Criminal Appeal (SJ) No. 36 of 1994 With Criminal Appeal (SJ) No. 42 of 1994 & Criminal Appeal (SJ) No. 49 of 1994 **** Against the judgment and order of conviction dated 20.01.1994 passed by the Special Judge, C.B.I., South Bihar, Patna, in Special Case No. 9 of 1982. **** Cr. Appeal No.36 of 1994: Shri Jai Narain Singh @ Jaya Narayan son of Late Shri Saryu Singh, resident of Rajbanshi Nagar, P.S.-Shastrinagar, Patna- 800 023 (Dead and following heirs are permitted to prosecute the appeal vide order dated 15.07.1998). (I) Smt. Kaushlya Devi, Widow (II) Arun Kumar, Son (III) Krishna Kumar, Son (IV) Permila Devi, Daughter …Appellants Versus The State (CBI) …Respondent With Cr. Appeal No. 42 of 1994: 1. Patna Polson Private Ltd., Digha, P.S.-Digha, Patna, through Managing Director, Janak Prasad Singh, son of Late Shri Chulhai Singh, resident of Punaichak, Police Station- Shashtri Nagar, District- Patna 2. Janak Prasad Singh, son of Late Shri Chulhai Singh, resident of Punaichak, Police Station- Shashtri Nagar, District- Patna …Appellants Versus The State of Bihar …Respondent With Cr. Appeal No. 49 of 1994: Krishna Kumar Yadav S/o Shri Mahabir Yadav, Resident of village- Mominpur, P.S. and P.O.- Pandaul, District- Madhubani, presently residing at and P.S. Digha, in the town and district of Patna …Appellant Versus The State of Bihar (Through the CBI, New Delhi) …Respondent **** 2 For the appellants : Mr. Rana Pratap Singh, Sr. Advocate with M/s Kapildeo Singh, & Arun Kumar, Advocates (Cr. Appeal No.36 of 1994) Mr. Birendra Pd. Sinha, Sr. Advocate with M/s Ratna Pd. Sinha, Indrajeet & Manish Kumar, Advocates (Cr. Appeal No. 42 of 1994) Mr. Chitranjan Sinha, Sr. Advocate with Mr. Manish Jha, Advocate (Cr. Appeal No. 49 of 1994) For the C.B.I :Mr. Bipin Kumar Sinha, SC, CBI (In all appeals) **** P R E S E N T HON‟BLE JUSTICE SMT. ANJANA PRAKASH **** Anjana Prakash,J. Along with the present appeals, one Krishna Gopal Datta, who was the Branch Manager of Punjab National Bank, New Market Branch, Patna, had also filed Cr. Appeal (SJ) No.37 of 1994 against his conviction by the same judgment. However, when it was brought to the notice of this Court that he had died during the pendency of this appeal, by the order dated 29.11.2010, after due enquiry with regard to the same, this Court observed that the appeal stood abated. 2. The appellant Jai Narain is dead, but by order dated 15.07.1998, this Court has permitted his wife, two sons, and a daughter to prosecute the appeal. The original appellant was the director of M/s Patna Polson Pvt. Ltd. whereas, the appellant Janak Singh was the Managing Director and the appellant Krishna Kumar Yadav was the Executive Director. 3. All the appellants have been convicted under section 120-B Indian Penal Code and sentenced to undergo rigorous imprisonment for one year and pay a fine of Rupees one lac each, in default of which they will have to undergo simple imprisonment for three months. In addition, appellants Patna Polson Ltd., Janak Prasad Singh and Krishna Kumar Yadav have been convicted under section 3 420 Indian Penal Code and sentenced to undergo two years rigorous imprisonment and pay a fine of Rupees one lac each, in default of which they will have to undergo simple imprisonment for six months by the Special Judge, CBI, South Bihar, Patna, in Special Case No. 9 of 1982 by a judgment dated 20.1.1994. 4. On 22.03.1982, the Deputy General Manager, Punjab National Bank, filed a written complaint before the Director, Central Bureau of Investigation, New Delhi, referring to it as a fraud of Rs.6.5 lacs committed in the Punjab National Bank, New Market Branch, Patna. It stated that M/s Patna Polson Pvt. Ltd. was incorporated in the year 1977 and were to carry on the business of manufacturing dairy products of which appellant Janak Prasd Singh was the Managing Director, appellant Krishna Kumar Yadav and Jai Narain were other Directors. It purchased Polson Model Dairy from M/s Polson Ltd. on 18.12.1980 for Rs.28 lacs through a registered sale deed. For purchase of the same M/s Patna Polson Pvt. Ltd. obtained a Term Loan of Rs.20 lacs from Bihar State Industrial Credit and Investment Corporation Ltd. (in short “BICICO”), but there was still short of some money and, therefore, in July, 1980, they submitted a proposal in the Punjab National Bank, New Market Branch, Patna, for obtaining credit facilities which was forwarded by the Manager Krishna Gopal Dutta to the Regional Manager, Patna. The Regional Manager, Patna, sent the proposal to the Chief Credit Administration Division, Head Office, New Delhi, on 14.07.1980 recommending the Term Loan of Rs.11.20 lacs. However, the Credit Administrative Division in the head office of Punjab National Bank, New Delhi, rejected the proposal vide letter dated 08.09.1980 addressed to the Regional Manager, Patna, on the ground that the Company was a sick unit and they were not dealing with them as also that the financial position of the company was not known. It was suggested by the Head office of Punjab National Bank that the company should approach their existing banker for rehabilitation of the unit. The 4 rejection letter mentions that the proposal could be considered after one year of satisfactory working on merits. The Regional Manager, Patna, by letter dated 12.09.1980, advised the Branch Manager, Punjab National Bank, New Market Branch, Patna, Krishna Gopal Datta accordingly. On 28.11.1980, Sri Krishna Gopal Datta, wrote back to the Regional Manager that the proposal of the parties could be considered for working capital only. This letter was also disposed of by the Regional Manager, by his letter dated 16.12.1980 rejecting the said proposal and advising them to approach their existing banker and that the Branch Manager should submit the proposal afresh after he was satisfied with the working of the company. It is relevant to note that the existing banker of the company was Bank of India. After the proposal of the Company was finally rejected on 16.12.1980, they allegedly colluded with Krishna Gopal Datta, Branch Manager, who accommodated them by issuing four drafts unauthorisedly for a total sum of Rs.6.5 lacs favouring Bank of India, account M/s Polson Ltd., from whom the factory was purchased drawn on Branch Officer, Punjab National Bank, House, Bombay, without their tendering any amount. Out of the four drafts, three drafts were for Rs.50,000/- each and the fourth draft was for Rs.5 lacs. For obtaining those drafts, the Managing Director of the Company Janak Pd. Singh had submitted four applications under his signature in Hindi but applications were filled by Krisnha Gopal Datta in English. The Managing Director Janak Prasad Singh also put his signature on the reverse of these applications in token of his having received the drafts. One of the draft application for Rs.50,000/- also bear the signature of other Director, K. K. Yadav on the reverse in English in token of his having received the draft along with Janak Prasad Singh. The written complaint alleged that the Branch Manager, had no authority to issue those drafts, Neither the company submitted any document nor offered any security and the party was accommodated without any basis. However, the Branch Manager, in 5 order to make the records falsely raised a demand loan for Rs.6.5 lacs in the name of Sone Command Area Development Authority (in short “SCADA”), a State Government undertaking and it was shown on records that drafts have been issued against this loan. The loan was said to have been raised on 18.12.1980, on which date drafts were issued to M/s Patna Polson Pvt. Ltd. It further appears that SCADA had opened Savings Fund Account No.1197 with Punjab National Bank, New Market Branch, Patna, on 30.09.1981, by depositing the cheque for the sum of Rs.10 lacs drawn on Bihar State Cooperative Bank, Patna, till 30.09.1981, was operated jointly by Sri Vishram Prasad, Chairman and Sri Baldeo Prasad, Secretary. Whereafter, it was operated by Sri A. K. Basu, the next incumbent and Sri Baldeo Prasad, Secretary. On 18.12.1980, when the demand loan account of Rs.6.5 lacs was shown to have been raised in the name of SCADA, they had rupees two crores in their account and, therefore, could have easily issued the cheque. The liability of SCADA was created falsely even though SCADA and M/s Patna Polson Pvt. Ltd. did not have any business connection. Later on, in order to adjust this amount, Krishna Gopal Datta, made yet another attempt to get the limits sanctioned by the higher authorities and sent a fresh proposal on 08.06.1981 for cash credit limit of Rs.7 lac and DD limit of Rs.3 lacs to the Deputy General Manager, Punjab National Bank, Patna, through the Regional Manager, Patna, which was sanctioned on 27.06.1981, but not released because the Bank of India, Fraser Road, Patna, advised that the Company owned to them a sum of Rs.6.47 lacs. When this proposal was rejected, accused Krishna Gopal Datta closed the demand loan in the name of SCADA which had been raised falsely and was still outstanding in order to avoid detection by debting the sum of Rs.7,07,509.24 paisa from the account of SCADA on 12.09.1981 and closed the loan account. It was, thus, concluded that Krishna Gopal Datta, Branch Manager, Punjab National Bank, New Market Branch, has abused his official position and 6 in collusion with M/s Polson, cheated Punjab National Bank, unauthorisedly caused pecuniary gain to M/s Patna Polson Ltd. by extending undue credit facilities of Rs.7.5 lacs with corresponding loss to the bank. In this process, records of the banks were also falsified. It further appears from the written report that Krishna Gopal Datta in order to issue bank drafts to the Directors of M/s Patna Polson Pvt. Ltd. had issued demand drafts to the tune of Rs.6.5 lacs and showed it to be the liability of SCADA. It specifically alleged that there was corresponding loss to the bank which is important for consideration. 5. The appellants were charged under section 120-B read with section 420 Indian Penal Code on 21.02.1984. The charge read that they were a party to a criminal conspiracy and with an object to cheat the Punjab National Bank, New Market Branch, Patna, the appellant Janak Prasad Singh had submitted four pay- in-slips dated 18.12.1980 without depositing either cash or cheque or without debiting the amount from his account and obtained four bank drafts and signed on the reverse of the pay-in-slips in acknowledgement of the drafts as loan from SCADA. Appellant Krishna Kumar Yadav and Jai Narain Singh were charged with having received the said demand drafts as loan from SCADA. The charge was subsequently amended on 20.05.1993 and thereafter the appellants were also charged under section 420 Indian Penal Code simplicitor. The charge once again read that the appellants had cheated/defrauded the Punjab National Bank, New Market Branch, Patna, and had taken delivery of four drafts totaling the sum of Rs.6.5 lacs and acknowledged the receipt of the aforesaid demand draft by signing on the reverse of the respective pay-in-slips without depositing the amount either in cash or through cheque or without getting the amount of draft debited from the current account of Janak Prasad Singh No.393 and by issuing a false receipt for obtaining the said demand draft as loan of Rs.6.5 lacs from SCADA and thereby committed an offence punishable under section 420 Indian Penal Code. 7 6. Evidently, as per the charge, the prosecution was obliged to prove the offence of cheating as defined under section 415 Indian Penal Code which reads as follows: “415. Cheating—Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to “cheat”. Explanation—A dishonest concealment of facts is a deception within the meaning of this section.” 7. As one can see that Section 415 Indian Penal Code has two parts. In the first part, the person must „dishonestly‟ or „fraudulently‟ induce the complainant to deliver any property, whereas, in the second part, the person should intentionally induce the complainant to do or omit to do a thing which inducement should result in causing loss to the complainant. So, in effect, the prosecution had to prove that either the appellants had „dishonestly‟ „fraudulently‟ induced the complainant (here Bank) to deliver any property or should have „intentionally‟ induced the complainant (Bank) to do an act which resulted in a loss to the bank. Whether the prosecution has been successful in proving the same has to be scrutinized by this Court. 8. To prove its case, the prosecution in all examined 54 witnesses, out of whom P.W.1, P.W.2, P.W.5, P.W.6, P.W.7, P.W.8, P.W.10, P.W.11, P.W.12, P.W.13, P.W.14, P.W.15, P.W.20, P.W.21, P.W.23, P.W.26, P.W.27, P.W.28, P.W.30, P.W.33, P.W.34, P.W.35, P.W.37. P.W.38, P.W.39, P.W.41, P.W.41, P.W.43, P.W.45, P.W.46, P.W.47, P.W.48, P.W.49, P.W.50, P.W.51, P.W.52 & P.W.53 are formal in nature. P.W.3, P.W.4, P.W.19, P.W.25, P.W.29, P.W.31, P.W.36 are officials of Punjab National Bank and important witnesses. P.W.9, 8 P.W.22, P.W.40 were officials of SCADA, who categorically denied that SCADA had ever taken loan of Rs.6.5 lacs as shown on the documents and their signature on the said documents were denied. 9. Since the bank officials are the material witnesses who alone could have testified that the appellants had ever practiced fraudulence or had dishonestly obtained bank draft, let me proceed to examine the evidence of each of the bank officials. P.W.3 Om Prakash Sinha, who happened to be the Clerk- cum-Cashier of Punjab National Bank, New Market Branch, Patna, has merely stated that there is no entry in Cash Book of four demand drafts having been prepared on 18.12.1980. P.W.4, Ratan Kumar Das, who was also the Clerk-cum- Cashier and had prepared the drafts which were Ext.-5 to 5/3 series stated that they were prepared on the basis of transfer from account but he had not received any instructions from accused Krishna Gopal Dutta as to from which account the amount was to be debited. P.W.19, Dharampal Nayar, the informant, has merely stated that Krishna Gopal Dutta as Branch Manager could not have sanctioned loan of Rs.6.5. lacs and had he done so, he should have brought it to the notice to the senior official and in accordance with their instructions. However, he stated in paragraph 10 that Sri Vishram Prasad, who was the Chairman of SCADA, had orally recommended for sanction of loan to M/s Patna Polson Pvt. Ltd. It is relevant fact that on the day the drafts were prepared a sum of Rs. seventy lacs was deposited in the account of SCADA i.e. Account No.11097 in the Punjab National Bank. P.W.25, S. K. Sharma, a Clerk in the Punjab National Bank has stated about the earlier loan proposals given by the appellants as also proved four vouchers dated 18.12.1980 (Ext.49-49/3) prepared by accused K. G. Dutta. He further testified that the four demand drafts had been prepared on the basis of the four vouchers. He proved the signature of accused K. G. Dutta on the same as Ext.6-6/3. On the back of voucher is the signature of appellant Janak Pd. Singh, 9 who signed in receipt of the drafts. He also proved Ext.50 which was a limit sanction form dated 18.12.1980 which contained the particulars of the party and the sanction limit. Of the same day there was a debit voucher showing of debit of Rs.6.50 lacs from the account of SCADA. He further proved Exts.51/1 and 51/2 with regard to a debit of Rs.7,07,509.74 from the account of SCADA as adjustment to the loan account of SCADA. This witness proved Ext.16 which was an application on behalf of SCADA for loan application. He proves his signature as Ext.16/1 in which he had written the word „SCADA‟ and its address. Ext.17- the document showing the money was pledged to the Bank by SCADA was also written out by him. He further stated that in the Register of Documentary, there is no entry of any document with regard to loan of Rs.6.5 lacs to SCADA. P.W.29 Narbeshwar Jha, Divisional Manager of Punjab National Bank has stated about the loan proposals of Patna Polson in the signature of accused K. G. Dutta and the reasons why the proposal was repeatedly rejected. He has stated that a party desirous of getting bank drafts makes an application with a prayer to debit the said amount from the account on which basis the demand drafts are prepared. He proved Exts.5-5/3 which was draft application form on behalf of appellant Janak Pd. Singh on 18.12.1980 for a tune of Rs.6.5 lacs. On the said applications, demand drafts were made on the basis of transfer and not cash. Four demand drafts were prepared vide Ext. 6-6/3 on the signature of accused K. G. Dutta. He explains Ext. 18-18/2, that the debit vouchers from the loan account of SCADA Rs.6.5 lacs were shown debited and the Bank Drafts (Ext.6-6/3) were prepared on the said basis. He also explained that Ext.16-16/1 that there were applications on behalf of SCADA and Rs.6.5 lacs were loan for SCADA. The pro-note (Ext.52) also showed that the loan was being secured by SCADA. PW 36, Anil Kakshyap, the last witness on behalf of the Bank and Clerk in Punjab National Bank stated that demand loan register (Ext.11/2) showed various irregularities committed by 10 accused K. G. Dutta in course of showing loan to SCADA. Further, he stated that Ext.27/1 revealed that even though Rs.6.50 lacs had been advanced as loan to SCADA, no corresponding amount has been debited from the account. He also stated that appellant Janak Pd. Singh had given the application for preparation of four demand drafts totalling to Rs.6.50 lacs vide Ext.5 series and the fact that four demands drafts were prepared in the name of Polson Ltd. drawn on Bank of India (Ext. 6 series) and that on the same day the three appellants signed on a document (Ext.19) in receipt of the same stating therein that they had received a sum of Rs.6.50 lacs through Chairman, SCADA, and that it would be returned to the Chairman, after the loan is sanctioned from BICICO. P.W.31, Pashupati Nath Tiwary, the Branch Manager of Punjab National Bank after the appellant Krishna Gopal Dutta stated that the demand loan had been sanctioned by Krishna Gopal Dutta in favour of SCADA on 18.12.1980 vide Ext.51. The amount was said to be debited from the account of SCADA and the same was sanctioned on the basis of saving banks account of SCADA. 10. From the evidence of the bank officials, one finds that they have given mode of preparation of demand drafts that either it could be on transfer or on presentation of cash. In the present case, demand drafts were purportedly made on transfer but there has been no debit from any account, much less the account of SCADA, even though the receipt of the appellants (Ext.19) showed that amount would be returned to the Chairman, SCADA, once the loan is sanctioned by BICICO. Importantly, none of the officials have stated that the appellants at any point of time had approached any of the witnesses to represent their case. In fact, their complicity has arisen circumstantially on the day the three documents i.e. Ext.5, 6 and 19 were prepared. Four other documents to connect the appellants to the present occurrence are: 11 (a) An application purported to have been given by SCADA (Ext.16) (b) An acknowledgement that SCADA pledged its account (details missing) (Ext.16/1) (c) Pro-note that SCADA promised to pay the amount to Punjab National Bank (Ext.18) and (d) Demand Loan Ledger showing loan of Rs.6.50 lacs in the name of SCADA (Ext.11/3 (figure) and Ext.11/2 collective two sheets). 11. All these documents point to the only conclusion that the demand drafts were received by the appellants as unsecured loan, without collateral surety, showing SCADA as its borrower. Now, the question whether SCADA stood surety for these drafts becomes relevant. As per the evidence of PW19 in paragraph 10 he stated that he had been approached by the Chairman of SCADA Sri Vishram Prasad for disbursement of loan to M/s Patna Polson Pvt. Ltd. Similarly, the Investigating Officer (P.W.44) confirmed in paragraph 7 that Vishram Prasad had asked for disbursement of loan to M/s Patna Polson Pvt. Ltd. In this regard, account no.11097 of SCADA shows a credit of Rs.70 lacs in the account of 18.12.1980. Further, when accused K. G. Dutta was asked to explain the accusation under section 313 Cr. P. C., he clarified that the demand drafts were in lieu of S.B. account of SCADA. The intriguing part of the entire occurrence is as to how the demand drafts were prepared when no money was debited from any account nor was any cash presented. There is no evidence forthcoming that the bank suffered any loss in preparation of the four demand drafts purportedly prepared on transfer. On the other hand, from the three documents which connect the appellants, I find that there is no misrepresentation on their behalf which would show that their act was a fraudulent transaction. 12 None of these documents also point to any loss having been caused to the Bank on account of these documents. P.W.22 Baldeo Singh, who was the Secretary of SCADA has proved Ext.27/1 which shows credit of Rs.6.50 lacs in its account subsequently on 04.06.1982, but that is much after the First Information Report was instituted. It does not explain or clarify anything. In any event, it does not form part of the allegations levelled against the appellants nor were they required to answer the said charge during trial. 12. In such result, there is no material to suggest that the appellants had misrepresented in any manner or acted fraudulently or dishonestly or they intended or conspired to cheat the bank or had caused loss to it by taking four demand drafts and thus the charges would automatically fail. 13. Under the circumstances, the Court has no option but to acquit the appellants of their respective charges. Accordingly, the appellants are acquitted of their respective charges and are also discharged from the liabilities of their respective bail bonds. 14. In the result, the appeals are allowed. (Anjana Prakash,J.) Patna High Court, Patna. Dated 23rd June, 2011 NAFR/ JA/-