IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE V.RAMKUMAR FRIDAY, THE 18TH FEBRUARY 2011 / 29TH MAGHA 1932 CRL.A.No. 295 of 2000(C) ------------------------ CC.9/1993 of III ADDL.SESSIONS COURT, ERNAKULAM .................... APPELLANT(S): ----------- RAJEEVAN,ASWATHY, PATTATHANAM, KADAPPAKADA, QUILON, (THE APPELLANT HEREIN AND THE 3RD ACCUSEDIN C.C. 9/1993 OF THE SPE/CBI-I COURT, ERNAKULAM) BY ADV. SRI.T.R.ASWAS RESPONDENT(S): ------------- SUPERINTENDENT OF POLICE, SPECIAL POLICE ESTABLISHMENT, C.B.I. COCHIN FOR R1 ADV. SRI. M.V. S. NAMBOOTHIRI SC FOR CBI THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 01/02/2011, ALONG WITH CRA NO. 296 OF 2000 CRA NO. 316 OF 2000 CRA NO. 305 OF 2000 CRA NO. 315 OF 2000 CRA NO. 304 OF 2000 CRA NO. 307 OF 2000, THE COURT ON 18/02/2011 DELIVERED THE FOLLOWING: V. RAMKUMAR, J. ....................................... Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 ........................................ Dated: 18th February, 2011 COMMON JUDGMENT INNER TITLES Sl.No. Subject Paragraph No. 1 Prosecution Case in C.C. 9/1993 2 2 -do- in C.C.10/93 3 3 -do- in C.C. 11/93 4 5 The Trial 5 to 9 6 The trial Court's verdict 10 7 These Appeals 11 & 12 8 The Point for consideration 13 9 Prosecution Witnesses in the case 14 A 10 Defence Witnesses 14 B 11 The stand of CBI 15 12 Judicial Evaluation 16 to 32 13 The conclusion 33 Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 -:2:- V. RAMKUMAR, J. ....................................... Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 ........................................ Dated: 18th February, 2011 COMMON JUDGMENT These appeals filed under Sec. 374 (2) Cr.P.C. arise out of the common judgment dated 28-4-2000 on the file of the Court of the Special Judge (SPE/CBI) - 1, Ernakulam (hereinafter referred to as the “Special Court” in C.C. Nos. 9, 10 and 11 of 1993 . Two of the accused in two of the aforesaid C.C. Cases are common. In C.C. 9 of 1993 there were three accused persons and in C.C. Nos. 10 and 11 of 1993 there were two accused persons. The first accused in all the three cases namely Joseph Alappatt is a common accused. The appeals filed by the said common first Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 -:3:- accused in C.C. Nos. 9, 10 and 11 of 1993 are Crl.Appeals 307, 315 and 316 of 2000. Crl. Appeal 304 of 2000 is filed by the 2nd accused (H.Vahab) in C.C. 9 of 1993. Crl.Appeal No. 295 of 2000 is filed by the 3rd accused (Rajeevan) in C.C. 9 of 1993). Crl.A. 305 of 2000 is filed by the 2nd accused (K.Thajudheen @ Thaju) in C.C. 10 of 1993. Crl.A. 296 of 2000 is filed by the 2nd accused (Rajeevan) in C.C. 11 of 1993. PROSECUTION CASE IN C.C. 9 OF 1993 2. The case of the prosecution in C.C. 9 of 1993 is as follows:- A1 (Joseph Alappatt) was working as the Manager of the Quilon Branch of the Punjab National Bank (“PNB”for short) during the period 1988-1990 and was competent to sanction term loans. He was responsible for conducting pre-sanction inspection of the units/premises of the applicants for loan for Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 -:4:- ascertaining the genuineness of the application and eligibility of the applicants before sanctioning the loan. Some time during October 1989 A1(Joseph Alappatt), A2 (H.Vahab) and A3 (Rajeevan) entered into a criminal conspiracy to cheat PNB. In pursuance of the said criminal conspiracy, A2 representing the firm Salim Agencies filed a false loan application before PNB for a term loan of ` 1,50,000/- on 7-10-1989 to operate a shop for hiring steel tables and chairs. Along with the loan application A2 had enclosed a quotation from “ Distributors Quilon” at Kadappakkada, a non-existing firm purportedly represented by A3 Rajeevan for the supply of folding chairs and folding tables for ` 2,04,375/- . On 7-10-1989 itself A1 sanctioned the loan fully knowing that the loan application was false. A1 issued pay orders for ` 1,44,375/- dated 7-10- 1989 and Rs. 60,000/- dated 16-10-1989 including the margin money of ` 54,375/- remitted by the loanee in favour Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 -:5:- of “Distributors Quilon”. In pursuance of the said conspiracy A3 Rajeevan opened an account in the name of “Distributors Quilon” in the Quilon branch of the Dhanalakshmi Bank and credited the said pay orders in the said account and withdrew the credited amounts by means of cheques dated 11-10- 1989 for ` 70,000/- and ` 74,000/- and by cheque dated 17- 10-1989 for ` 60,000/-. A3 was not doing any steel furniture business at Kadappakkada under the name and style of “Distributors Quilon”. He was actually running a Saw Mill at Quilon. He had not supplied any steel table or folding chairs to A2 and A2 had appropriated the loan amount with the assistance of A3. The quotation in the name of “Distributors Quilon”, a non-existing firm was forged by A3 on or about 7- 10-1989 intending that it shall be used for the purpose of cheating PNB. A1 (Joseph Alappat) being a public servant, in his capacity as the Manager of PNB, on or about 7-10-1989 Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 -:6:- by corrupt or illegal means or by otherwise abusing his position as such public servant, obtained for A2 pecuniary advantage to the extent of ` 1,50,000/- by sanctioning the said amount as loan from PNB acting on the false loan application submitted by A2 and by issuing the pay orders for ` 1,44,375/- and ` 60,000/- in favour of “Distributors Quilon”, which were encashed by A2 with the assistance of A3. A1 to A3 thereby committed offences punishable under Sections 120 B, 420 and 468 I.P.C. and Sec. 13 (2) read with Sec. 13 (1)(d) of the Prevention of Corruption Act, 1988 (“the P.C. Act” for short). PROSECUTION CASE IN C.C. 10 OF 1993 3. The case of the prosecution in C.C. 10 of 1993 is as follows:- In the month of November 1989 A1 (Joseph Alappat) who was working as the Manager of PNB entered into a criminal Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 -:7:- conspiracy to cheat PNB. In pursuance of the said conspiracy A2 (K.Thajudheen @ Thaju) representing the firm “Changathees Video Centre”, submitted a false loan application before A1 on 3-11-1989 for a term loan of ` 1,50,000/- for purchasing video cassettes for running a video cassette library . Along with the loan application A2 had enclosed a false quotation in the name of a fictitious and non-existing firm by name “K.S. Agencies”, M.G. Road, Trivandrum, for having purchased 1500 video cassettes for ` 1,01,000/-. A1 knowing fully well that the quotation submitted along with the loan application was false, sanctioned the loan on the same day and P.N.B. issued a Demand Draft for ` 2,01,000/- including margin money of ` 51,000/- in favour of K.S. Agencies. A2 fraudulently opened an account in the Trivandrum Branch of PNB in the name of K.S. Agencies , M.G. Road, Trivandrum on 2-11-1989. A2 then presented the above D.D. on 6-11-1989 Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 -:8:- and drew the money thereunder. Thus the amount intended for the supplier was drawn by the loanee himself and the loan amount was not utilised for purchasing video cassettes . The quotation in the name of a non-existing firm by name K.S. Agencies, M.G.Road, Trivandrum was forged by A2 with the intention that it shall be used for cheating PNB by dishonestly inducing the bank to sanction the loan. A1 being a public servant, by corrupt or illegal means or otherwise abusing his position as such public servant obtained for A2 pecuniary advantage to the extent of ` 1.5 lakhs by sanctioning the said loan . A1 and A2 have thereby committed offences punishable under Sections 120 B, 420 and 468 IPC and Sec. 13 (2) read with Sec. 13 (1)(d) of the P.C. Act. PROSECUTION CASE IN C.C. 11 OF 1993 4. The case of the prosecution in C.C. 11 of 1993 is as follows:- Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 -:9:- Sometime in the month of Nov. 1988 A1 (Joseph Alappat), Branch Manager, PNB, Quilon, and A2 (Rajeevan), Proprietor, Aswathi Wood Industries, entered into a criminal conspiracy to cheat PNB. In pursuance of the said conspiracy A2 submitted a false loan application before the Bank on 27-11-1989 for a term loan of ` 1,50,000/- for running a saw-mill and for constructing a shed for the saw mill. Along with the said loan application A2 had enclosed a false quotation from M/s. Deepak Industries, Kadappakkada, Quilon for the supply of machinery costing about ` 1,42,485/- and a false quotation from C.K. Prasad, P.W.D. Contractor, Ayathil, Quilon for the construction of a shed for the saw mill for a sum of ` 64,924.81 . On 5-12-1989, A1 sanctioned the loan fully knowing that the loan application was false . Accordingly, the Bank issued a pay order for ` 1,06,985/- in favour of Deepak Industries and another pay order for ` 49,924.81 in favour of Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 -:10:- C.K. Prasad including margin money of ` 6,904.81 remitted by the loanee. Rajesh, the brother of A2 opened account No. 532 in the Quilon Branch of the Dhanalakshmi Bank in the name of Deepak Industries, a fictitious firm and presented the pay order for ` 1,06,985/- in the above account on 6-12-1989 and withdrew the amount in instalments on different dates. C.K. Prasad, the P.W.D. Contractor presented the pay order for ` 49,924.81 in the said bank on 6-12-1989 and withdrew the amount. A2 did not utilise the loan for the purpose for which it was applied. C.K. Prasad did not construct the shed for the saw mill. A2 had appropriated the entire amount with the assistance of Rajesh and C.K. Prasad. The quotation in the name of M/s. Deepak Industries, Kadappakkada, Quilon, a non- existing firm was forged by A2 on or about 27-11-1989 intending that it shall be used for the purpose of cheating PNB. A1 being a public servant, by corrupt or illegal means or by Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 -:11:- otherwise abusing his position as such public servant had obtained for A2 pecuniary advantage to the tune of ` 1,50,000/- by sanctioning the above loan on the basis of false loan application and false quotations. A1 and A2 thereby committed offences punishable under Sections 120 B, 420 and 468 I.P.C. and Sec. 13 (2) read with Sec. 13(1)(d) of the P.C. Act. THE TRIAL 5. As agreed to by both sides, all the aforesaid three C.C. cases were jointly tried by the Special Court . C.C. No. 9 of 1993 was treated as the main case in which evidence was recorded. 6. On the accused persons pleading not guilty to the separate charges framed against them for the aforementioned offenses, the prosecution was permitted to adduce evidence in support of its case. The prosecution altogether examined 26 Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 -:12:- witnesses as P.Ws. 1to 26 and got marked 123 documents as Exts. P1 to P123. The prosecution also got marked four material objects as MO1 series. After the close of the prosecution evidence, the accused persons were questioned under Sec. 313 (1) (b) Cr.P.C. with regard to the incriminating circumstances appearing against them in the evidence for the prosecution. They denied those circumstances and maintained their innocence. 7. The common first accused namely Joseph Alappat had the following to submit further before the court below:- He has not done anything against the interests of the Bank. It was his first posting as Manager at the Quilon Branch after his promotion. The profit of a Bank increases proportionately to the increase in credit limits. After his joining the Quilon Branch the Regional Office had given huge credit limits to the Quilon Branch. As a result of his work in the Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 -:13:- Quilon Branch that branch was upgraded from scale II Managers' Branch to Scale IV Managers' Branch. He was depending on Sri. Ayyappan (P.W.23) , the loan officer for sanctioning all loans. Ayyappan belonged to that area and had been handling the loan section in different branches before joining the Quilon Branch. So he entrusted the loan section to Ayyappan. There were specific office orders entrusting the above responsibilities to Ayyappan. Those orders were withheld by the authorities. The loans granted in these cases were not big loans compared to loans worth crores of rupees which were sanctioned by the Quilon Branch. During his tenure a loan for Rs. 25 crores had been sanctioned to the Kerala Cashew Development Corporation and stock of KSCDC had to be inspected by the Manager himself every month. The said loan was spread over three districts and about 33 factories . The parties in this case had approached P.W.23 for Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 -:14:- the loan and had submitted the papers to him. After fulfilling the formalities, P.W.23 had put up the papers to A1 for sanction with his recommendations. A1 did not go for a thorough verification. He had not gone in search of the firm of the suppliers. It was not possible for the Manager to do so in the case of each and every loan account in a Branch like Quilon. What he had carefully verified was the credit worthiness of the borrower. For this he had depended on the valuation report of the bank's valuer of the properties and legal opinion of the title deeds pertaining to the immovable properties by the Bank's approved lawyers. This case was foisted against him since some of the senior officers thought that he was over smart. 8. H.B. Vahab (A2 in C.C. 9 of 1993) and Thajudeen (A2 in C.C. 10 of 1993) submitted that both of them were innocent . Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 -:15:- 9. Rajeevan (A3 in C.C. 9 of 1993) submitted that he had started the establishment by name Distributors Quilon in the year 1984, that he was getting letters sent to the address of the said establishment which had sales tax registration and he is prepared to produce evidence in this behalf. The said Rajeevan who was the 2nd accused in C.C. 11 of 1993 submitted that the amounts taken as loan for his factory by name Aswathy Wood Industries were fully utilised for the purpose of the loan, that his factory had all the requisite licenses and that the said factory is functioning even now. THE TRIAL COURT'S VERDICT 10. The learned Special Judge after trial as per common judgment dated 28-4-2000 held - (a) in C.C. 9 of 1993 that A1 to A3 therein conspired to secure pecuniary advantage to A2 (Vahab) to the tune of ` 1,50,000/- by furnishing bogus quotations for folding chairs and tables from Ms. Distributors Quilon, a non-existing firm and A1 sanctioned the loan on the date of application itself without complying with the formalities and without verifying whether the firm Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 -:16:- was an existing firm or not and thereby cheated the Quilon Branch of PNB and therefore, A1 to A3 committed offences punishable under Sections 120 B , 420 and 468 I.P.C. and Sec. 13 (2) read with Sec. 13 (1) (b) of the P.C. Act (b) in C.C. 10 of 1993 that A1 and A2 therein conspired together to obtain pecuniary advantage to A2 (Thajudeen @ Thaju) to the tune of ` 1,50,000/- by furnishing the bogus quotations for Video Cassettes from M/s. K.S. Agencies , M.G. Road, Trivandrum, a fictitious and non-existing firm and A1 sanctioned the loan on the date of application itself without complying with the formalities and without verifying whether the firm was a genuine one and thereby cheated the Quilon branch of PNB and therefore A1 and A2 have committed offences punishable under Sections 120 B, 420 and 468 I.P.C. and Sec. 13 (2) read with Sec. 13 (1) (d) of the P.C. Act. (c ) in C.C. 11 of 1993 that eventhough Ext.P13 quotation for ` 64,924.81 submitted by the Contractor C.K. Prasad (P.W.19) for the construction of the shed for Aswathy Wood Industries, Quilon was true and A2 therein (Rajeevan) had got the shed constructed by utilising the loan amount, A1 and A2 therein conspired together to obtain pecuniary advantage to A2 (Rajeevan) to the tune of ` 1,42,485/- by furnishing the bogus quotations for machinery for saw mill from Deepak Industries, Quilon a fictitious and non-existing firm and on 5-12-1989 A1 sanctioned the loan which was applied Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 -:17:- for on 27-11-1989 without obtaining any report as to whether Deepak Industries was real or fictitious and without complying with the formalities and A1 and A2 have thereby committed offences punishable under Sections 120 B, 420 and 468 I.P.C. and 13 (2) read with Sec. 13 (1) (d) of the P.C. Act . Accordingly, -- i) each of the accused in each of the three cases was sentenced to rigorous imprisonment for one year for the conviction under Section 120 B I.P.C. ii) the common first accused (Joseph Alappatt) in each of the three cases was sentenced to rigorous imprisonment for one year and to pay fine of ` 5,000/- and on default to pay the fine to suffer rigorous imprisonment for three months for the conviction under Section 13(1)(d) read with Sec. 13 (2) of the P.C. Act. iii) A2 (Vahab) in C.C. No. 9 of 1993 and A3 (Rajeevan) in c.C. No. 9 of 1993 and A2 (Thajudeen @ Thaju) in C.C. 10 of 1993 and A2 (Rajeevan) in C.C. 11 of 1993 were each sentenced to rigorous imprisonment for one year and to pay a fine of ` 5,000/- and on default to pay the fine to suffer rigorous imprisonment for three months for the conviction under Section 420 I.P.C. Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 -:18:- iv) A2 (Vahab) in C.C. 9 of 1993 and A3 (Rajeevan) in C.C. 9 of 1993 and A2 (Thajudeen @ Thaju) in C.C. 10 of 1993 and A2 (Rajeevan) in C.C. No. 11 of 1993 were each sentenced to rigorous imprisonment for one year and to pay a fine of ` 5,000/- and on default to pay the fine to suffer rigorous imprisonment for three months for the conviction under Section 468 I.P.C. THESE APPEALS 11. It is the aforesaid judgment which is assailed in these appeals. 12. I heard Advocate Sri. B. Raman Pillai, the learned counsel appearing for the common first accused ( Joseph Alappatt) in all the cases, Advocate Sri.K.A. Jaleel, appearing for A2 in C.C. 9 of 1993 and A2 (Thajudeen @ Thaju) in C.C. 10 of 1993 and Advocate Sri. T.R. Aswas, the learned counsel appearing for Rajeevan (A3 in C.C. 9 of 1993 and A2 in C.C. 11 of 1993). I also heard Adv. Sri. M.V.S. Namboothiri, the learned Standing Counsel for the C.B.I. Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 -:19:- 13. The only point which arises for consideration in these appeals is as to whether the conviction entered and the sentence passed against all or any of the appellants are sustainable or not ? 14. THE POINT:- THE WITNESSES EXAMINED IN THE CASE Prosecution Witnesses [A] . P.W.1. (B.R. Kher) was the zonal manger in the zonal office of P.N.B. Madras. It was this witness who sent Ext.P1 complaint dated 24-1-1991 to the S.P. CBI Cochin, by post. His complaint was on the basis of Ext. P2 enquiry report dated 20-4-1990 of P.W.2 (S.K. Prasad) who was the Chief Zonal Manager and on the basis of the report of P.W.3 (Anantharaman) who was a senior manager attached to the zonal office . Ext.P2 enquiry report of P.W.2 was marked subject to objection and the said objection was never Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 -:20:- considered at the time of final judgment. Ext.P2 (a) is a statement given in writing by P.W.23 (Ayyappan who was originally the 2nd accused in the F.I.R.) to P.W.2 on 16-3- 1990. Ext.D1 Circular prescribing the mode and manner of preparing the confidential reports (C.R. for short) and Ext.D2 flash report from the Regional Manager to A1 directing A1 to achieve the target for priority sector advances fixed by the Regional Office, were marked through P.W.2. P.W.3 Anantharaman had, on the direction by P.W.1, conducted a detailed investigation regarding the accounts of several advances given from the Kollam Branch. Ext.P3 is the relevant portion of his Inspection report pertaining to C.C. 9 of 1993. Exts.P7 and P12 are the relevant portions of his report pertaining to C.C. Nos., 10 and 11 of 1993. Exts. P4 to P6 and P8 to P19 were also marked through him. P.W.4 (Koshy Jacob) was the Manager of State Bank of Travancore (S.B.T) Kollam. Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 -:21:- He was a witness to the search conducted in the premises of Aswathy Wood Industries. Ext.P20 is the search list signed by him and Ext.P21 is the file seized as per Ext.P20. P.W.5 (Abdul Vahab Sait) was the Executive Officer of Vadakkevila Panchayath, Kollam during April 1991. He proved Ext.P22 reply dated 20-4-1991 to the investigating officer stating that no license was issued to Deepak Industries, Kadappakkada, Kollam from the said Panchayath. P.W. 6 (Dr. Peer Muhammed) was the health officer of Thiruvananthapuram Corporation . He was cited to depose about K.S. Agencies. After putting 2 or three questions this witness was given up by the prosecution. P.W. 7 (G.B. Jagadhara Panicker) was the Junior Superintendent of Kilikkollur Panchayath. He proved Ext.P23 reply dated 20-04- 1991 addressed to the C.B.I. Inspector in answer to the letter given by the C.B.I. asking him whether Deepak Industries was Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 -:22:- functioning in Kilikollur Panchayath area. P.W.8 (Anil Damodaran) was working with Sastha Roadways, Ashramam, Quilon belonging to his brother during the period 1989-90. This witness stated that No. 78548 was the telephone No, of Sastha Roadways. P.W.9 (Appukuttan Nair) was working as a clerk in the Kollam branch of Dhanalakshmi Bank during 1989. He introduced Rajeevan (A3 in C.C. 9 and A2 in C.C. 11 of 1993) to open a current account in the said branch in the name of “M/s. Distributors Quilon” on 6-1-1989. Ext.P24 is the account opening form. P.W. 10 (T.S.S. Krishnan) was the manager of the Kollam Branch of P.N.B, from December 1989 onwards. He had succeeded A1 consequent on the transfer of A1 to Bangalore as Senior Manager. P.W.11 (Lekshmanan Pillai) was the Manager of the Kollam Branch of the Dhanalakshmi Bank during 1987 to 1991. He proved Ext.P44 account opening form of current A/c. No. 531 of Deepak Crl. Appeal Nos. 295, 296, 304, 305,307,315 and 316 of 2000 -:23:- Industries, Kadappakkada, Kollam opened by R. Rajesh, Ext.P45 proprietorship declaration submitted by R. Rajesh, Ext.P46 ledger extract of the account of Deepak Industries from 6-12-1989 to 31-3-1991, Ext.P47 credit slip dated 7- 12-1989 for crediting Rs. 106985/- as per Ext.P18 pay order of P.N.B. issued in favour of Deepak Industries, Ext.P48 series (17 Nos.) of Cheques by which withdrawals were made from that account and Ext.P14 pay order of PNB issued in favour of C.K. Prasad (P.W. 19) which was credited to the account of P.W.19. He also proved Exts. P24 and P.37 to P43