' published in http://courtnic.nic.in/supremecourt/qrydisp.asp
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO.1001 OF 2001
B. RAGHUVIR ACHARYA ... APPELLANT
VERUS
CENTRAL BUREAU OF INVESTIGATION ... RESPONDENT
WITH
CRIMINAL APPEAL NO.1226 OF 2001
HITEN P. DALAL ... APPELLANT
VERUS
CENTRAL BUREAU OF INVESTIGATION ... RESPONDENT
J U D G M E N T
SUDHANSU JYOTI MUKHOPADHAYA, J.
These two appeals under Section 10 of the Special Court (Trial of
Offences Relating to Transactions in Securities) Act, 1992 (hereinafter referred to as the 'Act, 1992') are preferred by accused Nos.1 and 3
against the judgment and order dated 6th September, 2001 passed by the
Special Court in Special Case No. 8 of 1994 in [RC5(BSC)/93-Bom],
convicting and sentencing them.
2. The case of the prosecution, briefly, is as follows:
In September, 1991, an investment of Rs.65 crores came to be made by
four subscribers, who applied for purchase of CANCIGO units floated by
(Canbank Mutual Fund (hereinafter referred to as 'CMF'), a fund created by
Canara Bank.
The Andhra Bank and Andhra Bank Financial Services Limited
('ABFSL' for short) made an investment of Rs. 33 crores.
Two other
transactions were made by the Sahara India and Industrial Development Bank
of India ('IDBI' for short) worth Rs.32 crores.
3. During the said period,
accused No.1-B.Raghuvir Acharya was the Trustee and General Manager,
accused No.2- T.Ravi was the Fund Manager
and
accused No.3- Hiten P. Dalal was the approved broker of CMF.
4. Further case of the prosecution is that
accused No.3 got Andhra Bankto subscribe for the CANCIGO units of Rs.11 crores and
got ABFSL to
subscribe for the CANCIGO units of Rs.22 crores.
The above CANCIGO units
worth Rs.33 crores were purchased in the name of Andhra Bank and
ABFSL though the consideration amount for purchase of
such units was paid by accused No.3.
Accused
No.3 got the CANCIGO units purchased in the name of Andhra Bank and ABFSL so as to ensure that he could claim brokerage falsely from CMF.
Further,
the case of the prosecution is that although the consideration of Rs.33
crores was paid by accused No.3, the brokers stamp on the applications were
affixed in order to induce CMF to pay brokerage to accused No.3.
The said
accused No.3 applied for brokerage as a broker in the said transaction of Rs.33 crores when, in fact, he was not so appointed either by Andhra Bank or by ABFSL.
The investment of Rs.33 crores came from accused No.3 for
which he was not entitled to claim brokerage as he had not acted as a
broker for the said transactions.
Similarly, in September, 1991, accused
No.3 did not procure business from Sahara India and IDBI and, yet, he
claimed and received the brokerage in conspiracy with accused No.1 and
accused No.2.
It was alleged that accused No.3 never acted as broker in
any of the aforesaid transactions but claimed and received the brokerage in conspiracy with the rest two accused.
5. All the three accused were charged for the offences of criminal
conspiracy, conspiracy to commit offences of cheating/criminal breach of trust; receiving stolen property and falsification of accounts under Section 120-B, Section 420/409, Section 411, and Section 477-A of Indian Penal Code.
Accused No.1 and accused No.2 being public servants were also
charged for the offences of criminal misconduct under Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988.
All together
12 charges were framed jointly and severally vide Ex.3.
6. The prosecution had led evidence of 12 witnesses apart from a number
of Exhibits in order to prove their case.
7. Learned Judge, Special Court, by the impugned judgment and order
dated 6th September, 2001 held the accused No.1 and accused No.3 guilty and
convicted and sentenced them as under:
|Name of the |Offences for which |Sentenced awarded |
|accused/appellant |convicted | |
| | | |
|Accused No.1 - B. |Convicted for offence of|Rigorous imprisonment |
|Raghuvir Acharya |criminal breach of trust|for three years and fine|
| |under Section 409 IPC |of Rs.20,000/-, in |
| | |default rigorous |
| | |imprisonment for a |
| | |further period of 6 |
| | |months. |
| |Convicted for offence | |
| |under Section 477-A IPC | |
| |for falsification of |Rigorous imprisonment |
| |accounts of CMF in |for three years and find|
| |respect of amount of |of Rs.20,000/-, in |
| |Rs.32.50 lakhs paid to |default rigorous |
| |accused No.3. |imprisonment for a |
| | |further period of six |
| |Convicted for offence of|months. |
| |criminal misconduct | |
| |under Section 13(1)(d) | |
| |r/w Section 13(2) of the|Rigorous imprisonment |
| |Prevention of Corruption|for three years and fine|
| |Act. |of Rs.40,000/-, in |
| | |default rigorous |
| | |imprisonment for a |
| | |further period of six |
| | |months. |
| | | |
|Accused No.3 - Hiten P. |Convicted for offence of|Rigorous imprisonment |
|Dalal |criminal conspiracy |for three years and fine|
| |under Section 409 IPC. |of Rs.20,000/-, in |
| | |default rigorous |
| | |imprisonment for a |
| | |further period of 6 |
| |Convicted for offence |months. |
| |under Section 477-A IPC.| |
| | |Rigorous imprisonment |
| | |for three years and fine|
| | |of Rs.20,000/-, in |
| | |default rigorous |
| | |imprisonment for a |
| |Convicted for offence of|further period of 6 |
| |criminal breach of trust|months. |
| |under Section 411 IPC | |
| |and for being in |Rigorous imprisonment |
| |possession of stolen |for a period of 3 years |
| |property. |and fine of Rs.50,000/-,|
| | |in default rigorous |
| | |imprisonment for a |
| | |further period of six |
| | |months. |
8. During the trial the Special Court raised 30 points and determined
most of them against accused No.1 - B. R. Acharya and accused No.3 -
Hiten P. Dalal.
The points raised against accused No.2 - T. Ravi, Fund
Manager in CMF were answered in his favour and he was acquitted.
9. As against accused No.1, learned Special Court held that the
prosecution proved beyond reasonable doubt that
letter dated 9th March,
1992 of accused No.3 claiming brokerage was received by accused No.1;
endorsement on the letter dated 9th March, 1992 is in the handwriting ofaccused No.1
and
that by the said endorsement accused No.1 acting as the
General Manager instructed accused No.2 to pay brokerage of Rs. 32.50 lakhsto accused No.3.
There was criminal conspiracy between accused No.1 and
accused No.3 to procure the brokerage which was not due and payable to accused No.3.
Accused No.1 being the General Manager and Trustee of CMF
dishonestly and fraudulently induced CMF to part with Rs.32.50 lakhs by
authorizing payment of brokerage in favour of accused No.3 knowing fully
well that accused No.3 had not acted as a broker in the above said
transactions.
Accused No.1 acted dishonestly and in breach of Exs.84 and 85
being minutes of the Board Meetings prescribing the mode of payment of
brokerage, and thereby committed offence of criminal breach of trust under
Section 409 of IPC.
There was a criminal conspiracy in the matter of
disbursement of brokerage of Rs.32.50 lakhs between accused No.1 and
accused No.3 and thereby committed offence under Section 120-B of IPC read
with Sections 409, 411 and 477-A of IPC. Accused No.1 thereby committed the
offence of criminal misconduct under Section 13(1)(d) read with Section
13(2) of the Prevention of Corruption Act, 1988.
10. Learned counsel for accused No.1 submitted that
main allegation
against accused No.1 is based on presumption that the endorsement on letter
dated 9th March, 1992[Ext.17(i) ] was in the handwriting of accused No.1.
Such finding has been given solely on the basis of the statement of PW-5 - Rajesh Pitamberdas Mathija.
Learned counsel pointed out that there exists
inherent contradiction between the evidence of PW-4 and PW-5 and
as PW-5 is
not a competent witness under Section 47 of the Indian Evidence Act to provide evidence regarding the handwriting of accused No.1, no reliance can be made on the statement made by him. PW.5 was not familiar with the handwriting of accused No.1 in the course of his business as he was neither from the same department (CANCIGO), nor he worked under accused
No.1. Moreover, PW.5 had neither seen accused No.1 writing the endorsement nor was PW.5 recipient of any correspondence himself.
11. As against accused No.3, apart from the allegation of conspiracy
between accused No.1 and him,
learned Special Court further held that the
prosecution has proved beyond reasonable doubt that
accused No.3 was not
the broker in two transactions of Andhra Bank and ABFSL.
It was also proved
that accused No.3 did not act as a broker in the transactions of IDBI and
Sahara India as well.
In spite of this, accused No.3 made false
representation by writing letter dated 9th March, 1992 under his own
signatures claiming brokerage on the investments of Rs.65 crores knowing
that he had not acted as a broker and he was not entitled to brokerage.
Accused No.3 thereby induced CMF to part with payment of Rs.32.50 lakhs and
thereby he committed an offence punishable under Section 411 of IPC apart
from offence under Section 409 read with 120-B of IPC and 477-A of IPC.
12. Learned senior for accused No.3 contended that
accused No.3 was
entitled to brokerage under Rule 36 of the Scheme with respect to
investment made by Andhra Bank and ABFSL.
It was further contended that he
was also entitled for brokerage for the investment made by IDBI and Sahara India as well.
As per Rule 36 brokerage can be claimed for 'subscribing or
procuring the investment in CANCIGO'.
Accused No.3 subscribed and procured
the investment of Rs.65 crores including Rs.33 crores invested for Andhra
Bank and ABFSL.
13. He further submitted that
none of the witnesses (PW.4, 5 & 11)
positively stated that accused No.3 was not entitled to brokerage on the investment made by Andhra Bank and ABFSL.
The Auditors have never raised
any dispute as to payment of brokerage to accused No.3.
The Trustees and the Board
have neither discussed nor have they repudiated the payment of brokerage made to accused No.3.
The Bank, which was allegedly put to
wrongful loss never filed a complaint against accused No.3.
The Board never
addressed any letter to accused No.3 calling upon him to explain the payment of brokerage made to him.
In fact, the unequivocal stand of PW.11
is that the CMF did not raise queries with regard to the payment of brokerage on Rs.65 crores to accused No.3 possibly because they may be aware accused No.3 had procured business of Rs.65 crores.
14. It was submitted that such methodology of investment in terms of other i.e. on behalf of accused No.3 is well known in law.
The fact that
Andhra Bank /ABFSL had invested the said amounts on behalf of accused No.3
and the same was in the nature of a constructive trust has been accepted by
this Court in the case of
Canbank Financial Services v.The Custodian and others, (2004) 8 SCC 355.
In the said case, this Court has held the said
arrangement to be legal. In that view of the matter, the mere fact that
Andhra Bank/ABFSL applied for CANCIGO units on behalf of accused No.3 does
not show any sort of deception. The CMF itself has found no illegality or
deception in the application by Andhra Bank/ABFSL. It is clear from the
fact that the CMF has not claimed refund of the brokerage claimed by
accused No.3 on the investment made by Andhra Bank /ABFSL.
15. It was also contended that none of the witnesses of the CANCIGO
(PW.4, 5 and 11) have come out with a positive assertion that accused No.3
made a fraudulent and/or dishonest representation to CANCIGO which was
acted upon by the institution/CMF to its detriment which caused wrongful
loss.
There is no evidence as to who acted on the representation made by
accused No.3.
16. It was further contended that the applications of Andhra Bank and
ABFSL were duly stamped and Ex.19 clearly states that the applications were
on behalf of accused No.3.
The Investigating Officer (hereinafter referred
to as 'IO') has admitted, in his corss-examination that in the absence of written rule, circular or written instruction, payment of brokerage in good faith and in due course would not amount to an offence.
On the other hand
it was also admitted by the IO in his cross-examination that it was not the
case of the prosecution that any sort of deception was practiced on the
trustees and payment was made by them.
The IO, therefore, submitted that
"there was no question of deception of the Trustees. They have, in fact, authorized accused No.1 and 2 to deal with the funds and pursuant to which Rs.32.50 Lakhs came to be paid".
17. In so far as IDBI and Sahara's investments are concerned, it is
contended on behalf of accused No.3
that the accused No.3 was entitled to
brokerage because of the tripartite arrangement between CMF, Citibank and
accused No.3.
The tripartite agreement entailed accused No.3 and the Citi
Bank for procuring investment for CANCIGO. CMF would lend 80% of the amount of subscription to Citi Bank @ 15% for one year and accused No.3 would get brokerage on the investment so procured.
PW.11 admits that the scheme was
in a financial crunch and it was only because of accused No.3 the money was
infused in the financially starved scheme. The material on record also
establishes that investment by IDBI and Sahara was at the instance of Citi
Bank. The witnesses examined on behalf of IDBI and the Board note Ex.84
clearly show that the said investment was brought about as a result of the
efforts on part of Citi Bank. The money so infused in CANCIGO scheme was
for the advantage of Citi Bank as 80% of it was available to it at a
nominal rate of interest for a year.
18. The witness PW.11 in his cross-examination had admitted that CMF as a
matter of fact lent 80% of the amount to Citi Bank for one year at the rate
of 15% per year even when rate of interest was fluctuating between 20% to
50%. The amount given to Citi Bank over one year was 80% of entire amount
i.e 80% of Rs.65 crores which included Rs.33 crores by and on behalf of the
appellant.
19. According to the learned counsel for accused No.3, the said accused
cannot be held guilty of cheating under Section 420 IPC. The prosecution
case is that the letter Ex.17 was placed before accused No.1, who in turn
made his purported endorsement and thereby committed the offence of
cheating in conspiracy with accused No.2 and accused No.3. It was submitted
that it was not the case of the prosecution that accused No.1 or for that
matter anyone else in the CANCIGO mutual fund was cheated by accused No.3
by virtue of representation through Ex.17.
20. It is further contended that the Institution, CMF, is a juristic
entity, akin to a Company and it acts through its human agencies.
Therefore, for fastening criminal liability onto a Company, the criminal
intent of the human agencies of the Company is imperative. The logical
consequence is that if a Company/Institution is a 'victim' of cheating then
somebody acting for/on behalf of the institution must state how and/or in
what manner the institution has been cheated/put to wrongful loss.
21. It was submitted that the transactions with regard to Andhra Bank
/ABFSL were considered by a three Judge Bench of this Court in the case ofS. Mohan v. Central Bureau of Investigation, (2008) 7 SCC 1 wherein it was
held that:
"18. It is not disputed that CANCIGO units worth Rs.33 crores
were purchased by Andhra Bank or Andhra Bank Financial Services
Limited by making use of the money owned by the appellant Hiten
P.Dalal.
These two financial institutions impliedly agreed to
lend their name and allowed the appellant Hiten P. Dalal to
purchase CANCIGO units in their name. It is also important to
note that interest due on the CANCIGO units worth Rs.33 crores
received from CBMF by Andhra Bank and Andhra Bank Financial
Services Ltd. were credited to the account of the appellant
Hiten P. Dalal.
Therefore, it is clear for all practical
purposes that the CANCIGO units worth Rs.33 crores were
purchased by the appellant Hiten P. Dalal and he transferred
these units to CANFINA and CBMF did not raise any objection in
respect of transfer of the CANCIGO units by the appellant Hiten
P. Dalal.
If at all, it was for CBMF to raise any objection but
they did not raise any objection to the transfer of the CANCIGO
units.
xxx xxx xxx xxx
xxx xxx xxx xxx
21. So long as CANFINA has no grievance or complaint against
the appellant S. Mohan that he acted contrary to their
directions and accepted the CANCIGO units and paid the money to
the appellant Hiten P. Dalal, no offence is made out against the
appellant S. Mohan either of criminal breach of trust or
conspiracy.
In fact, PW.1(Mr. Kini, Executive Vice-President)
has admitted that CANFINA used to regularly deal in CANCIGO
units, that neither the Adult nor RBI made any remarks regarding
transactions relating to CANCIGO units and all the transactions
relating to CANCIGO units were in the ordinary course of
business.
Neither Canara Bank nor CANFINA had initiated any
disciplinary proceedings against him. They have also not
disputed the genuineness of the CANCIGO units which were got
encashed by the appellant Hiten P. Dalal."
22. According to learned Senior Counsel for accused No.3, the prosecution
has failed to produce any evidence documentary or testimonial to make out a
case of cheating against accused No.3 with respect to the Institution/CMF.
There is no material to convict accused No.3 under any of the charges.
23. Mr. Sidharth Luthra, learned Additional Solicitor General, appearing
on behalf of CBI submitted that accused No.1 was aware of receipt of Rs.65
crores into the funds of CANCIGO as stated by PW.11 and the payment of
brokerage showing the payment of Rs.32.50 lakhs to accused No.3 under
application dated 9th March, 1992, (Ex.17) though accused No.3 was not
entitled to receive brokerage. In fact, accused No.1 had personally
forwarded the applications of Sahara India to PW.4, as stated by PW.4 and
he was the only trustee who was personally looking into all affairs of the
scheme and was aware of the source of funds, yet accused No.1 by his
omissions led brokerage of Rs.32.50 lakhs be paid to accused No.3 by
accused No.2. The handwriting of accused No.1 [Ex.17(i)] has been proved
by PW.5.
24. It is further submitted that the parties accept about the fact that
accused No.3 claimed and received brokerage of Rs.32.50 lakhs from CMF on
account of CANCIGO scheme receiving an amount of Rs.65 crores as investment
(Exts.61 and 62) and Section 313 Cr.P.C. statement of accused No.3 also
indicates the same. The issue, however, is
whether accused No.3 was
entitled to the brokerage amount of Rs.32.50 lakhs and if not, then under
what circumstances was the payment made to accused No.3 by accused No.1 andaccused No.2 on behalf of the bank.
Referring to the impugned judgment
passed by the learned Judge, Special Court, it was contended that the mere
fact of acquittal of accused No.2 will have no effect, in view of the
decision of this Court in Devender Pal Singh v. State of NCT of Delhi and
Anr., (2002) 5 SCC 234 and Brathi alias Sukhdev Singh v. State of Punjab,
(1991) 1 SCC 519; that the evidence against accused No.2 can be relooked
afresh by the Appellate Court and for seeing the role of accused No.1 and
accused No.3 and the acquittal of accused No.2 would not prejudice the
prosecution case.
25. It was further submitted that accused No.3 though never acted as
broker in the IDBI and Sahara India, he claimed brokerage from CMF vide
letter dated 9th March, 1992 in respect of Andhra Bank, ABFSL, IDBI and
Sahara India.
26. The prosecution has proved beyond reasonable doubt that accused No.3
made false representation by writing letter dated 9th March, 1992, (Ex.17)
under his own signatures. He claimed brokerage for transactions for which
he did not act as a broker. In spite of knowing that he was not entitled to
brokerage to the said transactions, he induced CMF to part with payment of
Rs.32.50 lakhs.
27. According to the counsel for the CBI, accused No.3 did not produce
any witness in his defence to prove that he was in fact the broker who
brought about the purported tripartite agreement with Citi Bank. No
official of Citi Bank was named, nor examined in this regard, by accused
No.3.
28. Learned ASG on behalf of CBI submitted that assuming that this Court
were to disagree with the Special Court and hold that evidence against
accused No.1 is lacking, this Court can convict accused No.3 for the charge
of conspiracy read with Section 409 IPC with unknown persons or with
accused No.2 if so established from the available evidence. Alternatively,
accused No.3 can be convicted under Section 420 IPC for which a substantive
charge has been framed against accused No.1.
29. On hearing learned counsel for the parties, several facts appear to
be admitted on record.
These facts are:
The Andhra Bank and ABFSL invested Rs. 33 cores and purchased CANCIGO
units floated by CMF. Accused No.3 accepted that the amount of Rs.33 crores
was subscribed by him to procure CANCIGO units in the name of Andhra Bank
and ABFSL. Accused No.3 was an approved broker for CMF. He claimed that he
procured the investments of Rs.65 crores including Rs.33 crores of Andhra
Bank and ABFSL and Rs.32 crores invested by IDBI and Sahara India.
30. Accused No.3 made a representation by writing letter dated 9th March,
1992 (Ex.17) under his own signatures claiming brokerage on investment of
Rs.65 crores. On the basis of the said letter dated 9th March, 1992 (Ex.17)
and an endorsement made thereon [Ex.17(i)] CMF had to part with payment of
Rs.32.50 lakhs which was received by accused No.3.
31. Learned Judge, Special Court by the impugned judgment held that
accused No.1 being the General Manager and Trustee of CMF having dominion
over the funds of CMF made false endorsement on the letter dated 9th March,
1992 authorising payment of brokerage favouring accused No.3 by getting the
Fund Manager signed on the worksheet (Ex.16) containing details regarding
brokerage which was made to his knowledge. On the basis of such endorsement
made on the letter dated 9th March, 1992 [Ex.17(i)] the Special Court held
that accused No.1 acted dishonestly and committed breach of Ex.84 and
Ex.85. Thus it was held that accused No.1 thereby committed offence of
criminal breach of trust under Section 409 IPC. It was also held that
accused No.1 and 3 were involved in criminal conspiracy regarding
disbursement of brokerage of Rs.32.50 lakhs and thereby they committed
offence under Section 120-B IPC read with Section 409, 411 and 477-A IPC
and accused No.1 being a public servant committed the offence of criminal
misconduct by dishonestly providing undue pecuniary advantage to accused
No.3 to which accused No.3 was not entitled and thereby committed an
offence under Section 13(1)(d) of the Prevention of Corruption Act, 1988.
32. The main allegation against accused No.1 is that he made endorsement
on letter dated 9th March, 1992 [Ex.17(i)] in his hand-writing. The
prosecution relied on the evidence of PW.5 to prove the said allegation.
33. PW.5-Rajesh Pitamberdas Bhathija claimed to be conversant with the
hand-writing of accused No.1 because of some purported/alleged
correspondence. The witness contradicted himself whereby in an answer to a
previous question he asserted that there was no correspondence with accused
No.1. The witness-PW.5 failed to specify as to with whom accused No.1 was
in correspondence with. The said witness employs an all encompassing
generic term "we had entered into correspondence" which raised doubt.
Importantly, no such specific correspondence or material has been placed by
the prosecution in support of its bald allegation.
34. In Murari Lal v. State of Madhya Pradesh, (1980) 1 SCC 704
this Court
held that in scenarios where there is an absence of expert opinion, a
second screening in the form of the court's assessment is essential to
ascertain the authorship of document.
"12....There may be cases where both sides call experts and two
voices of science are heard. There may b e cases where neither
side calls an expert, being ill able to afford him. In all such
cases, it becomes the plain duty of the court to compare the
writings and come to its own conclusion. The duty cannot be
avoided by recourse to the statement that the court is no
expert. Where there are expert opinions, they will aid the
court. Where there is none, the court will have to seek guidance
from some authoritative textbook and the court's own experience
and knowledge. But discharge it must, its plain duty, with or
without expert, with or without other evidence.
We may mention
that Shashi Kumar v. Subodh Kumar and Fakhruddin v. State of
M.P. were cases where the Court itself compared the writings."
35. In the present case what the prosecution ought to have produced is
the alleged material on the basis whereof PW.5 claimed familiarity with the
handwriting of the author. In absence thereof, the Special Court was
precluded from having any independent assessment.
36. Another question that arises is whether PW.5 was a competent witness
under Section 47 of the Indian Evidence Act to provide evidence regarding
the handwriting of accused No.1. Section 47 of the Indian Evidence Act
reads:
"Section 47 - Opinion as to handwriting, when relevant.- When
the Court has to form an opinion as to the person by whom any
document was written or signed, the opinion of any person
acquainted with the handwriting of the person by whom it is
supposed to be written or signed that it was or was not written
or signed by that person, is a relevant fact.
Explanation.-A person is said to be acquainted with the
handwriting of another person when he has seen that person
write, or when he has received documents purporting to be
written by that person in answer to documents written by himself
or under his authority and addressed to that person, or when, in
the ordinary course of business, documents purporting to be
written by that person have been habitually submitted to him."
37. This Court in Fakhruddin v. State of M.P., AIR 1967 SC 1326 has held
that the premise of the witness claiming familiarity with the handwriting
of the author must be tested.
"11. Both under s.45 and s.47 the evidence is an opinion, in the
former by a scientific comparison and in the latter on the basis
of familiarity resulting from frequent observations and
experience. In either case the Court must satisfy itself by such
means as are open that the opinion may be acted upon. One such
means open to the Court is to apply its own observation to the
admitted or proved writings and to compare them with the
disputed one, not to become an handwriting expert but to verify
the premise of the expert in the one case and to appraise the
value of opinion in the other case."
38. The prosecution's failure to produce material before the Special Judge on which PW.5 claimed familiarity with the handwriting of accused No.1 is fatal.
It can safely be stated that the prosecution has failed to
establish the premise of witness in order to allow the Special Court to appreciate the veracity of assertions made by PW.5.
39. In Mobarik Ali Ahmed v. State of Bombay., (1958) SCR 328 at page 342
this Court held as follows:
"....It may be proof of the handwriting of the contents, or of
the signature, by one of the modes provided in ss.45 and 47 of
the Indian Evidence Act. It may also be proved by internal
evidence afforded by the contents of the document. This last
mode of proof by the contents may be of considerable value where
the disputed document purports to be a link in a chain of
correspondence, some links in which are proved to the
satisfaction of the Court. In such a situation the person who is
the recipient of the document, be it either a letter or a
telegram, would be in a reasonably good position both with
reference to his prior knowledge of the writing or the signature
of the alleged sender, limited though it may be, as also his
knowledge of the subject, matter of the chain of correspondence,
to speak to its authorship. In an appropriate case the court may
also be in a position to judge whether the document constitutes
a genuine link in the chain of correspondence and thus to
determine its authorship."
40. The question for our consideration is whether there is any
credibility in the evidence of PW.5. Admittedly, PW.5 was not posted in
CANCIGO. He came from CANGILT for the purpose of auditing in April, 1992
i.e after the payment of brokerage (paid on 10th March, 1992).Therefore,
the question arises whether PW.5 was familiar with the handwriting of
accused No.1 in the course of his business as he was neither from CANCIGO
nor was working under accused No.1. PW.5 had neither stated that he had
seen accused No.1 writing the endorsement nor he himself was the recipient
of any correspondence made by accused No.1. Therefore, it is clear that
PW.5 had no prior knowledge of the handwriting of accused No.1 or the
signatures of the author, and he was not a part of the chain of
correspondence to speak of its authors. It can be safely stated that PW.5
does not come within the ambit of Section 47 of the Indian Evidence Act to
provide evidence regarding the handwriting of accused No.1.
41. The sole witness who could have claimed familiarity with the
handwriting of accused No.1 was Suchaita Vaidhya since there was a
purported endorsement on the same letter by her as deposed by PW.5. She was
a member of the secretarial staff and was a link in the chain of
correspondence in order to qualify under Section 47 of the Indian Evidence
Act to depose as to the authorship of the endorsement. She was a crucial
witness; however, for the reasons best known to prosecution they have
chosen not to examine Suchaita Vaidya though she was cited as a witness.
42. PW.4- Rajesh Chandrakant Pawar, was transferred in June, 1991from
CANGROWTH to CANCIGO. He was aware of the scheme and worked under accused
No.2. In his deposition PW.4 stated that the endorsement [Ex.17(i)] was in
the handwriting Mr. Anil Narichania, AGM. For the reason best known to the
prosecution, they have not cited Mr. Anil Narichania as one of the
witnesses. Though PW.4, in his examination-in-chief specifically stated
that the endorsement [Ex.17(i)] was in the handwriting of Mr. Anil
Narichania, he was not declared hostile. We find a blatant contradiction
and discrepancy in the evidence of PW.5 who attributes the endorsement to
accused No.1 and, therefore, it will not be desirable to rely on his
evidence.
43. Apart from the statement of PW.5, there is no material to prove the
involvement of accused No.1. As noted above, PW.5's evidence is beset with
many unsatisfactory features which renders it clearly unreliable and in any
case inadequate to establish the charges levelled against accused No.1. On
a close scrutiny of the entire material on record, we have no hesitation to
hold that the learned Special Court was not correct in taking the view that
the prosecution has successfully established the charges against accused
No.1 and wrongly held him guilty for the same.
44. The evidence on record shows that in September, 1991 CMF received,
broadly, four applications for purchase CANCIGO units from Andhra Bank,
ABFSL, IDBI and Sahara India to the tune of Rs.65 crores. At that time
accused No.1 was the General Manager. He was also the Trustee and author of
Ex.84. He also took the decision as one of the Trustees in the meeting of
the Board on Ist November, 1990 to pay brokerage.
The evidence also shows
that the applications were routed to PW.4 through the General Manager. PW.4
in his evidence deposed that the applications of Sahara India were routed
through the General Manager but there is nothing on the record to show that
letter dated 9th March, 1992 (Ex.17) was received by accused No.1. The
finding of the Special Judge that the letter dated 9th March, 1992 was
received by accused No.1 is not based on evidence, therefore, such finding
cannot be upheld. In any case mere receiving of a letter cannot be a ground
to hold that the endorsement at Ex.17(i) was made by accused No.1.
45. Considering the aforesaid, we feel it expedient to record that the
Special Court fell into a manifest error in coming to a conclusion with
regard to accused No.1, as reflected in the judgment under appeal, which
cannot be sustained.
The appeal (Criminal Appeal No.1001 of 2001),
therefore, succeeds and is allowed and the appellant - B.R. Acharya is
acquitted of all the charges, his bail bonds shall stand discharged.
46. It is the case of prosecution that for various acts done by accused
No.3, he used accused No.1, the Trustee and General Manager of CMF to
commit criminal breach of trust in respect of funds of CMF. In this
context, it was submitted that under the general charge of criminal
conspiracy, all those acts also constitute cheating and criminal breach of
trust.
47. The evidence of PW.11 shows that accused No.3 was the broker for CMF.
He was also a member of the Stock Exchange. He had an account in Andhra
Bank. In the case of Andhra Bank and ABFSL, Rs.33, crores invested by them
in CMF belonged to accused No.3. This is also evidenced by the two cheques
(Ex.29 and Ex.30). It was the accused No.3 who induced Andhra Bank and
ABFSL to apply for allotment of CANCIGO units as apparent from the
applications (Ex.19 and Ex.15) which had been signed by the two officers-
Dhankumar and Kalyanaraman, who were accused in some other matter. This
position is not even disputed by accused No.3. The reason is not known as
to why accused No.3 got Andhra Bank and ABFSL to apply. The IO has rightly
pointed out in his evidence, repeatedly, that accused No.3 was not
concerned with the generation of funds in this case. Applications for
allotment were made by Andhra Bank and ABFSL but no entry regarding the
transactions were made in the books of Andhra Bank and ABFSL. Therefore, it
is clear that accused No.3, to whom Rs.33 crores belongs got Andhra Bank
and ABFSL to apply for the units but kept the said matter hidden by not
recording the same. In September, 1991, accused No.3 affixed the brokers
stamp on the applications (Ex.19 and Ex.15). Knowing fully well that the
investors were not Andhra Bank and ABFSL, he had got officers of Andhra
Bank and ABFSL to sign the application forms. Both these officers are
accused in other cases. By affixing the rubber stamp of the broker, accused
No.3 falsely represented to CMF that he had brought subscriptions from
Andhra Bank and ABFSL as a broker and, accordingly, claimed brokerage.
Even before September, 1991, he wrote a letter (Ex.18) to Andhra Bank to
the effect that units worth Rs.11 crores would be given to Andhra Bank and
ABFSL. They were offered as security for ready forward transaction with
ABFSL as evident from the statement of PW.11. From the evidence of PW.11 it
is clear that the entire record of CMF shows that pursuant to the
applications (Ex.19 and Ex.15) made by Andhra Bank and ABFSL, accounts were
opened in the names of Andhra Bank and ABFSL as subscribers. The names of
Andhra Bank and ABFSL found place in the Investment Register [Ex.38(i) and
Ex.39(i)] and also Investors Fund Ledger [Ex.A3(35)(2) and Ex.A3(37)(1)].
Thereby CMF had recognized only Andhra Bank and ABFSL as their investors
and the units could be redeemed only by Andhra Bank and ABFSL. The brokers
stamp was affixed on them by accused No.3 only with a view to claim
brokerage. Although he was aware that the total amount of Rs.33 crores was
invested by him. Even the half yearly interest which was paid on the
investments of Rs.33 crores on 8th January, 1992 by CMF was only in the
names of the subscribers- Andhra Bank and ABFSL. The evidence further shows
that after receiving the income distribution cheques, Andhra Bank and ABFSL
transferred the amount to the account of accused No.3 pursuant to his
letter (Ex.12). This was on 9th January, 1992 and, yet, accused No.3 made
an application vide Ex.17 claiming brokerage from CMF as a broker and not
as an investor. Accused No.3 never objected to allotment of units in favour
of Andhra Bank and ABFSL. In his statement under Section 313 of the
Criminal Procedure Code stated that he was aware of CMF simultaneously
deploying 80% of Rs.65 crores at 15% per annum in Citi Bank. Yet, accused
No.3 concealed the true nature of the transactions of Rs.33 crores in the
names of Andhra Bank and ABFSL though it was known to him on 9th March,
1992 that the half yearly interest came to him not from CMF but from Andhra
Bank and ABFSL. In view of the aforesaid evidence if learned Judge,
Special Court held that on 9th March, 1992 accused No.3 dishonestly claimed
brokerage from CMF by putting brokers stamp and by disguising his
investment of Rs.33 crores on Ex.19 and Ex.15, no interference is called
for against such finding.
48. In September, 1992, after the scam became public, the interest
warrants were returned by Andhra Bank and ABFSL disclaiming their
investments. With regard to the rest of two transactions of Sahara India
and IDBI, the evidence on record shows firstly, that on applications of
IDBI and Sahara India there is no brokers stamp. Despite there being no
brokers stamp on these applications accused No.3 had wrongfully and
dishonestly claimed brokerage on 9th March, 1992.
49. It was the case of accused No.3 that there was prior agreement
between him, CMF and Citi Bank under which Citi Bank got the units
purchased in the names of Sahara India and IDBI. What is relevant is
allotment of units in favour of Andhra Bank, ABFSL, Sahara India or IDBI.
It is to be noticed that the ownership of the units is with Andhra Bank,
ABFSL, Sahara India or IDBI. It is evident from CANCIGO Certificates that
at the expiry of one year, Sahara India and IDBI got CANCIGO units encashed
and they have received the entire money in their accounts on the basis that
they were the owners of the units. The evidence of PW.2, PW.6 and PW.7 on
behalf of IDBI and Sahara India, shows that no broker was involved in the
transactions involving purchase of CANCIGO units of Rs.32 crores face
value.
The case of the prosecution is very simple that out of four
applications for allotment of units, two contained rubber stamp and rest of
two applications of Sahara India and IDBI did not bear rubber stamp.
The
case of the prosecution is that brokerage was dishonestly claimed by
accused No.3 with full knowledge that he has not acted as a broker.
50. In cross-examination, the defence examined PW.11 extensively in
support of their case that brokerage was payable to accused No.3 even if
there was no brokers stamp affixed on the applications in cases where the
officer paying the brokerage is satisfied that the business was procured by
the broker. It was contended on behalf of accused No.3 that brokerage was
payable even on self investments.
However, PW.11 in his cross-examination
has deposed that even in cases where the brokers stamp does not find place
on the applications for allotment of units, the broker was required to
forward the applications for allotment under his covering letter to CMF. In
this case, the defence has not produced any such covering letter in support
of their case. Similarly, they have not produced any correspondence with
CMF claiming brokerage on that basis. Therefore, it is clear that accused
No.3 was not the broker with regard to four investments in question.
51. PW.2, PW.6 and PW.7, employees of IDBI and Sahara India were
extensively cross-examined by the defence and, yet, no case was made by the
defence from any of the three witnesses regarding any correspondence
between accused No.3 and IDBI and Sahara India authorizing him to collect
brokerage from CMF between September, 1991 and March, 1992. Therefore, the
prosecution has proved that accused No.3 is guilty of making a false
representation to CMF with full knowledge and it was so made to deceive CMF
to part with an amount of Rs.32.50 lakhs.
52. On 9th March, 1992 accused No.3 knew that Andhra Bank and ABFSL were
not the actual investors. He also knew that brokerage was payable only if
the business was procured for CMF as he was aware of the decision of Board.
He was the approved broker of CMF and had bought the units in the names of
Andhra Bank and ABFSL, which is admitted. He knew that that as the
subscriber of units, he was not entitled to brokerage yet, he claimed
brokerage as a broker vide Ex.17. Therefore, it is clear that both the
transactions of Andhra Bank and ABFSL got disguised. Their true nature was
suppressed. Though no brokerage was payable on such transactions, Ex.17 was
written by accused No.3 with dishonest intention. Without Ex.17, accused
No.3 could not have succeeded in obtaining from CMF an amount of Rs.32.50
lakhs.
53. Now the question arises as to
what will be the effect of acquittal of
co-accused Nos.1 and 2 on the case of accused No.3. According to the appellant if co-accused No.1 is acquitted and in view of acquittal of co- accused No.2 no charge under Sections 409, 411 and 477-A substantiate against accused No.3 and he cannot be punished with the aid of Section 120-B IPC.
54. Per contra, according to the learned counsel for the CBI, even if
this Court disagrees with the Special Court and holds that the that
evidence against accused No.1 is lacking, this Court can convict accused
No.3 for the charges of conspiracy read with Section 409 IPC with unknown
person or accused No.2 if so established from the available evidence.
Alternatively, accused No.3 can be convicted under Section 420 IPC for
which a substantive charge had been framed against him.
55. This Court in Devender Pal Singh(supra), held that acquittal of one
accused does not raise doubt against conviction of another accused person.
A plea that acquittal of the co-accused has rendered the prosecution
version brittle has no substance. Acquittal of co-accused on the ground of
non-corroboration has no application to the accused himself.
56. The question arises whether accused No.3 can be convicted for the
alternative charge under Section 420 of the IPC for which a substantive
charge had been framed against him. In this connection we may refer to
decision of this Court in Satyavir Singh Rathi v. State through CBI, (2011)
6 SCC 1, wherein this Court held:
"68. We find the situation herein to be quite different. We
must notice that the charges had indeed been framed in the
alternative and for cognate offences having similar ingredients
as to the main allegation of murder. Section 386 Cr.P.C. refers
to the power of the appellate court and the provision insofar
relevant for our purpose is sub-clause (b)(ii) which empowers
the appellate court to alter the finding while maintaining the
sentence.
It is significant that Section 120-B IPC is an offence
and positive evidence on this score has to be produced for a
successful prosecution whereas Section 34 does not constitute an
offence and is only a rule of evidence and inferences on the
evidence can be drawn, as held by this Court in Lachhman Singh
v. State, AIR 1952 SC 167. We are, therefore, of the opinion
that the question of deemed acquittal insuch a case where the
substantive charge remains the same and a charge under Sections
302/120-B and an alternative charge under Sections 302/34 IPC
had been framed, there was nothing remiss in the High Court in
modifying the conviction to one under Sections 302/307/34 IPC.
It is also self-evident that the accused were aware of all the
circumstances against them. We must, therefore, reject Mr.
Sharan's argument with regard to the deemed acquittal in the
circumstances of the case."
57. In Sunil Kumar Paul vs. State of West Bengal, AIR 1965 SC 706, the
accused was charged for the offence under Section 409 IPC. In the said case
the Court held that the accused could have also been charged for the
offence under Section 420 IPC and held:
"(15). It is urged for the appellant that the provisions of s.
236 Cr.P.C. would apply only to those cases where there be no
doubt about the facts which can be proved and a doubt arises as
to which of the several offences had been committed on the
proved facts. Sections 236 and 237 read :
"236. If a single act or series of acts is of such a nature
that it is doubtful which of several offences the facts which
can be proved will constitute, the accused may be charged with
having committed all or any of such offences, and any number of
such charges may be tried at once; or he may be charged in the
alternative with having committed some one of the said offences.
Illustrations
(a) A is accused of an act which may amount to theft, or
receiving stolen property, or criminal breach of trust or
cheating. He may be charged with theft, receiving stolen
property, criminal breach of trust and cheating, or he may be
charged with having committed theft, or receiving stolen
property, or criminal breach of trust or cheating.
x x x x x x
237. If, in the case mentioned in section 236, the accused
is charged with one offence, and it appears in evidence that he
committed a different offence for which he might have been
charged under the provisions of that section, he may be
convicted of the offence which he is shown to have committed,
although he was not charged with it.
Illustration
A is charged with theft. It appears that he committed the
offence of criminal breach of trust, or that of receiving stolen
goods. He may be convicted of criminal breach of trust or of
receiving stolen goods (as the case may be) though he was not
charged with such offence."
The framing of a charge under s. 236 is, in the nature of
things, earlier than the stage when it can be said what facts
have been proved, a stage which is reached when the court
delivers its judgment. The power of the Court to frame various
charges contemplated by s. 236 Cr.P.C. therefore arises when it
cannot be said with any definiteness, either by the prosecutor
or by the Court, that such and such facts would be proved. The
Court has at the time of framing the charges, therefore to
consider what different offences could be made out on the basis
of the allegations made by the prosecution in the complaint or
in the charge submitted by the investigating agency or by the
allegations made by the various prosecution witnesses examined
prior to the framing of the charge. All such possible offences
could be charged in view of the provisions of s. 236 Cr.P.C. as
it can be reasonably said that it was doubtful as to which of
the offences the facts which could be ultimately proved would
constitute. The facts which must have been alleged prior to the
stage of the framing of the charge in the present case must have
been what had been stated in the charge-sheet submitted by the
Investigating Officer, 24-Parganas, which is printed at p. 3 of
the appeal record. This charge-sheet narrates in the column
meant for the name of offences and circumstances connected with
it :
"that on the 6th October 1956 Sunil Kumar Paul, a Public
servant in the employment of the office the Sub-Divisional
Health Officer, Barrackpore i.e., (clerk) dishonestly drew Rs.
1,763-6-0 excluding Postal Life Insurance deduction of Rs. 5-10-
0 from the State Bank of India, Barrackpore Branch by submitting
a false duplicate Estt. Pay Bill under head 39 for the month of
September 1956 for the office of the said S.D.H.O., Barrackpore.
The money drawn was not credited to the office of the Sub-
Divisional Health Officer, Barrackpore."
It is practically on these facts that the conviction of the
appellant for an offence under s. 420 I.P.C. has been founded.
It follows that the Special Court could therefore have framed a
charge under s. 420 I.P.C. at the relevant time if it had been
of the opinion that it was doubtful whether these facts
constitute an offence under s. 409 I.P.C. as stated in the
charge-sheet or an offence under s. 420 I.P.C.
(16). When a charge under s. 420 I.P.C. could have been
framed by the trial Court by virtue of s. 236 Cr.P.C. that Court
or the appellate Court can, in law, convict the appellant of
this offence instead of an offence under s. 409 I.P.C. if it be
of the view that the offence of cheating had been established.
This would be in accordance with the provisions of s. 237
Cr.P.C.
(17) It is then urged for the appellant that under the
proviso to s. 4 of the Act, the Special Court can try any other
offence only when the accused is specifically charge with that
offence. The language of the proviso does not lead to such a
conclusion. It provides for the trial of the accused for any
other offence provided the accused could be charged with that
offence at the same trial under the provisions of the Code of
Criminal Procedure. The proviso does not say that the charge
must be framed, though of course, if the trial Court itself
tries the accused for a certain offence, it will ordinarily
frame a charge. The proviso empowers a Court to try the accused
for that offence and has nothing to do with the power of the
trial court or of the appellate Court to record a conviction for
any other offence when an accused is being tried with respect to
an offence mentioned in the Schedule. The Court's power to take
recourse to the provisions which empower it to record a
conviction for an offence not actuality charged, depends on
other provisions of the Code and the Act.
(24) The ingredients of two offences must be different from one
another and it is therefore not necessary to consider whether
the ingredients of the two offences are in any way related. The
Court has to see, for the purpose of the proviso, whether the
accused could be charged with any offence other than the one
referred to in the allotment order, in view of the provisions of
the Code. There is nothing in the proviso which could lead to
the construction that any limitations other than those laid down
by the provisions of the Code of Criminal Procedure were to
affect the nature of the offence which could be tried by the
Special Court.
(25.) We are therefore of opinion that the Special Court could
try the appellant for the offence under s. 420 I.P.C. and that
therefore the High Court was right in altering his conviction
from that under s. 409 to s. 420 I.P.C."
58. In this case the prosecution proved that the accused No.3 deceived
CMF by making a false representation dated 9th March, 1992 and dishonestly
induced the official of CMF to deliver Rs.32.50 lakhs in his favour and he
dishonestly received the amount and thereby committed offence under Section
420 IPC. Accused No.3 was originally charged for the offence of cheating,
criminal breach of trust for receiving stolen property/falsification of
accounts under Section 120-B, Section 420/409 of the IPC apart from Section
411 and Section 477-A of the IPC. We, therefore, alter his conviction from
that of under Section 409 to Section 420 of the IPC and convict him for the
offence under Section 420 of the IPC and sentence him to undergo rigorous
imprisonment for three years.
59. Further, as the prosecution successfully established the ingredients
of theft for receiving stolen property from Canara Bank i.e. Rs.32.50 lakhs
against accused No.3, we uphold the order of his conviction and sentenced
passed by the Special Court under Section 411 of the IPC.
However, in view of the acquittal of accused Nos.1 and 2, the order
of conviction of accused No.3 under Section 477-A is set aside. The
judgment dated 6th September, 2001 passed by the learned Special Judge is
affirmed with modification as mentioned above. The appeal (Criminal Appeal
No.1226 of 2001) filed by the appellant-Hiten P. Dalal is dismissed. The
bail bonds of the appellant - Hiten P. Dalal, if he is on bail, shall stand
cancelled and he is directed to be taken into custody to serve out the
remainder of the sentence.
.........................................................J.
( G.S. SINGHVI )
.........................................................J.
( SUDHANSU JYOTI MUKHOPADHAYA)
NEW DELHI,
JULY 1, 2013.
ITEM NO.1F COURT NO.4 SECTION IIA
(FOR JUDGMENT)
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
CRIMINAL APPEAL NO(s). 1001 OF 2001
B. RAGHUVIR ACHARYA Appellant (s)
VERSUS
CENTRAL BUREAU OF INVESTIGATION Respondent(s)
WITH
CRIMINAL APPEAL NO. 1226 of 2001
Date: 01/07/2013 These Appeals were called on for Judgment
today.
For Appellant(s)
Mr. Praneet Ranjan,Adv.
Mr. V.N. Raghupathy, Adv.
For Respondent(s)
Mr. Arvind Kumar Sharma,Adv.
Hon'ble Mr. Justice Sudhansu Jyoti Mukhopadhaya pronounced the
Judgment for the Bench comprising Hon'ble Mr. Justice
G.S. Singhvi and His Lordship.
In terms of the Judgment, Criminal Appeal No. 1001 of 2001
succeeds and is allowed and the appellant - B.R. Acharya is acquitted
of all the charges, his bail bonds shall stand discharged.
In terms of the Judgment, Criminal Appeal No. 1226 of 2001
filed by the appellant-Hiten P. Dalal is dismissed. The bail bonds of
the appellant - Hiten P. Dalal, if he is on bail, shall stand
cancelled and he is directed to be taken into custody to serve out the
remainder of the sentence.
(Rajesh Dham) (Renu Diwan)
Court Master Court Master
(reportable signed Judgment is placed on the file)
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO.1001 OF 2001
B. RAGHUVIR ACHARYA ... APPELLANT
VERUS
CENTRAL BUREAU OF INVESTIGATION ... RESPONDENT
WITH
CRIMINAL APPEAL NO.1226 OF 2001
HITEN P. DALAL ... APPELLANT
VERUS
CENTRAL BUREAU OF INVESTIGATION ... RESPONDENT
J U D G M E N T
SUDHANSU JYOTI MUKHOPADHAYA, J.
These two appeals under Section 10 of the Special Court (Trial of
Offences Relating to Transactions in Securities) Act, 1992 (hereinafter referred to as the 'Act, 1992') are preferred by accused Nos.1 and 3
against the judgment and order dated 6th September, 2001 passed by the
Special Court in Special Case No. 8 of 1994 in [RC5(BSC)/93-Bom],
convicting and sentencing them.
2. The case of the prosecution, briefly, is as follows:
In September, 1991, an investment of Rs.65 crores came to be made by
four subscribers, who applied for purchase of CANCIGO units floated by
(Canbank Mutual Fund (hereinafter referred to as 'CMF'), a fund created by
Canara Bank.
The Andhra Bank and Andhra Bank Financial Services Limited
('ABFSL' for short) made an investment of Rs. 33 crores.
Two other
transactions were made by the Sahara India and Industrial Development Bank
of India ('IDBI' for short) worth Rs.32 crores.
3. During the said period,
accused No.1-B.Raghuvir Acharya was the Trustee and General Manager,
accused No.2- T.Ravi was the Fund Manager
and
accused No.3- Hiten P. Dalal was the approved broker of CMF.
4. Further case of the prosecution is that
accused No.3 got Andhra Bankto subscribe for the CANCIGO units of Rs.11 crores and
got ABFSL to
subscribe for the CANCIGO units of Rs.22 crores.
The above CANCIGO units
worth Rs.33 crores were purchased in the name of Andhra Bank and
ABFSL though the consideration amount for purchase of
such units was paid by accused No.3.
Accused
No.3 got the CANCIGO units purchased in the name of Andhra Bank and ABFSL so as to ensure that he could claim brokerage falsely from CMF.
Further,
the case of the prosecution is that although the consideration of Rs.33
crores was paid by accused No.3, the brokers stamp on the applications were
affixed in order to induce CMF to pay brokerage to accused No.3.
The said
accused No.3 applied for brokerage as a broker in the said transaction of Rs.33 crores when, in fact, he was not so appointed either by Andhra Bank or by ABFSL.
The investment of Rs.33 crores came from accused No.3 for
which he was not entitled to claim brokerage as he had not acted as a
broker for the said transactions.
Similarly, in September, 1991, accused
No.3 did not procure business from Sahara India and IDBI and, yet, he
claimed and received the brokerage in conspiracy with accused No.1 and
accused No.2.
It was alleged that accused No.3 never acted as broker in
any of the aforesaid transactions but claimed and received the brokerage in conspiracy with the rest two accused.
5. All the three accused were charged for the offences of criminal
conspiracy, conspiracy to commit offences of cheating/criminal breach of trust; receiving stolen property and falsification of accounts under Section 120-B, Section 420/409, Section 411, and Section 477-A of Indian Penal Code.
Accused No.1 and accused No.2 being public servants were also
charged for the offences of criminal misconduct under Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988.
All together
12 charges were framed jointly and severally vide Ex.3.
6. The prosecution had led evidence of 12 witnesses apart from a number
of Exhibits in order to prove their case.
7. Learned Judge, Special Court, by the impugned judgment and order
dated 6th September, 2001 held the accused No.1 and accused No.3 guilty and
convicted and sentenced them as under:
|Name of the |Offences for which |Sentenced awarded |
|accused/appellant |convicted | |
| | | |
|Accused No.1 - B. |Convicted for offence of|Rigorous imprisonment |
|Raghuvir Acharya |criminal breach of trust|for three years and fine|
| |under Section 409 IPC |of Rs.20,000/-, in |
| | |default rigorous |
| | |imprisonment for a |
| | |further period of 6 |
| | |months. |
| |Convicted for offence | |
| |under Section 477-A IPC | |
| |for falsification of |Rigorous imprisonment |
| |accounts of CMF in |for three years and find|
| |respect of amount of |of Rs.20,000/-, in |
| |Rs.32.50 lakhs paid to |default rigorous |
| |accused No.3. |imprisonment for a |
| | |further period of six |
| |Convicted for offence of|months. |
| |criminal misconduct | |
| |under Section 13(1)(d) | |
| |r/w Section 13(2) of the|Rigorous imprisonment |
| |Prevention of Corruption|for three years and fine|
| |Act. |of Rs.40,000/-, in |
| | |default rigorous |
| | |imprisonment for a |
| | |further period of six |
| | |months. |
| | | |
|Accused No.3 - Hiten P. |Convicted for offence of|Rigorous imprisonment |
|Dalal |criminal conspiracy |for three years and fine|
| |under Section 409 IPC. |of Rs.20,000/-, in |
| | |default rigorous |
| | |imprisonment for a |
| | |further period of 6 |
| |Convicted for offence |months. |
| |under Section 477-A IPC.| |
| | |Rigorous imprisonment |
| | |for three years and fine|
| | |of Rs.20,000/-, in |
| | |default rigorous |
| | |imprisonment for a |
| |Convicted for offence of|further period of 6 |
| |criminal breach of trust|months. |
| |under Section 411 IPC | |
| |and for being in |Rigorous imprisonment |
| |possession of stolen |for a period of 3 years |
| |property. |and fine of Rs.50,000/-,|
| | |in default rigorous |
| | |imprisonment for a |
| | |further period of six |
| | |months. |
8. During the trial the Special Court raised 30 points and determined
most of them against accused No.1 - B. R. Acharya and accused No.3 -
Hiten P. Dalal.
The points raised against accused No.2 - T. Ravi, Fund
Manager in CMF were answered in his favour and he was acquitted.
9. As against accused No.1, learned Special Court held that the
prosecution proved beyond reasonable doubt that
letter dated 9th March,
1992 of accused No.3 claiming brokerage was received by accused No.1;
endorsement on the letter dated 9th March, 1992 is in the handwriting ofaccused No.1
and
that by the said endorsement accused No.1 acting as the
General Manager instructed accused No.2 to pay brokerage of Rs. 32.50 lakhsto accused No.3.
There was criminal conspiracy between accused No.1 and
accused No.3 to procure the brokerage which was not due and payable to accused No.3.
Accused No.1 being the General Manager and Trustee of CMF
dishonestly and fraudulently induced CMF to part with Rs.32.50 lakhs by
authorizing payment of brokerage in favour of accused No.3 knowing fully
well that accused No.3 had not acted as a broker in the above said
transactions.
Accused No.1 acted dishonestly and in breach of Exs.84 and 85
being minutes of the Board Meetings prescribing the mode of payment of
brokerage, and thereby committed offence of criminal breach of trust under
Section 409 of IPC.
There was a criminal conspiracy in the matter of
disbursement of brokerage of Rs.32.50 lakhs between accused No.1 and
accused No.3 and thereby committed offence under Section 120-B of IPC read
with Sections 409, 411 and 477-A of IPC. Accused No.1 thereby committed the
offence of criminal misconduct under Section 13(1)(d) read with Section
13(2) of the Prevention of Corruption Act, 1988.
10. Learned counsel for accused No.1 submitted that
main allegation
against accused No.1 is based on presumption that the endorsement on letter
dated 9th March, 1992[Ext.17(i) ] was in the handwriting of accused No.1.
Such finding has been given solely on the basis of the statement of PW-5 - Rajesh Pitamberdas Mathija.
Learned counsel pointed out that there exists
inherent contradiction between the evidence of PW-4 and PW-5 and
as PW-5 is
not a competent witness under Section 47 of the Indian Evidence Act to provide evidence regarding the handwriting of accused No.1, no reliance can be made on the statement made by him. PW.5 was not familiar with the handwriting of accused No.1 in the course of his business as he was neither from the same department (CANCIGO), nor he worked under accused
No.1. Moreover, PW.5 had neither seen accused No.1 writing the endorsement nor was PW.5 recipient of any correspondence himself.
11. As against accused No.3, apart from the allegation of conspiracy
between accused No.1 and him,
learned Special Court further held that the
prosecution has proved beyond reasonable doubt that
accused No.3 was not
the broker in two transactions of Andhra Bank and ABFSL.
It was also proved
that accused No.3 did not act as a broker in the transactions of IDBI and
Sahara India as well.
In spite of this, accused No.3 made false
representation by writing letter dated 9th March, 1992 under his own
signatures claiming brokerage on the investments of Rs.65 crores knowing
that he had not acted as a broker and he was not entitled to brokerage.
Accused No.3 thereby induced CMF to part with payment of Rs.32.50 lakhs and
thereby he committed an offence punishable under Section 411 of IPC apart
from offence under Section 409 read with 120-B of IPC and 477-A of IPC.
12. Learned senior for accused No.3 contended that
accused No.3 was
entitled to brokerage under Rule 36 of the Scheme with respect to
investment made by Andhra Bank and ABFSL.
It was further contended that he
was also entitled for brokerage for the investment made by IDBI and Sahara India as well.
As per Rule 36 brokerage can be claimed for 'subscribing or
procuring the investment in CANCIGO'.
Accused No.3 subscribed and procured
the investment of Rs.65 crores including Rs.33 crores invested for Andhra
Bank and ABFSL.
13. He further submitted that
none of the witnesses (PW.4, 5 & 11)
positively stated that accused No.3 was not entitled to brokerage on the investment made by Andhra Bank and ABFSL.
The Auditors have never raised
any dispute as to payment of brokerage to accused No.3.
The Trustees and the Board
have neither discussed nor have they repudiated the payment of brokerage made to accused No.3.
The Bank, which was allegedly put to
wrongful loss never filed a complaint against accused No.3.
The Board never
addressed any letter to accused No.3 calling upon him to explain the payment of brokerage made to him.
In fact, the unequivocal stand of PW.11
is that the CMF did not raise queries with regard to the payment of brokerage on Rs.65 crores to accused No.3 possibly because they may be aware accused No.3 had procured business of Rs.65 crores.
14. It was submitted that such methodology of investment in terms of other i.e. on behalf of accused No.3 is well known in law.
The fact that
Andhra Bank /ABFSL had invested the said amounts on behalf of accused No.3
and the same was in the nature of a constructive trust has been accepted by
this Court in the case of
Canbank Financial Services v.The Custodian and others, (2004) 8 SCC 355.
In the said case, this Court has held the said
arrangement to be legal. In that view of the matter, the mere fact that
Andhra Bank/ABFSL applied for CANCIGO units on behalf of accused No.3 does
not show any sort of deception. The CMF itself has found no illegality or
deception in the application by Andhra Bank/ABFSL. It is clear from the
fact that the CMF has not claimed refund of the brokerage claimed by
accused No.3 on the investment made by Andhra Bank /ABFSL.
15. It was also contended that none of the witnesses of the CANCIGO
(PW.4, 5 and 11) have come out with a positive assertion that accused No.3
made a fraudulent and/or dishonest representation to CANCIGO which was
acted upon by the institution/CMF to its detriment which caused wrongful
loss.
There is no evidence as to who acted on the representation made by
accused No.3.
16. It was further contended that the applications of Andhra Bank and
ABFSL were duly stamped and Ex.19 clearly states that the applications were
on behalf of accused No.3.
The Investigating Officer (hereinafter referred
to as 'IO') has admitted, in his corss-examination that in the absence of written rule, circular or written instruction, payment of brokerage in good faith and in due course would not amount to an offence.
On the other hand
it was also admitted by the IO in his cross-examination that it was not the
case of the prosecution that any sort of deception was practiced on the
trustees and payment was made by them.
The IO, therefore, submitted that
"there was no question of deception of the Trustees. They have, in fact, authorized accused No.1 and 2 to deal with the funds and pursuant to which Rs.32.50 Lakhs came to be paid".
17. In so far as IDBI and Sahara's investments are concerned, it is
contended on behalf of accused No.3
that the accused No.3 was entitled to
brokerage because of the tripartite arrangement between CMF, Citibank and
accused No.3.
The tripartite agreement entailed accused No.3 and the Citi
Bank for procuring investment for CANCIGO. CMF would lend 80% of the amount of subscription to Citi Bank @ 15% for one year and accused No.3 would get brokerage on the investment so procured.
PW.11 admits that the scheme was
in a financial crunch and it was only because of accused No.3 the money was
infused in the financially starved scheme. The material on record also
establishes that investment by IDBI and Sahara was at the instance of Citi
Bank. The witnesses examined on behalf of IDBI and the Board note Ex.84
clearly show that the said investment was brought about as a result of the
efforts on part of Citi Bank. The money so infused in CANCIGO scheme was
for the advantage of Citi Bank as 80% of it was available to it at a
nominal rate of interest for a year.
18. The witness PW.11 in his cross-examination had admitted that CMF as a
matter of fact lent 80% of the amount to Citi Bank for one year at the rate
of 15% per year even when rate of interest was fluctuating between 20% to
50%. The amount given to Citi Bank over one year was 80% of entire amount
i.e 80% of Rs.65 crores which included Rs.33 crores by and on behalf of the
appellant.
19. According to the learned counsel for accused No.3, the said accused
cannot be held guilty of cheating under Section 420 IPC. The prosecution
case is that the letter Ex.17 was placed before accused No.1, who in turn
made his purported endorsement and thereby committed the offence of
cheating in conspiracy with accused No.2 and accused No.3. It was submitted
that it was not the case of the prosecution that accused No.1 or for that
matter anyone else in the CANCIGO mutual fund was cheated by accused No.3
by virtue of representation through Ex.17.
20. It is further contended that the Institution, CMF, is a juristic
entity, akin to a Company and it acts through its human agencies.
Therefore, for fastening criminal liability onto a Company, the criminal
intent of the human agencies of the Company is imperative. The logical
consequence is that if a Company/Institution is a 'victim' of cheating then
somebody acting for/on behalf of the institution must state how and/or in
what manner the institution has been cheated/put to wrongful loss.
21. It was submitted that the transactions with regard to Andhra Bank
/ABFSL were considered by a three Judge Bench of this Court in the case ofS. Mohan v. Central Bureau of Investigation, (2008) 7 SCC 1 wherein it was
held that:
"18. It is not disputed that CANCIGO units worth Rs.33 crores
were purchased by Andhra Bank or Andhra Bank Financial Services
Limited by making use of the money owned by the appellant Hiten
P.Dalal.
These two financial institutions impliedly agreed to
lend their name and allowed the appellant Hiten P. Dalal to
purchase CANCIGO units in their name. It is also important to
note that interest due on the CANCIGO units worth Rs.33 crores
received from CBMF by Andhra Bank and Andhra Bank Financial
Services Ltd. were credited to the account of the appellant
Hiten P. Dalal.
Therefore, it is clear for all practical
purposes that the CANCIGO units worth Rs.33 crores were
purchased by the appellant Hiten P. Dalal and he transferred
these units to CANFINA and CBMF did not raise any objection in
respect of transfer of the CANCIGO units by the appellant Hiten
P. Dalal.
If at all, it was for CBMF to raise any objection but
they did not raise any objection to the transfer of the CANCIGO
units.
xxx xxx xxx xxx
xxx xxx xxx xxx
21. So long as CANFINA has no grievance or complaint against
the appellant S. Mohan that he acted contrary to their
directions and accepted the CANCIGO units and paid the money to
the appellant Hiten P. Dalal, no offence is made out against the
appellant S. Mohan either of criminal breach of trust or
conspiracy.
In fact, PW.1(Mr. Kini, Executive Vice-President)
has admitted that CANFINA used to regularly deal in CANCIGO
units, that neither the Adult nor RBI made any remarks regarding
transactions relating to CANCIGO units and all the transactions
relating to CANCIGO units were in the ordinary course of
business.
Neither Canara Bank nor CANFINA had initiated any
disciplinary proceedings against him. They have also not
disputed the genuineness of the CANCIGO units which were got
encashed by the appellant Hiten P. Dalal."
22. According to learned Senior Counsel for accused No.3, the prosecution
has failed to produce any evidence documentary or testimonial to make out a
case of cheating against accused No.3 with respect to the Institution/CMF.
There is no material to convict accused No.3 under any of the charges.
23. Mr. Sidharth Luthra, learned Additional Solicitor General, appearing
on behalf of CBI submitted that accused No.1 was aware of receipt of Rs.65
crores into the funds of CANCIGO as stated by PW.11 and the payment of
brokerage showing the payment of Rs.32.50 lakhs to accused No.3 under
application dated 9th March, 1992, (Ex.17) though accused No.3 was not
entitled to receive brokerage. In fact, accused No.1 had personally
forwarded the applications of Sahara India to PW.4, as stated by PW.4 and
he was the only trustee who was personally looking into all affairs of the
scheme and was aware of the source of funds, yet accused No.1 by his
omissions led brokerage of Rs.32.50 lakhs be paid to accused No.3 by
accused No.2. The handwriting of accused No.1 [Ex.17(i)] has been proved
by PW.5.
24. It is further submitted that the parties accept about the fact that
accused No.3 claimed and received brokerage of Rs.32.50 lakhs from CMF on
account of CANCIGO scheme receiving an amount of Rs.65 crores as investment
(Exts.61 and 62) and Section 313 Cr.P.C. statement of accused No.3 also
indicates the same. The issue, however, is
whether accused No.3 was
entitled to the brokerage amount of Rs.32.50 lakhs and if not, then under
what circumstances was the payment made to accused No.3 by accused No.1 andaccused No.2 on behalf of the bank.
Referring to the impugned judgment
passed by the learned Judge, Special Court, it was contended that the mere
fact of acquittal of accused No.2 will have no effect, in view of the
decision of this Court in Devender Pal Singh v. State of NCT of Delhi and
Anr., (2002) 5 SCC 234 and Brathi alias Sukhdev Singh v. State of Punjab,
(1991) 1 SCC 519; that the evidence against accused No.2 can be relooked
afresh by the Appellate Court and for seeing the role of accused No.1 and
accused No.3 and the acquittal of accused No.2 would not prejudice the
prosecution case.
25. It was further submitted that accused No.3 though never acted as
broker in the IDBI and Sahara India, he claimed brokerage from CMF vide
letter dated 9th March, 1992 in respect of Andhra Bank, ABFSL, IDBI and
Sahara India.
26. The prosecution has proved beyond reasonable doubt that accused No.3
made false representation by writing letter dated 9th March, 1992, (Ex.17)
under his own signatures. He claimed brokerage for transactions for which
he did not act as a broker. In spite of knowing that he was not entitled to
brokerage to the said transactions, he induced CMF to part with payment of
Rs.32.50 lakhs.
27. According to the counsel for the CBI, accused No.3 did not produce
any witness in his defence to prove that he was in fact the broker who
brought about the purported tripartite agreement with Citi Bank. No
official of Citi Bank was named, nor examined in this regard, by accused
No.3.
28. Learned ASG on behalf of CBI submitted that assuming that this Court
were to disagree with the Special Court and hold that evidence against
accused No.1 is lacking, this Court can convict accused No.3 for the charge
of conspiracy read with Section 409 IPC with unknown persons or with
accused No.2 if so established from the available evidence. Alternatively,
accused No.3 can be convicted under Section 420 IPC for which a substantive
charge has been framed against accused No.1.
29. On hearing learned counsel for the parties, several facts appear to
be admitted on record.
These facts are:
The Andhra Bank and ABFSL invested Rs. 33 cores and purchased CANCIGO
units floated by CMF. Accused No.3 accepted that the amount of Rs.33 crores
was subscribed by him to procure CANCIGO units in the name of Andhra Bank
and ABFSL. Accused No.3 was an approved broker for CMF. He claimed that he
procured the investments of Rs.65 crores including Rs.33 crores of Andhra
Bank and ABFSL and Rs.32 crores invested by IDBI and Sahara India.
30. Accused No.3 made a representation by writing letter dated 9th March,
1992 (Ex.17) under his own signatures claiming brokerage on investment of
Rs.65 crores. On the basis of the said letter dated 9th March, 1992 (Ex.17)
and an endorsement made thereon [Ex.17(i)] CMF had to part with payment of
Rs.32.50 lakhs which was received by accused No.3.
31. Learned Judge, Special Court by the impugned judgment held that
accused No.1 being the General Manager and Trustee of CMF having dominion
over the funds of CMF made false endorsement on the letter dated 9th March,
1992 authorising payment of brokerage favouring accused No.3 by getting the
Fund Manager signed on the worksheet (Ex.16) containing details regarding
brokerage which was made to his knowledge. On the basis of such endorsement
made on the letter dated 9th March, 1992 [Ex.17(i)] the Special Court held
that accused No.1 acted dishonestly and committed breach of Ex.84 and
Ex.85. Thus it was held that accused No.1 thereby committed offence of
criminal breach of trust under Section 409 IPC. It was also held that
accused No.1 and 3 were involved in criminal conspiracy regarding
disbursement of brokerage of Rs.32.50 lakhs and thereby they committed
offence under Section 120-B IPC read with Section 409, 411 and 477-A IPC
and accused No.1 being a public servant committed the offence of criminal
misconduct by dishonestly providing undue pecuniary advantage to accused
No.3 to which accused No.3 was not entitled and thereby committed an
offence under Section 13(1)(d) of the Prevention of Corruption Act, 1988.
32. The main allegation against accused No.1 is that he made endorsement
on letter dated 9th March, 1992 [Ex.17(i)] in his hand-writing. The
prosecution relied on the evidence of PW.5 to prove the said allegation.
33. PW.5-Rajesh Pitamberdas Bhathija claimed to be conversant with the
hand-writing of accused No.1 because of some purported/alleged
correspondence. The witness contradicted himself whereby in an answer to a
previous question he asserted that there was no correspondence with accused
No.1. The witness-PW.5 failed to specify as to with whom accused No.1 was
in correspondence with. The said witness employs an all encompassing
generic term "we had entered into correspondence" which raised doubt.
Importantly, no such specific correspondence or material has been placed by
the prosecution in support of its bald allegation.
34. In Murari Lal v. State of Madhya Pradesh, (1980) 1 SCC 704
this Court
held that in scenarios where there is an absence of expert opinion, a
second screening in the form of the court's assessment is essential to
ascertain the authorship of document.
"12....There may be cases where both sides call experts and two
voices of science are heard. There may b e cases where neither
side calls an expert, being ill able to afford him. In all such
cases, it becomes the plain duty of the court to compare the
writings and come to its own conclusion. The duty cannot be
avoided by recourse to the statement that the court is no
expert. Where there are expert opinions, they will aid the
court. Where there is none, the court will have to seek guidance
from some authoritative textbook and the court's own experience
and knowledge. But discharge it must, its plain duty, with or
without expert, with or without other evidence.
We may mention
that Shashi Kumar v. Subodh Kumar and Fakhruddin v. State of
M.P. were cases where the Court itself compared the writings."
35. In the present case what the prosecution ought to have produced is
the alleged material on the basis whereof PW.5 claimed familiarity with the
handwriting of the author. In absence thereof, the Special Court was
precluded from having any independent assessment.
36. Another question that arises is whether PW.5 was a competent witness
under Section 47 of the Indian Evidence Act to provide evidence regarding
the handwriting of accused No.1. Section 47 of the Indian Evidence Act
reads:
"Section 47 - Opinion as to handwriting, when relevant.- When
the Court has to form an opinion as to the person by whom any
document was written or signed, the opinion of any person
acquainted with the handwriting of the person by whom it is
supposed to be written or signed that it was or was not written
or signed by that person, is a relevant fact.
Explanation.-A person is said to be acquainted with the
handwriting of another person when he has seen that person
write, or when he has received documents purporting to be
written by that person in answer to documents written by himself
or under his authority and addressed to that person, or when, in
the ordinary course of business, documents purporting to be
written by that person have been habitually submitted to him."
37. This Court in Fakhruddin v. State of M.P., AIR 1967 SC 1326 has held
that the premise of the witness claiming familiarity with the handwriting
of the author must be tested.
"11. Both under s.45 and s.47 the evidence is an opinion, in the
former by a scientific comparison and in the latter on the basis
of familiarity resulting from frequent observations and
experience. In either case the Court must satisfy itself by such
means as are open that the opinion may be acted upon. One such
means open to the Court is to apply its own observation to the
admitted or proved writings and to compare them with the
disputed one, not to become an handwriting expert but to verify
the premise of the expert in the one case and to appraise the
value of opinion in the other case."
38. The prosecution's failure to produce material before the Special Judge on which PW.5 claimed familiarity with the handwriting of accused No.1 is fatal.
It can safely be stated that the prosecution has failed to
establish the premise of witness in order to allow the Special Court to appreciate the veracity of assertions made by PW.5.
39. In Mobarik Ali Ahmed v. State of Bombay., (1958) SCR 328 at page 342
this Court held as follows:
"....It may be proof of the handwriting of the contents, or of
the signature, by one of the modes provided in ss.45 and 47 of
the Indian Evidence Act. It may also be proved by internal
evidence afforded by the contents of the document. This last
mode of proof by the contents may be of considerable value where
the disputed document purports to be a link in a chain of
correspondence, some links in which are proved to the
satisfaction of the Court. In such a situation the person who is
the recipient of the document, be it either a letter or a
telegram, would be in a reasonably good position both with
reference to his prior knowledge of the writing or the signature
of the alleged sender, limited though it may be, as also his
knowledge of the subject, matter of the chain of correspondence,
to speak to its authorship. In an appropriate case the court may
also be in a position to judge whether the document constitutes
a genuine link in the chain of correspondence and thus to
determine its authorship."
40. The question for our consideration is whether there is any
credibility in the evidence of PW.5. Admittedly, PW.5 was not posted in
CANCIGO. He came from CANGILT for the purpose of auditing in April, 1992
i.e after the payment of brokerage (paid on 10th March, 1992).Therefore,
the question arises whether PW.5 was familiar with the handwriting of
accused No.1 in the course of his business as he was neither from CANCIGO
nor was working under accused No.1. PW.5 had neither stated that he had
seen accused No.1 writing the endorsement nor he himself was the recipient
of any correspondence made by accused No.1. Therefore, it is clear that
PW.5 had no prior knowledge of the handwriting of accused No.1 or the
signatures of the author, and he was not a part of the chain of
correspondence to speak of its authors. It can be safely stated that PW.5
does not come within the ambit of Section 47 of the Indian Evidence Act to
provide evidence regarding the handwriting of accused No.1.
41. The sole witness who could have claimed familiarity with the
handwriting of accused No.1 was Suchaita Vaidhya since there was a
purported endorsement on the same letter by her as deposed by PW.5. She was
a member of the secretarial staff and was a link in the chain of
correspondence in order to qualify under Section 47 of the Indian Evidence
Act to depose as to the authorship of the endorsement. She was a crucial
witness; however, for the reasons best known to prosecution they have
chosen not to examine Suchaita Vaidya though she was cited as a witness.
42. PW.4- Rajesh Chandrakant Pawar, was transferred in June, 1991from
CANGROWTH to CANCIGO. He was aware of the scheme and worked under accused
No.2. In his deposition PW.4 stated that the endorsement [Ex.17(i)] was in
the handwriting Mr. Anil Narichania, AGM. For the reason best known to the
prosecution, they have not cited Mr. Anil Narichania as one of the
witnesses. Though PW.4, in his examination-in-chief specifically stated
that the endorsement [Ex.17(i)] was in the handwriting of Mr. Anil
Narichania, he was not declared hostile. We find a blatant contradiction
and discrepancy in the evidence of PW.5 who attributes the endorsement to
accused No.1 and, therefore, it will not be desirable to rely on his
evidence.
43. Apart from the statement of PW.5, there is no material to prove the
involvement of accused No.1. As noted above, PW.5's evidence is beset with
many unsatisfactory features which renders it clearly unreliable and in any
case inadequate to establish the charges levelled against accused No.1. On
a close scrutiny of the entire material on record, we have no hesitation to
hold that the learned Special Court was not correct in taking the view that
the prosecution has successfully established the charges against accused
No.1 and wrongly held him guilty for the same.
44. The evidence on record shows that in September, 1991 CMF received,
broadly, four applications for purchase CANCIGO units from Andhra Bank,
ABFSL, IDBI and Sahara India to the tune of Rs.65 crores. At that time
accused No.1 was the General Manager. He was also the Trustee and author of
Ex.84. He also took the decision as one of the Trustees in the meeting of
the Board on Ist November, 1990 to pay brokerage.
The evidence also shows
that the applications were routed to PW.4 through the General Manager. PW.4
in his evidence deposed that the applications of Sahara India were routed
through the General Manager but there is nothing on the record to show that
letter dated 9th March, 1992 (Ex.17) was received by accused No.1. The
finding of the Special Judge that the letter dated 9th March, 1992 was
received by accused No.1 is not based on evidence, therefore, such finding
cannot be upheld. In any case mere receiving of a letter cannot be a ground
to hold that the endorsement at Ex.17(i) was made by accused No.1.
45. Considering the aforesaid, we feel it expedient to record that the
Special Court fell into a manifest error in coming to a conclusion with
regard to accused No.1, as reflected in the judgment under appeal, which
cannot be sustained.
The appeal (Criminal Appeal No.1001 of 2001),
therefore, succeeds and is allowed and the appellant - B.R. Acharya is
acquitted of all the charges, his bail bonds shall stand discharged.
46. It is the case of prosecution that for various acts done by accused
No.3, he used accused No.1, the Trustee and General Manager of CMF to
commit criminal breach of trust in respect of funds of CMF. In this
context, it was submitted that under the general charge of criminal
conspiracy, all those acts also constitute cheating and criminal breach of
trust.
47. The evidence of PW.11 shows that accused No.3 was the broker for CMF.
He was also a member of the Stock Exchange. He had an account in Andhra
Bank. In the case of Andhra Bank and ABFSL, Rs.33, crores invested by them
in CMF belonged to accused No.3. This is also evidenced by the two cheques
(Ex.29 and Ex.30). It was the accused No.3 who induced Andhra Bank and
ABFSL to apply for allotment of CANCIGO units as apparent from the
applications (Ex.19 and Ex.15) which had been signed by the two officers-
Dhankumar and Kalyanaraman, who were accused in some other matter. This
position is not even disputed by accused No.3. The reason is not known as
to why accused No.3 got Andhra Bank and ABFSL to apply. The IO has rightly
pointed out in his evidence, repeatedly, that accused No.3 was not
concerned with the generation of funds in this case. Applications for
allotment were made by Andhra Bank and ABFSL but no entry regarding the
transactions were made in the books of Andhra Bank and ABFSL. Therefore, it
is clear that accused No.3, to whom Rs.33 crores belongs got Andhra Bank
and ABFSL to apply for the units but kept the said matter hidden by not
recording the same. In September, 1991, accused No.3 affixed the brokers
stamp on the applications (Ex.19 and Ex.15). Knowing fully well that the
investors were not Andhra Bank and ABFSL, he had got officers of Andhra
Bank and ABFSL to sign the application forms. Both these officers are
accused in other cases. By affixing the rubber stamp of the broker, accused
No.3 falsely represented to CMF that he had brought subscriptions from
Andhra Bank and ABFSL as a broker and, accordingly, claimed brokerage.
Even before September, 1991, he wrote a letter (Ex.18) to Andhra Bank to
the effect that units worth Rs.11 crores would be given to Andhra Bank and
ABFSL. They were offered as security for ready forward transaction with
ABFSL as evident from the statement of PW.11. From the evidence of PW.11 it
is clear that the entire record of CMF shows that pursuant to the
applications (Ex.19 and Ex.15) made by Andhra Bank and ABFSL, accounts were
opened in the names of Andhra Bank and ABFSL as subscribers. The names of
Andhra Bank and ABFSL found place in the Investment Register [Ex.38(i) and
Ex.39(i)] and also Investors Fund Ledger [Ex.A3(35)(2) and Ex.A3(37)(1)].
Thereby CMF had recognized only Andhra Bank and ABFSL as their investors
and the units could be redeemed only by Andhra Bank and ABFSL. The brokers
stamp was affixed on them by accused No.3 only with a view to claim
brokerage. Although he was aware that the total amount of Rs.33 crores was
invested by him. Even the half yearly interest which was paid on the
investments of Rs.33 crores on 8th January, 1992 by CMF was only in the
names of the subscribers- Andhra Bank and ABFSL. The evidence further shows
that after receiving the income distribution cheques, Andhra Bank and ABFSL
transferred the amount to the account of accused No.3 pursuant to his
letter (Ex.12). This was on 9th January, 1992 and, yet, accused No.3 made
an application vide Ex.17 claiming brokerage from CMF as a broker and not
as an investor. Accused No.3 never objected to allotment of units in favour
of Andhra Bank and ABFSL. In his statement under Section 313 of the
Criminal Procedure Code stated that he was aware of CMF simultaneously
deploying 80% of Rs.65 crores at 15% per annum in Citi Bank. Yet, accused
No.3 concealed the true nature of the transactions of Rs.33 crores in the
names of Andhra Bank and ABFSL though it was known to him on 9th March,
1992 that the half yearly interest came to him not from CMF but from Andhra
Bank and ABFSL. In view of the aforesaid evidence if learned Judge,
Special Court held that on 9th March, 1992 accused No.3 dishonestly claimed
brokerage from CMF by putting brokers stamp and by disguising his
investment of Rs.33 crores on Ex.19 and Ex.15, no interference is called
for against such finding.
48. In September, 1992, after the scam became public, the interest
warrants were returned by Andhra Bank and ABFSL disclaiming their
investments. With regard to the rest of two transactions of Sahara India
and IDBI, the evidence on record shows firstly, that on applications of
IDBI and Sahara India there is no brokers stamp. Despite there being no
brokers stamp on these applications accused No.3 had wrongfully and
dishonestly claimed brokerage on 9th March, 1992.
49. It was the case of accused No.3 that there was prior agreement
between him, CMF and Citi Bank under which Citi Bank got the units
purchased in the names of Sahara India and IDBI. What is relevant is
allotment of units in favour of Andhra Bank, ABFSL, Sahara India or IDBI.
It is to be noticed that the ownership of the units is with Andhra Bank,
ABFSL, Sahara India or IDBI. It is evident from CANCIGO Certificates that
at the expiry of one year, Sahara India and IDBI got CANCIGO units encashed
and they have received the entire money in their accounts on the basis that
they were the owners of the units. The evidence of PW.2, PW.6 and PW.7 on
behalf of IDBI and Sahara India, shows that no broker was involved in the
transactions involving purchase of CANCIGO units of Rs.32 crores face
value.
The case of the prosecution is very simple that out of four
applications for allotment of units, two contained rubber stamp and rest of
two applications of Sahara India and IDBI did not bear rubber stamp.
The
case of the prosecution is that brokerage was dishonestly claimed by
accused No.3 with full knowledge that he has not acted as a broker.
50. In cross-examination, the defence examined PW.11 extensively in
support of their case that brokerage was payable to accused No.3 even if
there was no brokers stamp affixed on the applications in cases where the
officer paying the brokerage is satisfied that the business was procured by
the broker. It was contended on behalf of accused No.3 that brokerage was
payable even on self investments.
However, PW.11 in his cross-examination
has deposed that even in cases where the brokers stamp does not find place
on the applications for allotment of units, the broker was required to
forward the applications for allotment under his covering letter to CMF. In
this case, the defence has not produced any such covering letter in support
of their case. Similarly, they have not produced any correspondence with
CMF claiming brokerage on that basis. Therefore, it is clear that accused
No.3 was not the broker with regard to four investments in question.
51. PW.2, PW.6 and PW.7, employees of IDBI and Sahara India were
extensively cross-examined by the defence and, yet, no case was made by the
defence from any of the three witnesses regarding any correspondence
between accused No.3 and IDBI and Sahara India authorizing him to collect
brokerage from CMF between September, 1991 and March, 1992. Therefore, the
prosecution has proved that accused No.3 is guilty of making a false
representation to CMF with full knowledge and it was so made to deceive CMF
to part with an amount of Rs.32.50 lakhs.
52. On 9th March, 1992 accused No.3 knew that Andhra Bank and ABFSL were
not the actual investors. He also knew that brokerage was payable only if
the business was procured for CMF as he was aware of the decision of Board.
He was the approved broker of CMF and had bought the units in the names of
Andhra Bank and ABFSL, which is admitted. He knew that that as the
subscriber of units, he was not entitled to brokerage yet, he claimed
brokerage as a broker vide Ex.17. Therefore, it is clear that both the
transactions of Andhra Bank and ABFSL got disguised. Their true nature was
suppressed. Though no brokerage was payable on such transactions, Ex.17 was
written by accused No.3 with dishonest intention. Without Ex.17, accused
No.3 could not have succeeded in obtaining from CMF an amount of Rs.32.50
lakhs.
53. Now the question arises as to
what will be the effect of acquittal of
co-accused Nos.1 and 2 on the case of accused No.3. According to the appellant if co-accused No.1 is acquitted and in view of acquittal of co- accused No.2 no charge under Sections 409, 411 and 477-A substantiate against accused No.3 and he cannot be punished with the aid of Section 120-B IPC.
54. Per contra, according to the learned counsel for the CBI, even if
this Court disagrees with the Special Court and holds that the that
evidence against accused No.1 is lacking, this Court can convict accused
No.3 for the charges of conspiracy read with Section 409 IPC with unknown
person or accused No.2 if so established from the available evidence.
Alternatively, accused No.3 can be convicted under Section 420 IPC for
which a substantive charge had been framed against him.
55. This Court in Devender Pal Singh(supra), held that acquittal of one
accused does not raise doubt against conviction of another accused person.
A plea that acquittal of the co-accused has rendered the prosecution
version brittle has no substance. Acquittal of co-accused on the ground of
non-corroboration has no application to the accused himself.
56. The question arises whether accused No.3 can be convicted for the
alternative charge under Section 420 of the IPC for which a substantive
charge had been framed against him. In this connection we may refer to
decision of this Court in Satyavir Singh Rathi v. State through CBI, (2011)
6 SCC 1, wherein this Court held:
"68. We find the situation herein to be quite different. We
must notice that the charges had indeed been framed in the
alternative and for cognate offences having similar ingredients
as to the main allegation of murder. Section 386 Cr.P.C. refers
to the power of the appellate court and the provision insofar
relevant for our purpose is sub-clause (b)(ii) which empowers
the appellate court to alter the finding while maintaining the
sentence.
It is significant that Section 120-B IPC is an offence
and positive evidence on this score has to be produced for a
successful prosecution whereas Section 34 does not constitute an
offence and is only a rule of evidence and inferences on the
evidence can be drawn, as held by this Court in Lachhman Singh
v. State, AIR 1952 SC 167. We are, therefore, of the opinion
that the question of deemed acquittal insuch a case where the
substantive charge remains the same and a charge under Sections
302/120-B and an alternative charge under Sections 302/34 IPC
had been framed, there was nothing remiss in the High Court in
modifying the conviction to one under Sections 302/307/34 IPC.
It is also self-evident that the accused were aware of all the
circumstances against them. We must, therefore, reject Mr.
Sharan's argument with regard to the deemed acquittal in the
circumstances of the case."
57. In Sunil Kumar Paul vs. State of West Bengal, AIR 1965 SC 706, the
accused was charged for the offence under Section 409 IPC. In the said case
the Court held that the accused could have also been charged for the
offence under Section 420 IPC and held:
"(15). It is urged for the appellant that the provisions of s.
236 Cr.P.C. would apply only to those cases where there be no
doubt about the facts which can be proved and a doubt arises as
to which of the several offences had been committed on the
proved facts. Sections 236 and 237 read :
"236. If a single act or series of acts is of such a nature
that it is doubtful which of several offences the facts which
can be proved will constitute, the accused may be charged with
having committed all or any of such offences, and any number of
such charges may be tried at once; or he may be charged in the
alternative with having committed some one of the said offences.
Illustrations
(a) A is accused of an act which may amount to theft, or
receiving stolen property, or criminal breach of trust or
cheating. He may be charged with theft, receiving stolen
property, criminal breach of trust and cheating, or he may be
charged with having committed theft, or receiving stolen
property, or criminal breach of trust or cheating.
x x x x x x
237. If, in the case mentioned in section 236, the accused
is charged with one offence, and it appears in evidence that he
committed a different offence for which he might have been
charged under the provisions of that section, he may be
convicted of the offence which he is shown to have committed,
although he was not charged with it.
Illustration
A is charged with theft. It appears that he committed the
offence of criminal breach of trust, or that of receiving stolen
goods. He may be convicted of criminal breach of trust or of
receiving stolen goods (as the case may be) though he was not
charged with such offence."
The framing of a charge under s. 236 is, in the nature of
things, earlier than the stage when it can be said what facts
have been proved, a stage which is reached when the court
delivers its judgment. The power of the Court to frame various
charges contemplated by s. 236 Cr.P.C. therefore arises when it
cannot be said with any definiteness, either by the prosecutor
or by the Court, that such and such facts would be proved. The
Court has at the time of framing the charges, therefore to
consider what different offences could be made out on the basis
of the allegations made by the prosecution in the complaint or
in the charge submitted by the investigating agency or by the
allegations made by the various prosecution witnesses examined
prior to the framing of the charge. All such possible offences
could be charged in view of the provisions of s. 236 Cr.P.C. as
it can be reasonably said that it was doubtful as to which of
the offences the facts which could be ultimately proved would
constitute. The facts which must have been alleged prior to the
stage of the framing of the charge in the present case must have
been what had been stated in the charge-sheet submitted by the
Investigating Officer, 24-Parganas, which is printed at p. 3 of
the appeal record. This charge-sheet narrates in the column
meant for the name of offences and circumstances connected with
it :
"that on the 6th October 1956 Sunil Kumar Paul, a Public
servant in the employment of the office the Sub-Divisional
Health Officer, Barrackpore i.e., (clerk) dishonestly drew Rs.
1,763-6-0 excluding Postal Life Insurance deduction of Rs. 5-10-
0 from the State Bank of India, Barrackpore Branch by submitting
a false duplicate Estt. Pay Bill under head 39 for the month of
September 1956 for the office of the said S.D.H.O., Barrackpore.
The money drawn was not credited to the office of the Sub-
Divisional Health Officer, Barrackpore."
It is practically on these facts that the conviction of the
appellant for an offence under s. 420 I.P.C. has been founded.
It follows that the Special Court could therefore have framed a
charge under s. 420 I.P.C. at the relevant time if it had been
of the opinion that it was doubtful whether these facts
constitute an offence under s. 409 I.P.C. as stated in the
charge-sheet or an offence under s. 420 I.P.C.
(16). When a charge under s. 420 I.P.C. could have been
framed by the trial Court by virtue of s. 236 Cr.P.C. that Court
or the appellate Court can, in law, convict the appellant of
this offence instead of an offence under s. 409 I.P.C. if it be
of the view that the offence of cheating had been established.
This would be in accordance with the provisions of s. 237
Cr.P.C.
(17) It is then urged for the appellant that under the
proviso to s. 4 of the Act, the Special Court can try any other
offence only when the accused is specifically charge with that
offence. The language of the proviso does not lead to such a
conclusion. It provides for the trial of the accused for any
other offence provided the accused could be charged with that
offence at the same trial under the provisions of the Code of
Criminal Procedure. The proviso does not say that the charge
must be framed, though of course, if the trial Court itself
tries the accused for a certain offence, it will ordinarily
frame a charge. The proviso empowers a Court to try the accused
for that offence and has nothing to do with the power of the
trial court or of the appellate Court to record a conviction for
any other offence when an accused is being tried with respect to
an offence mentioned in the Schedule. The Court's power to take
recourse to the provisions which empower it to record a
conviction for an offence not actuality charged, depends on
other provisions of the Code and the Act.
(24) The ingredients of two offences must be different from one
another and it is therefore not necessary to consider whether
the ingredients of the two offences are in any way related. The
Court has to see, for the purpose of the proviso, whether the
accused could be charged with any offence other than the one
referred to in the allotment order, in view of the provisions of
the Code. There is nothing in the proviso which could lead to
the construction that any limitations other than those laid down
by the provisions of the Code of Criminal Procedure were to
affect the nature of the offence which could be tried by the
Special Court.
(25.) We are therefore of opinion that the Special Court could
try the appellant for the offence under s. 420 I.P.C. and that
therefore the High Court was right in altering his conviction
from that under s. 409 to s. 420 I.P.C."
58. In this case the prosecution proved that the accused No.3 deceived
CMF by making a false representation dated 9th March, 1992 and dishonestly
induced the official of CMF to deliver Rs.32.50 lakhs in his favour and he
dishonestly received the amount and thereby committed offence under Section
420 IPC. Accused No.3 was originally charged for the offence of cheating,
criminal breach of trust for receiving stolen property/falsification of
accounts under Section 120-B, Section 420/409 of the IPC apart from Section
411 and Section 477-A of the IPC. We, therefore, alter his conviction from
that of under Section 409 to Section 420 of the IPC and convict him for the
offence under Section 420 of the IPC and sentence him to undergo rigorous
imprisonment for three years.
59. Further, as the prosecution successfully established the ingredients
of theft for receiving stolen property from Canara Bank i.e. Rs.32.50 lakhs
against accused No.3, we uphold the order of his conviction and sentenced
passed by the Special Court under Section 411 of the IPC.
However, in view of the acquittal of accused Nos.1 and 2, the order
of conviction of accused No.3 under Section 477-A is set aside. The
judgment dated 6th September, 2001 passed by the learned Special Judge is
affirmed with modification as mentioned above. The appeal (Criminal Appeal
No.1226 of 2001) filed by the appellant-Hiten P. Dalal is dismissed. The
bail bonds of the appellant - Hiten P. Dalal, if he is on bail, shall stand
cancelled and he is directed to be taken into custody to serve out the
remainder of the sentence.
.........................................................J.
( G.S. SINGHVI )
.........................................................J.
( SUDHANSU JYOTI MUKHOPADHAYA)
NEW DELHI,
JULY 1, 2013.
ITEM NO.1F COURT NO.4 SECTION IIA
(FOR JUDGMENT)
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
CRIMINAL APPEAL NO(s). 1001 OF 2001
B. RAGHUVIR ACHARYA Appellant (s)
VERSUS
CENTRAL BUREAU OF INVESTIGATION Respondent(s)
WITH
CRIMINAL APPEAL NO. 1226 of 2001
Date: 01/07/2013 These Appeals were called on for Judgment
today.
For Appellant(s)
Mr. Praneet Ranjan,Adv.
Mr. V.N. Raghupathy, Adv.
For Respondent(s)
Mr. Arvind Kumar Sharma,Adv.
Hon'ble Mr. Justice Sudhansu Jyoti Mukhopadhaya pronounced the
Judgment for the Bench comprising Hon'ble Mr. Justice
G.S. Singhvi and His Lordship.
In terms of the Judgment, Criminal Appeal No. 1001 of 2001
succeeds and is allowed and the appellant - B.R. Acharya is acquitted
of all the charges, his bail bonds shall stand discharged.
In terms of the Judgment, Criminal Appeal No. 1226 of 2001
filed by the appellant-Hiten P. Dalal is dismissed. The bail bonds of
the appellant - Hiten P. Dalal, if he is on bail, shall stand
cancelled and he is directed to be taken into custody to serve out the
remainder of the sentence.
(Rajesh Dham) (Renu Diwan)
Court Master Court Master
(reportable signed Judgment is placed on the file)
