hvn Cri.Revn. appln.306.2010 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE SIDE CRIMINAL REVISION APPLICATION NO. 306 OF 2010 Mr. Ajay Damodar Bodke ... Applicant Versus State of Maharashtra and anr. ... Respondents Mr. Shrikant Bhat along with Mr. Prashant Sawardekar and Ms. Shruti Kalyankar, Advocate for applicant. Ms. Revati Mohite Dere, Advocate for respondent no. 2. Mr. A.S. Shitole, A.P.P. for State. CORAM : K.U. CHANDIWAL,J. DATED : OCTOBER 20, 2011 P.C. Heard finally. 2. The applicant is accused no. 19 in Special Case No. 53 of 2006 for the offence punishable under section120(B) I.P.C. read with 409, 420, 467, 468, 471 IPC and section 13(2) read with 13(i)(d) of Prevention of Corruption Act, 1988. 3. The accused/applicant was Fund Manager of SBI Mutual Fund 1 hvn Cri.Revn. appln.306.2010 (for short "SBIMF"). SBIMF was constituted as a trust with SBI as Sponsor and SBMF Trustee company Private Limited as the Trustee. The trustee ensures that the transactions entered into by the Associated Management Company (AMC) are in accordance with SEBI Regulations and it also reviews the activities carried on by the AMC. The applicant was one of the member of the Investment Committee being Fund Manager which consist of Managing Director, Executive Vice President, Senior Vice President, Chief Investment Officer, Head of Research or Research Analylst, Chief Dealer or Assistant Dealer and All Fund Managers. The applicant was to take part in the deliberations regarding investment in shares of different companies. 4. In the instant case the applicant had signed the discussion sheets for purchase of shares. These discussion sheets, thereafter are to be put forward in the Investment Committee for discussion and thereafter decision in respect of approval for purchase or rejection of shares has to be taken. The discussion sheet if approved would be signed by the participants. Thereafter the Chief Dealer would place order with Stock Brokers for purchase of shares. 2 hvn Cri.Revn. appln.306.2010 5. On 7.3.2000 discussion has taken place in the meeting attended by the applicant as Fund Manager wherein decision to purchase 1 lac. shares of Padmini Polylmers Ltd. (for short PPL) at the rate of Rs.254/- per share was taken. Another discussion sheet in respect of purchase of 40000 shares of PPL at the rate of Rs.250/- was also signed by applicant Ajay Bodke with Assistant Dealer Smt. Aparna Nirgude, Head of Research Divya Krishnan, Mr. Piteamber Chaudhary, Senior Vice President, Executive Vice President, P.P.R. Upadhyay and Managing Director. The discussion sheets dated 24.5.2001 in respect of sale of shraes of PPL at the rate of Rs.11/-, was signed by the applicant Ajay Bodke with other officers. 6. On 18.2.2000 SBIMF received offer from M/s. Triumph International Finance Limited (TIMFL) (A3) to sale 22 lac shares of M/s. PPL (A28). The transaction was not approved. However, fresh note was put up by another Fund Manager strongly recommending to purchase shares from M/s. TIFL a non-empaneled broker indicating that the offer by M/s. Triumph International was at the price of Rs.164.85 as against shares prevailing market price of Rs.177/- and mutual fund is 3 hvn Cri.Revn. appln.306.2010 not able to have acquired 22 lacs shares from market. Inspite of objections, the then M.D. of SBIMF approved purchase of 22 lac shares of M/s. PPL through TIFL on the recommendation of the Fund Manager. 7. The learned counsel for the accused/applicant submits that the applicant being Fund Manager with 30 other accused persons, has very limited role in the transaction. He has least capacity to influence decision of the Investment Committee. The shares were purchased on available price at particular date and not beyond that from the dealer. The shares were subsequently sold in the market may be at the lessor price and thereby SBIMF suffered loss. However, in such property offences dishonesty is to be surfaced. The set of mind accompanying the act is essential which is apparently lacking. No favour or gratification or monitory gain is received by the accused/applicant in the said transaction of purchase of shares. Even CBI accepts that the prices were not rigged. The fall of PPL shares was consistent with the fall in the market of identical companies belong in Information Technology categories irrespective of its business past and future. The learned counsel submits loss must be wrongful, intentional and of private gain and no such private gain is surfaced in the transaction and consequently 4 hvn Cri.Revn. appln.306.2010 no legal liability or loss. SBIMF did not put any grievance against accused/applicant or entire committee. On the contrary, the applicant has received letter of appreciation dated 17.3.2004. The prosecution has followed unhealthy practice of pick and drop as Chief Dealer Ajit George and Assistant Dealer Aparna Nirgule are not arraigned as accused, though they had major role in the transaction. However, on decision to purchase 20 lac of shares of PPL accused applicant has not signed nor he has chosen M/s. Triumph International as its dealer to sale shares. PPL was listed company of Stock Exchange. There is nothing that the case would be turned into conviction against the accused/applicant. It may be investers were cheated by Ketan Parikh and Company. However, it would not be indicative of guilt of SBIMF or accused/applicant. As SBIMF is naturally victim of fraud by Ketan Parikh. 8. The learned counsel submits the real anger and animous of CBI is against Ketan Parikh while SBIMF is victim of circumstances. The report of Dr. Arvind Virmani, Chief Economic Advisor, Finance Ministry, Government of India, carries weightage to the report of Khare Committee, a Chartered Accountant. Khusro report not being the part of 5 hvn Cri.Revn. appln.306.2010 the chargesheet was ignored by the learned Sessions Judge. 9. The learned counsel for CBI submits that the entire transaction of sale of PPL shares to SBIMF is network of conspiracy hatched with coordination of the market rigger Ketan Parikh and his defunct companies. The submission of the other companies which were shown to be holding shares of PPL indicated they do not purchase said shares. They did not put in consideration of PPL and consequently sale of PPL shares by these companies through M/s. Triumph International is an arrangement inter se in the league with Fund Manager. She has invited my attention to Ganesh's statement, an employee of M/s. Triumph International. The shares owned were rooted back. She pointed, requisite caution as was expected of the accused/applicant as Fund Manager as to the background of the company with which fund was being invested was not carried. The concerned report prepared on 12.2.2000 by Sonia Sharma was inaccurate and full of falsehood. Shares were purchased between 15.2.2000 and 18.2.2000, though M/s. Triumph International was not empaneled company with SBIMF. The learned counsel invited my attention to the statements of Mr. Ashwinikumar Dinesh, Rajkumar, Arpana. 6 hvn Cri.Revn. appln.306.2010 10. Reading statement of Ajit George, it is apparent that the responsibility to management of fund lie with Fund Manager (accused applicant). Though Ajit George has executed deal of 22 lacs of shares, primary requirement, expected to be carried by the accused/applicant to verify the back record, previous history, earlier balance sheet, assets of the PPL was not carried. A rozy picture was presented of PPL to ensure that the said shares are put forward to be purchased by SBIMF. The investment of SBI of Rs. 64 Crores and due to sale at very low price subsequently SBIMM has suffered wrongful loss of Rs.60.90 Crores during the period 1999-2000. The accused/applicant does not dispute that the discussion sheets for purchase of shares of PPL were signed by him and it was at his recommendation, that the proposal to purchase shares was advanced. 11. Let us venture to importance of a Fund Manager in the system. The Fund Manager has naturally sharp eye to monitor gouge and understand changes in the market. The Fund Manager gear up to meet new challenges environments in the market. He has ability to capture growth potentials of securities and has to manage complex port folios as 7 hvn Cri.Revn. appln.306.2010 well as delivery optimum results of their knowledge. It is selection of securities by Fund Manager which is based on incisive search, intensive coverage, activities of the entering into transaction to purchase shares is further projected. 12. In the light of this situation, the role imposed, capabilities of the accused/applicant as Fund Manager carries importance and he has by virtue of his status definitely decisive role to change mind set to either purchase shares of PPL at particular moment or to withdraw from purchase of the said shares. It is curious a note of caution was forwarded by Ajit George that M/s. Triumph International was not an empaneled company. However, on subliminal advertising gushed by the accused applicant as Fund Manager, prodded to enter into transaction of purchase of shares though the shares had no worth in the market and PPL had no prospects and potentiality to generate price of the shares in future. 13. Everybody in the Investment Committee indeed was aware that M/s. Triumph International is a front company of Ketan Parikh, Speculator and rigger. In the statement of Mr. B.K. Bhatia, it is confirmed that Mr. Ketan Parikh's wife and other family members had 8 hvn Cri.Revn. appln.306.2010 majority of shares in Triumph securities. It would not have been desirable for the mutual fund by avoiding recognized sources to deal directly with M/s. Triumph Securities. Mr. B.K. Bhatia dealer of M/s. Triumph International used to meet dealer, Fund Managers including applicant. He had presentation of PPL at the premises of SBIMF. He also organized meeting of Vivek Nagpal, officers of SBIMF including applicant. He even indicated that there were relations of Fund Manager and Vivek Nagpal. 14. There is prima facie material that the applicant has connived with other co-officials of SBIMF to purchase shares of PPL by mis use of official position resulting in huge loss to SBIMF. The statement of Arpana Nirgude speaks of situation at the material time. Khare Bhadnari report dated 29.7.2005 found that there were commission or omission in the investment appraisal of the PPL shares. The earning per share (EPS) for 18 months period was not analyzed. The annual EPS from December 1998 and June, 2000 was only Rs.3.90 and 7.33 respectively. The earnings of 17.80 Crores for the period of December, 1998 including miscellaneous income from investment activities of Rs.12.93 9 hvn Cri.Revn. appln.306.2010 Crore and higher profits due to change in Inventory. valuation policy. Thus apparently the earning of PPL shares was negative by 0.87 Crores. The book value of the share was never Rs.200/-. It was Rs.91.22, 69.81 and 78.07 respectively as on 30.6.1996, 30.6.1997 and 31.12.1998. Naturally, book value should have been checked, verified by the accused applicant as Fund Manager as the entire activities of the Investment Committee basically starts with his foundation and research report and analysis. Weakness and threats were not disclosed so strongly and opportunities were broadly elaborated by the accused applicant as Fund Manager. Khare report informs not only in the research report, even purchase execution was full of irregularities. The investment committee, Managing Director, CIO had decided to purchase 1020 lac. shares of PPL on 15.2.2000. However, till 18.2.2000 no share could be purchased from the market. Yet further decision of acquisition of 13 lacs. of shares was taken on 18.2.2000, which was surprising and no justification for the same was available on the discussion sheet. It is pointed, ironically offer of 22 lac shares was made by Triumph on 18.2.2000 and it was accepted on 21.2.2000. 15. Analyzing the papers, it is apparent before taking investment 10 hvn Cri.Revn. appln.306.2010 decision, the Investment Committee should have properly crystalised the audited balance sheets for 18 months period in December, 1998 which the accused applicant as Fund Manager has failed to comprehend. 16. The learned counsel for the accused/applicant has critisized to the factum of FIR not disclosing the name of the accused applicant. However, it will not dilute the merits as the name of the accused applicant could be added at any subsequent stage, if any investigation as claimed is figured. The criticism is at the first draft charge tabled by the CBI is inconsequential as it was not to be acted upon. It was only for the submission of the court. The second draft charge was tabled before the court. 17. Though the learned counsel submits that there was no wrongful gain by employees of SBIMF, however, there could not be direct evidence of such wrongful gain as the monitory or extraneous considerations has its feedbacks at several other places. It is true in all the property offences, dishonesty is set of mind accompanying the act is essential. However, the set of mind of accused applicant with others was certainly to cause benefit in rigging movement of Ketan Parikh. 11 hvn Cri.Revn. appln.306.2010 Accused had ensured purchase of shares of PPL at higher prices and in magnitude without there being proper base of potential to said PPL. It may be correct that at the material time, shares of Information Technology identically dropped down. However, it is also to be seen, that other companies to which Mr. Bhat has given reference has solid background with magnanimous work culture, good potentiality, credibility yet there was no such ornamental culture associated to PPL. The other I.T. companies survived the storm of market hostility and generated strength due to basic sound culture. However, PPL was a front company of market rigger and showed depravity to the value paid by SBIMF.. The loss caused to SBIMF was prima facie wrongful and intentional and certainly concomitant to provide gain to others. This attracts misconduct in terms of Prevention of Corruption Act. The slopy research of Sonia Sharma has not been checked by accused/applicant nor he has protested at any time that the transaction in respect of purchase of 22 lac shares of PPL was mooted on wrong ideas. The collective decision was apparently as part of conspiracy to ensure wrongful loss to SBIMF and consequently the investors at large are the sufferers. The conspiracy has different shades which are to be indicated thread bare by 12 hvn Cri.Revn. appln.306.2010 evidence and documentation from statements of witnesses. 18. Considering the overall effect of the matter, the statement of PW 2 Arpana Nirgude, PW 6 Ajit George, PW 16 Bhitia, I find sufficient material to frame charge against the accused applicant. It may be that there is strong suspicion. however, this leads the court to think that there is ground for presuming that the accused has committed offence and consequently it is not open to the court to say that there is no sufficient ground for proceeding against the accused. 19. Application lacks merit and the same is dismissed. (K.U. CHANDIWAL,J.) 13