1 REVN437/2009 REVN438/2009 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL REVISION APPLICATION NO. 437 OF 2009 1. M/s Capman Financials Ltd., ) a Company incorporated under ) the Companies Act 1956, having ) its Office address at C/o 11-A, ) Anupam Consultants, 66, Tamarind) Lane, 3rd Floor, Fort, Mumbai- ) 400 023. ) ) 2. Suresh Chandra Kookada ) Aged 50 years, Indian Inhabitant ) of Bombay Occupation Service, ) residing at 301, Labh Samruddhi, ) 85 Bajaj Road, Vile Parle (W), ) Mumbai – 400 056 ) ) 3. Sharad Saboo ) Age 49 years, Indian Injhabitant ) of Bombay, Occupation service ) residing at B-40/01, Yogi Nagar ) Borivali (West), Mumbai 400 091 ) ..... Applicants (Orig accused Nos. 2, 3 and 4.) v/s State CBI. ) .... Respondent (Orig. Complainant) Mr. Vijay Pradhan, Senior counsel with Mr. Ajay Khandhar and Mr. Himanshu V. Pradhan i/b M/s Ajay Khandhar & Co. for the applicants. Mr. D.A. Nalawade, Government Pleader (O.S.) for CBI – Respondent No.1 2 REVN437/2009 REVN438/2009 Mrs. V.R. Bhonsle, APP for the State. CORAM: V.M. KANADE, J. DATE : 21st October, 2009 WITH CRIMINAL REVISION APPLICATION NO.438 OF 2009 1. M/s Networth Stock Broking ) Limited, a company registered ) under the Companies Act, 1956 ) having its Office address at 2nd ) Floor, D.C. Silk Mills Compound, ) Kondivita Road, Andheri (East) ) Mumbai 400 059. ) ) 2. Suresh Pukhraj Jain ) Age 45 years, Indian Inhabitant ) of Bombay, Occupation Business ) residing at 701, Vasant Vihar, ) 10th Floor, Santacruz (East), ) Mumbai – 400 055 ) .... Applicants. (Org. accused Nos.5 and 6) V/s The State (CBI) ) ....Respondent (Org. complainant) Mr. Shrikant Bhatt, Senior Counsel, Mr. Ajay Khandar and Mr. Himanshu V. Pradhan, Counsel i/b Ms/ Khandar & Co. for the applicants. Mrs. P.H. Kantharia, APP with Mr. Y.M. Nakhwa for CBI – Respondent No.1. Mr. V.R. Bhonsle, APP for the State. 3 REVN437/2009 REVN438/2009 CORAM: V. M. KANADE, J. DATE : 25th October, 2010. JUDGMENT: 1. Both these applications can be disposed off by a common Judgment since applicants in both these applications have challenged the order passed by the Special Judge in Misc. Application No.316 of 2008 in Special Case No. 72 of 2009 and on the application below Exhibit-14 in Special Case No.72 of 2009. 2. Applicants in Criminal Revision Application No.437 of 2009 are original accused Nos. 2, 3 and 4 and applicants in Criminal Revision Application No.438 of 2009 are original accused Nos. 5 and 6. All the accused had filed applications for discharge before the Special Court. However, the said applications were dismissed by two separate orders both dated 9/4/2009. 3. Brief facts are as under:- 4. An FIR was registered dated 22/06/2004 by CBI.ACU.VI at New Delhi for the offence punishable under section 120-B of the Indian Penal Code read with section 13(2) read with section 13(1)(d) and (e) of the Prevention of Corruption Act against Shri Praveen Chand Mohnot, Assistant Vice 4 REVN437/2009 REVN438/2009 President, Department of Investments, UTI Mumbai & Senior Vice President, UTI, Mumbai on deputation and accused No.2 – M/s Capman Financials Ltd., accused No.3 – M/s Nethworth Stock Broking Ltd., accused No.4 – M/s Nethworth Finance Services Ltd. Mumbai and accused No.5 – Renaissance Securities Ltd., Mumbai. In the complaint, it was stated that reliable information was received that Shri Praveen Chand Mohnot, while he was posted and functioning as Assistant Vice President, Department of Investments UTI, Mumbai and Senior Vice President on deputation to ISL, Belapur, New Mumbai during period from 10/01/1989 to 31/03/1998, abused his official position as public servant and amassed assets to the tune of Rs 22,92,034/- by corrupt and illegal means which are disproportionate to his known sources of income. It was alleged in the FIR that Praveen Chand Mohnot – accused No.1 entered into criminal conspiracy, abused his official position as public servant and rendered undue advantage by giving substantial business to M/s Renaissance Securities Ltd and M/s Networth Stock Broking Firm Ltd. between July, 1996 and June, 1998. It was further alleged that an amount of Rs 12,75,531/- was credited in the account of Shri Kishanmal Mohnot, father of Shri Praveen Chand Mohnot in 1997 from the accounts of M/s Capman Financial Services Ltd. - original accused No.2, M/s Networth Finance Ltd. and other firms and it was also disclosed that Shri Atul Hanwatchand Bhansali, Sub broker of M/s Renaissance Securities Ltd. paid on 07/07/1997 an amount 5 REVN437/2009 REVN438/2009 of Rs 2.5 lakhs to the seller of the flat (D-1, Sunita Apartments, Peddar Road, Mumbai) directly on behalf of Shri Praveen Chand Mohnot and, therefore, the accused had committed an offence punishable under section 120-B and under section 13(2) read with section 13(1)(d) & (e) of the Prevention of Corruption Act, 1988. Charge-sheet was filed on 14/12/2005 and in the final charge-sheet, offences punishable under sections 120-B and 13(1)(d) were dropped and so far as applicants herein are concerned, only charges which were levelled against them were under section 109 of the Indian Penal Code i.e abetment read with section 13(2) read with section 13(1)(e) of the Prevention of Corruption Act. 5. Applicants in both the Revision Applications filed applications for discharge. In the application No.437 of 2009 filed by original accused Nos. 2, 3, and 4 i.e. M/s Capman Financials Ltd & other Directors it was submitted that there was no dealing between the said applicants and the UTI wherein the accused were then employed. It was submitted that there was no dealing whatsoever between applicants and accused No.1 at any time. It was also submitted that applicant No.2 had no business relationship with UTI where accused No.1 was working. It was further submitted that the applicant No.2 was not even registered as share broker and, as such, could never have done any business or dealings with the UTI. It was also submitted that applicant accused 6 REVN437/2009 REVN438/2009 No.2 – Company was never empaneled with the UTI to do any stock broking business or dealings with UTI. It was further submitted that this fact was admitted by CBI. It was, therefore submitted that linking of the personal loan transaction between father of accused No.1 Kishanmal Mohnot and accused Nos. 2, 3 and 4 had no relevance whatsoever. It was further submitted that the transaction was fully disclosed in the Books of Accounts and Income-tax Returns of the applicants and the loan had been repaid fully by the borrower Kishanmal Mohnot. It was further alleged that the applicant No.1 was a Company carrying on business of advancing short term/long term loans and credit to individuals either on securities or on guarantees or even without securities as per Memorandum of Articles of Association of the Company which was established with the sole objective of being a Financial Company. 6. So far as the applicants in Criminal Application No.438 of 2009 are concerned, they are original accused Nos. 5 and 6. They had also filed an application for discharge. In the application for discharge it was submitted that the allegation of criminal misconduct, though it was mentioned in the FIR, was not found in the charge-sheet which was filed against accused No.1, the gist of allegations against these applicants - original accused Nos. 5 and 6 is as under. One Premchand Surana (co-brother of accused No.1), 7 REVN437/2009 REVN438/2009 Shri Suresh Pukhraj Jain – accused No.6 and Shri Rajendra S. Mutha were the Directors of the applicant – Company. The said Shri Premchand Surana, co-brother of the public servant – accused No.1 resigned from the directorship of the applicant – company on 17/06/1997. The said company was empaneled with UTI on 24/05/1996 as a share broker. During the course of investigation, it was noted that an amount of Rs 4,75,000/- was transferred from Account No. 11611 of the applicant – company to the Current Account of one M/s Bahubali Investments Limited on 07/04/1997 and 02/05/1997. Shri S.P. Jain – accused No.6 was the Director of M/s Bahubali Investments Limited. Thereafter, the said amount of Rs 4,75,000/- was transferred from the account of Bahubali Investment Ltd to the joint Account No.141534 standing in the name of Shri S.P. Jain and his wife Kanta Jain. During the course of investigation, it was also noticed that the amount of Rs 4,75,000/- and Rs 3,00,000/- was transferred to Account No.440547 in the name of Shri Kishanal Mohnot, father of accused No.1 by issuing a cheque signed by Smt. Kanta Jain and subsequently the said amount was given by Shri Kishanmal Mohnot to Smt. Anju Mohnot deposited in the joint Account No.438853 of accused No.1 for purchase of Flat D-1, Sunita Apartments, Peddar Road, Mumbai. It was alleged that the accused No.1 while functioning in the department of market operation as a dealer in UTI during the period from 24/05/1996 to 27/11/1998 had allotted substantial business to the applicant 8 REVN437/2009 REVN438/2009 – company to the tune of Rs 23,19,63,782/- and, therefore, applicant – company abetted accused No.1 in acquisition of the flat by routing Rs 3,00,000/- to his wife, who, in turn, issued a cheque for the same amount in favour of her father- in-law, which was further transferred into the joint Account of accused No.1 and his wife and was paid in favour of the flat owner Smt. Pramila S. Parmar for purchasing the said flat. 7. It was firstly submitted that since the charge under section 120-B of the Indian Penal Code and 13(1)(d) of the criminal misconduct had been dropped by CBI in the Final Report, the question of receiving any amount in any manner by abusing official position of the public servant by accused No.1 by giving substantial business to the applicant – company was irrelevant and the said question did not arise. It was secondly submitted that since the charges under section 13(1)(d) and 120-B were dropped, the question of abetment under section 109 against the applicants did not arise. Thirdly, it was submitted that the payment of Rs 4,75,000/- was made by the applicant – company to Bahubali Investments Limited in its normal course of business and the said Bahubali Investments Limited was also a separate entity and, therefore payment made by the applicant – company to Bahubali Investments Limited could not in any manner be related to payment made by Bahubali Investments Limited in the personal account of Smt. Kanta Jain. It was then 9 REVN437/2009 REVN438/2009 submitted that there was no question of abetment in respect of acquisition of the property by accused No.1 which was allegedly disproportionate to his known sources of income under section 13(1)(e). 8. On the other hand, Shri Nalawade, the learned Counsel appearing on behalf of Respondent invited my attention to the affidavit in reply filed by CBI and was at pains to point out how the amount was paid by the applicants – original accused Nos. 2, 3 and 4 and original accused Nos. 5 and 6 for the purpose of purchasing the Flat at Peddar Road. It was submitted that, therefore, the applicants had abetted the public servant in acquiring the property and, therefore, were liable to be charged for the offence punishable under section 109 of the Indian Penal Code and under section 13(1) (e) of the Prevention of Corruption Act. It was further submitted that there was material on record to show that Shri Kishanmal Mohnot to whom the loan was given by applicants – original accused Nos.2, 3 and 4 did not have any source of income and the said loan was given without any security and the loan was repaid only after the FIR was lodged. It was therefore urged that the original accused Nos. 2, 3 and 4, therefore, were liable for the offence of abetment for the purpose of helping the public servant – accused No.1 in acquiring the property. Similar allegations were made against original accused Nos. 5 and 6. It was alleged that the amount of Rs 4,75,000/- was paid by 10 REVN437/2009 REVN438/2009 accused Nos. 5 and 6 to M/s Bahubali Investments Limited which money thereafter landed in the account of wife of accused No.1. It was also alleged that substantial business was given by accused No.1 to accused Nos. 5 and 6 and in return the said amount was paid by these accused to accused No.1 indirectly. 9. I have heard the learned Counsel appearing on behalf of the applicants and the learned Counsel appearing on behalf of the CBI at length. I have given my anxious and thoughtful consideration to the submissions made by the learned Counsel on either side. 10. Before taking into consideration rival submissions, it will be necessary to keep in mind the powers of the court while deciding the application for discharge filed under section 227 of the Criminal Procedure Code. 11. In the present case, applicants are not relying on their own documents and have contended that even if the case of CBI is accepted at its face value, the ingredients of offence of abetment are not attracted against the applicants in so far as charge of 13(1)(d) read with 13(2) of the Prevention of Corruption Act is concerned. The law on this point is very succinctly laid down by the Supreme Court in its judgment in State of Bihar vs. Ramesh Singh1 in which it has been observed in para 4 as under:- 1 AIR 1977 SC 2018 11 REVN437/2009 REVN438/2009 “4. ...............If “the Judge considers that there is not sufficient ground for proceeding against the accused, he shall discharge the accused and record his reasons for so doing”, as enjoined by S.227. If, on the other hand, “the Judge is of opinion that there is ground for presuming that the accused has committed an offence which- .......... .............. ........... ............. (b) is exclusively triable by the Court, he shall frame in writing a charge against the accused”, as provided in S. 228. Reading the two provisions together in juxtaposition, as they have got to be, it would be clear that at the beginning and the initial stage of the trial the truth, veracity and effect of the evidence which the Prosecutor proposes to adduce are not to be meticulously judged. Nor is any weight to be attached to the probable defence of the accused. It is not obligatory for the Judge at that stage of the trial to consider in any detail and weigh in a sensitive balance whether the facts, if proved, would be incompatible with the innocence of the accused or not. The standard of test and judgment which is to be finally applied before recording a finding regarding guilt or otherwise of the accused is not exactly 12 REVN437/2009 REVN438/2009 to be applied at the stage of deciding the matter under S. 227 or S. 228 of the Code. At that stage the Court is not to see whether there is sufficient ground for conviction of the accused or whether the trial is sure to end in his conviction. Strong suspicion against the accused, if the matter remains in the region of suspicion, cannot take the place of proof of his guilt at the conclusion of the trial. But at the initial stage if there is strong suspicion which leads the Court to think that there is ground for presuming that the accused has committed an offene then it is not open to the Court to say that there is no sufficient ground for proceeding against the accused. The presumption of the guilt of the accused which is to be drawn at the initial stage is not in the sense of the law governing the trial of criminal cases in France where the accused is presumed to be guilty unless the contrary is proved..........................” 12. Keeping in view the aforesaid principles, it will now have to be seen whether the prosecution has made out a case for framing charge against the applicants. 13. It is an admitted position that though, initially, in the FIR it was alleged that the public servant – accused No.1 had 13 REVN437/2009 REVN438/2009 committed an offence punishable under section 13(1)(d), 13(1)(e) read with section 13(2) of the Prevention of Corruption Act read with section 120-B of the Indian Penal Code, when the charge-sheet was filed, the charge under section 13(1)(d) of the P.C. Act and 120-B of the Indian Penal Code has been dropped against all the accused. The only charge, therefore, which is sought to be leveled against the applicants herein is that of abetment of the public servant in respect of section 13(1)(e) which is possession of assets which are disproportionate to the known sources of income of the public servant. 14. In this context, therefore, it will be necessary to examine provisions of section 109 of the Indian Penal Code and section 13(1)(e) of the P.C. Act. Section 13(1)(e) of the P.C. Act reads as under:- “13. Criminal misconduct by a public servant.- (1) A public servant is said to commit the offence of criminal misconduct,- (a).............. (b).............. (c)............. (d)............ (e) if he or any person on his behalf, is in possession or has, at any time during 14 REVN437/2009 REVN438/2009 the period of his office, been in possession for which the public servant cannot satisfactorily account, of pecuniary resources or property disproportionate to his known sources of income. Explanation.- For the purposes of this section, “known sources of income” means income received from any lawful source and such receipt has been intimated in accordance with the provisions of any law, rules or orders for the time being applicable to a public servant.” Perusal of the said sub-clause (e) clearly discloses that what is made punishable under the said section is the possession of pecuniary resources or property at the time when the offence is registered against him or at any time during the period of his office he has been in possession of pecuniary resources or property. It is a well settled position in law that mere possession of the property; movable or immovable, is not an offence but if the public servant is not in a position to give explanation satisfactorily about possession of the movable or immovable property in the context of his known sources of income, only then the offence is complete. Another feature which has to be noticed from the said sub- 15 REVN437/2009 REVN438/2009 section 13(1)(e) is that the public servant or any other person on his behalf who is found to be in possession of movable or immovable property can be prosecuted under this sub-section. 15. In this context, it has to be noted that neither against his father-in-law nor his wife nor co-brother, charge of section 13(1)(e) is leveled and they are not made accused in this case. 16. So far as the applicants are concerned charge which is leveled against them is of abetment under section 109 of the Indian Penal Code. Section 109 reads as under:- “109. Punishment of abetment if the act abetted is committed in consequence and where no express provision is made for its punishment.- whoever abets any offence shall, if the act abetted is committed in consequence of the abetment, and not express provision is made by this Code for the punishment of such abetment, be punished with the punishment provided for the offence. Explanation.- An act or offence is said to be committed in consequence of 16 REVN437/2009 REVN438/2009 abetment, when it is committed in consequence of the instigation, or in pursuance of the conspiracy, or with the aid which constitutes the abetment.” 17. So far as applicants in Criminal Application No.437 of 2009 are concerned, it is an admitted position that applicant No.1 – original accused No.2 is a Finance Company engaged in the business of providing finance i.e. short term/long term loans and credit to individuals. It never had any business dealings with the Unit Trust of India. Neither the accused No.1 nor UTI at any point of time had any business transaction with original accused No.2 - M/s Capman Financial Ltd. What is alleged against the said applicants is that the Company had given a loan to the father of the public servant – accused No.1 of an amount of Rs 3 lakhs and it was transferred by applicant No.3 on 11/04/1997 from the account of M/s Capman Market Ltd to the account of M/s Capman Financial Ltd and, thereafter, three cheques amounting to Rs 3 lakhs, Rs 2 lakhs and Rs 1.25 lakhs were issued from the account of M/s Capman Financial Ltd on 11/04/1997, 27/5/1997 and 09/06/1997 in favour of Shri Kishanmal Mohnot, father of accused No.1. The cheque of Rs 3 lakhs was issued by applicant No.3 Shri Sharad Saboo as a Director of M/s Capman Financial Market Ltd. The cheque of Rs 2 lakhs was issued by applicant No.2 Shri 17 REVN437/2009 REVN438/2009 Suresh Chandra Kookada, as a Director. The cheque of Rs 1.25 lakhs was jointly issued by applicant Nos. 2 and 3. Further, the cheque of Rs 75,000/- was issued by Shri Sharad Saboo – applicant No.2 in favour of Kishanmal Mohnot in his personal capacity on 23/05/1997 from his personal account. These cheques were deposited in personal account of Shri Kishanmal Mohnot at Central Bank of India, New Marine Lines, Mumbai on various dates. 18. It is the case of CBI, as found in affidavit in reply filed by them, that Shri Kishanmal Mohnot has no tangible sources of income after his retirement from the Bank of Rajsthan in 1988 and he received retirement benefits to the tune of Rs 3.44 lakhs on 27/01/1995. According to CBI, there was no substantial regular transaction until March, 1997 in both the accounts which were standing in the name of Kishanmal Mohonot and suddenly the balance in his account was increased from 17/04/1997 to 17/06/1997. It is an admitted position that in the account of M/s Capman Financial Ltd., the said transaction was reflected as personal loan given to Mr. Kishanmal Mohnot and it was reflected in their Balance Sheet/Income-tax Returns for 1988-99 to 2003-04. No loan document was executed between M/s Capman Financial Ltd. or Sharad Saboo and Shri Kishanmal Mohnot. According to CBI, the said amount of Rs 6.25 lakhs and Rs 75,000/- was transferred by Shri Kishanmal Mohnot to joint account of Shri Praveen Chand Mohnot and his wife 18 REVN437/2009 REVN438/2009 Smt. Anju Mohnot and which amount was utilized for acquisition of property i.e. Flat at D-1, Sunita Apartments, Peddar Road, Mumbai. Since this was the only allegation leveled against M/s Capman Financial Ltd and its two Directors, the question is whether prima facie there is any material to indicate that they had abetted the offence committed by the public servant – accused No.1. 19. Reverting back to the provisions of section 13(1)(e) of the P.C. Act, it has to be noted that what is made punishable under this section is the possession of property disproportionate to the known sources of income which cannot be satisfactorily accounted and not the acquisition of the property. In the present case, admittedly, since the offence of section 13(1)(d) has been dropped by the prosecution, it is not their case that money belonging to the public servant – accused No.1 was in possession of M/s Capman Financial Ltd. and it was routed back to the public servant – accused No.1 for the purpose of purchasing the flat at Peddar Road. Even otherwise, so far as M/s Capman Financial Ltd. are concerned, no favour has been made on behalf of accused No.1 to the said applicants and, admittedly, there was no business transaction between the two. M/s Capman Financial Ltd. – accused No.2 is a Finance Company and is in the business of giving finance i.e. short term/long terms loans. It is an admitted position that the said amount has been repaid to them in 2003 and the loan 19 REVN437/2009 REVN438/2009 account has now been closed. There is no material on record to indicate