Criminal Appeal (SJ) No.525 OF 2007 With Criminal Appeal (SJ) No. 496 OF 2007 Against the judgment and order, dated 4.5.2007 passed by the Special Judge, C.B.I., North Bihar, Patna in Special Case No. 3/1982, R.C. No. 1 of 1982. … Cr. Appeal No. 525 of 2007: Bijendra Nath Tripathi @ B N Tripathi, son of Late Jang Bahadur Tripathi, village Chandwa, PS Ara Nawada, District Bhojpur – Appellant. Vs. The State of Bihar through the C.B.I. – Respondents. … Cr. Appeal No. 496 of 2007: Raj Kumar Darolia, son of Late Jagdish Prasad Darolia, Mohalla Jamalpur Gogri, PS Gogri, District Khagaria – Appellant. Vs. 1) The State of Bihar, 2) Union of India through the C.B.I. – Respondents. For the appellant in Cr. Appeal No. 496/2007: Mr. Umakant Shukla and Mr. Anil Kumar Choudhary, Advocates. For the appellant in Cr. Appeal No. 525/2007: Mr. Awadhesh Kumar Mishra , Mr. Arun Kumar Mandal, and Mr. Vijay Kumar, Advocates. For the respondent in both the cases: Mr. Bipin Kumar Sinha, Advocate. P R E S E N T THE HON'BLE JUSTICE SMT. SHEEMA ALI KHAN S.A. Khan,J. These appeals are directed against the judgment and order, dated 4.5.2007 passed by the Special Judge, C.B.I., North Bihar, Patna in Special Case No. 3/1982, R.C. No. 1/1982 by which the appellants have been convicted to undergo rigorous imprisonment for a period of three years for the offence under section 420 of the Penal Code and to pay a fine of Rs. 25,000/-. Late S.N. Jha is further sentenced to undergo rigorous imprisonment for a period of three years under section 477A of the Penal Code and three years under section 418 of the Penal Code 2 along with a fine of Rs. 25,000/-, two years under section 5(2) of the Prevention of Corruption Act. Both the appellants are directed to undergo six months‟ rigorous imprisonment for the offence under section 120B of the Penal Code read with section 420 of the Penal Code. Appellant Raj Kumar Darolia is to undergo sentence of three years under section 420 of the Penal Code and six months rigorous imprisonment under section 120B read with section 420 of the Penal Code. All the sentences were directed to run concurrently. 2. Three persons i.e. the two appellants and one Surya Narain Jha were convicted by the judgment and order under appeal. Late S.N. Jha who was the then Bank Manager of Mahesh Kund branch of the State Bank of India (hereinafter referred to as „the S.B.I.‟). Appellant B.N. Tripathi was the Head Cashier of the said bank and appellant Raj Kumar Darolia was the alleged partner of M/s. Kiran Machinery Store, a private dealer of pump sets and boring materials. 3. The allegations as made out in the F.I.R. are that Sri S.N.Jha while functioning as the Branch Manager of S.B.I. during January 1981 to June 1981 in conspiracy with B.N. Tripathi, Branch Head Cashier and Mahendra Thakur floated an agricultural loan to the tune of Rs. 38,82,348/- beyond his competence and supposedly in violation of the instructions / norms of the bank in the name of 532 borrowers including several fake and fictitious persons towards 524 pump sets, 531 boring and 5 thrashers and thereby caused a great loss to the S.B. I. as the loan could not be 3 recovered. The said pump sets, 530 borings and 5 thrashers were purchased through M/s. Kiran Machinery Store. Debi Prasad Darolia was the partner of M/s. Kiran Machinery Store who is said to have supplied the said machineries to different loanees. Debi Prasad Darolia died before the trial commenced. His brother Raj Kumar Darolia is one of the appellant before this court. 4. It is alleged that the Branch Manager Late S. N. Jha allowed the loans without appraising the loan applications. On examining it was found that a number of loan forms were not signed, or were on blank papers, non-encumbrance certificate was not attached while sanctioning the loans in many cases, mortgage deeds were not found available on record, debit authority from the borrowers was not obtained in many cases, legal opinion regarding the loans granted was also not found on the record, delivery challan was not available in many cases, A.T.L. sheets / control card were not available, photographs of the borrowers were not found in the control card, signatures of the borrowers were not verified by the authorized official on the control cards and no inspection card was made available. The payments were made to the dealer (M/s. Kiran Machinery) on the basis of the list of persons submitted by them without submission of the loan applications and without execution of the security document. It is alleged that the Branch Manager did not inspect a single pump set, boring and thrasher before making payment to the dealer. In fact the F.I.R. discloses that all the necessary formalities in many cases were given a go bye. With regard to the alleged borrowers it is said that some of them did not 4 exist, some were minors, some denied ever having applied for the loan and, therefore, it has been alleged that S.N. Jha allowed Late Debi Prasad Darolia and Raj Kumar Darolia. Partners of M/s. Kiran Machinery Store withdrew fund of Rs. 33,82,273/- out of the funds transferred to the account of M/s. Kiran Machinery Store, Gogri, Jamalpur. These Cheques were issued by Debi Prasad Darolia and Raj Kumar Darolia and were passed by S.N. Jha and B.N. Tripathi. Therefore, the allegation is that all the accused have committed criminal misappropriation. 5. The prosecution has examined 45 witnesses in this case. PWs 1 to 35 and PW 37 are the alleged loanees. PW 5 has proved the sanction order marked as ext. 1, dated 13.9.1983 issued by the Chief General Manager, namely, N. Roy. The rest are loanees who have stated in court that they had applied for the loan but did not receive the boring, pump, some have stated that they have filled up the forms for the loan but the loan was not sanctioned, whereas other loanees alleged that the loans were sanctioned in false names and on false and fake documents. None of these witnesses, however, have directly or indirectly been able to connect the appellants i.e. Head Cashier and Raj Kumar Darolia, partner of M/s. Kiran Machinery with the allegations levelled against them. To illustrate, the loanees have not stated that they had ever approached B.N. Tripathi or that he had veted their applications or for that matter forwarded their loan application forms to the Branch Manager. In fact as far as Pws 1 to 4, 6 to 35 and 37 are concerned, the prosecution has only been able to show 5 by examining these witnesses that the loans granted by the Bank Manager was not done in accordance with law and the procedure which is said to be followed for grant of such agricultural loans. It shows the manner in which the Branch Manager had approached the whole issue and thereby had caused a loss to the bank by granting and sanctioning the loan to fictitious persons or had not followed the procedures by examining the loan documents which would have ensured proper distribution of the agricultural loan. The entire prosecution case is in fact based on the premise that Late S.N. Jha, the Bank Manager was the person solely responsible for grant and sanction of loan as well as payment of the Cheques to M/s. Kiran Machinery Store. The allegations as far as appellant B.N. Tripathi is concerned, is only to the extent that he in conspiracy with S.N. Jha and M/s. Kiran Machinery was also responsible for the so called acts of omission or commission. 6. In order to substantiate the aforesaid allegations of conspiracy the prosecution has examined PWs 36, 39 and the I.O. Pw 45. I shall discuss the evidence of the aforesaid witnesses before looking into the documentary evidence. PW 36 is Subrato Paul, Clerk of the S.B.I. posted at Mahesh Kund branch from 1979 to November 1981. His evidence would be relevant for the purpose of deciding the case. This witness is also relevant for the purpose of proving Exts. 3 to 3/22 which are pay in slip, debit voucher and credit voucher. He further goes to explain that through the „pay in‟ slip, debit voucher and the credit voucher , 75% of the payment was made. He also identifies the signature of B.N. Tripathi which 6 are marked as Exts. 3/25 to 3/29. At paragraph 11 he states that his duty in the bank was related to ledger keeping, voucher preparation, ledger posting, attending the customers, issuing tokens, opening accounts and preparation of weekly abstract. He subsequently stated that the loan paid by debit and credit vouchers was exclusively done by Late S.N. Jha. At paragraph 13 this witness has stated that credit and debit vouchers were sent to the passing authority, who used to make an entry in the scroll book and forwarded the same to the cashier for payment. He further states in paragraph 16 that there was no misappropriation as long as he was posted in the branch. He explains that payment was made of about Rs. 3 lakhs to Raj Kumar Darolia which is Exts. „A‟ to A/3. It has specifically been stated that the payment register and other registers remained in the custody of the Branch Manager. Lastly this witness has stated that his job is a clerical one and the Branch Manager has the power to allocate the work of the bank to the employees. The rest of the evidence relates to cross examination on behalf of S.N.Jha. 7. On perusal of evidence of PW 36 it would appear that the evidence given by Sri Paul does not substantiate any part of the allegations levelled against B.N. Tripathi, which would substantiate that he in conspiracy with S.N. Jha, Branch Manager was responsible for sanctioning the loan to the alleged loanees. The law of evidence with respect to the role of this appellant, will be further fortified on examination of the exhibits. 8. The next witness who is relevant for the purpose of 7 this case is PW 39, the successor Branch Manager N.C. Das, He identifies the signatures of S.N. Jha on Exts. 10 to 10/37. He affirms the fact that the loan documents were not properly prepared and states that the list of borrowers Exts. 11 to 11/27 has been prepared by S.N. Jha. The evidence of this witness is with respect to the fact that S. N. Jha was the Regional Manager of Mahesh Kund Branch which is a „D‟ class bank and was responsible for the sanction and grant of loan. 9. PW 42 has proved the signature of the Chief General Manager on the order of sanction. PW 43 Naina Nand Rai has issued the sanction order for prosecution of S.N. Jha and D.N. Tripathi, Ext. I. 10. It has been argued and submitted on behalf of B.N. Tripathi that the sanction order has been issued without application of mind and without considering the materials and the evidence on record. There is a suggestion that it was prepared by the C.B.I. and PW 43 has put his signature on the documents so prepared. This court finds no material to substantiate this part of the submission made by counsel for appellant B.N. Tripathi. The sanction order does not necessarily need to refer to the documents on which the sanctioning authority is relying to substantiate that the authority had applied its mind while sanctioning the prosecution. It is sufficient that it indicates the gist of the allegations which led the sanctioning authority to conclude that prima facie a case is made out against the concerned persons for prosecuting them for the offences alleged. 8 11. Pw 44 has proved certain documents which are Exts. 4/15 to 4/21 which relate to S.N. Jha and Exts. 4/22 to 4/24 which relate to appellant B.N. Tripathi. He also proved the signature of S.N. Jha i.e. Ext. 13/1 and the signature of B.N. Tripathi Exts. 14 to 14/1. 12. Lastly this court will consider the evidence of PW 45, the I.O. of this case. His evidence, in short, to the extent that he admits that he took the signature of Raj Kumar Darolia and also was responsible for filing of the charge sheet in this case and obtaining the order of sanction for prosecution of the accused persons. 13. On the basis of the evidence aforesaid the prosecution has tried to show to this court the involvement of B. N. Tripathi in this case. Undoubtedly this court cannot deny the fact that in fact the Bank Manager had sanctioned loans, perhaps, beyond the limitation to which he was entitled. It would also appear from the evidence of PWs 1 to 35 and 37 that the documents for preparation of loan were not made in accordance with the requirements of the bank. The fact that some of the loanees existed only on paper also indicates that the persons concerned had prepared the aforesaid documents in such a manner which would indicate their intention to misappropriate and cheat the bank. The machineries that were supplied by M/s. Kiran Machinery Store were found to be in short supply to the amount charged by M/s. Kiran Machinery which would lead to the conclusion that the persons i.e the Bank Manager concerned in connivance with the 9 Manager / Partner of M/s. Kiran Machinery had in conspiracy with each other misappropriated money of the bank, whereas by the sole evidence of PW 36 the prosecution has tried to prove that all the documents i.e. preparation of the list of loanees, the cash register, the scroll book and the accounts were in the hands of Late S.N. Jha. However, the prosecution has not led any evidence to indicate that S.N. Jha had conspired with B.N. Tripathi in furtherance of his intention to cheat the bank in connivance with M/s. Kiran Machinery store. In fact, PW 36 has not led any evidence been able to show that appellant B.N. Tripathi was responsible for sanctioning the loan or responsible for signing on the Cheques through which the loan amount was withdrawn through M/s. Kiran Machinery. 14. In this regard the court will now examine the documentary evidence on this issue. Much emphasis has been led by counsel for the C.B.I. on Exhibits i.e. Exts. 3 to 3/29. These are the pay-in-slips, all bearing signatures of Darolia and S.N.Jha. Not a single of these credit slips have been signed by appellant B.N. Tripathi. Exts. 4 to 4/14 which are Cheques withdrawn by partner of M/s. Kiran Machinery with respect to the loan amount have been signed by Debi Prasad Darolia. Exts. 4,12, 4/13, 4/14, 4/22, 4/23 and 4/24 have all been signed by Raj Kumar Darolia and S.N. Jha. Here again this court finds that none of the Cheques have been signed by appellant B.N. Tripathi. 15. On the basis of the evidence i.e. oral and documentary, this court finds that there is lack of evidence to 10 establish that there was any element of conspiracy as far as this appellant is concerned, either at the stage of sanctioning loan, issuing the pay slip or counter signing on the Cheques by which the loan amount was paid for the machineries to M/s. Kiran Machinery Store. 16. On behalf of Raj Kumar Darolia it has been said that he was not involved directly in the business of M/s. Kiran Machinery. It has been stated that by virtue of being brother of Debi Prasad Darolia, he has been dragged into this case and has been convicted. Appellant Raj Kumar Darolia has been convicted in this case to undergo R.I. for six months along with B.N. Tripathi under section 120B read with section 420 of the Penal code. It has been argued on behalf of Raj Kumar Darolia that he was not involved in the business of Debi Prasad Darolia. It is further submitted that in fact there is no evidence to show that the pump sets etc. were not supplied to the loanees. In fact, the prosecution has been able to bring on record the documents which would show that the machineries were not supplied. It has also been submitted that this appellant was not a partner in the firm and he cannot be held responsible for the alleged offence. In this context the evidence of PW 40 Sri Awdhesh Prasad, the Income Tax Inspector who raided the premises of Debi Prasad Darolia would be relevant. On raid he could not find the document relating to the supply of machineries to the loanees. However, he found some documents which have been marked as Exts. 12 to 12/3 as well as challans which have been marked as Exts. 12/4 to 12/87. This witness was 11 examined for the first time in court. He has not led evidence before the Officer Incharge regarding the aforesaid seizure. Ext. 12 is a partnership deed which reveals that all the bothers i.e. Raj Kumar Darolia, Binod Kumar Darolia and Debi Prasad Darolia were partners and were doing business of sale and purchase of machine parts, hardware goods and commodities of different kind in the name and style of M/s. Kiran Machinery Store. The said deed has been signed by Raj Kumar Darolia and, therefore, it has been argued that this deed of partnership has no meaning as unless it was signed by all three parties to the deed, it cannot be said to be a valid deed of partnership. The said signature is, dated 16.6.1980 i.e. before the transactions between the bank and the said firm. In order to substantiate that in fact Raj Kumar Darolia was part and parcel of M/s. Kiran Machinery, the prosecution has brought on record Ext. 4 series. Ext. 4/22 indicates that a sum of Rs. 1,52,073.20 was withdrawn by Raj Kumar Darolia. Ext. 4/23 indicates that Rs. 1,81,108.60 was withdrawn by him. These are, dated 7.4.1981, 1.6.1981 and 6.5.1981 which indicates that the account was in the name of both Debi Prasad Darolia and Raj Kumar Darolia which enabled Raj Kumar Darolia to withdraw the said amount. 17. An argument has been advanced on behalf of Raj Kumar Darolia that he was a minor in view of the fact that at the time of recording of the judgment, his age has been assessed to be 36 years of age by the Special Judge on 4.5.2007 which would mean that he would have been about 9-10 years of age in 1981. This argument is obviously unbelievable and this court has to hold 12 that the assessment of the court is unrealistic in view of the fact that it is admitted that Exts. 4/22 and 24 bears the signature of Raj Kumar Darolia which are of the year 1981, indicating that he was not a minor as he would not have been able to issue and sign Cheques for withdrawal of the amount if he was a minor at the relevant time. An alternative argument has also been advanced that appellant Raj Kumar Darolia had no direct concern with the business and that the main business was in the hands of Debi Prasad Darolia who used to manage the business. Evidence have been led on behalf of Raj Kumar Darolia by examining four witnesses who have stated that they had worked with M/s. Kiran Machinery Store for more than a decade. It is said that Debi Prasad Darolia died in 1991 and that he was the Malik of the business and it is just by a matter of chance that after his death this appellant has been made to bear the burnt of accusation. Documentary evidence has also been led to show that M/s. Kiran Machinery had prepared a list of loanees to whom they had supplied the machineries which have been marked as Exts. 19 onwards. The list along with the payments made as well as the vouchers have been produced on behalf of Raj Kumar Darolia to indicate that in fact supply has been made to the persons mentioned in the list. 18. The prosecution unfortunately has not made any attempt to prepare a list of persons who were supplied the machineries, list of persons who did not exists and to whom the machineries were supplied and a list of such persons who had allegedly been granted the agricultural loan but had not received 13 the machineries from M/s. Kiran Machinery. No attempt has been made to tally the documents and the list supplied by the defence and the list which was with the prosecution to bring home the fact that there was misappropriation of funds. The grant of loan is essentially a duty of the Branch Manager. The question of conspiracy with the Branch Manager would if at all would be with Debi Prasad Darolia who was admittedly the main person who was working with the Branch Manager S.N.Jha. The documents brought on record except for the three cheques signed by Raj Kumar Darolia. Thus, there is only a presumption regarding the involvement of Raj Kumar Darolia based on his signatures on three Cheques withdrawing the said amount. 19. In this context it has been submitted on behalf of Raj Kumar Darolia that there is no evidence to indicate that he had entered into a conspiracy along with his brother who was the managing partner of business until he died, with Late S.N.Jha, the Bank Manager to withdraw the loan amount, which was made in the name of fictitious persons. There is no evidence led by the official witnesses which would lead this court to conclude that there was a nexus between Late S.N. Jha and Raj Kumar Darolia in particular. The main business was transacted by Debi Prasad Darolia who has signed the cheques, ordered the machinery and subsequently supplied the same to some of the loanees. Appellant Raj Kumar Darolia has only withdrawn an amount of Rs. 8 lakhs from the bank from the loan account. On the basis of this fact it cannot be concluded that there existed an element of conspiracy. 14 The gist of the offence of conspiracy lies in forming the scheme or agreement between the parties. There should be a conscious meeting of mind and each person alleged to be a party to the conspiracy must be proved to have shared the criminal intention. Conspiracy can be established either by direct evidence or by proof of circumstances from which legitimate inference of existence of an agreement between the parties can be drawn. Since conspiracy is of a secret nature, it is difficult to prove and as such it has to be taken from the circumstances surrounding the act, which should be of such a nature as must necessarily lead to a finding of guilt. To prove conspiracy it should be shown from evidence that the person so accused had knowledge of the illegal act sought to be done or done. In the present facts Raj Kumar Darolia by virtue of signing on three Cheques cannot be said to be a conspirator as no evidence has been led that he was responsible for ordering the machines or that he was responsible for supply of the thrashers etc. All acts were done by senior partner which would be apparent from whatever exhibits the prosecution has brought on record. 20. In defence the parties have tried to indicate that in fact as far as Debi Prasad Darolia was concerned, his only duty was to supply pump sets, boring and five thrashers to the persons concerned. It has been argued that Xerox copy of payment register marked as Annexure-A, Xerox copy of payment register, dated 5.5.1981 marked as Ext. A/1, Exts. A/2, A/3 would indicate that supply was made to the persons concerned. It has also been argued that the challans which have been marked as Exts. B/1 to B/30 15 would also show that