in both cases.For Appellants : Mr.M.Ajmal Khan Senior Counsel in Crl.The case of the prosecution, in brief, is as follows:The second accused is a private person and he was the proprietor of M/s.(b) The second accused submitted a proposal dated 18.01.1995 to the Indian Overseas Bank, Salem main branch, stating that he had opened a new proprietorship concern called 'Valley Exporters' in November, 1994, whereas he had opened the company in the year 1993 and he has taken over the potential black granite quarry situated at Pagadupattu village, Chinnakalrayan Hills, Attur Taluk, Salem, with an extent of 6 acres with 10 years mining lease from the Government of Tamil nadu, and he had an order from M/s.Toyo Trading Co., Ltd., Japan and M/s.Macmarvels Co., Ltd., Japan for 500 cubic meters.He gave an undertaking that the granites manufactured from the mine will be exported as rough blocks under 'letters of credit' only and that there will be no indigenous sales and requested the bank, Salem Main Branch, Indian Overseas Bank, for a Packing Credit facility to an extent of Rs.75 lacs for the purpose of excavating granite blocks form the quarry and Rs.50 lacs as secured OD for meeting hire charges of Mining machineries.The second accused also revised his request for the credit facilities vide letter dated 02.02.1995, seeking for a Packing Credit facility of Rs.70 lakhs, secured over draft of Rs.20 lakhs and Foreign Bill Negotiation facility for Rs.30 lakhs.At that time, the second accused submitted applications with false project report, inflated valuation certificates in respect of collateral securities, false and forged agreement dated 01.01.1995 as if entered into between the second accused as proprietor of Valley Export and Karunagaran (PW-31) owner of the Compressor and Cranes and another agreement entered into between the second accused and one Ramesh (PW-36) proprietor of Virgo Exporters for hiring Proclain and Tippers. The second accused also submitted along with the application a false and forged purchase order dated 28.01.1995 said to have been issued by one H.Fuji of M/s.Toya Trading Company Limited, Japan offering to purchase 500 cubic meters Black granite at the rate of 1100 US Dollar.The second accused furnished the title deeds of 75 acres of landed property situated at Sevvapet, Thandalam Village, Thiruvallur Taluk, Salem and false valuation certificates showing inflated rates by valuing one acre of land at Rs.1 lakh wherein the cost of the lands were only Rs.16,000/- to Rs.20,000/- per acre during the relevant period.During 1993, the second accused had obtained IE Code, but only during 1995, he obtained IE Code from the Controller of Imports and Exports, Ministry of Commerce, Coimbatore and from the Joint Controller, ECD, RBI, Chennai.In Ex.P.3, it is mentioned that M/s. Toyo Trading Co., Ltd., Japan and M/s. Macmarvels Co., Ltd., Japan have insisted and approved the materials and have placed orders.P.4 is a related purchase order from Toyo Trading Co., Ltd., but according to the prosecution, it is a forged document.As per Ex.P.4 one Mr.Fuji had inspected.It is the evidence of P.W.31, who was working as Typist under second accused, had deposed that Ex.P.4 was prepared in the office being typed by him as instructed by the second accused.Though P.W.31 admitted in the cross-examination that Mr.Fuji was available in the office at the time of preparing Ex.P.4, he had not stated that Mr.Fuji signed in Ex.18.07.2012Index : yes Internet : yesksr/jrl T. SUDANTHIRAM, J.ksr/jrlToA.No.1390 of 2003 For Respondent : Mr.N.Chandrasekaran Special Public Prosecutor for CBI Cases in both CasesCOMMON JUDGMENT The appellants herein are the accused 1 and 2 in C.C.No.3 of 2000, on the file of the learned II Additional District Judge and Special Judge (CBI Cases), Coimbatore.The accused 1 and 2 were convicted for the offences under Sections 120-B r/w 420, 467, 468, 471 IPC and Sections 13(2) r/w 13(1)(d) of Prevention of Corruption Act, 1988 and each one of them sentenced to undergo six months rigorous imprisonment and to pay a fine of Rs.500/- in default to undergo one month rigorous imprisonment.The first accused was further convicted for the offence under Section 13(2) r/w 13(1)(d) of Prevention of Corruption Act and sentenced to undergo one year rigorous imprisonment and to pay a fine of Rs.1000/- in default to undergo two months rigorous imprisonment.The second accused was further convicted for the offence under Section 420, 467, 468 and 471 r/w 468 IPC and sentenced to undergo one year rigorous imprisonment and to pay a fine of Rs.1000/-, in default to undergo two months rigorous imprisonment for each offence.It was ordered for the sentence of imprisonment to run concurrently.Challenging the said conviction and sentence, the first accused preferred Crl.A.No.1390 of 2003 and the second accused preferred Crl.(c) The first accused with the help of the second accused prepared a processing note, credit appraisal and assets and liabilities details in his own handwriting without verifying the genuineness of the purchase order and project report, need for the credit facilities, correctness of the valuation certificate.The first accused issued a letter dated 25.02.1995 giving sanction for Rs.1 crore limits, even though he was not competent to sanction such facilities up to Rs.1 Crore as stipulated under the Delegation of the sanction powers.He also sanctioned a fund based limit of Rs.30 lakhs as Packing Credit and Rs.5 lakhs as miscellaneous cash credit abusing his official position.Thereafter, the second accused prepared a false agreement with forged signature of Ramesh (PW-36) allegedly representing Virgo Exporters which was actually owned by the second accused himself.The second accused prepared another hire purchase agreement in the name of the R.Karunagaran (PW-31) who was actually employee of the second accused.These forged agreements were accepted by the first accused in order to favour and bestow undue official favours to the second accused.The second accused had not undertaken even a single export as per the purchase order though he used the packing credit facilities.No exports of black granites from the quarry was made as per the purchase order.The outstanding liability to the bank on 10.03.1997 was Rs.49,76,970/-.In order to establish the prosecution case, prosecution examined Pws.1 to 44, marked Exs.When the accused were questioned under Section 313 Cr.P.C, they denied their complicity.Both the accused filed separate written statements.In the written statements, the first accused stated that there was no irregularity in the sanction of loan and other credit facilities and the credit sanctioned by the bank were adequately covered by securities in the shape of the immovable properties offered by the second accused.The bank also filed a recovery proceedings against the accused in the Debt Recovery Tribunal and fraud has not been alleged by the bank before the DRT.On the side of the accused, one Kannan was examined as a defense witness - DW-1 and Ex.D.1 to D.5 were marked.P.33 to 36, legal opinion Exs.P.18, sanction order also was signed by PW-1 Senior Manager.Learned counsel also pointed out that in the evidence of PW-1 that there is nothing wrong in the Manager filling forms and he had power to sanction loan to the second accused up to Rs.65 lakhs.The learned Senior Counsel further submitted that there is no material to substantiate that the first accused acted in connivance with the second accused and it was only he who took steps for recovering the dues from the second accused and Ex.D.1 shows that the application was filed before the Debt Recovery Tribunal only by the first accused.During the pendency of this criminal appeal, the second accused had paid the entire amount due to the Indian Overseas Bank, Salem Branch.The bank also filed full satisfaction memo in the proceedings in T.A.No.1157 of 2002, before the Debt Recovery Tribunal stating that the matter was settled out of court.The learned senior counsel further submitted that PW-34 and PW-35 stated that appellant was a granite businessman and PW-28 stated that appellant had spent huge amount for improving the quarry business and the appellant was having various companies for running his business.PW-31 had deposed that he was present when Ex.P.4, purchase order was prepared in the office of second accused and it was typed by PW-31 as per the request of Mr.Fuji- buyer who is from Japan.PW-31 also had deposed to the extent that he had leased out machineries to the second accused and it was not necessary for a person to own the equipments.P.46 agreement entered into between the second accused and PW-36, Ramesh is not a forged document and handwriting expert was not in a position to express any definite opinion regarding the signature found in Ex.Per contra, learned Special Public Prosecutor appearing for CBI cases submitted that for packing credit facility, letter of credit is a must, but it was not provided by the second accused and packing credit facility was given by the first accused to the second accused on the basis of Ex.P.45 contract letter is also not a true one and there were no machineries.Ex.P.46 is also false and PW-36 did not sign in Ex.PW-33, employee of the second accused though turned hostile, he admits that as per the agreement in Ex.P.46, Ramesh had no machineries and Ramesh is not the owner of Virgo export Companies. PW-33 also admitted before the learned Magistrate while giving statement under Section 164 Cr.P.C that he only signed in the name of Ramesh.P.2 and P.3 applications were given with false particulars that the second accused had already got lease agreement from the government for quarrying.The learned Special Public Prosecutor also submitted that the properties which were shown as securities are only agricultural lands, but they were shown as housing plots in Ex.P.16 and the value was shown as Rs.75 lakhs by the first accused.This clearly shows that the first accused deliberately acted in favour of the second accused and the conspiracy among the first and second accused is established.This Court considered the submissions made by the parties and perused the materials available on record.Now it is to be seen from the available evidence whether the second accused availed credit facility from the bank in a fraudulent manner by producing forged documents and it is also to be seen whether the first accused/Chief Manager of the bank sanctioned loan facility abusing his official position knowing about the incorrectness of the documents submitted by the second accused.It is mentioned in Ex.P.2 and Ex.P.3 that the second accused's firm M/s. Valley Exporters, Chennai, had mining lease from the Tamil Nadu Government for 10 years, but as per Ex.P.76, the second accused claims that he was operating the quarry under power of Attorney from M/s. Happy Granite India Private Limited to whom lease was given by the Government.As per Ex.P.81 - Inspection Report of P.W.13, no quarrying operation was noticed and only one old worked pit was noticed.There is a suppression of fact and wrong information is given by the second accused.He had stated that second accused signed in Ex.P.2 and P.3 applications are dated 18.01.1995 and 02.02.1995, but Ex.Therefore, Ex.P.4 is only to the extent that it was prepared for the purpose of getting loan from the bank.The properties relating to documents Exs.P.37 to 40 are given as security for loan.The properties are purchased from 01.03.1995 to 10.03.1995 and the total value is Rs.80,450/-.These properties are agricultural lands, but in the documents Exs.P.37 to 40 the word (tptrhak;) 'Agricultural' is deleted by applying whitener.P.W.8, the bank approved panel valuer has given valuation reports under Exs.He had stated that he gave the reports to one Vasu.According to the prosecution, the value was boosted.P.W.8 while giving certificate he had not taken the land as agricultural land but stated as vacant land which could be converted as housing sites.Therefore, again it appears that Exs.P.33 to 36 were obtained by the second accused showing not the real value but with enhanced value for the purpose of getting loan.The second accused also approached on his own, the panel lawyer of the banks to get his opinion and obtained Exs.Further, for getting the amount the second accused had produced Exs.P.43 to 46, but according to the prosecution, they are bogus documents.P.45 and 46 were false agreements.P.45 is an agreement between P.W.31-Karunagaran and the second accused for hiring the machineries.As per Ex.P.45, P.W.31 was the owner of machineries, but as per his evidence, he was not the owner but he got on lease those machineries.P.W.31 was employed under the second accused as typist.P.45 was prepared falsely.Ex.P.46 is an agreement between one Ramesh and second accused.P.W.36 admitted in his evidence that his name is Ramesh but he did not sign in Ex.P.46 and there was no agreement.Therefore, Ex.P.46 also was prepared falsely.Hence, it is to be held from the oral and documentary evidence that the second accused had cheated the bank by producing bogus documents for getting loan.The contention of the learned Senior Counsel Mr.AR.L. Sundaresan that this is a case of civil nature and no criminal liability can be fastened is only to be rejected for the above said reasons.The repayment of the loan amount due to the bank after twelve years does not wipe out the criminal liability of the accused.M.P.No.1 of 2012 is filed seeking permission to take additional evidence to mark the documents relating to payment made to the Bank.All these subsequent happenings cannot form part of evidence.Hence, M.P.No.1 of 2012 is dismissed.Though the application is dismissed, it is taken note of by this Court that a sum of Rs.50 lakhs was paid in the year 2007 for the claim made by the bank in the year 1997 for a sum of Rs.51,09,090/-.It is to be noted that Indian Overseas Bank is a nationalised bank and the money involved is public money.Though Bank had entered into one time settlement with the accused for a sum of Rs.50 lakhs, after 12 years, the interest amount that accrued for the sum of Rs.50 lakhs for a period 12 years (i.e., minimum Rs.50 lakhs) is a loss to the bank and it is a wrongful gain for the accused.Therefore, this repayment of amount of Rs.50 lakhs by the second accused to the Bank cannot be taken as a mitigating circumstance even while sentencing the accused.Regarding the first accused as it was contended by the learned Senior Counsel Mr.Ajmalkhan that the first accused had no mens rea and he had performed only his official duty and at the most there can be only negligence or dereliction of duty on his part; it must be looked into whether the evidence available on record show that deliberately and knowingly the first accused had helped the second accused to avail the loan facility in a improper manner.Of course in Exs.P.2 and P.3, the second accused suppressed the fact that he did not have any direct lease from the Tamil Nadu Government for quarrying and the first accused could have verified it.Though Ex.P.4 is bogus purchase order, it had been produced by the second accused and first accused had simply accepted it.The properties, which were given as security for loan were having only low value but second accused suppressed the fact that the lands were agricultural lands and in the documents produced before the bank the word 'agricultural' had been deleted.The first accused accepted the valuation certificate given by P.W.8, though inflated value was given by P.W.8 as requested by the second accused saying the vacant land may be converted as housing sites.P.17 sanction for credit facility is signed by P.W.1 and the first accused.The hire purchase agreement for machineries produced by the second accused were forged but they have been accepted by the first accused.Though there are several defects and faults on the part of the first accused, still it cannot be definitely said that the first accused had acted with the criminal dishonest intention by helping the second accused to avail loan facilities.Though conspiracy cannot be proved directly and it can be inferred from the materials available, in this particular case, it is not possible to hold beyond doubt that the first accused acted only in pursuance of conspiracy with the second accused.Of course there is suspicion against the first accused in this case but however the suspicion is strong that cannot take the place of proof.In the result, the criminal appeal No.1390 of 2003 is allowed and the conviction and sentence imposed on the first accused/appellant in Crl.Since the first accused had been acquitted, the second accused cannot be convicted for the offence under conspiracy.Hence, the conviction and sentence imposed on the second accused/appellant in Crl.A.No.1385 of 2003, for the offence under Sections 120B r/w 420, 467, 468 and 471 IPC and Section 13(2) r/w 13(1) (d) of Prevention of Corruption Act by the trial Court are set aside.The other convictions imposed on the second accused by the trial Court are confirmed.The sentence of imprisonment for each offence is altered and reduced to six months rigorous imprisonment.The fine amount imposed on the second accused is enhanced to a sum of Rs.5,000/- to each offence and in default of payment of fine, he is sentenced to undergo one month rigorous imprisonment.The fine amount already paid shall be adjusted.The Criminal Appeal No.1385 of 2003 is partly allowed.The II Additional District Judge and Special Judge for CBI Cases, Coimbatore.The Inspector of Police CBI/BSFC, Chennai RC.No.3(E)/97, Bangalore.The Special Public Prosecutor for CBI Cases, High Court, Madras.Pre-delivery Judgment in Crl.A.Nos.1385 and 1390 of 200318.07.2012

Relevant sections: Section 13 in The Indian Penal Code