book by Act 38 of 1956 which came into force from 6-10-1956. 34. In terms of the said provision each bank is to maintain, what is known as, 'Cash Reserve Ratio' (CRR) every day. It is accepted at the bar that where a bank having an excess amount would like to invest the same so as to enable it to earn interest, those who fall short of 'cash reserve ratio' would be under a statutory obligation to borrow the same so as to maintain the 'cash re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sits, cash certificates etc. 40. "Call money" transactions are thus indisputably banking transactions. It is no doubt true that in the event any irregularity is committed, the Reserve Bank of India would be entitled to take action against the erring Bank. Jurisdiction of the Special Courts 41. During the period April, 1992 and June, 1992 certain large scale irregularities and malpractices were detected in transactions of both Governmental and other securities, carried out by some brokers in collusion with the employees of various Banks and Financial Institutions. To have a more close look into the matter the RBI appointed a committee under the chairmanship of the then Deputy Governor of RBI, Shri R. Janakiraman ("the Janakiraman Committee"). The committee submitted its report between May, 1992 and April 1993. On the basis of the said report and to deal with the situation as also to ensure the speedy recovery of the huge amount involved the Parliament enacted the Special Court (Trial of Offences Relating to Transaction in Securities) Act, 1992 ("the Special Courts Act"), establishing the Special Court, from whose judgment this appeal arises. 42. The learned counsel for the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or other body corporate; (ii )Government securities; and (iii)rights or interests in securities;" [Emphasis added] 46. Section 4 of the Act gives the Custodians the requisite power to cancel certain contracts entered into fraudulently and/or to defeat the provisions therein. Section 5 of the Act provides for the establishment of a special Court with a sitting judge of a High Court for speedy trial of such offences. Section 6 empowers the Special Court to take cognizance or try such cases as are instituted before it. 47. Section 7, which is of relevance in determining the present issues before us, defines the jurisdiction of the Special Courts in criminal matters. It reads as under : "7. Jurisdiction of Special Court.--Notwithstanding anything contained in any other law, any prosecution in respect of any offence referred to in sub-section (2) of section 3 shall be instituted only in the Special Court ...." [Emphasis supplied] 48. The said section begins with a non obstante clause providing that the Special Court shall have jurisdiction to try matters in respect of the offences referred to in section 3(2) of the Act. 49. The definition of 'securities' in the Act is an inclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Criminal Procedure provides that all offences under the Indian Penal Code shall be investigated and tried as per the provisions of the Code. The same, however, would be subject to special provisions to the contrary. Section 5 of the Code of Criminal Procedure contains a saving clause in terms of which the jurisdiction of special legislations is saved. The Jurisdiction of the Special Court was required to be determined with reference to the said provision. The Act is a special Act. The section conferring jurisdiction on the Special Courts under the Act contains a 'Non Obstante' clause. It, thus, prevails over any other Law. [See Solidaire India Ltd. v. Fairgrowth Financial Services Ltd. [2001] 30 SCL 59 (SC). 56. The Jurisdiction of the Special Court may be invoked when an offence committed relate to transactions in securities; the logical corollary whereof would be that all parties connected in diverting the funds of the public sectors and/or financial institutions would also come within the purview thereof. For considering the provisions of the said Act, it has to be borne in mind the object and purport thereof. We have noticed here to before that the Reserve Bank of India con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'pertaining to'), is a very broad expression which presupposes another subject-matter. These are words of comprehensiveness which might both have a direct significance as well as an indirect significance depending on the context.... In this connection reference may be made to 76 Corpus Juris Secundum at pages 620 and 621 where it is stated that the term 'relate' is also defined as meaning to bring into association or connection with. It has been clearly mentioned that 'relating to' has been held to be equivalent to or synonymous with as to 'concerning with' and 'pertaining to' the expression 'pertaining to' is an expression of expansion and not of contraction." [Emphasis supplied] (p. 328) 60. These lines were also quoted with approval in T.N. Kalyana Mandapam Association v. Union of India [2004] 5 SCC 632. (See also Bismag v. Amblins (Chemists) [1970] 3 All ER 1053 (QB) and Re National Federation of Retail Newsagents', Booksellers' & Stationers Agreement (Nos. 3 & 4) [1971] 1 WLR 408.) 61. Regard, therefore, in the matter of establishing and constitution of the Special Court must also be had to the object of creating the Special Courts. 62. In Minoo Mehta v. Shavak D. Mehta [19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was passed by the Chairman-cum-Managing Director of NHB, Shri R.V. Gupta, who has been examined as PW 3. The relevant portion of the order granting sanction reads as under :-- "And whereas, I R.V. Gupta, Chairman National Housing Bank, being the Authority competent to remove the said Shri C. Ravi Kumar from office, after fully and carefully examining the materials and investigation report in regard to said allegations and circumstances of the case, consider that the said Shri C. Ravi Kumar should be prosecuted in the Court of Law of competent jurisdiction for the said offences. Now therefore, I.R.V. Gupta, Chairman National Housing Bank, do hereby accord sanction under section 19(1)(c) of Prevention of Corruption Act, 1988 for prosecution of the said Shri C. Ravi Kumar for the said offences and any other offence punishable under other provisions of law in respect of the acts aforesaid and for taking cognizance of the offences by the Court of competent jurisdiction." 67. It is contended by accused No. 6, C Ravi Kumar that he had come to NHB on deputation from the RBI, and therefore the conditions of his service were governed by the RBI regulations and not those of NHB Act. Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or order passed by a special judge shall be reversed or altered by a court in appeal, confirmation or revision on the ground of the absence of, or any error, omission or irregularity in, the sanction required under sub-section (1), unless in the opinion of that court, a failure of justice has in fact been occasioned thereby;... Explanation.--For the purpose of this section.-- (a )error includes competency of the authority to grant sanction;..." [Emphasis supplied] 72. What has been challenged here before us by both the accused is in fact the competence of the sanctioning authority to issue sanction orders against them. As per the said section, 'a finding' or a 'sentence' shall not be reversed by a court of appeal on the ground of any error, omission or irregularity in the sanctioning order unless a failure of justice has been occasioned thereby. In our considered opinion even if we assume for the sake of argument that the Chairman-cum-managing director of NHB, Shri R.V. Gupta was not the competent authority to pass the orders of sanction against the officials of NHB, the prosecution could still rely on the said section 19(3) of the Act; especially since there has been no failu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n AIR 1956 SC 66, this Court held that the Commission appointed under the Public Servants (Inquiries) Act, 1850, was not a court within the meaning of the Contempt of Courts Act, 1952. [See also Ram Krishna Dalmia v. S.R. Tendolkar AIR 1958 SC 538, Puhupram v. State of Madhya Pradesh [1968] MPLJ 629 and Sham Kant v. State of Maharashtra [1992] Suppl. 2 SCC 521. 77. Accordingly, the Janakiraman committee report was not admissible in evidence. The report in terms of the provisions of the Evidence Act, 1872 is not a judgment. The report may facilitate investigation but cannot form basis of conviction and sentencing of the accused. For the said purpose the report was wholly inadmissible in evidence. Criminal conspiracy 78. It would now be appropriate to deal with the offence of criminal conspiracy of which all the appellants herein have been charged with and convicted of. It is alleged by the prosecution that K. Margabandhu (A 1), R. Venkatkrishnan (A-2) and S.V. Ramanathan (A 3), who all were at the relevant time officials of UCO Bank, along with C. Ravikumar (A 6) and S. Suresh Babu (A 7), both of whom were at the relevant time officials of the National Housing Bank, at the behest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances in which the offences have been committed and the level of involvement of the accused persons therein are relevant factors. For the said purpose, it is necessary to prove that the propounders had expressly agreed to or caused to be done the illegal act but it may also be proved otherwise by adduction of circumstantial evidence and/or by necessary implication. See Mohammad Usman Mohammad Hussain Maniyar v. State of Maharashtra [1981] 2 SCC 443. 85. The following passage from Russell on Crimes (12th Edn. Vol. 1) referred to by Jagannatha Shetty, J. in Kehar Singh v. State (Delhi Administration) [1988] (3) SCC 609 at 731 brings out the legal position succinctly : "The gist of the offence of conspiracy then lies, not in doing the act, or effecting the purpose for which the conspiracy is formed, nor in attempting to do them, nor in inciting others to do them, but in the forming of the scheme or agreement between the parties. Agreement is essential. Mere knowledge, or even discussion, of the plan is not, per se enough." 86. It was further noted in that case that to establish an offence of criminal conspiracy 'it is not required that a single agreement should be enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial evidence, usually both the existence of conspiracy and its objects have to be inferred from the circumstances and the conduct of the accused, stating : "101. One more principle which deserves notice is that the cumulative effect of the proved circumstances should be taken into account in determining the guilt of the accused rather than adopting an isolated approach to each of the circumstances. Of course, each one of the circumstances should be proved beyond reasonable doubt. Lastly, in regard to the appreciation of evidence relating to the conspiracy, the Court must take care to see that the acts or conduct of the parties must be conscious and clear enough to infer their concurrence as to the common design and its execution. 90. In Ram Narain Poply (supra), this Court noted : "...Law making conspiracy a crime is designed to curb immoderate power to do mischief which is gained by a combination of the means. The encouragement and support which co-conspirators give to one another rendering enterprises possible which, if left to individual effort, would have been impossible and furnish the ground for visiting conspirators and abettors with consign punishment...." (P. 287) (S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Instructions in this respect were given by the treasury and investment department head office, Kolkata by the General Manager to the DN Road branch in Bombay. .... Mr. Venkatkrishnan, General manager used to take decisions after knowing the requirement, the rate of interest etc. The call money transactions are authorized by him and are recorded in a register known as call money register." 95. Such a power had been conferred upon various officers to deal with call money transactions. Indisputably, Accused No. 2 was one of them. Although, those various other officers might have been taking decisions in this behalf, but there is no reason to disbelieve P.W. 12 that ordinarily Accused No. 2 used to take a decision. 96. For the purpose of exercise of power furthermore it may not be necessary that he would be given instructions only by Accused No. 2 and no other. If he had been given instructions in this behalf from time to time by the Assistant General Manager or Assistant Manager, the same would not necessarily mean that Accused No. 2 was not exercising his power. 97. P.W. 13 in his evidence categorically stated that Mr. Mallikarjunan (P.W. 17) would take instructions from all the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. The entries in Call Money Authorization register would be made subsequently by Sunil Kakkar and register would be signed by Venkatkrishnan. I am shown the register [...] These are in the handwriting of Mr. Kakkar and signed by Venkatkrishnan. [...]" 101. With respect to the said chit in which Mr. Mallikarjun had noted down the details regarding the call money transaction after receiving information from A2 [Mr. Venkatkrishnan], he further stated : "On this sheet, I wrote the names, Can Mutual, SB Saurashtra, and SBH, with the amounts and interest against them as 21 crores. Can Mutual 23 per cent, 30 crores Saurashtra at 26 per cent and 50 crores SB Hyderabad at 26 per cent and these three were totalled after drawing a line below it and the total of 101 crore was written. Thereafter I wrote NHB and against that 40 crore and 26 per cent and again after drawing line the total of 141 crores is made. Exactly I do not remember what happened but I can say that [K. Venkatkrishnan (A2)] must have told me three names of the banks and there figures and after totalling, he must have told the fourth name and the figure which is added and the amount is retotalled but I say that I noted down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . These figures are collected from a slip of paper given to me by Assistant general manager Mr. Mallikarjun. The signature of the Assistant General Manager on this document signifies that he has noted the daily funds position as mentioned in the sheet." 107. He, upon making entries with regard to the said transaction in the register, in his deposition, stated : "11. [...] I am shown the entry of 6-4-1992. The entry reads as borrowing transaction on 6-4-1992 call money of can bank mutual fund 21 crores payable next date, i.e., 7-4-1992 rate of interest 23 per cent [...]. This entry is in my handwriting. [...] The other three entries on that day are of State Bank of Saurashtra, State Bank of Hyderabad and National Housing Bank. These three entries are also in my handwriting [...]" 108. The question as to whether the aforementioned amount of Rs. 40 crores, which was to be taken on loan from National Housing Bank was really needed or not is, however, a matter of some controversy. We may, at this juncture, take note thereof. 109. The prosecution in view of the aforementioned documentary and oral evidence must be held to have proved the following facts : (i)That the decisions regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard from Accused No. 2 that it was not a call money and that the said amount was raised from the Bank by Harshad Mehta. He further accepted : "I did not tell the CBI about this as I was not asked any question about the same by the CBI, [...] I was not knowing for what purpose the inquiry was made. I did not tell CBI of my own regarding the meeting in the Chamber of Mr. Margabandhu, as I was only answering the questions." 113. We have noticed hereinbefore that he, therefore, has given some explanation as to why we could not disclose as to what had taken place in the said meeting in his statement recorded by the Central Bureau of Investigation. The fact that such a meeting had taken place was also the subject-matter of deposition by P.W. 13, stating : "7. On that day in the afternoon I and Mallikarjun were called by General Manager Venkatkrishnan. Mr. Venkatakrishnan told us that we had to go to the chamber of Managing Director Margabandhu and report to him about all the treasury transactions. Then we, means, I, Mallikarjun [PW 17] and Venkatkrishnan [A 2] went to Mr. Margabanthu's office [A 1] and Venkatkrishnan informed him the day's transactions. While referring to NHB's call m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, notice that at one stage, according to this witness, such a telephone call had been made at about 2:00 or 2:30 p.m. 118. Our attention has also been drawn that P.W. 13 before the CBI stated: "Mr. Kakkar also told me that the telex message received at Head Office from DN Road, Bombay branch showing position of call money borrowed lend on that day does not contain the borrowing item of Rs. 40 crores from National Housing Bank." 119. Telex message has not been produced. Nothing much turns on the said purported admission. It appears from the records that at a later stage the General Manager (I&M) was asked to make an investigation. A report was filed by P.W. 17. Only because in the said report again the factum of the meeting did not find place, the same by itself should not be taken to be a ground to ignore the depositions of all these witnesses. 120. Apart from the supposed contradictions and inconsistencies, it is also pointed by the learned counsel for the appellants that no such meeting had taken place in the chamber of Accused No. 1 on 6-4-1992. Our attention has been drawn to the evidence of D.W 1- Ajit Sadhukhan, who at the relevant time was the driver of the Accus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being maintained, but the final call money register which was being maintained only had three call money transactions, since by the time the entries in the register had to be noted down the fourth transaction had already been cancelled : "9. I am shown note Book [...] These four entries in my handwriting are of all call money. [...] and last entry is of NHB Rs. 40 crore rate of interest @ 26 per cent and this entry has subsequently cancelled on receipt of instruction from Head Office. [...] The entry of call money transaction is taken in the call money register [...] Mr. Rupani made entry in call money register from the note book. 10. The register shown to me is call money register in which entries are taken from note book. Only three call money transactions of 6-4-1992 are mentioned in this register where as fourth transaction of NHB is not mentioned and there is no entry in this register. [...] 11. [...] In respect of other three banks they issued call money receipts to the said banks and collected the cheques. It was between 2:00 to 3:00 pm. In case of NHB Receipt was not prepared and sent as transaction was cancelled. Before 2:00 pm it was cancelled. [...]" 125. However, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the cheque was to be transferred to the Hamam Street Branch in the following terms : "It did not happen that I contacted Ravi Kumar on telephone and he told me that amount of Rs. 40 crores is meant for Harshad Mehta, he only told me that it is meant for Hamam Street Branch." 131. There is a discrepancy between the two testimonies of Mr. Vijayan [DN Road] and Mr. Karkhanis [Hamam Street], as Mr. Vijayan in his testimony stated that the amount of Rs. 40 crore was meant for Hamam Street Branch and that he himself had not been informed that the amount was meant for Mr. Harshad Mehta. Mr. Pradeep Kharkhanis stated that Mr. Vijayan specifically informed him that the said amount was meant to be credited to the account of Mr. Harshad Mehta. If Mr. Vijayan himself did not know that the Rs. 40 crore were meant to be deposited in the account of Mr. Harshad Mehta at Hamam Street Branch how could he have informed Mr. Kharkhanis that it was for Mr. Harshad Mehta ? 132. The matter, however, must be considered from another angle. A bankers' cheque for a sum of Rs. 40 crores was received by the Hamam Street Branch of the UCO Bank. The records of the UCO Bank reflect that the same amount was to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used Nos. 1 and 2 in tandem for the purpose of entering into such agreement, thus, stands established. 138. It would be appropriate also to deal with the role played by SV Ramanathan (A 3) in carrying out the said call money transactions at this stage. As per Mr. CK Mukherjee (PW 13) [Kolkata], Mr. Margabanthu (A1), in the meeting which took place in his chambers, reference whereto has been made heretobefore, had informed him that Mr. SV Ramanathan (A3) had been authorized him to deal with security transactions of Mr. Harshad Mehta at the Hamam Street Branch, Bombay. 139. It has also been emphasized by the prosecution that Mr. SV Ramanathan was present at the Hamam Street Branch on the day the said transaction took place. The testimony of Pradeep Kharkhanis (PW 18) is relevant which reads as under : "On that day at about 12:00 to 12:30 Noon, Mr. SV Ramanathan, the Divisional Manager had come to our office. Mr. SV Ramanathan came to our office at about 12:00 to 12:30 noon and told me that he will take care of any difficulty about the transaction as required by Parekh. These were brokers transactions. Mr. SV Ramanathan was presenting the Bank when Mr. Atul Parekh was there." [Emph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith any transaction." answered in negative. 146. The testimony of Mr. Jeroo Dalal also brings out the involvement of Mr. Atul Parekh (A5) in the entire chain of conspiracy, stating : "7. We used to get instructions from Atul Parekh on behalf of accused No. 4 and as per instructions from the bank, the amount used to be debited in the account of Harshad Mehta." 147. Mr. Pradeep Anant Karkhanis (PW 18) [Hamam Street branch] notes in his testimony, stated : "Shri Atul Parekh accused in this case had also come in our branch on that day. Shri Atul Parekh had come to me for starting transaction in brokers account. I raised certain queries in this respect and I told Shri Atul Parekh that I was seeking replied (sic) to the queries. . . . These were brokers transactions. Before I received telephone from Vijayan. Shri Atul Parekh told me that he was expecting a cheque of Rs. 40 crores from National Housing bank." 148. Whatever doubt had been left regarding the involvement of Shri Atul Parekh (A5) has been cleared by the above stated testimony. He knew that he was to receive Rs. 40 crores from NHB and that is why he had on the said day come to the Hamam Street Branch of the Bank. 149. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eive cheque from UCO bank, Hamam Street Branch.... However I did not get the cheque from there as directed by Shri Suresh Babu. On Coming from UCO Bank I told Shri Suresh Babu that I did not get the cheque and the person to whom I was asked to meet had told me that cheque was sent directly by UCO Bank." 153. In our opinion, reliance on the said testimony is not enough. Just because Sunil Pandurang Gondale (PW 7) had been sent by Shri Suresh Babu (A7) is not enough for his involvement in the criminal conspiracy which was hatched on behalf of the other accused. Something more substantial would be needed to bring him within its fold. In fact in his cross examination he admits : "It is not true to say that on 16-4-1992 Suresh Babu [A 7] told me to go to Hamam Street Branch. It is not true to say that when I was sent to UCO bank accused C Ravi Kumar [A 6] was not present." 154. The burden of proof is always heavy on the prosecution. The prosecution must stand on its own legs basing its findings on the evidence that has been let in by it. The prosecution has however failed in this task at least with respect to A7, Shri Suresh Babu who was an officer working with NHB. 155. Now that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuted under a Central or State Legislation. Furthermore, sub-section (4) of section 49 of the Act lays down that if any other provision of the Act is contravened or if any default is made in complying with any other requirement of this Act, or of any order, regulation or direction made or given or condition imposed thereunder, any person guilty of such contravention or default shall be punishable with fine. 161. It reads as under : "49. Penalties. . . .(4) If any other provision of this Act is contravened or if any default is made in complying with any other requirement of this Act, or of any order, regulation or direction made or given or condition imposed thereunder, any person guilty of such contravention or default shall be punishable with fine which may extend to two thousand rupees and where a contravention or default is a continuing one, with further fine which may extend to one hundred rupees for every day, after the first, during which the contravention or default continues." 162. The NHB cannot, therefore, advance loans to anybody except housing finance institutions, scheduled banks and statutory slum clearance body, and in case it advances any loan to any individual t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wilfully suffers any other person so to do, commits 'criminal breach of trust'." 167. Punishment for criminal breach of trust is provided in section 406. Punishment for an aggravated form of criminal breach of trust is provided in section 407 to section 409. 168. The terms of the section are very wide. They apply to one who is in any manner entrusted with property or dominion over property. The section does not require that the trust should be in furtherance of any lawful object. It merely provides, inter alia, that if such a person dishon- estly misappropriates or converts to his own use the property entrusted to him; he commits criminal breach of trust. This section requires : (1)Entrusting any person with property or with dominion over property. (2)That person entrusted (a) dishonestly misappropriates or converts to his own use that property; or (b) dishonestly uses or disposes of that property or wilfully suffers any other person so to do in violation -- (i)of any direction of law prescribing the mode in which such trust is to be discharged, or (ii)of any legal contract made touching the discharge of such trust. 169. In Onkar Nath Mishra v. State (NCT of Delhi) [2008] 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classes together public servants, bankers, merchants, factors, brokers, attorneys and agents. The duties of such persons are of a highly confidential character, involving great powers of control, over the property entrusted to them and a breach of trust by such persons may often induce serious public and private calamity. High morality is expected of these persons. They are to discharge their duties honestly. 174. The following are the essential ingredients of the offence under this section : (1)The accused must be a public servant; (2)He must have been entrusted, in such capacity with the property ; (3)He must have committed breach of trust in respect of such property. 175. In Raghunath Anant Govilkar v. State of Maharashtra [2008] 2 SCALE 303 the court noted that section 406 which provides the punishment for criminal breach of trust simplicitor and 409 of IPC are cognate offences in which the common component is criminal breach of trust. When an offence punishable under section 406 is committed by a public servant (or holding any one other of the positions listed in the section) the offence would escalate to section 409 of the Penal Code. 176. In Superintendent & Remembranc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of trust." (p. 428) Non-institution of departmental proceedings 179. In this regard, it must be emphasized that the submission of the learned counsel that the Banks have not initiated any proceedings and suffered any loss and thus the judgment of conviction and sentence of criminal breach of trust is wholly unsustainable cannot be accepted for more than one reason. 180. It is not the law that complaint petition under all circumstances must be made by the Banks and Financial Institutions whose money had been the subject-matter of offence. It is also not the law that suffering of loss is a sine qua non for recording a judgment of conviction. It is now trite that criminal law can be set in motion by anybody. The prosecution was initiated on the basis of the information received by the Central Bureau of Investigation. It would be entitled to do so not only in regard to its statutory powers contained in the Delhi Special Police Act but it was also entitled to take cognizance in terms of the report submitted by 'Janakiraman Committee'. The money involved in the transfer is public money belonging to Public Sector Banks. 181. The first allegation of criminal breach of trust is against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention is concerned, the term 'Dishonestly' is defined by section 24 of the IPC : "'Dishonestly' - Whoever does anything with the intention of causing wrongful gain to one person or wrongful loss to another person, is said to do that thin 'dishonestly'." 187. Thus, an act done with the intention to cause 'wrongful gain' can be said to be dishonest. 188. The term 'wrongful gain' is defined in section 23 of the IPC as follows: "'Wrongful gain' - 'Wrongful gain' is gain by unlawful means of property to which the person gaining is not legally entitled." 189. The most essential ingredient of proof of criminal breach of trust, therefore, is misappropriation with a dishonest intention. Breach of trust simplicitor is not an offence as is it not associated with intention which is dishonest. 190. The term dishonestly defined in section 24 IPC means doing anything with the intention of causing wrongful gain to one person or wrongful loss to another. So the offence is completed when misappropriation of the property has been made dishonestly. Accordingly, even a temporary misappropriation falls within the ambit of the said offence. [See the Judgment of the Orissa High Court in Kartikeshw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ischarge of its judicial functions. The Community or the State is not a persona non grata whose cause may be treated with disdain. The entire community is aggrieved if economic offenders who ruin the economy of the State are not brought to book. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eve on personal profit regardless of the consequence to the Community...." (p. 431) Prevention of Corruption Act 194. Apart from the charges under the IPC, accused Nos. 1 to 3 [UCO Bank officials] and accused Nos. 6 and 7 [NHB officials] have also been charged of committing the offence under section 13(1)(d)( iii) read with section 13(2) of the Prevention of Corruption Act. It must be placed on record that in this regard that the Prevention of Corruption Act, 1988 replaced the Prevention of Corruption Act, 1947. The new Act was enacted 'to consolidate and amend the law relating to the prevention of corruption and for matters connected therewith.' Relevant portions of section 13 which provide for criminal misconduct by a public servant read as under. "13. Criminal misconduct by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Bureau of Investigation, Anti-Corruption Branch, Crl. A. No. 553 of 2000, dated 23-3-2007 noted thus : "Section 13(1)(d) of the said Act also deals with the criminal misconduct by a public servant by means of corrupt or illegal means, obtains for himself or for any other person any valuable thing or pecuniary advantage; or by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage; or while holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest." 200. In the light of the provisions already enumerated by us we per the law laid down we therefore hold that the accused Nos. A1 to A3 [officials of UCO Bank] & A6 [officials of NHB] are guilty of criminal misconduct under the Prevention of Corruption Act. For the reasons already mentioned by us we do not find sufficient evidence to bring in the involvement of A7, Suresh Babu within the fold of the said transaction. 201. All the accused were at the relevant time public servants. Each one of them played a specific role in diversion of funds from NHB to the account of Harshad Mehta, all os ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d exactly the same sentence as that was imposed on A1. We do not intend to interfere with the sentence of A2 either as regards to the punishment that he had to undergo or the amount of fine imposed on him. 205. As regards A3, SV Ramanathan the court considering his lower rank in the hierarchy of the bank imposed on him only a sentence of one month RI and ordered to pay a fine of Rs. 10,000 and in default SI for 15 days. Though we are of the opinion that he deserved to be dealt more harshly by the trial court but after five years having passed since the pronouncement of the judgment we do not propose to effect any change the said sentence. 206. As to A 5, Atul M Parekh the court took note of the fact that he was working under the orders of A4, the deceased Harshad Mehta, being his employee, and handed him a sentence of merely 15 days and ordered him to pay a fine of Rs. 10,000 and in default SI for 15 days. We need not interfere with the said sentence. 207. As to A6, C. Ravi Kumar the court gave him a sentence of three years and ordered him to pay a fine of Rs. 1,00,000 in default SI for 3 months. We have hereinbefore already deprecated against the reference by the Special Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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