Bombay High Court
C B I vs C. Ravikumar & 9 Ors on 25 November, 2016
Bench: Dr. Shalini Phansalkar-Joshi
Dixit
IN THE SPECIAL COURT AT BOMBAY
( Constituted under the Special Court [Trial of Offences Relating to
Transactions in Securities] Act, 1992 )
SPECIAL CASE NO.2 OF 1994
IN
C.B.I. CASE NO.R.C.52/A/92-BOM
Central Bureau of Investigation ] ... Complainant
Versus
1. Coodli Ravikumar ]
S/o. Shri C. Chandrasekhar, ]
Assistant General Manager, ]
National Housing Bank, ig ]
Bombay Life Buildings, ]
IIIrd Floor, 45, Veer Nariman Road,]
Bombay - 400 023. ]
]
Resident of A1/186, Snehadhara ]
Co-operative Society, Dadabhai ]
Cross Road No.3, Vile Parle (W), ]
Bombay - 400 056. ]
]
Permanent Resident of House ]
th th
No.648, Shilpa, 14 Cross, 14 Main, ]
J. P. Nagar, IInd Phase, ]
Bangalore - 400 078. ]
]
2. Seetapathy Suresh Babu, ]
S/o. Shri R. Seethapathy, ]
Assistant Manager, ]
National Housing Bank, ]
Bombay Life Buildings, ]
rd
III Floor, Veer Nariman Road, ]
Bombay - 400 023. ]
]
Resident of B-9. Shaakya Vihar ]
Co-operative Housing Society, ]
Behind Usha Apartments, ]
90 Ft Road, Mulund (E), ]
Bombay - 400 081. ]
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Permanent Resident of No.1, ]
Tagore Street, Ayyappa Nagar, ]
Thiruchirappally, Tamil Nadu. ]
]
3. R. Sitaraman, ]
S/o. Late K. Ramasubramaniam, ]
Officer, JMG-I, Securities Division, ]
State Bank of India, ]
Bombay Main Branch, Bombay. ]
]
Resident of 11, Shantiniketan, ]
Lallubhai Park, Andheri (West), ]
Bombay - 400 058. ]
]
4. Harshad S. Mehta, ]
S/o. Late Shantilal M. Mehta
ig ]
Proprietor M/s Harshad S.Mehta, ]
Stock, Securities & Finance Broker, ] .... (Abated / 23.4.2002)
1205/6/1518, Maker Chambers, ]
V-221, Nariman Point, ]
Bombay - 400 021. ]
]
rd
Resident of Madhuli, 3 Floor, ]
A. B. Road, Worli, Bombay-400 018. ]
]
5. Atul M. Parekh, ]
S/o. Late Manubhai Parekh, ]
Assistant Vice-President, ]
M/s. Harsh Estates Ltd., ]
1518, Maker Chambers, ]
V. Nariman Point, Bombay-400 021. ]
]
R/of 705/6, Prabhu Apartments, ]
Near Rajawadi Hospital, ]
Ghatkopar (East), Bombay - 400 077. ]
]
6. Pankaj B. Shah, ]
S/o. Shri. Vrijlal C. Shah, ]
Assistant Vice President, ]
M/s. Growmore Research & Assets ]
Management Ltd., ]
1205-6, Maker Chambers, ]
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V. Nariman Point, Bombay - 400 021. ]
R/of 16, Rajshree Kutir, 37, Jagdusha ]
Nagar, Ghatkopar (West), Bombay 86. ]
]
7. Sudhir S. Mehta, ]
S/o. Late Shantilal M. Mehta, ]
Authorized signatory for ]
M/s Harshad S Mehta, 1205-6, ]
Maker Chambers, V. Nariman Point, ]
Bombay - 400 021. ]
]
rd
R/o Madhuli, 3 Floor, Dr. A. B. Road, ]
Worli, Bombay. ]
]
8. Hiten B. Mehta, ]
S/o. Late Bhpatrai Mehta,
ig ]
Treasury Dealer, ]
M/s. Harshad S. Mehta, ]
th
12 Floor, Maker Chambers, ]
V. Nariman Point, Bombay - 400 021. ]
]
R/o. 6B Baria Apartments, Marwari ]
Chawl, Opp. Telephone Exchange, ]
S.V. Road, Malad (West), ]
Bombay - 400 064. ]
]
9. Deepak B. Mehta, ]
S/o. Late Bhupatrai M. Mehta, ]
Partner of M/s Extol Investments ]
& Proprietor of M/s. D. M. Investments,]
6B Baria Apartments, Marwari Chawl, ]
Opp. Telephone Exchange, ]
S.V. Road, Malad (West), ]
Bombay - 400 064. ]
]
Resident of 6B, Baria Apartment, ]
Marwari Chawl, Opposite Telephone ]
Exchange, S.V. Road, Malad (W), ]
Bombay - 400 064. ]
]
10. Virendra D. Damani, ]
S/o. Shri. Dulerai K. Damani, ]
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M/s Extol Investments, S. V. Road, ]
Malad (West), Bombay - 400 064. ]
R/of Plot No.103, Ashirwad, ]
Room No.2, Liberty Garden, ]
Road No.2, Malad (West), Bombay. ] .... Accused
Shri. Limosin, Senior P.P., for the Complainant-CBI.
Shri. R. Satyanarayanan for Accused No.1-Ravikumar.
Accused No.2-Suresh Babu and Accused No.3-Sitaraman are present-in-
person.
Accused No.4-Harshad S. Mehta dead.
Shri. Ajay Kandhar for Accused No.5-Atul and Accused No.6-Pankaj.
Shri. Vivek Sharma for Accused No.7-Sudhir.
Shri. D.U. Mirajkar for Accused No.8-Hiten, Accused No.9-Deepak and
Accused No.10-Virendra.
CORAM : DR. SHALINI PHANSALKAR-JOSHI, J.
RESERVED ON : 23RD SEPTEMBER 2016.
PRONOUNCED ON : 25TH NOVEMBER 2016.
JUDGMENT :
1. This Special Case is pertaining to the offences relating to
transactions in securities, which popularly came to be known as
'Securities Scam of the Year - 1992' and which has rocked the economy of
the country. Accused No.4-Harshad S. Mehta, since deceased, (for short,
"Accused No.4-HSM"), is said to be the kingpin of the said scam, who
has, according to the prosecution case, in connivance with the Officers of
National Housing Bank, State Bank of India and various other Banks and
Financial Institutions, illegally siphoned-off crores of funds of the Banks
and Financial Institutions for speculative returns by systemic and
deliberate abuse of the system.
2. Accused No.1-Ravikumar and Accused No.2-Suresh Babu in this
case, at the relevant time of incident, were Assistant General Manager
and Assistant Manager, respectively, of the National Housing Bank, (for
short, "NHB"), established under the National Housing Bank Act, 1987,
(for short, "the NHB Act"). Accused No.1-Ravikumar was in-charge of the
Fund Management Group, (for short, "FMG"), which was established to
deal with the transactions of the securities for deployment of the funds of
the NHB.
3. Accused No.3-Sitaraman was the Officer of the State Bank of India,
(for short, "SBI"), who, at the relevant time, was handling these securities
transactions with various other Banks and Brokers.
4. Accused No.4-HSM, since deceased and hence case being abated
against him on 23rd April 2002, was the kingpin and the main culprit for the
entire security scam that broke out in the wake of the early months of
1992.
5. Accused No.5-Atul and Accused No.6-Pankaj were the Assistant
Vice Presidents of M/s. Harish Private Limited and M/s. Growmore
Research and Asset Management Limited, which were the Partnership
Firms of Accused No.4-HSM.
6. Accused No.7-Sudhir is the brother of Accused No.4-HSM and, like
Accused No.8-.Hiten, Accused No.9-Deepak and Accused No.10-
Virendra, he was also dealing in the business of Broker.
7.
The gravamen of the charge levelled against all these Accused is of
entering into criminal conspiracy with an object to commit criminal breach
of trust by misappropriating the funds of NHB with an intention to obtain
valuables, securities and pecuniary advantage to Accused No.4-HSM
without any public interest.
8. As per prosecution case, Accused No.1-Ravikumar and Accused
No.2-Suresh Babu, being the Officers of NHB and having dominion over
the funds of NHB, and Accused No.3-Sitaraman, being in-charge of the
securities transactions at SBI, have committed this criminal breach of trust
by misappropriating the funds of NHB, by transferring the said funds to the
accounts of Accused No.4-HSM by showing fake transactions of purchase
of securities from SBI, by preparing forged documents to substantiate the
said transactions with the aid and abatement of Accused No.5-Atul and
Accused No.6-Pankaj, who were working with Accused No.4-HSM, and in
abatement with the Brokers, namely, Accused No.7-Sudhir, Accused No.8-
Hiten, Accused No.9-Deepak and Accused No.10-Virendra, who were
dealing with the securities.
9. It is also the prosecution case that Accused No.1-Ravikumar and
Accused No.2-Suresh Babu have also committed the offence of cheating
other Financial Institutions by entering into the transactions of purchase
and sale of securities by issuing the Bank Receipts, (for short, "BRs"),
without those receipts being backed by the securities, which were not in
existence at all, and inducing these Financial Institutions to part with large
amounts in favour of NHB and also by preparing forged and fabricated
documents to substantiate these transactions of sale and purchase.
10. Accused No.1-Ravikumar, Accused No.2-Suresh Babu and Accused
No.3-Sitaraman are further charged and tried for the offences punishable
under Sections 409 r/w. 120B of IPC and Sections 13(1)(c) and 13(1)(d)
r/w. Section 13(2) of the Prevention of Corruption Act, 1988.
11. Accused No.1-Ravikumar and Accused No.2-Suresh Babu are also
charged further for the offence punishable under Section 477A r/w.
Section 120B of IPC.
12. Accused No.5-Atul, Accused No.6-Pankaj and Accused No.7-Sudhir
are specifically charged for the offence punishable under Section 409 r/w.
Section 109 r/w. Section 120B of IPC.
13. Accused No.8-Hiten and Accused No.9-Deepak are specifically
charged for the offences punishable under Sections 467 and 471 r/w.
Section 120B of IPC.
14.
Accused No.9-Deepak and Accused No.10-Virendra are tried with a
specific charge for the offences punishable under Sections 403, 467 and
471 r/w. Section 120B of IPC.
15. All these accused, thus, stand charge-sheeted and being tried for
the offence punishable under Section 120B of IPC, which is referred as
"umbrella" charge and for various other offences punishable under
Sections 403, 409, 411, 420, 467, 471, 477 r/w. Sections 120B, 467 and
477A of IPC.
16. Before adverting to the facts of this particular case, for better
understanding of the case against these accused, it would be necessary
to take overview of the short history, which acts as background to this
case.
BACKGROUND FACTS
17. During the period April-1992 and June-1992, certain large scale
irregularities and mal-practices were detected in transactions of, both, the
Government and other Securities, committed by some Brokers in collusion
with the employees of various Banks and Financial Institutions. In the first
week of April-1992, Reserve Bank of India, (for short, "RBI"), advised SBI
to furnish Statement of Investments held by them upto 31 st January 1992.
SBI could not furnish the details and found that there is a huge short fall in
the securities. When news-report to that effect appeared in the 'Times of
India' on 23rd April 1992, RBI appointed a five-member Committee headed
by the then Deputy Governor of RBI Mr. R. Janakiraman on 30th April 1992
for inquiring into the alleged irregularities in the Securities Scam. The
Committee altogether submitted five Interim Reports and the sixth and
Final Report in April 1993. In August 1992, a Joint Parliamentary
Committee was also constituted to inquire into the Securities Scam with
Mr. Ram Niwas Mirdha as its Chairman. The Committee had given its
Report in December 1993. Both these Committees examined the reasons
and causes for the Securities Scam and found large scale irregularities
committed by the Banks, Financial Institutions and Brokers. It was also
noticed that there was blatant violation of RBI Guidelines by misuse of the
BRs, which was the result of unholy nexus between some of the Bankers
and the Brokers. It was revealed that huge money of Public Sector
Undertakings was pumped into the Stock Market, which overheated the
Stock Market, the benefit of which ultimately went to the Brokers.
18. The aftermath of the Securities Scam was so devastating that at-
least two Banks, namely, Bank of Karad and Metropolitan Co-operative
Bank Limited went into liquidation. Millions of investors lost their hard
earned savings and it took nearly three years for the market to recover
from the Scam.
19. On the basis of the Reports of these two Committees and to deal
with the situation, as also to ensure the speedy recovery of the huge
amount involved, the Parliament enacted the Special Court (Trial of
Offences Relating to Transactions in Securities) Act, 1992, for establishing
the Special Court for trial of the offences relating to the Securities Scam.
As stated above, the instant case pertains to one of such offences relating
to the Securities Scam, for the trial of which this Special Court is
established.
BRIEF FACTS OF THIS CASE
20. In this backdrop of the events, brief conspectus of the facts of this
case can be stated as follows :-
21. Somewhere in the Year-1988, by an enactment called National
Housing Bank Act, 1987, the 'National Housing Bank' was established on
9th July 1988, as a subsidiary of RBI, to operate as a Principal Agency to
promote Housing Finance Institutions at local regional levels and to
provide financial and other supports to such Institutions and for matters
connected therewith or incidental thereto. Under Section 14 of the NHB
Act, the NHB was authorized to invest its funds and enter into certain
types of transactions, like, the investment of funds by way of Ready-
Forward Transactions in Public Sector Bonds, Units of UTIs and the
Securities of various Financial Institutions.
22. The FMG was constituted, somewhere in the Year-1989, to take
care of the funds of NHB. The funds of NHB were in the form of Share
Capital as well as in the form of Loan from RBI called 'National Long Term
Operational Fund'. The FMG was involved in the transactions relating to
investment of funds available with NHB. In February-1989, the RBI
accorded permission to NHB for operating in the Deals Discounting
Market and in October-1990, the permission was granted to invest its
Short Term Surplus Funds by way of Call Money.
23. Accused No.1-Ravikumar joined NHB as 'Regional Manager' in
August-1988, on deputation from RBI and, later on, he was absorbed in
NHB with effect from 1st July 1989 and thereafter promoted as 'Assistant
General Manager' from 1st January 1992. He was in-charge of FMG from
the said date. The services of Accused No.2-Suresh Babu were adopted
from other Financial Institution by the NHB and, at the relevant time, he
was working as 'Assistant Manager' and assisting Accused No.1-
Ravikumar for carrying out operations of the FMG.
24. By the Office Order dated 31st May 1991, the then General Manager
of the NHB appointed Mr. B. Murlidharan as 'Manager' of FMG in place of
Accused No.1-Ravikumar. However, Accused No.1-Ravikumar was
directed to continue to oversee the working of FMG till completion of the
audit for the year 1991. It is a matter of record that, despite Office Order
dated 31st May 1991, Mr. B. Murlidharan never took charge of FMG and
Accused No.1-Ravikumar continued to be in-charge of FMG, even after
completion of the work of audit for the year 1991.
25. By Office Order issued on 21st September 1991, under the signature
of Mr. M.J. Pherwani, the then Chairman of NHB, the then General
Manager Mr. S.D. Hosangadi, the Assistant General Manager Mr. Baliga,
four Regional Managers, namely, PW-17 Vivek Katre, Accused No.1-
Ravikumar; Late Mr. P. Jambukeshwaran and Mr. Rakesh Bhalla were
authorized to operate Current Account No.7382 of NHB with RBI. By this
Office Order, the General Manager Mr. Hosangadi was authorized to
operate the Current Account singly; whereas, the other Officers were
authorized to operate the same jointly, by any two Officers. All the
transactions in respect of either purchase or sale of securities were
carried out by the Officers in the FMG; especially, by Accused No.1-
Ravikumar being in-charge of the FMG. As per the procedure, the Deal
Slip used to be prepared with regard to the sale transaction; then an entry
used to be made in the Deal Diary; thereafter entries connected to the
transactions used to be made in the Investment Register and RBI Scroll,
after preparing the sale and purchase vouchers. In case of purchase
transaction, RBI cheque used to be issued, signed by Accused No.1-
Ravikumar and any other authorized Officer. The same used to be handed
over against the physical securities or BRs in lieu of physical security. In
case of sale transaction, Accused No.1-Ravikumar was to issue the BR in
lieu of physical securities and the same used to be delivered against the
cheque from the counter party Bank.
26. The NHB was authorized to enter into Call Money Market only as a
lender with effect from 28th October 1990 in accordance with the
permission of the RBI and since then the NHB started participating in the
Call Money Market and the said function used to be carried out in the
FMG, which was headed by Accused No.1-Ravikumar. The NHB was
entering into the transaction of buying and selling the securities in
exercise of the powers conferred upon it by clause (e) of Section 14 of the
said Act with the Scheduled Banks, Financial Institutions, Mutual Funds
and Financial Services, Companies sponsored by Public Sector Banks.
These transactions used to be carried out at the NHB's Office, situate at
Fort, Mumbai, by the FMG directly with the aforesaid Agencies. As
deposed by PW-1 Manojkumar Rakshit, the Deputy General Manager,
NHB was not authorized to enter into the transactions of buying and
selling the securities through any Broker. However, the NHB was
authorized to enter into such transactions with the aforesaid Financial
Institutions or their Brokers. The nature of transaction used to be on
outright basis or on a ready-forward basis. Most of the ready-forward
deals used to be on back-to-back basis i.e. forward purchase deal with
one agency. There used to be corresponding ready-forward sale deal with
another agency. The conduct of this business was entrusted to FMG.
FMG consisted of only two Officers, namely, Accused No.1-Ravikumar as
'Regional Manager', subsequently as 'Assistant General Manager' and
Accused No.2-Suresh Babu as 'Assistant Manager'.
27. Thus, the NHB's dealing in securities always used to be with
Financial Institutions directly or through their Broker, but NHB never
purchased or sold the securities from or to the Broker on a principal-to-
principal basis. The cheques drawn by NHB always used to be crossed
Account Payee Cheques drawn on RBI in favour of the counter party
Institutions. These cheques used to be handed over to the representatives
of the concerned Institutions or its Brokers acting on behalf of the counter
party Bank.
28. After the Security Scam broke out, the team of four Officers of NHB,
namely, Mr. Hosangadi, the then Chief General Manager of NHB, PW-1
Manojkumar Rakshit, the then Deputy General Manager of NHB and other
two Officers, with the help of Mr. P. Jambukeshwaran, carried out
investigation in respect of the transactions of NHB with Grindlays Bank,
SBI and other Banks. The investigation so carried out revealed that
Accused No.1-Ravikumar and Accused No.2-Suresh Babu had, during the
period from October, 1991 to April, 1992, by corrupt or illegal means or by
abusing their official position as public servants, issued cheques totaling
several crores of rupees in favour of the Grindlays Bank and SBI for
Ready-Forward Transactions, but without obtaining concerned securities
or BRs therefor, and thereby caused wrongful loss to the NHB and that
they handed over the cheques to Accused No.4-HSM or his
representatives or Accused No.3-Sitaraman of SBI, who manipulated to
get the said cheques to be credited to the Current Account of Accused
No.4-HSM with SBI, causing wrongful gain to Accused No.4-HSM.
29. With regard to the present case, the investigation revealed that ten
cheques for aggregated amount of Rs.707.76 crores were issued during
the period between November 1991 and April 1992 by Accused No.1-
Ravikumar and Accused No.2-Suresh Babu in favour of SBI in respect of
ten Ready-Forward Transactions with SBI without obtaining the Sale
Memos or Securities or BRs from Accused No.4-HSM, who had acted as
a Broker of SBI or from SBI, which was the counter party Bank. The
investigation also revealed that the transactions were recorded in the
Books of Accounts of NHB despite the Securities / BRs. not being
received.
30. At this stage, it may be stated that, though the case pertains to
issuance of totally ten cheques and charge is also framed accordingly, as
regards cheque dated 25th October 1991 for Rs.76,03,07,123=00, it has
been included in Special Case No.1 of 1996, which has already been
disposed off. Hence, prosecution has dropped the charge in respect of the
said transaction in this case. This case, therefore, pertains to issuance of
nine cheques only.
31. It was also revealed in their investigation that Accused No.1-
Ravikumar and Accused No.2-Suresh Babu had dishonestly and
fraudulently falsified NHB's Books of Accounts, Deal Diaries, Investment
Registers, RBI Registers and Vouchers, showing that NHB purchased
these Securities even though SBI did not sell the said Securities on the
given dates. They had also handed over the Account Payee RBI Cheques
to the delivery boys of M/s. HSM as per the instructions of Accused No.4-
HSM, Accused No.5-Atul, Accused No.6-Pankaj and Accused No.7-
Sudhir, without collecting the Securities.
32. These cheques were, in turn, handed over to Accused No.3-
Sitaraman, who had, at the request, by letter dated 10 th January 1992, of
Accused No.5-Atul, made on behalf of M/s. HSM, unauthorizedly
extended the Single Window Clearance Facility to M/s. HSM, much before
the formal request of M/s. HSM was received in the Bank. Accused No.3-
Sitaraman had then arranged to deposit the said cheques, even though
SBI did not have any securities transactions with NHB and prepared false
vouchers. He also arranged to credit the said cheques in the Account
No.4/8710 of Accused No.4-HSM in Personal Banking Division of SBI for
his use, even though there was no advice to that effect from NHB or State
Bank of Patiala.
33. In view of this material on record, PW-1 Manojkumar Rakshit, the
Deputy General Manager of NHB, on 10th July 1992, lodged written
complaint with the CBI against Accused No.1-Ravikumar, Accused No.2-
Suresh Babu, Accused No.3-Sitaraman, Accused No.4-HSM, Accused
No.5-Atul, Accused No.6-Pankaj and Accused No.7-Sudhir for the alleged
loss of Rs.1,214.30 crore caused to NHB in the securities transactions
during the period 1991-92. This complaint was addressed to DIG, CBI,
Mumbai. It was given to PW-68 P.K. Jacob - the then Superintendent of
Police, who registered the case as Crime No.RC-52[A]/92-ACB-BOM vide
F.I.R. on 13th July 1992.
34. As per the complaint, out of the said amount, cheques aggregating
Rs.506.54 crore were issued in favour of Grindlays Bank for fourteen
Ready Forward Transactions and cheques aggregating Rs.707.76 crore
were issued in favour of SBI towards ten Ready Forward Transactions.
Complaint also disclosed the fact that an amount of Rs.707,56,39,000/-
was paid by SBI to NHB on 13th June 1992 under protest.
35. After registration of the offences, PW-68 P.K. Jacob - the then
Superintendent of Police himself took over the investigation and carried
out the same with the assistance of two Inspectors of Police, namely, PW-
65 Satish Gavali and PW-67 Satyapal Singh.
36. During the investigation, it was found that the allegations about
issuance of cheques in favour of Grindlays Bank constitute separate
conspiracy and hence separate charge-sheet has been filed against
accused persons for the transactions with ANZ Grindlays Bank. The said
case was numbered as Special Case No.4 of 1994, which is already
decided by this Court, ending into conviction of Accused Nos.1 to 3
herein. Hon'ble Supreme Court has also disposed of the Appeals against
Order bearing Nos.796 and 797 of 2005, preferred by Accused No.1-
Ravikumar, Accused No.2-Suresh Babu and Accused No.3-Sitaraman, by
the Judgment passed on 4th March 2016, confirming their conviction and
reducing the sentence to the period already undergone in Jail.
37.
As regards this case, PW-68 P.K. Jacob has, during the course of
investigation of this case, recorded further statement of PW-1 Manojkumar
Rakshit on 18th July 1992 and also statements of various other witnesses
from time to time. He also seized various documents, like, Deal Diary,
Cheques, Investment Register, RBI Scroll, Purchase and Sale Voucher,
Pay-in-Slips, Counterfoils of Pay-in-Slips, Statement of Account of NHB
with RBI, Statement of Account of SBI with RBI, then RBI Agency Account
with SBI etc.
38. In the course of investigation, it was also transpired that in order to
divert the funds of NHB cheques, Accused No.3-Sitaraman introduced
Accused No.9-Deepak to the Personal Banking Division of SBI, Main
Branch, to get S.B. Account No.5660 opened in his name. Accused No.8-
Hiten and Accused No.9-Deepak got possession of three cheques.
Accused No.8-Hiten then prepared a false credit advice for crediting the
proceeds of those cheques in the account of Accused No.9-Deepak. The
amounts of those three cheques of NHB were got transferred to the
account of M/s. Extol Investments, of which Accused No.9-Deepak and
Accused No.10-Virendra were Partners. These three Accused, namely,
Accused No.8-Hiten, Accused No.9-Deepak and Accused No.10-Virendra
then falsified Books of Accounts of M/s. Extol Investments to show that
they had purchased 500 Shares of M/s. Mazda Packaging Enterprises
Ltd., 9,700 Shares of M/s. Gujarat Cycles Ltd. and 5,700 Shares of M/s.
Apollo Tyres Ltd. for Late Mr. M.J. Pherwani, former Chairman of NHB.
Hence, these three accused persons also came to be implicated and
arrested in this case along with other accused.
39. During the course of investigation, the specimen signatures and
hand-writing of mostly all the accused were collected and forwarded to the
Government Examiner of Questioned Documents [GEQD], Shimla, by
PW-67 Satyapal Singh. The Report of the Handwriting Expert PW-64
Madhusudanlal Sharma is produced on record of the case at Exhibit-613.
On completion of the investigation, it was revealed that the moneys had
been transferred to the accounts of Accused No.4-HSM in SBI and there
was conspiracy between the aforesaid accused and Accused No.4-HSM
for diverting the funds of NHB to the account of Accused No.4-HSM with
SBI. PW-68 P.K. Jacob, the Investigation Officer, also found that Accused
No.1-Ravikumar, Accused No.2-Suresh Babu and Accused No.3-
Sitaraman, being the public servants, working with the NHB and SBI
respectively, had misused their authority and got the moneys of the NHB
transferred to the account of Accused No.4-HSM in the SBI, pursuant to
the criminal conspiracy and with the aid and abatement of Accused No.4-
HSM and Accused No.5-Atul, Accused No.6-Pankaj and Accused No.7-
Sudhir working in his office. PW-68 P.K. Jacob, therefore, made a report
to the Sanctioning Authority for getting the sanction to prosecute Accused
No.1-Ravikumar and Accused No.2-Suresh Babu. Accordingly, PW-56
Ravi Gupta, who was the Chairman of the NHB, having authority to
accord sanction, on examining the documents and the C.B.I. Report
placed before him, found prima facie case having been made out against,
both, Accused No.1-Ravikumar and Accused No.2-Suresh Babu,
accorded sanction vide Exhibit-545 and Exhibit-546. For prosecution of
Accused No.3-Sitaraman, papers were placed before PW-60 Govardhan
Kathuria, the Chief General Manager of SBI, Local Head Office, Mumbai.
He has, on examining the papers, found prima facie case against Accused
No.3-Sitaraman and accorded sanction for his prosecution vide Exhibit-
568.
40. In this way, on completion of the investigation, on 19 th April 1994,
PW-68 P.K. Jacob submitted charge-sheet against aforesaid ten accused,
including Accused No.4-HSM, in this Special Court.
41. As Accused No.4-HSM died during the pendency of this case, on
23rd April 2002, the case against him stands abated.
42. As regards remaining accused, my learned predecessor was
pleased to frame Charge against them vide Exhibit-1 on 1 st October 2010,
for the various offences referred above. All the accused pleaded not guilty
to the charge and claimed trial, raising the defence of denial and false
implication.
43. Defence of Accused No.1-Ravikumar is that he has not flouted any
rules, regulations or guidelines issued by RBI in conduct of these
transactions. He has followed the market practice and, that too, in good
faith, on the advice of his superiors. He has not gained any financial
benefits, but has suffered a lot. He has been made a scapegoat by the top
Management of NHB to save their own skin. Thus, according to him, he
has not committed any offence.
44. The defence of Accused No.2-Suresh Babu is that he was the last
person in the hierarchical organization of NHB. His post though called as
'Assistant Manager', it was actually a post of 'glorified clerk', having no
authority to finalize the transaction or to sign any cheque. His duty was
only to prepare the cheques, vouchers and make entries in the record
after the deal was finalized. He is also, thus, made a scapegoat by his
superiors, though he is innocent.
45. The defence of Accused No.3-Sitaraman is that he has followed the
market practice and allowed the facility of Single Point Clearance to
Accused No.4-HSM, as sought by him, on the recommendation of the
Committee headed by late Shri. Goiporia, the then Chairman of the SBI.
He has, therefore, not done anything illegal or irregular. Moreover, NHB
has received entire funds from SBI, which were allegedly gone to the
account of Accused No.4-HSM. Thus, now nothing remains in the case
and it deserves to be quashed.
46. The defence of Accused No.5-Atul is that he was merely an
employee of Accused No.4-HSM. He had never taken part in any deal or
transaction. He has merely made initials on the Contract Notes in a
normal course of business, after the deals were completed. He has not
gained any pecuniary benefits from any of these transactions. It is
submitted that he was made prosecution witness in many other cases by
C.B.I. for the similar role.
47. Accused No.6-Pankaj has also raised the same defence of being
merely an employee of Accused No.4-HSM. According to him, he has
signed and handed over the letter Exhibit-154 to SBI only as per the
instructions of Accused No.4-HSM. Except that, he has not played any
other role. Hence, he needs to be acquitted from this case.
48. The defence of Accused No.7-Sudhir is also similar to the effect that
he was working in another office. However, as Constituted Attorney of
Accused No.4-HSM, he has signed on the Contract Notes in the absence
of Accused No.4-HSM. He has nothing to do with any of these
transactions.
49. The defence of Accused No.8-Hiten is that he was only 19 years old
at the relevant time and working on meager salary of Rs.600/- p.m. with
Accused No.4-HSM. However, as he was cousin brother of Accused No.4-
HSM, C.B.I. has falsely implicated him for the same role, for which he is
made witness by C.B.I. in five cases, and already acquitted in two other
cases, in which he was arraigned as Accused.
50. According to Accused No.9-Deepak, he has received three cheques
for purchase of shares for Mr. Pherwani. Since the balance amount was
not received, he has kept those shares with him and when the scam broke
out, he himself went to C.B.I. and voluntarily surrendered those shares. As
a result, he has suffered a great loss. He also, thus, claims to be innocent.
51. Lastly, according to the defence of Accused No.10-Virendra, he has
nothing to do with any of the transactions. Some of the shares were only
transferred in the name of his family members as Book Closure Date was
arriving. He is, thus, implicated in this case merely because he was
Partner of Accused No.9-Deepak in M/s. Extol Investments.
52. On these facts of the case and in view of the submissions advanced
by learned Senior P.P. Shri. Limosin and learned counsel for various
accused, it can be said that the main charge levelled against the accused
persons is of hatching criminal conspiracy to siphon off the funds of NHB,
which were transferred to SBI through various cheques issued towards
the purported sale and purchase of securities transactions, by diverting
the same to the accounts of Accused No.4-HSM. Hence, the charge of
criminal conspiracy under Section 120B IPC, as rightly submitted by
learned counsel for the accused, is the 'umbrella' charge. Other charges
for the various offences are like that of forgery, falsification of account,
cheating, misappropriation etc., which are committed in prosecution of the
common object of criminal conspiracy. Accused No.1-Ravikumar, Accused
No.2-Suresh Babu and Accused No.3-Sitaraman being the public
servants, they are specifically charged for the offence of criminal breach of
trust, punishable under Section 409 IPC and of misusing and taking
advantage of their position as public servants, which are punishable under
Section 13(2) r/w. Section 13(1)(c) and Section 13(d) of the Prevention of
Corruption Act, 1988. Hence, though there are as many as twenty-one
charges levelled against these accused for different transactions, the
following points, which cover those charges, arise for my determination
and I record my findings thereon for the reasons stated below :-
Sr.
ig Points Findings
No.
1 Whether it is proved by the prosecution Yes
that between 1st October 1991 to 2nd April Only against Accused
1992, or, thereabout, Accused No.1 to Nos.1, 2, 3, 5, 7 and 9
Accused No.10, or, any of them, have
entered into criminal conspiracy to commit
criminal breach of trust by misappropriating
the funds of the NHB to the tune of
Rs.707,84,75,626=76 with an object to
obtain pecuniary advantage to Accused
No.4-HSM and Accused Nos.9 and 10,
without any public interest, by crediting
those funds to the account of Accused
No.4-HSM and to the account of Accused
Nos.9 and 10 with the SBI and thereby
committed an offence punishable under
Section 120B of I.P.C.?
2 Yes
Whether it is established by the
Against all the three
prosecution that, in furtherance of the
Accused viz. Accused No.1,
aforesaid criminal conspiracy, Accused
Accused No.2 and Accused
No.1, Accused No.2 and Accused No.3, or,
No.3 in respect of all the
any of them, committed criminal breach of
transactions
trust by diverting the funds of the cheques
issued in favour of SBI in respect of
purported purchase of securities, when
there was no such transaction at all, by
dishonestly and fraudulently getting the
amounts of those cheques credited to the
account of Accused No.4-HSM with the
SBI and thereby committed an offence
punishable under Section 409 r/w. Section
120B of IPC?
Whether it is proved by the prosecution Yes
that Accused Nos.1 and 2, or, any of them, Against Accused
being in the employment of the NHB, and Nos.1, 2 and 3
Accused No.3, being in the employment of
SBI, and as such being the public servants
and having been entrusted in such
capacity with the funds of the said Banks,
dishonestly misappropriated, or, converted
to their own use, or, allowed Accused No.4-
HSM to misappropriate the amounts of
nine cheques and thereby committed
offence punishable under Section 13(1)(2)
r/w. Section 13(1)(c) of Prevention of
Corruption Act and Section 120B of IPC?
Whether it is established by the Yes
prosecution that Accused Nos.1 and 2, or, Against, both,
any of them, made or caused to be made Accused Nos.1 and 2
false BRs purported to have been issued
by the NHB, dishonestly and fraudulently
with intention of causing it to be believed
that these BRs were made by the authority
of NHB, by which authority Accused Nos.1
and 2 knew that they were not made and
thereby committed an offence of forgery of
valuable security punishable under Section
467 r/w. Section 120B of IPC?
Whether it is proved by the prosecution Yes
that, in furtherance of the aforesaid Against, both,
criminal conspiracy, Accused Nos.1 and 2 Accused Nos.1 and 2
dishonestly and fraudulently used as
genuine the aforesaid BRs, which they
knew or had reason to believe to be forged
documents and thereby committed an
offence punishable under Section 471 r/w.
Section 120B of IPC?
Whether it is proved by the prosecution Yes
that, in furtherance of the aforesaid Against, both, Accused
criminal conspiracy, Accused Nos.1 and 2, Nos.1 and 2
or, any of them, being in the employment of
the NHB and while holding the positions as
an Officer of the NHB, acting in that
capacity willfully and, with intent to defraud,
falsified and caused to be falsified Deal
Diary, BRs, Cost Memos and relevant
Vouchers in respect of the purported
transactions of sale of securities, as
indicated by the aforesaid BRs with the
respective Financial Institutions, and made
the false entries with regard to those
transactions and committed the offence
punishable under Section 477A r/w.
Section 120B of IPC?
Whether it is proved by the prosecution Yes
that, in furtherance of the aforesaid Against, both,
criminal conspiracy and in the course of Accused Nos.1 and 2
same transaction, Accused Nos.1 and 2,
being in the employment of NHB and being
the public servants, dishonestly and
fraudulently induced counter-Banks and
Financial Institutions to part with their funds
by falsely representing that the NHB had
entered into securities transactions, for
which forged Bank Receipts were issued
and thereby committed offence punishable
under Section 420 r/w. Section 120B of
IPC?
Whether it is proved by the prosecution Yes
that, in furtherance of the aforesaid Against, both,
criminal conspiracy, Accused Nos.1 and 2, Accused Nos.1, 2 and 3
or, any of them, being in the employment of
NHB, as such, being the public servants,
dishonestly and fraudulently issued or
caused to be issued the cheques for
respective amounts in favour of SBI in
relation to the purported securities
transactions which NHB, purportedly, had
with the respective Financial Institutions,
which, in fact, had never taken place with
an intention to aid and abet Accused No.4-
HSM to misappropriate the amounts of the
cheques and Accused No.3 actively
assisted in the same by abusing his
position as public servant, without any
public interest, and thereby committed an
offence of criminal misconduct punishable
under Section 13(2) r/w. Section 13(1)(d) of
Prevention of Corruption Act and Section
120B of IPC?
9 Whether prosecution proves that, during Yes
the above-said period, in furtherance of the Against Accused
aforesaid criminal conspiracy, Accused Nos.5 and 7
Nos.5, 6 and 7, acting dishonestly for and
on behalf of Accused No.4-HSM, engaged
themselves in the said conspiracy and
dishonestly arranged and accepted the
credit of the various amounts in
connivance with Accused No.3, who, at the
relevant time, was Officer in the Security
Division of SBI, where account of Accused
No.4-HSM was operated, actively assisted
them in doing so and thereby Accused
Nos.5, 6 and 7 acted, instigated and
facilitated by Accused Nos.1 and 2, as also
aided and abated by Accused No.3 in
committing the offence of criminal breach
of trust and thereby committed the offence
punishable under Section 409 r/w. Section
109 r/w. Section 120B of IPC.
10 Whether prosecution further proves that, in Yes
furtherance of the aforesaid criminal Against Accused
conspiracy, Accused No.9, being the Nos.1, 2, 3 and 9
Partner of M/s. Extol Investments, and
Accused No.8, acting dishonestly for and
on behalf of Accused No.9, dishonestly
arranged and accepted the credit of the
amounts of Rs.2,50,000/- and
Rs.13,00,000/- and Rs.8,98,912/- and
Accused Nos.1 to 3 actively assisted,
instigated and facilitated them and thereby
committed the offence punishable under
Section 409 r/w. 109 r/w. 120B of IPC.
11 Whether prosecution proves that, in Yes
furtherance of aforesaid conspiracy, Against Accused
Accused Nos.1 and 2, being the Officers of Nos.1, 2, 3 and 9
NHB, Accused No.3, being the Officer of
SBI, Accused Nos.9 and 10, being the
Partners of M/s.
ig Extol Investments,
dishonestly misappropriated, on or about
21st February 1992, a sum of Rs.2,50,000/-
and, on 22nd February 1992, a sum of
Rs.13,00,000/-, being the proceeds of the
cheques issued at the instance of Accused
Nos.1 and 2 for and on behalf of NHB
drawn on the RBI and payable to the SBI,
by causing the same to be ultimately
credited in the account of Accused No.9,
knowing or having reason to believe that
they did not have transactions with the
NHB and also knowing that the said
amounts did not belong to them and
thereby committed an offence punishable
under Section 403 r/w. Section 120B of
IPC?
Whether prosecution further proves that, in Yes
furtherance of aforesaid criminal Against Accused
conspiracy, Accused Nos.1 and 2, being Nos.1, 2, 3 and 9
the Officers of NHB, and Accused No.3,
being the Officer of SBI, and Accused
Nos.9 and 10, being the Partners of M/s.
Extol Investments, committed the offence
of criminal misconduct by causing the
above mentioned cheques to be credited
and
into the Personal Account of Accused No.9
illegally which was ultimately
misappropriated by them and thereby
committed the offence punishable under
Sections 13(1)(c), 13(1)(d) r/w. 13(2) of the
Prevention of Corruption Act r/w. Sections
109 and 120B of IPC.
13 Yes
Whether the prosecution further proves
that, Accused No.9, in furtherance of
aforesaid criminal conspiracy, dishonestly
received the sum of Rs.2,50,000/-,
Rs.13,00,000/- and Rs.8,98,912/-, being
the amounts purportedly payable to the
SBI vide cheques drawn on the RBI and
ultimately credited to his own account
No.5660 with the SBI, knowing or having
reason to believe the same to be stolen
property, being the property in respect of
which the criminal breach of trust had been
committed and thereby committed an
offence punishable under Section 411 r/w.
Section 120B of IPC.
14 Whether the prosecution further proves No
that, in furtherance of aforesaid criminal
conspiracy, Accused No.8 made or caused
to be made a false document, namely, a
letter dated 1st February 1992 addressed
by NHB to SBI for causing the credit of
Rs.8,98,912/- into the Savings Bank
Account No.5660 of Accused No.10 with
SBI, which letter was purported to have
been issued by NHB, which was
dishonestly or fraudulently made with the
intention of causing it to be believed that
the said letter was made and signed by the
Assistant Manager / Manager of the NHB,
knowing that it was not so made and
thereby committed an offence of forgery of
valuable security punishable under Section
467 r/w. Section 120B of IPC.
15 Whether the prosecution further proves
Yes
that, in furtherance of aforesaid criminal
conspiracy, Accused No.9 made or caused
to be made false documents, namely, the
letters dated 21st February 1992 and 22nd
February 1992, addressed by NHB to SBI,
for causing the credit of Rs.2,50,000/- and
Rs.13,00,000/- given to his Savings Bank
Account No.5660 with SBI, which letters
were purported to have been issued by
NHB and which were dishonestly or
fraudulently made with the intention of
causing it to be believed that the said
letters were made and signed by the
Assistant Manager / Manager of the NHB,
knowing that they were not so made and
thereby committed an offence of forgery of
valuable securities punishable under
Section 467 r/w. Section 120B of IPC.
16 Whether the prosecution further proves
Yes
that, in furtherance of aforesaid criminal Against Accused
conspiracy, Accused Nos.8 and 9 No.9 only
dishonestly and fraudulently used as
genuine the letter dated 1st February 1992,
which they knew or had reason to believe
to be a forged document and thereby
committed an offence punishable under
Section 471 r/w. Section 120B of IPC.
17 What order? As per final order
REASONS
53. As can be seen from perusal of the Charge-Sheet and the
prosecution evidence, the prosecution case pertains to two different sets
of transactions involving two different sets of Accused. Accused No.1-
Ravikumar, Accused No.2-Suresh Babu and Accused No.3-Sitaraman are
common in both the sets of transactions. Similarly, charge of criminal
conspiracy and other offences, like criminal breach of trust, forgery,
falsification accounts etc., are also common in both the sets of
transactions. However, the nature of transactions differs. The first set of
transactions consists of purchase and sale of securities by Accused No.1-
Ravikumar and Accused No.2-Suresh Babu, without there being securities
in physical form or backed by BRs, which transactions are called by
prosecution as "structured transactions", wherein the cheques are issued
by Accused No.1-Ravikumar and Accused No.2-Suresh Babu, drawn on
RBI in favour of SBI, the credits of which Accused No.3-Sitaraman
diverted to the account of Accused No.4-HSM, thereby causing wrongful
gain to him and wrongful loss to the Banks. In these transactions,
Accused No.5-Atul, Accused No.6-Pankaj and Accused No.7-Sudhir are
implicated, as Accused No.5-Atul and Accused No.6-Pankaj have issued
the Contract Notes for these transactions and Accused No.7-Sudhir has
given request letter Exhibit-154 to Accused No.3-Sitaraman for extending
the 'Single Point Clearance Facility' to Accused No.4-HSM, so as to
facilitate diversion of funds to the account of Accused No.4-HSM directly.
54. The second set of transactions involves issuance of three cheques
for the amount of Rs.2,50,000/-, Rs.13,00,000/- and Rs.8,98,912/-,
respectively, by Accused No.1-Ravikumar and Accused No.2-Suresh
Babu, drawn on RBI in favour of SBI, the credits of which ultimately went
to the account of Accused No.9-Deepak and Accused No.10-Virendra, for
the purpose of which Accused No.8-Hiten, Accused No.9-Deepak and
Accused No.10-Virendra made false and forged documents and Accused
No.3-Sitaraman facilitated them in doing so. Hence, in this set of
transactions, the role of only Accused No.1-Ravikumar, Accused No.2-
Suresh Babu, Accused No.3-Sitaraman, Accused No.8-Hiten, Accused
No.9-Deepak and Accused No.10-Virendra is implicated.
55. Thus, though the offences alleged against all the accused are
same, the nature of transactions and involvement of accused in those
transactions is different. In the first set of transactions, Accused No.1-
Ravikumar, Accused No.2-Suresh Babu, Accused No.3-Sitaraman,
Accused No.5-Atul, Accused No.6-Pankaj and Accused No.7-Sudhir are
involved. In the second set of transactions, Accused No.1-Ravikumar,
Accused No.2-Suresh Babu and Accused No.3-Sitaraman are involved
along with Accused No.8-Hiten, Accused No.9-Deepak and Accused
No.10-Virendra.
56. As a result, some witnesses as to the role of Accused No.1-
Ravikumar, Accused No.2-Suresh Babu and Accused No.3-Sitaraman are
common in both the sets of transactions; whereas, some witnesses are
examined by the prosecution with their specific roles in respect of that
particular set of transactions only. Majority of the prosecution witnesses
are officers or employees of NHB, SBI and the counter-party Banks or
Financial Institutions, with whom NHB has entered into transactions.
Some witnesses are in the category of 'Brokers' and others are the
'Investigating Officers'.
57. For the sake of convenience, therefore, the large number of
witnesses examined by the prosecution, in all sixty-eight in number, can
be categorized as follows :-
List of the Prosecution Witnesses
Witness Status at the Relevant
Name of the Witness
No. Time
Officers from NHB
to prove the transactions at the end of NHB
PW-1 Shri. Manojkumar L. Rakshit Complainant (NHB)
Funds Management
PW-14 Shri. N. A. Sivaraman
Department, NHB
PW-15 Shri. Basant Sheth Regional Manager, NHB.
Shri. Bantwal Chandrashekhar Assistant General
PW-16
Baliga Manager, NHB
Manager/Regional
PW-17 Shri. Vivek Ramesh Katre
Manager, NHB
Manager,
PW-18 Shri. K. Muralidharan
New Delhi Office, NHB
PW-19 Shri. Milind Govind Deshpande Assistant Manager, NHB
NHB - Accounts
PW-30 Shri. B. Muralidharan
Department
PW-56 Shri. Ravi Veera Gupta Chairman - NHB
Officers from SBI
to prove the transactions at the end of SBI
Clearing Officer,
PW-9 Shri. Girdhar Hariram Hargunani
Mumbai Main Br. of SBI
Deputy General Manager,
PW-10 Shri. Madan Mohan Sharma
SBI Main Br., Mumbai
Assistant Manager
(Securities Division),
PW-13 Shri. Bhushan Damodar Raut
Mumbai Main
Branch, SBI
Public Sector Unit,
PW-25 Smt. Harsha Rajesh Shah SBI - Mumbai
Main Branch
Treasury Manager,
PW-26 Shri. Janardan Bandopadhyay SBI Capital
Markets Limited.
Clerk,
PW-27 Shri. Girish Balwant Patel SBI - Mumbai
Main Branch
Securities Division,
PW-28 Smt. Devyani Vinod Dalwani
SBI-Mumbai Main Br.
Clerk-cum-Cashier,
PW-29 Shri. Prakash R. Kanchan Bank Investment Cell, SBI
- Mumbai Main Branch
Asst. Accounts Officer,
PW-33 Shri. Venkatchalapathy V.G. Deposit Accounts
Department-RBI
Accountant
(Personal Banking
PW-35 Shri. Mohan Trimbak Vijapurkar Division),
SBI - Mumbai
Main Branch
Assistant General
PW-36 Shri. Mahesh Kumar Gambhir
ig Manager, SBI
Deputy Manager
(Funds Management
PW-37 Shri. T. P. Nageswara Rao
Dept.),
S.B.I. - Mumbai.
Assistant General
Manager,
(Personal Banking
PW-38 Shri. Anil Divakar Padhye
Division),
SBI - Mumbai
Main Branch
Deputy Manager,
Institutional Division,
PW-39 Shri. Anant Baburao Nargund
SBI - Mumbai
Main Branch
Deputy Manager,
Securities Department,
PW-40 Shri. Arun Narendra Bavdekar
SBI - Mumbai
Main Branch
Deputy Manager,
DGM Secretariat,
PW-43 Shri. Vishwanath Shankar Shetty
SBI - Mumbai
Main Branch
General Manager,
PW-47 Shri. Sagun Vishnu Naik Treasury & Investment
Management, SBI
Employee,
Securities Division,
PW-59 Shri. Anil Vinayak Josjhi
SBI - Mumbai
Main Branch
Chief General Manager/
Chief Financial Officer,
PW-60 Shri. Govardhan Bhojiram Kathuria
SBI - Mumbai
Main Branch
Banks and Financial Institutions,
whose Securities were Sold and Purchased
ig Senior Project Manager,
PW-2 Shri. A.V. Meenakshisundaram
BOI Finance Limited
Chief Manager,
PW-3 Shri. Ranjeetsignh P.Anjaria
UCO Bank
Chief Manager
PW-4 Shri. Surinder Kumar Khurana (Investment)
State Bank of Patiala
Senior Manager,
PW-5 Shri. Pradip Anant Karkhanis
UCO Bank
Agent or Branch Manager,
PW-6 Shri. Mukund Krishnaji Kher Fort Mumbai Branch,
Bank of Karad
Probationary Officer,
PW-7 Shri. Chinmoy Kumar Mukherjee Investment Department
UCO Bank
Ledger Posting Machine
PW-8 Shri. Vasudev Anant Sant
Operator, R.B.I.
Manager (Investments),
Shri. Sharwankumar Munnalal State Bank of Patiala,
PW-31
Jindal K.G. Marg Branch,
New Delhi
Manager (Corporate
Deployment Services),
PW-32 Shri. V. R. Srinivasan
Standard Chartered Bank,
Mumbai.
Senior Manager
(Investments),
PW-34 Shri. Janakiram Subra Mani
Punjab National Bank,
PNB House, Mumbai.
Executive Vice President,
PW-42 Shri. Ullal Ravindra Bhat Indian Bank
Mutual Fund
PW-44 Shri. Sudhir Gopal Raikar
Assistant Manager,
Discount Finance House
of India Ltd.
Chief Manager,
PW-45 Shri. Srinivasan Narayan Funds Management Dept.,
State Bank of Saurashtra
Officer (Investment Dept.),
PW-51 Shri. T. S. Thiagarajan
Bank of Madura, Mumbai
Scale-I Officer,
PW-52 Shri. Kupuswami Mohan Karur Vyasya Bank,
Mumbai
Assistant Manager,
PW-63 Shri. Sudhakar Manpragada
Indian Overseas Bank
Officers from R.B.I.
Dept. Banking Operation
PW-12 Shri. Paras Ram Jangid
and Development
Employee,
PW-20 Shri. Ramnathan Ganesh
M/s. Extol Investments
Various Brokers
Broker,
PW-21 Shri. G. Pushpanathan
M/s. G. Pushpanathan
Broker,
PW-22 Shri. Mukesh Pravinchandra Shroff M/s. Mukesh Shroff
Kanpur Stock Exchange
Office of Broker
PW-23 Shri. Chunilal Ratilal Kanani (M/s. Bhupendra
Champaklal Devidas)
Broker,
M/s. Sharda and Co.
PW-24 Smt. Sharda Krishnan
Mangalore
ig Stock Exchnage
Share Broker
PW-49 Shri. Ganapayya Nagappa Hegde GNH Global
Securities Ltd.
Manager,
PW-50 Shri. Mohammed Ziaur Rehman M/s. A.R. Financial
Services
Stock Broker
PW-57 Shri. Sundardas Kalyanji Kankal 'Sunderdas Kalyanji
Kankal'
Dealer,
PW-61 Shri. Navneet Nanubhai Rana Broker Firm -
M/s. V.B.Desai
Broker,
PW-62 Shri. Manjunath Anant Kamat Broker Firm -
M/s. V.B.Desai
Employees from the Office of Accused No.4-HSM
Computer Operator
PW-41 Shri. Vishwesh Bhatt M/s. Growmore Group
of Companies
Executive,
PW-48 Shri. Vijay Rajaram Palande
Firm of Harshad Mehta
Peon
PW-58 Shri. Santosh Eknath Indulkar
M/s. Growmore
Sundry Witnesses
Inspector
PW-11 Shri. Sudhir R.Raokadnur (Investigation Wing),
Income Tax Department
Data Entry Operator
PW-46 Smt. Farzana Abdul Khalid Shaikh M/s. Harsh Estate
Pvt Ltd Co.
Professional Developer,
PW-53 Shri. Sunil Shantikumar Majithia 'Your Developer &
Construction Company'
ig Assistant,
PW-54 Shri. Shailendra Arun Chandurkar
State Trading Corporation
Chief Enforcement Officer,
PW-55 Shri. Mani Lal Acharya Enforcement Directorate,
Nariman Point, Mumbai
Deputy Government
PW-64 Shri. Madhusudanlal K.Sharma Examiner of Questioned
Documents at Shimla
Investigating Officers
Investigating Officer /
Inspector in Bank
PW-65 Shri. Satish Sahebrao Gavali
Securities and Frauds Cell
of CBI
PW-66 Shri. S.K.Vijay Rajiv Investigating Officer
PW-67 Shri. Satyapal Singh Investigating Officer
Investigating Officer /
Deputy Superintendent of
PW-68 Shri. P.K. Jacob Police in Banks Security
Cell, CBI,
New Delhi.
EVIDENCE RELATING TO THE PROCEDURE ADOPTED AT NHB
58. In order to appreciate the evidence produced on record by the
prosecution in this case, to decide whether prosecution has succeeded in
proving its case against the accused beyond reasonable doubt, it would
be necessary to understand the functioning at NHB and at SBI in respect
of the sale and purchase of securities.
59. As regards the functioning at NHB, as stated, at the outset, it was
established by the enactment of National Housing Bank Act, 1987 and
came into existence on 9th July 1988. The main purpose of setting up of
NHB was to promote Housing Finance Institutions at local and regional
levels for providing financial support to such Institutions. As deposed by
PW-1 Manojkumar Rakshit, NHB was looking for other avenues for
deployment of its Short Term Surplus Funds and one of the avenues
found out was to deal in Ready-Forward Transactions of permitted
securities. Proposal for Ready-Forward Transactions was, accordingly, put
up by Accused No.1-Ravikumar. Exhibit-13 is a 'Note' dated 13th July 1991
submitted by Accused No.1-Ravikumar seeking avenue for deployment of
Short Term Surplus Fund. Exhibit-99 is another 'Note' dated 4 th April 1991
put up by Accused No.1-Ravikumar, in which it was recommended that,
"taking into account the situation explained in the note, it would be
necessary to enter into Ready-Forward Deals as and when required;
especially, around reporting Fridays." The perusal of the 'Note' Exhibit-99
reflects that, the General Manager has noted on it, "in the deployment of
our resources, the first allocation is always re-finance operations, which
are our mandate. The balance funds are invested in re-discounting of the
bills, call money, etc. However, since RBI's buy-back facility has ceased
from 1st April 1991, RFD would be seen to be next best avenue."
60. Thus, as per this 'Note' Exhibit-99, the first priority, which was set up
for NHB, was re-finance operations and RFDs were given the last
preference. Moreover, only the surplus fund could have been deployed in
the RFDs. Accordingly, NHB started deployment of short term funds
available for investing in securities. This was done by the Funds
Management Group, (for short, "FMG"). Accused No.1-Ravikumar was the
'Head' of the said group, whereas, Accused No.2-Suresh Babu was
assisting him in his capacity as 'Assistant General Manager'.
61. PW-1 Manojkumar Rakshit has deposed, in detail, about the
procedure for purchase of securities by NHB. According to him, NHB had
not appointed any Broker for the purpose of investment transactions,
including Call Money and Ready-Forward Transaction, as NHB had very
short term funds available, after meeting its normal obligations. He has
further deposed that, FMG was required to contact the concerned Bank
and Financial Institution or their authorized Brokers or Representative.
After getting most favourable rate from the counter-parties, the deal was
to be finalized and after the finalization of the deal, it was to be entered
into the Deal Diary Register. The voucher and the cheques were also to
be prepared and the entry of the same was to be taken in the Investment
Register. The cheque would be then actually handed over to the counter-
party, only after Costs Memo, Sale Memo, actual Securities or the BRs
would be received by the FMG.
62. PW-1 Manojkumar Rakshit has then explained the procedure for
sale of securities by NHB. In the sale of securities, according to him,
reverse procedure was to be followed. The FMG was to then prepare
Costs Memo or Sale Note and deliver Securities, either physically, or,
hand over the BRs to the counter-party, after receiving the cheque of the
sale proceeds from the counter-party. As deposed by PW-19 Milind
Deshpande, the Assistant Manager of NHB, all the deals entered into by
NHB were first to be entered in a Deal Diary maintained by Accused No.1-
Ravikumar. The entries on the left side of the Deal Diary would indicate
'Payment Received By NHB' and right side would indicate 'Payment Made
By NHB'.
Evidence Relating to Procedure Adopted at SBI
63. As to the procedure adopted by SBI in respect of sale or purchase
of securities, PW-37 T.P. Nageswara Rao, who was working, at the
relevant time, as 'Deputy Manager of FMD' in SBI, has explained, in
detail, the said procedure by stating that whenever an offer regarding sale
or purchase of securities would be received by the Deputy General
Manager, who will be the Member of the Investment Committee, he would
take the deal to the Investment Committee consisting of himself, Deputy
Manager, Director and Managing Director for discussing the offer and to
take a decision in that regard. If the deal was finalized, a Deal Book would
be prepared by the Deputy General Manager and signed by all the
Members of the Investment Committee. Then, information would be given
to the Mumbai Main Branch through the Desk Officer and written
confirmation would be exchanged by both the sides i.e. by the Corporate
Centre of SBI and Securities Division of Mumbai Main Branch. A Desk
Officer would, after informing Mumbai Main Branch about the deal, make
an entry in that regard in the Sale and Purchase Register. The Sale and
Purchase Register of the relevant period is produced and proved through
him vide Exhibit-432.
64. PW-29 Prakash Kanchan, who, at the relevant time, was working as
'Clerk-cum-Cashier' in the Bank Investment Cell of SBI, has explained the
procedure for sale of securities at Bank's Investment Cell in Mumbai Main
Branch. According to him, Sale-Slip-Books and Purchase Books were
maintained by SBI for sale and purchase of securities, giving details of
securities sold by SBI, such as, face value of the security, the rate at
which it was sold, the name of the counter-party Bank as well as the name
of the Broker. According to his evidence, the cheques would be received
in case of sales and cheques would be issued to the counter-parties in
case of purchases. In case of sale by SBI, the Cost Memo, along with BR,
or, SGLF, or, physical delivery of security would be physically delivered.
65. PW-13 Bhushan Raut, Assistant Manager of Securities Division at
SBI, has then explained the procedure adopted for preparing Cost Memo,
Voucher etc. in sale and purchase of securities at SBI. According to him,
the Funds Management Department used to give necessary instructions
about the same. These instructions were received on phone. The
concerned Officer used to instruct the 'Computer Operator' to feed the
instructions in the computer. Then a Cost Memo was generated. On the
basis of the Costs Memo, they used to make entry in Sale and Purchase
Slip-Books. In case of purchase of securities, pay orders were issued,
whereas, in case of sale of securities, pay orders were received. On the
basis of the Slip-Book, debit or credit vouchers used to be prepared for
issuance of Banker's Cheques. A Waste-Book was maintained for the said
purpose. The 'Computer Generated Memo' then used to be sent to Funds
Management Department subsequently. Sale-Slip-Book of the SBI for the
relevant period has been produced at Exhibit 400A. As to the Waste-Book,
all entries taken in this Book used to be matched every day.
66. It is not disputed that, at the relevant time, Accused No.3-Sitaraman
was heading SBI's Investment Department at Mumbai Main Branch and
all the documents were prepared by either Accused No.3-Sitaraman or as
per the instructions given by Accused No.3-Sitaraman.
67. It is also not disputed that Accused No.4-HSM was holding account
with SBI's Personal Banking Division bearing Account No.4/8710. PW-35
Mohan Vijapurkar, who was the 'Accountant' in the Main Branch, has
proved the Account Opening Form Exhibit-428 of the account of Accused
No.4-HSM. The certified copy of the Statement of the said Account for the
period from 9th September 1991 to 16th July 1992 is produced at Exhibit
429. PW-35 Mohan Vijapurkar has explained that, in the Banking Division,
though they are supposed to maintain only Current and Savings Bank
Accounts of their clients, this particular account of Accused No.4-HSM
was maintained therein, as it was related to the transactions done in the
Securities Division of Mumbai Main Branch. According to his evidence, at
the end of the day, the Securities Division used to send debit or credit
voucher through a Transit Voucher Book to their Personal Banking
Division. Then the voucher used to be entered in the Ledger Account of
Accused No.4-HSM by the concerned Clerk and the Ledger along with
voucher used to come to his Desk. He used to verify the voucher as per
the account number, the name of the account-holder and the amount
mentioned in the voucher and tally with the amount entered into Ledger
Account. Then, by putting his initials on the voucher and the entry made in
the Ledger Account mentioning that it is duly and correctly posted in the
Ledger, the account of Accused No.4-HSM would be debited or credited,
as the case may be. Accordingly, by the end of the day, whatever the
credit or debit, as the case may be, was given to the account of Accused
No.4-HSM.
68. PW-36 Mahesh Gambhir, the Assistant General Manager of SBI,
has, in his deposition, explained how the money used to be diverted to the
account of Accused No.4-HSM. According to him, if credit of its amount is
received from R.B.I. in the S.B.I. Account and in some cases 'Y' amount
will be added to this account by debiting Accused No.4-HSM's account,
then the Banker's Cheque or clearance cheque would be issued from that
account to SBI account and total amount would be disposed of as per the
instructions of Accused No.4-HSM. Thus, the amount 'X' + 'Y' would go to
various accounts as per the instructions of Accused No.4-HSM. Similarly,
there were transactions of a reverse nature that its credit would be coming
from RBI account of SBI and local clearing account and the total amount
would be credited into the account of Accused No.4-HSM.
First Set of Transactions Pertaining to Sale and Purchase
of Securities and Involving Accused Nos.1 to 3 and 5 to 7.
69. It is in the background of this procedure that the following purchase
and sale transactions, which were entered into by NHB, are required to be
considered with a caveat, as stated above, that though the case pertains
to issuance of, totally, ten cheques and charge is also framed accordingly,
as regards cheque dated 25th October 1991 for Rs.76,03,07,123=00, it
has been included in Special Case No.1 of 1996, which has already been
disposed off. Hence, prosecution has dropped the charge in respect of the
said transaction in this case. This case, therefore, pertains to issuance of
nine cheques only.
PURCHASE TRANSACTIONS
31st January 1992
70. NHB Record shows that there is purchase of UTI Units 6.50 crores
@ Rs.13.70 from SBI for Rs.89,05,00,000/-. Exhibit-17 is the entry in Deal
Diary. Exhibit-17 is in the hand-writing of Accused No.2-Suresh Babu,
which is proved by PW-1 Manojkumar Rakshit (Deposition Page 6 Para
6).
71. NHB has prepared Voucher No.38 for the said transaction showing
purchase of UTI Units, which is Exhibit-354. Voucher is in the hand-writing
of Accused No.2-Suresh Babu (Photocopy is at Exhibit-163). The voucher
is signed by Accused No.2-Suresh Babu (Evidence of PW-30 B.
Murlidharan - Para 2 Page 2).
72. The purchase of Units of 6.50 crores also appearing in the
Investment Register. The Investment Register is at Exhibit-18. It is in the
hand-writing of PW-14 Sivaraman. (Deposition of PW-14 Sivaraman -
Page 4 Para 3).
73. RBI Cheque No.173921 dated 31.01.1992 for Rs.89.05 crores has
been issued in the name of SBI towards the said transaction, which is
marked as Exhibit-19. The cheque Exhibit-19 bears the signatures of
Accused No.1-Ravikumar and Mr. P. Jambukeshwaran. (Deposition of
PW-1 Manojkumar Rakshit - Page 7 Para 6, and Deposition of PW-14
Sivaraman - Page 3 Para 3). The cheque is in the hand-writing of Accused
No.2-Suresh Babu. (Deposition of PW-1 Manojkumar Rakshit - Page 7
Para 6 and Deposition of PW 14 - Sivaraman - Page 3 Para 3).
74. Exhibit-19 has been presented along with the pay-in-slip dated 31 st
January 1992, which is marked as Exhibit-385. Exhibit-385 would show
that Exhibit-19 is presented for crediting to the account of SBI with RBI.
The pay-in-slip containing the signature of Accused No.3-Sitaraman
(marked as Q-100).
75. Exhibit-60 is the Statement of Account No.7382 of NHB with RBI. In
Exhibit-60, on 31st January 1992, in the withdrawal column, it is shown
that Cheque No.173921 for Rs.89,05,00,000/- has been debited.
76. Exhibit-392 Colly is the Statement of Account No.2001 of SBI with
RBI. In Exhibit-392 Colly, on 31st January 1992, there is a credit of
Rs.89,05,00,000/-. Hence, this would show that the cheque amount has
been debited in the account maintained by NHB and credited to the
account of SBI.
Transactions in SBI
77. Exhibit-340 Colly is the Waste-Book Entries dated 31 st January
1992. All the days transactions done by SBI would be appearing in the
Waste Book. The Debit Voucher would be appearing on the credit side of
the Waste Book and Credit Voucher would be appearing on the debit side
of the Waste Book. Day-end, all the debit side and credit side should be
tallied.
78. The Waste Book would show the following entries on 31 st January
1992 pertaining to Accused No.4-HSM on that day and it apparently can
be seen that both the sides are tallying.
Waste Book Credit Side
Sr. Exhibit in Proved Total Amount
Vouchers
No. Waste Book Through [In Rs.]
Exh 279 for debiting
58 Exh 340/8 PW 28 89,05,00,000.00
RBI
Exh 346 for National
59 Exh 340/9 PW 28 21,96,27,397.26
and local clearing
Exh 413 - Entry for
Harshad S. Mehta
62 (original voucher in Exh 340/10 PW 29 113,68,15,268.65
Exhibit 158 colly Sr.
No.61)
Total 224, 69,42,665.91
Waste Book Debit Side
Sr. Exhibit in Proved Total Amount
Vouchers
No. Waste Book Through [In Rs.]
Exh 280 for credit to
70 Exh 340/1 PW 28 111,01,27,397.26
Harshad Mehta
Exh 341 for credit to
inter divisional transfer
74 Exh 340/2 PW 28 2,00,01,525.00
a/c - Institutional
Division
Exh 276 for RBI
Account - being
75 Exh 340/3 PW 28 26,66,32,017.48
purchase of securities
from NHB
Exh 342 for RBI
Account being
76 Exh 340/4 PW 28 44,00,00,000.00
purchase of securities
for NHB
Exh 343 being
77 purchase for various Exh 340/5 PW 28 40,91,81,576.17
Banks
Exh 344 for Banker's
78 Exh 340/6 PW 28 10,00,000.00
cheque
Exh 345 for
commission
Total 224, 69,42,665.91
79. Apparently, all the above transactions done on 31 st January 1992
were on behalf of Accused No.4-HSM. It can be seen that both the sides
of transactions are tallying. On the very same day, there is a credit to the
account of Accused No.4-HSM and also a debit.
80. Exhibit-429/2 is the entry for Rs.111,01,27,397=26, thereby giving
credit to the account of Accused No.4-HSM with Personal Banking
Division, Mumbai Main Branch. The above entry is corresponding to
Exhibit-340/1. The corresponding voucher for Exhibit-429/2 is Exhibit-280.
81. On the same day, there is another entry for Rs.113,68,15,268=15
for debiting the account of Accused No.4-HSM, which is marked as
Exhibit-429/3. The above entry is corresponding to Exhibit-340/10 in the
Waste Book. The corresponding voucher for Exhibit-429/3 is Exhibit-413.
82. The procedure for sale of securities by SBI has already been
discussed. Hence, if there is sale of securities by SBI, it should invariably
be appeared in the Sale Purchase Register maintained at SBI Corporate
Centre. Exhibit-432 Colly is the Sale Purchase Register of SBI Corporate
Centre. Page Nos.166 and 167 of the Register show the entries dated 27 th
January 1992 to 21st February 1992. Exhibit-432/2 is the entry related to
sale of securities on 31st January 1992. The entry shows that it is sale of
securities to Citi Bank and there was no sale of securities to NHB by SBI
on 31st January 1992. PW-37 T.P. Nageswara Rao, in his deposition at
page 4 para 7, stated that "had there been a sale of securities to NHB on
31st January 1992, the same would have been reflected in these pages."
83. Bank Investment Cell of SBI, Mumbai Main Branch, was
maintaining Sales Slip Book for recording the sales done by SBI. Exhibit-
400A is the Sales Slip Book for the concerned period. Exhibit-400/6A is
Page No.3727 of Sales Slip Book dated 31st January 1992. The Sales Slip
Book dated 31st January 1992 does not show any sale transaction with
NHB on 31st January 1992. PW-29 Prakash Kanchan, in his deposition at
page 30 para 68, stated that, "had there been any such transaction, it
would have been shown in Exhibit-400/6".
84. So, none of the SBI records would show that there was sale of
securities by SBI to NHB on 31st January 1992. Rather, the cheque issued
by NHB on that date was utilized by Accused No.4-HSM and the balance
amount was adjusted in the account of Accused No.4-HSM maintaining
with the PBD, SBI.
16.03.1992
NHB
85. NHB purchased 2.50 crore UTI Units @ Rs.15.087 from SBI for
Rs.37,71,75,000/-. Exhibit-20 is the Entry in Deal Diary for the said
transaction. Exhibit-20 is in the hand-writing of Accused No.1-Ravikumar.
(Evidence of PW-1 Manojkumar Rakshit, page 7 para 7).
86.
Exhibit-21 is the entry in Investment Register dt. 16.03.1992 for
purchase of 2.50 crore Units of UTI from SBI.
87. A cheque No.212521 dt. 16.03.1992 for Rs.25,41,40,170=21 in the
hand-writing of Accused No.2-Suresh Babu and signed by Accused No.1-
Ravikumar and P. Jambukeshwaran was issued by NHB towards the
transaction, which is marked as Exhibit-23. The amount is less than the
purchase price, because there was a sale of 13% RINL Bonds (Deal
No.212) on 13th March 1992 for Rs.12,30,34,829=79. That amount has
been adjusted in the transaction. Exhibit-162 is the voucher prepared for
reversal of Deal No.212 for securities 13% RINL for Rs.12,30,34,829=79.
Hence, the balance was Rs.25,41,40,170=21.
88. Exhibit-355 is the voucher dated 16th March 1992 for the said
transaction (photocopy is at Exhibit-168). The voucher shows purchase of
2½ crore Units by NHB for Rs.37,71,75,000/-. The voucher is signed by
Accused No.2-Suresh Babu. (Evidence of PW-30 B. Muralidharan - page
3 para 3).
89. Exhibit-24 is the entry in RBI Scroll Book showing issuance of
cheque for Rs.25,41,40,170=21 on 16th March 1992.
90. Exhibit-23 is the cheque presented before RBI along with a pay-in-
slip dated 16th March 1992, which is marked as Exhibit-389. Overleaf of
Exhibit-389 would show that Cheque No.212521 dated 16th March 1992
for Rs.25,41,40,170=21 from NHB has been presented along with the
pay-in-slip. The pay-in-slip is prepared to get the credit of cheque amount
into the Account No.2001 of SBI with RBI.
91. Exhibit-60 is the Account Statement of NHB with RBI. In Exhibit-60,
on 16th March 1992, Cheque No.212521 for Rs.25,41,40,170=21 has
been debited and in Exhibit-392 Colly, (SBI Account statement with RBI),
an amount of Rs.25,41,40,170=21 has been credited. This would show
that the NHB account was debited and amount has been credited to the
account of SBI.
SBI
92. On 16th March 1992, an amount of Rs.25,41,40,170=21 has been
credited to Account No.4/8710 of Accused No.4-HSM by Credit Voucher
No.53, which is at Exhibit-273 and signed by Accused No.3-Sitaraman.
93. On 16th March 1992, an amount of Rs.26,28,27,857=19 has been
debited from the account of Accused No.4-HSM. The narration shows that
it is for purchase of securities from SBI Cap. Exhibit-406 would prove the
same.
94. The entries for Waste Book dated 16th March 1992 have been
marked as Exhibit-411.
Waste Book Credit Side
Sr. Exhibit in Proved Total Amount
Vouchers
No. Waste Book Through [In Rs.]
98 Exh 278 for RBI Exh-411/1 PW-29 25,41,40,170.21
Exh 406 for Harshad S.
Mehta (original in
97 Exh-411/2 PW-29 26,28,27,857.19
Exhibit 158 colly Sl.
No.62)
Total 51,69,68,027.40
Waste Book Debit Side
Sr. Exhibit in Proved Total Amount
Vouchers
No. Waste Book Through [In Rs.]
Exh 407 for Bankers
50 Exh-411/3 PW-29 12,58,38,058.22
Cheque
51 Exh 408 for RBI Exh-411/4 PW-29 9,00,00,000.00
52 Exh 409 for RBI Exh-411/5 PW-29 4,69,89,623.97
Exh 273 for Harshad S.
53 Exh-411/6 PW-29 25,41,40,170.21
Mehta
Exh 410 for
49 Exh-411/7 PW-29 '175.00
Commission
Total 51,69,68,027.40
95. Exhibit-429/9 is a credit entry for Rs.25,41,40,170=21 dated 16 th
March 1992, in Accused No.4-HSM's account with SBI Personal Banking
Division, which is a corresponding entry for Exhibit-411/6 of Waste Book
and Voucher Exhibit-273.
96.
Exhibit-429/10 is a debit entry for Rs.26,28,27,857=19 dated 16 th
March 1992, which is a corresponding entry for Exhibit-411/2. Exhibit-406
is the corresponding debit voucher for the debit entry marked as Exhibit-
429/10.
97. Exhibit-432 Colly is the Sale Purchase Register maintained at SBI
Corporate Centre. On Page Nos.94 and 95 of Exhibit-432 Colly, the
entries are pertaining to sale of securities from 10 th March 1992 to 21st
March 1992. However, this page would not show any sale of securities to
any Institution on 16th March 1992. PW-37 T. P. Nageswara Rao, in his
deposition at page 5 on para 11, stated that, "entries on these pages do
not show any sale transactions dated 16th March 1992. Had there been a
sale transaction on 16th March 1992, the same would have been reflected
in these pages."
98. Exhibit-400 Colly is the Sale Slip Book maintained at Bank
Investment Cell at Bombay Main Branch. On 16th March 1992, there was
no sale of securities transactions with any Banks by SBI. Exhibit-400
Colly., Page No.3762, is the sale transaction dated 14th March 1992 and
Page No.3763 is the sale transaction dated 17th March 1992, which
proves that there was no sale transaction on 16 th March 1992 by SBI. PW-
29 Prakash Kanchan, in his deposition at page 28 para 61, stated that,
"had there been any sale transaction of SBI with anybody on 16 th March
1992, it would have been reflected in Exhibit-400 Colly".
24th March 1992
99. NHB purchased 4 crore UTI Units @ Rs.15/- for Rs.60,00,00,000/-
by Deal No.222; 17% NTPC Bonds face value Rs.50 crore @ 93% of face
value for Rs.47,94,38,356=16 by Deal No.244; and 9% IRFC Bonds face
value Rs.30 crore @ 90% face value for Rs.28,29,45,205=48 by Deal
No.245. There are total three Deals on 24th March 1992. Exhibit-26 is the
entries in Deal Diary dt. 24th March 1992, however, it is not specifically
stated what are the securities in the Deal Diary.
100. However, Investment Register shows the nature of securities
purchased on that day. Exhibit-27 is the entry dated 24 th March 1992 in
Investment Register for Deal No.222 for Rs.60,00,00,000/-. Exhibit-28
shows the entries in the Investment Register for Deal Nos.244 and 245 for
Rs.47,94,38,356=16 and Rs.28,29,45,205=48.
101. A Voucher No.24 dated 24th March 1992 prepared and signed by
Accused No.2-Suresh Babu is marked as Exhibit-356.
102. A Cheque No.212587 dt. 23rd March 1992 for Rs.14,62,12,000/-
under the signature of P. Jambukeshwaran and Accused No.1-Ravikumar
has been issued in the name of SBI, which is marked as Exhibit-29. The
cheque is in the handwriting of Accused No.1-Ravikumar. (Deposition of
PW-14 Sivaraman - page 3 para 2). PW-1 Manojkumar Rakshit further
deposed, in his deposition at page 10 para 8, that, "possibly, the cheque
was prepared on 23rd March 1992 on the basis of oral finalization of the
Deal on that day, but the Deal appears to have taken place on 24 th March
1992 and the cheque was also handed over on that day."
103. For the Deal, NHB had to make payment of Rs.136,23,83,561=64.
However, they had made payment of Rs.14,62,12,000/- towards the
transaction. Even though the Deal Diary shows three transactions on 24th
March 1992, subsequently, through Exhibit-372, rectification entry has
been passed. Exhibit-372 would show that, on 24th March 1992, there was
only one transaction for Rs.40,45,93,060/- with SBI. On the same day,
there was sale of UTI 1.77 crore Units @ 14.5918 for Rs.25,83,81,060/-
as per Exhibit-30 in the Deal Diary by NHB to SBI. Exhibit-30 is in the
handwriting of Accused No.2-Suresh Babu. (Deposition of PW-14
Sivaraman - page 3 para 2). Hence, the cheque was issued for
Rs.14,62,12,000/- (i.e. Rs.40,45,93,060/- - Rs.25,83,81,060/- =
Rs.14,62,12,000/- made on account of the transactions for purchase of
securities on 24th March 1992). Exhibit-31 is the entry showing outflow of
Rs.14,62,12,000/- in the Deal Diary.
104. Cheque at Exhibit-29 has been presented with RBI along with a
pay-in-slip dated 24th March 1992 to credit the amount to the account of
SBI. The pay-in-slip is marked as Exhibit-390. Overleaf of Exhibit-390
would show that a Cheque No.212587 issued by NHB for
Rs.14,62,12,000/- presented for payment.
105. Exhibit-60 is the Account Statement of NHB with RBI. In Exhibit-60,
an entry is separately marked as Exhibit-134, which would show that on,
24th March 1992, a cheque No.212587 for Rs.14,62,12,000/- has been
issued from the account of NHB maintained with RBI. In Exhibit-392 Colly,
on 24th March 1992, an amount of Rs.14,62,12,000/- has been credited to
the account of SBI. A combined reading of above Exhibits would prove
that, on 24th March 1992, an amount of Rs.14,62,12,000/- has been
debited from the account of NHB and credited to the account of SBI with
RBI.
SBI
106. Certified copy of Waste Book, Page No.68, dated 24 th March 1992
is marked as Exhibit-415.
Waste Book Credit Side
Sr. Exhibit in Proved Total Amount
Vouchers
No. Waste Book Through [In Rs.]
82 Exh 277 for RBI ig Exh 401/10 PW 29 14,62,12,000.00
Exhibit 414 for SBI Cap
83 Exh 401/11 PW 29 14,61,84,000.00
Market
Exhibit 158 colly
84 (Sl.No.64) - Harshad Exh 401/12 PW 29 1,000.00
Mehta
Total 29,23,97,000.00
Waste Book Debit Side
Sr. Exhibit in Proved Total Amount
Vouchers
No. Waste Book Through [In Rs.]
Exh 416 for Bankers
52 Exh 401/13 PW 29 14,61,85,000.00
Cheque
Exh 281 for SBI Cap
51 Exh 401/14 PW 29 14,62,12,000.00
Market
Total 29,23,97,000.00
107. Exhibit-429/11 is a debit entry for Rs.1,000/- in Exhibit-429 Colly,
which is corresponding to Exhibit-410/11 and Voucher Exhibit-158 Colly.
108. Exhibit-281 would show that the amount of Rs.14,62,12,000/- has
been further credited to the account of M/s. SBI Cap and the narration in
the voucher would show that it is for purchase of securities. From the
above, it appears that RBI Account has been debited and SBI Cap
Account has been credited, which shows SBI Cap had sold securities. (In
such cases, the transaction will appear in Slip Book of SBI Cap.). Hence,
in this case, the amount has not been credited to the account of Accused
No.4-HSM, but gone to the account of SBI Capital Market.
109. Now, we may examine why the amount has been credited to the
account of SBI Capital Market :
110. On 10th March 1992, SBI Cap entered into a deal with Canfina for
purchase of Rs.10 crore Units @ Rs.14.55 by Deal Ticket No.4121, which
is marked as Exhibit-302. The deal was to be reversed on 24 th March
1992. The total amount, as per the deal, was Rs.14,55,00,000/- and the
Broker for the transaction was Accused No.4-HSM.
111. The payment was made to Canfina for the said transaction by giving
debit advice to SBI Mumbai Main Branch on 10 th March 1992. Exhibit-303
is the copy of Debit Advice. Exhibit-303/1 is Sr. No.4, which would show
purchase of 1 crore UTI Units @ Rs.14.55 with Broker Accused No.4-
HSM and the total amount was Rs.14,55,00,000/-.
112. Blue Book entries dated 10th March 1992 has been marked as
Exhibit-304 Colly. On Page No.2 of Exhibit-304 Colly, the last entry shows
that payment to Canfina has been made for purchase of 1 crore UTI Units
@ Rs.14.55, total Rs.14,55,00,000/-, which is marked as Exhibit-304/1.
113. On 24th March 1992, the above deal was reversed by Deal Ticket
No.4121 through Broker Accused No.4-HSM. The Deal Ticket No.4121 is
Exhibit-305. The Deal Ticket shows that the counter-party is Canfina. Total
amount was Rs.14,62,12,000/-.
114. Exhibit-306 is the Credit Advice dated 24 th March 1992 given to SBI
Mumbai Main Branch and Exhibit-306/1 is the entry at Sr. No.4, which
would show that SBI Cap sold 1 crore Units face value Rs.10 crore @
Rs.14.6212, total Rs.14,62,12,000/-, with Accused No.4-HSM as the
Broker.
115. Exhibit-307 Colly, is the Blue Book copy of entries dated 24 th March
1992 and Exhibit-307/1 would show that as per Deal Ticket No.4237, 1
crore units @ Rs.14.6212, total Rs.14,62,12,000/-, sold to Canfina.
116. Entries at Exhibit-432/7 Colly are related to sale of securities on 24 th
March 1992 in the Sale and Purchase Register maintained at the
Corporate Office of SBI. Exhibit-432/7 would show sale of securities to Citi
Bank only. There is no sale of securities to NHB on 24 th March 1992 by
SBI. PW-37 T. P. Nageswara Rao, in his deposition at page 6 para 13,
stated that, "none of these entries show any sale to NHB on 24 th March
1992. Had there been a sale of securities to NHB on 24 th March 1992, the
same would have been reflected in these pages".
117. Exhibit-400/7 and Exhibit-400/8 are Sale Slip Books, Page
Nos.3769 and 3771 respectively, for 24th March 1992. (Page No.3770 is
missing in Exhibit-400 Colly). In Exhibit-400/7 and Exhibit-400/8, names of
counter-parties are not mentioned. However, the entries at Exhibit-400/7
are tallying with Exhibit-432/7 Colly, which would prove that the
transactions appearing in Exhibit-400/7 are pertaining to Citi Bank. Hence,
there was no sale of securities transactions with NHB on that date by SBI.
Further, the amount paid by NHB has been directly credited to the account
of SBI Capital Market. So, there is no chance to have a sale of securities
transactions with SBI on 24th March 1992.
14th March 1992
118. On 14th March 1992, there was an entry showing outflow of
Rs.44,97,75,000/- to SBI and same amount to be received from State
Bank of Patiala. The entry has been struck off. This entry is marked as
Exhibit-33, which is in the handwriting of Accused No.2-Suresh Babu.
Evidence of PW-1 Manojkumar Rakshit and PW-14 Sivaraman (Page 5
Para 5) would prove the same. However, Deal Diary has not shown what
was the securities and what was the rate.
119. On 16th March 1992, the same entry has been repeated in the Deal
Diary, but it is in the handwriting of Accused No.1-Ravikumar. The entry is
marked as Exhibit-34, which also has been struck off. Evidence of PW-1
Manojkumar Rakshit and PW-14 Sivaraman (page 5 para 5) would prove
that it is in the handwriting of Accused No.1-Ravikumar. However, there is
no such sale of securities by NHB on that date. PW-1 Manojkumar
Rakshit deposed, at page 11 para 9, that, "this entry was regarding
purchase of Units from SBI and sale of same Units to State Bank of
Patiala. On 16th March 1992, Accused No.1-Ravikumar had addressed a
letter to the Manager of State Bank of Patiala to make payment of those
Units directly to SBI. State Bank of Patiala had issued cheque for
payment of that amount to SBI....."
120. A Cheque No.331295 dt. 14th March 1992 has been issued by State
Bank of Patiala to SBI for Rs.44,97,75,000/-. Exhibit-122 is the cheque
issued by State Bank of Patiala to SBI. (Statement for SBI not produced
for 14th March 1992).
SBI
121. A Debit Voucher at Exhibit-274 dated 14th March 1992 for
Rs.4,69,35,616=44 has been prepared by PW-25 Harsha Shah, signed by
Accused No.3-Sitaraman, shows that the amount has been debited from
RBI account of SBI.
122. The Waste Book for 14th March 1992 would show the following
entries, which would clearly show as to how much amount has been
totally received on that date by SBI and how much has been paid by SBI
on account of transactions with Accused No.4-HSM. Waste Book dated
14th March 1992 is marked as Exhibit-310 Colly. The Waste Book for 14 th
March 1992 was prepared by PW-27 Girish Patel.
Waste Book Credit Side
Sr. Exhibit in Proved Total Amount
Vouchers
No. Waste Book Through [In Rs.]
Exhibit 274 for debiting
63 Exh 310/2 PW-25 Rs.4,69,35,616.44
RBI Account
Exhibit 311 for debiting
64 National and Local Exh 310/3 PW-27 Rs.45,30,25,000.00
Clearing Account
Exhibit 158 colly
62 (Sl.No.63) debiting Exh 310/1 PW-27 Rs.48,42,37,034.89
account of HSM
Total 98,41,97,651.33
123. The narration at Exhibit-311 would show that the amount mentioned
in the voucher is on behalf of sale proceeds of securities.
Waste Book Debit Side
Sr. Exhibit in Proved Total Amount
Vouchers
No. Waste Book Through [In Rs.]
Exh 312 for
61 Exh 310/4 PW-27 100.00
Commission
Exh 313 for Bankers
62 Exh 310/5 PW-27 9,47,42,193.15
cheque
63 Exh 314 for RBI ig Exh 310/6 PW-27 6,13,87,300.68
Exh 315 for Bankers
64 Exh 310/7 PW-27 19,67,06,986.30
cheque
Exh 316 for credit of
65 Exh 310/8 PW-27 13,14,00,454.76
SBI Cap Ltd.
Exh 275 for credit HSM
66 Exh 310/9 PW-27 49,99,60,616.44
Account
Total 98,41,97,651.33
124. Both the credit as well as debit entries for the day are tallying. An
amount of Rs.49,99,60,616=44 has been credited to the account of
Accused No.4-HSM, having account with Personal Banking Division
(PBD) through Exhibit-275. Entry at Exhibit-310/9 in the Waste Book
would be showing credit of the said amount to the account of Accused
No.4-HSM.
125. Exhibit-429/7 is a credit entry for Rs.49,99,60,616=44 dated 14 th
March 1992, in Exhibit-429 Colly, which is the corresponding entry for
Exhibit-310/9 in the Waste Book. Exhibit-275 is the corresponding voucher
for Exhibit-429/7.
126. Exhibit-429/8 is a debit entry for Rs.48,42,37,034=89 dated 14 th
March 1992 in Exhibit-429 Colly. The corresponding entry in the Waste
Book is Exhibit 310/1. Hence, on 14th March 1992, there is credit as well
as debit in the account of Accused No.4-HSM.
127. Entries at Exhibit-432/6 Colly are related to the sale of securities by
SBI on 14th March 1992. The entries would not show any sale of securities
on that day by SBI to NHB. PW-37 T. P. Nageswara Rao, on page 5 para
11 of his deposition, stated that, "none of these entries show any sale to
NHB on 14th March 1992. Had there been a sale of securities to NHB on
14th March 1992, the same would have been reflected in these pages."
128. Exhibit-400/5 Colly is the Sales Slip Book, page Nos.3760 to 3762,
for sale of securities by SBI on 14th March 1992. In Exhibit-400/5 Colly,
there has been no sale transaction to NHB on 14 th March 1992. PW-29
Prakash Kanchan, in his deposition, on page 22 para 43, stated that,
"had there been any transaction with NHB on 14 th March 1992, it would
have been reflected in Exhibit 400/5 Colly."
21st February 1992
129. NHB purchased Treasury Bills face value Rs.50 crore for
Rs.47,97,50,000/- from SBI. Exhibit-35 is the entry in the Deal Diary for
purchase of Rs.50 crore Treasure Bills from SBI for Rs.47,97,50,000/-,
which is in the handwriting of Accused No.1-Ravikumar. (Evidence of PW-
1 Manojkumar Rakshit - page 12 para 10). However, Exhibit-35 would not
show description of security.
130. Voucher No.25 dated 21st February 1992 was signed by Accused
No.2-Suresh Babu for the said transaction, which is marked as Exhibit-
357 (Exhibit-165 is the photocopy). The voucher evidences investment by
NHB in Treasury Bills. (Evidence of PW-30 B. Muralidharan - page 4 para
6). The deal number is "1" and the deal date was "21 st February 1992".
The country-party shown in the voucher was "SBI".
131. Exhibit-36 is the entry dated 21 st February 1992 in the Treasury Bills
Investment Register in the handwriting of Accused No.1-Ravikumar. There
is a purchase of securities, face value 50 crore, for Rs.47,97,50,000/-. The
second entry shows that on the same day, there is sale of same securities
to State Bank of Patiala for Rs.47,97,50,000/- and the amount has been
credited.
132. NHB issued two separate cheques for the said transaction, both
signed by Accused No.1-Ravikumar and P. Jambukeshwaran. Exhibit-37
is Cheque No.212156 dated 21st February 1992 for Rs.47,95,00,000/- and
Exhibit-38 is Cheque No.212157 dated 21st February 1992 for
Rs.2,50,000/-, both, in favour of SBI. The cheques are written by PW-14
Sivaraman. (Deposition of PW-14 Sivaraman - page 6 para 6).
133. Exhibit-39 is the entry dated 21 st February 1992 in RBI Scroll for
issuance of cheques dated 21st February 1992.
134. Cheque at Exhibit-37 is presented with RBI, along with a pay-in-slip,
dated 21st February 1992. The pay-in-slip is marked as Exhibit-386.
Exhibit-386 would show that the amount of Rs.47,95,00,000/- mentioned
in the cheque has been credited to the account of SBI with RBI on 21 st
February 1992.
135. Vide entry at Exhibit-60 made on 21 st February 1992, an amount of
Rs.47,95,00,000/-, on account of Cheque No.212156, has been debited.
Vide entry at Exhibit-392 Colly made on 21st February 1992, an amount of
Rs.47,95,00,000/- has been credited. A combined reading of the above
documents would show that the cheque amount has been debited from
the account of NHB and the same has been credited to the account of SBI
with RBI.
136. Vide entry at Exhibit-60 made on 26th February 1992, an amount of
Rs.2,50,000/- has been debited on account of clearing of Cheque
No.212157. The details about the transaction has been explained later.
SBI
137. The cheque issued in favour of SBI for purchase of the securities
has been adjusted as per the directions of Accused No.4-HSM and
entered the details in the Waste Book on 21 st February 1992. Exhibit-350
is the copy of Waste Book for transaction dated 21st January 1992.
Waste Book Credit Side
Sr. Exhibit in Proved Total Amount
Vouchers
No. Waste Book Through [In Rs.]
80 Exh 351 for HSM Exh 350/3 PW-29 4,01,50,000.00
81 Exh 284 for RBI Exh 350/4 PW-29 47,95,00,000.00
Exh 352 for National
82 Exh 350/5 PW-29 46,00,000.00
and Local Clearing
Total 56,56,50,000.00
Waste Book Debit Side
Sr. Exhibit in Proved Total Amount
Vouchers
No. Waste Book Through [In Rs.]
59 Exh 349 for RBI Exh 350/1 PW-29 8,81,00,000.00
Exh 348 for SBI Cap
60 Exh 350/2 PW-29 47,75,50,000.00
Ltd.
Total 56,56,50,000.00
138. Waste Book entries for 21st February 1992 are tallying for the day.
Perused Exhibit-351 for debiting the account of Accused No.4-HSM. The
narration shows that it is the difference amount adjusted into the account
of Accused No.4-HSM, maintained at PBD of SBI. Moreover, from the
narration at Exhibit-349, it can be seen that it is prepared for purchase of
securities for NHB.
139. Exhibit-429/4 is the entry dated 21st February 1992 in the account of
Accused No.4-HSM with PBD, SBI Mumbai Main Branch, which would
show that an amount of Rs.4,01,50,000/- has been credited to the account
of Accused No.4-HSM as per voucher at Exhibit-351.
140. Exhibit-432 Colly is the Sale and Purchase Register maintained at
SBI Corporate Centre. Entries at Exhibit-432/3 Colly are the deals done
by SBI on 21st February 1992. None of the entries at Exhibit-432/3 Colly
relate to sale of securities to NHB. PW-37 T. P. Nageswara Rao, in his
deposition, at page 4 para 8, deposed that, "had there been a sale of
securities to NHB on 21st February 1992, the same would have been
reflected in these pages."
141. Exhibit-400/1 Colly is the Sale Slip Book (Page Nos.3734 and
3735). Exhibit-400/1 would not show any sale of securities to NHB on 21 st
February 1992. PW-29 Prakash Kanchan, in his deposition, at page 8
para 20, has stated that, "had there been a transaction of sale of
securities with NHB on 21st February 1992, it would have been reflected in
the Sale Slip Book."
22nd February 1992
142. NHB purchased Government of India Loan Securities (11.50% GOI
2010) by two different deals i.e. Deal No.5 and Deal No.6. The first deal
was for securities purchased at 98.44% and 99.82% of the face value for
a total sum of Rs.151,99,22,734/- and the second deal was for
Rs.13,00,000/-.
143. Entry dated 22nd February 1992 for the two deals in Deal Diary is
Exhibit 40, which are in the handwriting of Accused No.2-Suresh Babu.
144. Deal Nos.5 and 6 entered in the Investment Register for
Government Securities on 22nd February 1992, shows that NHB had
invested 11.50% in GOI 2010 for Rs.152,12,22,734/- on 22nd February
1992, which is marked as Exhibit-41. Exhibit-41 is in the handwriting of
Accused No.2-Suresh Babu (Deposition of PW-14 Sivaraman - page 7
para 7).
145. Exhibit-358 is Voucher No.19 dated 22 nd February 1992 signed by
Accused No.2-Suresh Babu for the transaction dated 22 nd February 1992,
which shows investment of Government of India Loan and reversal date of
the transaction is 7th March 1992. Amount of the voucher is
Rs.152,12,22,734/- (Photocopy is at Exhibit-166).
146. NHB Cheque No.212166 dated 22nd February 1992 for
Rs.151,99,22,734/-, issued in favour of SBI, signed by Accused No.1-
Ravikumar and P. Jambukeshwaran, for the said transaction is at Exhibit
42. NHB Cheque No.212167 dt. 22nd February 1992 for Rs.13,00,000/-,
issued in favour of SBI, signed by Accused No.1-Ravikumar and P.
Jambukeshwaran is at Exhibit-43. The entries at Exhibit-42 and Exhibit-43
are in the handwriting of Accused No.2-Suresh Babu. (Deposition of PW-
14 - Sivaraman - page 6 para 7).
147. RBI Scroll dated 22nd February 1992 shows that Cheque
Nos.212166 and 212167 for Rs.151,99,22,734/- and Rs.13,00,000/-,
respectively, have been issued in favour of SBI on 22nd February 1992,
which is at Exhibit-44.
148. Cheque at Exhibit-42 has been submitted to RBI, along with a pay-
in-slip dated 22nd February 1992, which is marked as Exhibit-387. The
pay-in-slip would show that the amount has been credited to the account
of SBI with RBI on 22nd February 1992. The total amount in the pay-in-slip
was Rs.173,61,10,262=41. However, on the overleaf of Exhibit-387, it can
be seen that three cheques from NHB have been presented by a single
pay-in-slip. The third Cheque No.212166 for Rs.151,99,22,734/- is related
to the transaction, which represented Exhibit-42.
149. Vide entry at Exhibit-60 made on 22 nd February 1992, an amount of
Rs.151,99,22,734/- has been debited in the account of NHB against the
Cheque No.212166. Further, Exhibit-60 would show that three cheques,
viz. Cheque No.212164 for Rs.12,80,75,460=41, Cheque No.212165 for
Rs.8,81,12,068/- and Cheque No.212166 for Rs.151,99,22,734/-, coming
to a total amount of Rs.173,61,10,262=41, have been debited. Vide entry
at Exhibit-392 Colly made on 22nd February 1992, an amount of
Rs.173,61,10,262=41 has been credited in the account of SBI with RBI.
The above would show that Cheque No.212166 for Rs.151,99,22,734/-
has been debited from the account of NHB and credited to the account of
SBI with RBI.
150. In case of Cheque at Exhibit-43 bearing No.212167 for
Rs.13,00,000/-, the amount has been debited from the account of NHB on
26th February 1992 by clearing. Entry dated 26 th February 1992 at Exhibit-
60 would prove the same. The details of the transaction are explained
later in the Notes of Arguments.
SBI
Waste Book Credit Side
Sr. Exhibit in Proved Total Amount
Vouchers
No. Waste Book Through [In Rs.]
No voucher - Banks
44 Exh 401/1 PW-29 26,51,78,240.00
Investment Account
45 No voucher - for RBI Exh 401/2 PW-29 5,22,81,104.78
No voucher - Banks
46 Exh 401/3
PW-29 114,39,88,950.00
Investment Account
Interest on Government ig Exh 401/4 PW-29 2,46,11,265.89
Securities
No voucher -for
47 National and Local Exh 401/5 PW-29 279,52,85,035.34
Clearing
No voucher - National
48 Exh 401/6 PW-29 48,89,69,630.67
and Local Clearing A/c.
Exh 328 for National
49 Exh 327/1 PW-27 546,85,58,058.34
and Local Clearing
Exh 402 for SBI Cap
50 Exh 401/7 PW-29 100,52,01,100.56
Ltd.
Exh 329 for Banks
51 Exh 327/2 PW-27 150,19,50,000.00
investment in securities
Exh. 329 interest Exh 327/2A PW-29 4,51,21,527.77
52 Exh 330 for RBI Exh 327/3 PW-27 173,61,10,262.41
Exh 331 for SBI Cap
53 Exh 327/4 PW-27 9,52,25,700.00
Ltd.
Exh 332 for Harshad S.
54 Exh 327/5 PW-27 94,94,30,639.83
Mehta
Total 1557,19,11,516.00
Waste Book Debit Side
Sr. Exhibit in Proved Total Amount
Vouchers
No. Waste Book Through [In Rs.]
No voucher - Entry
72 Exh 327/12 PW-27 26,51,78,240.00
related to RBI Account
No voucher - Entry
73 related to Interest on Exh 327/13 PW-27 2,56,81,320.67
Government Securities
No voucher - Entry
related to Bank
74 Exh 327/14 PW-27 119,52,00,000.00
Investment
Government Securities
No voucher - Entry
related to Bank
75 Exh 327/15 PW-27 239,36,00,000.00
Investment
Government Securities
No voucher - Entry
76 related to Interest on Exh 327/16 PW-27 2,53,78,966.01
Government Securities
No voucher - Entry
related to Bank
77 Exh 327/17 PW-27 86,52,75,700.00
Investment
Government Securities
No voucher - Entry
78 Exh 327/18 PW-27 100,52,01,100.56
related to RBI Account
Exh 333 for Interest on
79 Government and other Exh 327/6 PW-27 6,60,61,111.11
securities
Exh 334 for Bank
80 Investment Exh 327/7 PW-27 155,46,51,650.00
Government Securities
Exh 335 for RBI
81 Exh 327/8 PW-27 110,00,00,000.00
Account
Exh 336 for RBI
82 Exh 327/9 PW-27 48,81,60,393.78
Account
Exh 337 for SBI Cap
83 Exh 327/10 PW-27 100,64,01,101.56
Mark Ltd.
Exh 338 for credit of
84 Exh 327/11 PW-27 558,11,21,931.90
various Banks
Total 1557,19,11,516.00
151. Both the sides are tallying. Exhibit-429/5 is an entry dated 22 nd
February 1992 showing that Accused No.4-HSM was having account with
PBD, SBI Mumbai Main Branch, which would prove that an amount of
Rs.94,94,30,639=83, as per Exhibit-332, has been debited to his account.
152. Exhibit-432 Colly is the Sale and Purchase Register maintained at
SBI Corporate Centre. Entries at Exhibit-432/4 Colly are related to sale of
securities by SBI on 22nd February 1992. PW-37 T. P. Nageswara Rao, in
his deposition at page 4 para 9, deposed that, "none of the entries show
sale of securities to NHB on 22nd February 1992. Had there been a sale of
securities to NHB on 22nd February 1992, the same would have been
reflected in these pages."
153. Exhibit-400/2 Colly is the Sale Slip Book. Page Nos.3736 to 3739
pertaining to sale of securities by SBI on 22 nd February 1992. Entries at
Exhibit-400/2 do not reflect any transaction with NHB on 22 nd February
1992 for sale of securities. PW-29 Prakash Kanchan, in his deposition at
page 15 para 30, stated that, "had there been any sale transaction with
NHB on that day, it would have been reflected in Exhibit-400/2".
7th March 1992
154. NHB purchased 11.5% Government of India 2010 Securities, face
value Rs.100/- crore, @ Rs.101.88%, from SBI for Rs.101,88,50,194=56
on 7th March 1992. The entry for the said purchase in Deal Diary is at
Exhibit-45, which is in the handwriting of Accused No.2-Suresh Babu.
Evidence of PW-1 ig Manojkumar Rakshit and PW-14 Sivaraman
(Deposition - page 7 para 8). However, securities description is not
mentioned in Exhibit-45.
155. The entry in Government of India Securities Portfolio dated 7 th
March 1992 shows Deal No.7. There is purchase of 11.5% GOI 2010, face
value Rs.100 crore, from SBI, for Rs.101,88,50,194=56, which is Exhibit-
46.
156. NHB has prepared Voucher No.16 dt. 7th March 1992 showing
purchase of GOI securities from SBI on 7 th March 1992, signed by
Accused No.2-Suresh Babu, which is at Exhibit-359. (Photocopy is at
Exhibit-167). The voucher is evidencing purchase of Government
Securities by NHB from SBI. The amount shown in the voucher is
Rs.101,88,50,194=56.
157. NHB Cheque No.212282 dt. 7th March 1992 for
Rs.101,88,50,194=56, in favour of SBI, signed by Accused No.1-
Ravikumar and P. Jambukeshwaran has been issued for the said
transaction, which is at Exhibit-47. Evidence of PW-1 Manojkumar Rakshit
and PW-14 Sivaraman (Deposition page 7 para 8).
158. RBI Scroll dt. 7th March 1992 shows that Cheque No.212282 for
Rs.101,88,50,194=56 has been issued in favour of SBI, which is at
Exhibit-48.
159. NHB Cheque No.212282 dt. 7th March 1992 has been presented
with RBI on 7th March 1992, along with a pay-in-slip, which is marked as
Exhibit-388. Overleaf of Exhibit-388 would show that NHB cheque for
Rs.101,88,50,194=56 has been presented along with the pay-in-slip and
the amount has been credited to the account of SBI with RBI.
160. Vide entry at Exhibit-60 made on 7th March 1992, an amount of
Rs.101,88,50,194=56 has been debited from the account of NHB on
account of issuance of Cheque No.212282. Vide entry at Exhibit-392
Colly, an amount of Rs.101,88,50,194=56 has been credited in the
account of SBI. A combined reading of the above Exhibits would prove
that the amount has been debited in the account of NHB and credited in
the account of SBI with RBI.
SBI
161. In the SBI, the particular day's transaction has been recorded in the
Waste Book. Waste Book entries would show receipt of money from
various parties and payments made as per the directions of Accused
No.4-HSM. Waste Book entries for the day 7 th March 1992 are at Exhibit
317-Colly.
Waste Book Credit Side
Sr. Exhibit in Proved Total Amount
Vouchers
No. Waste Book Through [In Rs.]
Exh 318 for Banks 1076,39,25,850.00
61 Exh 317/1 PW-27
Investment and Interest 20,55,28,109.68
62 Exh 319 for H S Mehta Exh 317/2 PW-27 16,57,27,428.60
Exh 320 for SBI Cap
63 Exh 317/3 PW-27 1,46,00,000.00
Market
64 Exh 321 for RBI Exh 317/4 PW-27 127,55,00,194.87
Exh 322 for National
65 and Local Clearing Exh 317/5 PW-27 502,80,23,610.20
Account
Total 1745,33,05,193.35
Waste Book Debit Side
Sr. Exhibit in Proved Total Amount
Vouchers
No. Waste Book Through [In Rs.]
Exh 323 for Banks
74 Investment in Exh 317/6 PW-27 1269,12,44,860.00
Government Securities
Exh 324 for Interest on
75 Exh 317/7 PW-27 26,54,14,257.13
Government Securities
Exh 325 for SBI Cap
76 Exh 317/8 PW-27 7,53,200.00
Market Ltd.
Exh 326 for various
77 Banks for purchase of Exh 317/9 PW-27 449,58,92,876.22
securities
Total 1745,33,05,193.35
162. Here the total transactions are more in the debit side of the Waste
Book and hence an amount of Rs.16,57,27,428=60, through Exh-319, has
been debited from the account of Accused No.4-HSM with PBD. The entry
at Exhibit-317/2 in the Waste Book would prove the same.
163. Exhibit-429/6 is a debit entry for Rs.16,57,27,428=60 in the Account
Statement of Accused No.4-HSM dated 22nd February 1992 and Exhibit-
317/2 is the corresponding entry in the Waste Book for the same. Exhibit-
319 is the corresponding debit voucher for the transaction.
164. Exhibit-432 Colly. is the Sale and Purchase Register maintained at
SBI Corporate Centre. Exhibit-432/5 Colly. are the deals showing sale of
securities on 7th March 1992. PW-37 T. P. Nageswara Rao, in his
deposition at page 5 para 10, deposed that, "none of these entries show
any sale to NHB on 7th March 1992. Had there been a sale of securities to
NHB on 7th March 1992, the same would have been reflected in these
pages".
165. Entries made at Exhibit-400/3 Colly. are Page Nos.3749 to 3753
dated 7th March 1992, which do not reflect any sale of securities with NHB
on 7th March 1992. PW-29 Prakash Kanchan, in his deposition at page 17
para 35, stated that, "had there been any sale transaction with NHB on 7 th
March 1992, it would have been reflected in Exhibit-400/3 Colly.".
30th March 1992
166. NHB purchased 17% NTPC Bonds for Rs.90,45,53,603=20 from
SBI. However, there is no corresponding entry in the Deal Diary dated 30 th
March 1992. (Voucher shows IRFC Bonds).
167. RBI Scroll dated 30th March 1992 would show that Cheque
No.212666 for Rs.90,45,53,603=20 has been issued in the name of SBI,
which is at Exhibit-50.
168. NHB Voucher No.9 dated 30th March 1992 shows purchase of 9%
IRFC Bonds by NHB on 30th March 1992 for Rs.145,63,97,260=27 from
SBI and Standard Chartered Bank. The voucher evidences two
transactions; one for Rs.90,45,53,603=20, and, another for
Rs.55,18,43,657=07, which is in the handwriting of Accused No.2-Suresh
Babu and signed by Accused No.2-Suresh Babu. Voucher is at Exhibit-
360 (Photocopy is at Exhibit-169).
169. A Cheque No.212666 dated 30th March 1992 for
Rs.90,45,53,603=20 has been issued in the name of SBI for the said
transaction, which is signed by Accused No.1-Ravikumar and PW-17
Vivek Katre. Cheque is at Exhibit-49. PW-17 Vivek Katre also admitted his
signature in Exhibit-49 (Deposition - page 2 para 2). The cheque is in the
handwriting of PW-14 Sivaraman (Deposition - page 8 para 9).
170. Entry for this transaction is not appearing in the Investment Register
and in the Deal Diary of NHB (Deposition of PW-1 Manojkumar Rakshit at
page 15 para 14). However, Investment Register has not been produced
for 30th March 1992.
171. Cheque at Exhibit-49 has been presented for payment on 30 th
March 1992 along with a pay-in-slip dated 30th March 1992. The pay-in-
slip is marked as Exhibit-391. The overleaf of Exhibit-391 would show that
Cheque No.212666 for Rs.90,45,53,603=20 issued by NHB has been
presented along with the pay-in-slip.
172. Vide entry at Exhibit-60 made on 30th March 1992, an amount of
Rs.90,45,53,603=20 has been debited on account of issuance of Cheque
No.212666. Vide entry at Exhibit-392 Colly made on 30th March 1992, an
amount of Rs.90,45,53,603=20 has been credited in the account of SBI
with RBI. Hence, a combined reading of the above Exhibits would prove
that the cheque amount has been debited from the account of NHB and
credited to the account of SBI with RBI on the very same day.
SBI
Waste Book Credit Side
Sr. Exhibit in Proved Total Amount
Vouchers
No. Waste Book Through [In Rs.]
81 Exh 403 for RBI Exh 401/8 PW-29 90,45,53,603.20
ig Waste Book Debit Side
Sr. Exhibit in Proved Total Amount
Vouchers
No. Waste Book Through [In Rs.]
Exh 405 for SBI Cap
79 Exh 401/9 PW-29 90,45,53,603.20
Mark
173. The above statement would show that SBI account has been
debited and account of SBI Cap has been credited.
SBI Cap
174. We may examine now why the amount has been credited to the
account of M/s. SBI Cap Ltd.
175. Evidence of PW-26 Janardan Bandopadhyay, at page Nos. 4 to 8,
paragraph Nos.6 to 20, would explain the transactions.
176. According to him, M/s. SBI Capital Market has entered into the
following deals with NHB :-
Exhibit
Nature Deal for Deal
Date of Amount on
Date of Ticket Ticket
Reversal Reversal
Security Exhibit for
Reversal
17%
Exhibit Exhibit
28.03.1992 NTPC 30.03.1992 200696286.58
Bond
Exhibit Exhibit
28.03.1992 Units 30.03.1992 300822000.00
Total 501518286.58
177. PW-26 Janardan Bandopadhyay further deposed that, M/s. SBI
Capital Market had entered into the following deals with M/s. Canfina
through Broker Accused No.4-HSM :-
Exhibit
Nature Deal for Deal
Date of Amount on
Date of Ticket Ticket
Reversal Reversal
Security Exhibit for
Reversal
Exhibit Exhibit
04.03.1992 30.03.1992 256692315.62
Exhibit Exhibit
28.03.1992 Units 30.03.1992 146343000.00
Total 403035315.62
178. On 28th March 1992, there was a deal for purchase of 17% NTPC
Bonds for Rs.20,01,47,945=21 from NHB and Exhibit-291 is the Deal
Ticket No.4282 for the said transaction. Exhibit-291 would show that the
above deal is to be reversed on 30th March 1992. The payment for the
said transaction was done by giving debit authority to the Mumbai Main
Branch from the account of M/s. SBI Cap for payment to NHB. Serial No.2
in Exhibit-292 and the Debit Note dated 28th March 1992 would show that
M/s. SBI Cap have given debit instructions to the Manager, SBI, Securities
Division, SBI Mumbai Main Branch, to debit Rs.20,01,47,945=21 on
account of purchase of 17% NTPC Bonds from NHB. Exhibit-292 also
would show that the Deal Ticket No.4282.
179. On 30th March 1992, there was a deal for sale of 17% NTPC Bonds,
face value Rs.20 crore, for a total amount of Rs.20,06,96,286=58 from
NHB. Exhibit-290 is the Deal Ticket No.4315 for the said deal. The above
said deal was a reversal of earlier Deal No.4282 dated 28 th March 1992,
which is proved from Exhibit-290 itself. The Deal Ticket at Exhibit-290
would show the counter-party as "NHB" and it was a direct deal with M/s.
SBI Cap and NHB. Evidence of PW-26 Janardan Bandopadhyay, at page
4 para 6, also would prove the same.
180. Exhibit-297 Colly is the copy of Blue Book dated 30 th March 1992, in
which the receipts from other Banks would be showing on the particular
day. Exhibit-297/2 is the entry at page No.1 of Exhibit-297 Colly, which
shows receipt of Rs.20,06,96,286=58 from NHB in respect of 17% NTPC
Bonds, face value Rs.20 crore.
181. On 28th March 1992, vide Deal Ticket No.4283, M/s. SBI Cap
entered into a deal for purchase of Units, face value Rs.20 crore @
Rs.15/-, for a total sum of Rs.30,00,00,000/- from NHB. The Deal Ticket
dated 28th March 1992 is at Exhibit-293. Exhibit-293 would show that the
deal is to be reversed on 30th March 1992 and it was a direct deal
between M/s. SBI Cap and NHB. Evidence of PW-26 Janardan
Bandopadhyay, at page 5 para 9, also would prove the same.
182. All the credit and debit instructions issued by M/s. SBI Cap are
maintained in a Book called "Blue Book" and Exhibit-294 Colly is the copy
of the Blue Book dated 28th March 1992. On page No.2 of Exhibit-294
Colly, the two entries, which are marked as Exhibit-294/1 Colly, would
show that for Deal Ticket Nos.4282 and 4283, debit instructions have
been given to debit the amount mentioned in the Deal Ticket for purchase
of securities from NHB.
183. On 30th March 1992, vide Deal Ticket No.4324, M/s. SBI Cap sold
Units, face value Rs. 20 crore @ Rs.15.0411 to NHB for a total sum of
Rs.30,08,22,000/-, which is marked as Exhibit-295. The transaction is a
reversal of Deal Ticket No.4283 dt. 28th March 1992 with NHB and there is
no Broker involved in the contract. Exhibit-296 is the Credit Advise dated
30th March 1992 given to SBI Mumbai Main Branch - Sr. No.4 showing
sale of Rs.2 crore Units @ Rs.15.0411 for Rs.30,08,22,000/-.
184. On 4th March 1992, vide Deal Ticket No.4055, M/s. SBI Cap
purchased IRFC Bonds from M/s. Canfina through Accused No.4-HSM for
Rs.25,43,36,986=30, which was to be reversed on 30 th March 1992.
Exhibit-298 is the copy of the Deal Ticket dated 4th March 1992. The deal
was reversed on 30th March 1992 vide Deal Ticket No.4311, which is
marked as Exhibit-299. Total amount in the reversal was
Rs.25,66,92,315=62
185. On 4th March 1992, M/s. SBI Cap, vide Deal Ticket No.4056,
purchased 1 crore Units @ Rs.14.50 for a total sum of Rs.14,50,00,000/-.
Exhibit-300 is the Deal Ticket No.4056. The Broker in the transaction was
Accused No.4-HSM and it was to be reversed on 30 th March 1992. The
transaction was reversed on 30th March 1992 by Deal Ticket No.4307 for
Rs.14,63,43,000/-, which is marked as Exhibit-301. Exhibit-301 would
show the Broker in the transaction as Accused No.4-HSM and the
counter-party as M/s. Canfina. The Deal Ticket also shows it as the
reversal of Deal Ticket No.4056 dated 4th March 1992. The entries for
Exhibit-299 and Exhibit-301, as are appearing in the Blue Book, which is
marked as Exhibit-297 Colly, are separately marked as Exhibit-297/3 and
Exhibit-297/4, respectively.
186. Hence, the total amount for the above four transactions is
Rs.90,45,53,602=20. According to PW-26 Janardan Bandopadhyay, the
amount that has been received by them on 30th March 1992 from NHB
was towards the above dues.
187. Entries at Exhibit-432/8 Colly are related to sale of securities by SBI
on 30th March 1992. PW-37 T. P. Nageswara Rao, in his deposition at
page 6 para 14, has deposed that, "none of these entries would show any
sale to NHB on 30th March 1992. Had there been a sale of securities to
NHB on 30th March 1992, the same would have been reflected in these
pages."
188. Entries at Exhibit-400/4 Colly, page Nos.3774 to 3776, are from
Sales Slip Book dated 30th March 1992. PW-29 Prakash Kanchan
deposed that he could not say whether there is a sale of securities to NHB
on 30th March 1992, but he admitted that there is no sale of securities of
17% NTPC Bonds by SBI on that date. (9% IRFC Bonds also not
appearing in Exhibit-400/4 Colly).
16th November 1991
189. NHB purchased 2 crore Units of UTI for Rs.27,08,50,000/- from SBI.
Deal Diary dt. 16th November 1991 would show the transaction, which is at
Exhibit-100. The deal number is '68' and the Units were purchased @
Rs.13.5425. Exhibit-100 is in the handwriting of PW-19 Milind Deshpande
(Deposition on page 2 para 3).
190. UTI Portfolio Investment Register dated 18 th November 1991 shows
that there is purchase of 2 crore Units from SBI @ Rs.13.5425. PW-1
Manojkumar Rakshit deposed that the entry is appearing in the
Investment Register on 18th November 1991, since 16th November 1991
was a Saturday and the Bank was closed. The entry in the Investment
Register is at Exhibit-53.
191. Accused No.2-Suresh Babu has prepared and signed Voucher
No.37 dated 16th November 1991 for Rs.27,08,50,000/- for the said
transaction, which is marked as Exhibit-655. Exhibit-181 is the signature
of Accused No.1-Ravikumar in the voucher.
192. NHB Cheque No.173483 dt. 16th November 1991 for
Rs.27,08,50,000/- has been issued by NHB for purchase of securities
under the signatures of Accused No.1-Ravikumar and PW-17 Vivek Katre.
Cheque is at Exhibit-54. PW-17 Vivek Katre, who is the second signatory
on the cheque, also identified his signature on the cheque, (Deposition on
page 2 para 2). The cheque at Exhibit-54 was prepared by PW-19 Milind
Deshpande, (Deposition on page 3 para 7). PW-19 Milind Deshpande also
deposed that the cheque was written by him as per the instructions of
Accused No.1-Ravikumar and the entry in the Deal Diary was also made
on the instructions of Accused No.1-Ravikumar, (Deposition of PW-19
Milind Deshpande on page 3 para 7).
193. RBI Scroll Entry dated 16th November 1991 would show issuance of
RBI Cheque No.173483 for Rs.27,08,50,000/- in favour of SBI. The entry
is at Exhibit-55.
194. The NHB Cheque No.173483 for Rs.27,08,50,000/- has been
deposited in RBI on 16th November 1991 and Exhibit-384 is the pay-in-slip
for the same. The pay-in-slip i.e. Exhibit-384 has been signed by Accused
No.3-Sitaraman, which is proved by the evidence of GEQD. Further,
Exhibit-384 would show that the credit has been given to the account of
SBI bearing Account No.2001 with RBI.
195. Vide entry at Exhibit-60 made on 16th November 1991, an amount of
Rs.27,08,50,000/- has been debited on account of issuance of Cheque
No.173483. Vide entry at Exhibit-392 Colly made on 16 th November 1991,
an amount of Rs.27,08,50,000/- has been credited to the account of SBI
with RBI. So, the cheque was issued for purchase of securities from NHB
and the amount has been credited to the account of SBI with RBI.
SBI
196. Exhibit-425 Colly is Page Nos.139 to 143 of Waste Book dated 16 th
November 1991, maintained at SBI.
Waste Book Credit Side
Sr. Exhibit in Proved Total Amount
Vouchers
No. Waste Book Through [In Rs.]
Exh 417 Government
Securities A/c. and ig 25,05,00,000.00
29 Exh 425/1 PW-29
Interest on Government 15,68,229.33
Securities
Exh 418 Government
Securities A/c. and 180,48,80,000.00
30 Exh 425/2 PW-29
Interest on Government 77,10,555.56
Securities
31 Exh 285 for RBI Exh 425/3 PW-29 47,25,50,500.00
Exh 419 for National
32 Exh 425/4 PW-29 84,88,32,462.97
and Local Clearing
Total 338,60,41,747.86
Waste Book Debit Side
Sr. Exhibit in Proved Total Amount
Vouchers
No. Waste Book Through [In Rs.]
Exh 420 for Banker's
37 Exh 425/5 PW-29 75,000.00
cheque
Exh 421 for Harshad
38 Exh 425/6 PW-29 25,33,895.18
Mehta
Exh 282 for RBI
39 Exh 425/7 PW-29 5,78,14,947.95
Cheque
40 Exh 422 for Interest on Exh 425/8 PW-29 79,54,166.67
Government Securities
Exh 423 for Bank
41 Investment on Exh 425/9 PW-29 181,50,90,000.00
Government Securities
Exh 424 colly various
42 Exh 425/10 PW-29 150,25,73,738.06
Banks
Total 338,60,41,747.86
197. Exhibit-429 Colly is the certified copy of the Account Statement of
Accused No.4-HSM with Personal Banking Division, SBI, Mumbai Main
Branch. On 16th November 1991, an amount of Rs.25,33,895=18 has
been credited to the account of Accused No.4-HSM with PBD, SBI, which
is marked as Exhibit-429/1. Exhibit-429/1 is the corresponding entry in the
Waste Book, which is marked as Exhibit-425/6. The above statement
would show that the excess amount in the whole day's transaction has
been credited to the account of Accused No.4-HSM with PBD, SBI.
Exhibit-429/1 is made on the basis of the voucher at Exhibit-421.
198. Exhibit-432 Colly is the Sale and Purchase Register maintained at
SBI Corporate Office at the relevant time. In Exhibit-432 Colly, page
Nos.158 and 159 are the relevant pages for the deals taken place during
the period from 11th November 1991 to 30th November 1991. Exhibit-432/1
Colly is the details of deals taken place on 16 th November 1991. PW-37 T.
P. Nageswara Rao has stated that, in Exhibit-432/1 Colly, no sale of
securities have been done to NHB on 16 th November 1991. He also
deposed, in page 3 para 6, that, "had there been any sale of securities to
NHB on that day, the same would have been reflected in these pages."
199. Exhibit-426 Colly is the Sales Slip Book (Page Nos. 976 to 979 dt.
16th November 1991 in X-21). The entries at Exhibit-426 Colly do not show
any sale transactions with NHB on 16th November 1991. PW-29 Prakash
Kanchan, in his deposition on page 43 para 97, stated that, "had there
been any sale transactions with NHB on 16th November 1991, it would
have been reflected in Exhibit 426 Colly."
SALE TRANSACTIONS
31st January 1992
200. There is sale of securities to Bank of India Finance by NHB.
Deposition of PW-2 A.V. Meenakshisundaram, Senior Project Manager of
BOI Finance, would show that there was a Ready-Forward Transaction
with NHB on 31st January 1992 for purchase of Units of 7 crore for
Rs.95.83 crore. The date of reversal was on 30 th April 1992. Exhibit-105 is
the Deal Slip for the transaction dated 31st January 1992 with NHB. The
Deal Slip would show that there is transaction with NHB for purchase of 7
crore Units, which was to be reversed on 30th April 1992. However, the
reversal date has been rounded in Exhibit-105 and shown as "5 th May
1992". The witness, in his deposition, explained that this was due to
Banker's strike on that date and fixed as the next working day as the
reversal, which was on 5th May 1992.
201. The Payment Voucher issued by BOI Finance Ltd. on 31st January
1992 is marked as Exhibit-107. Exhibit-106 is the request letter dated 31 st
January 1992 issued by BOI Finance Ltd. to the Assistant General
Manager of Bank of India, Stock Exchange Branch, to issue RBI cheque
for Rs.95.83 crore in favour of NHB.
202. The cheque dt. 31st January 1992 for Rs.95.83 crore issued by
Bank of India in favour of NHB is at Exhibit-394.
203. Exhibit-395 is the RBI Voucher, which would show that cheque for
Rs.95.83 crore has been deposited in the Current Account No.7382 of
NHB. Exhibit-60 is the Account Statement of NHB (Current A/c. No.7382)
and entry dated 31st January 1992 Exhibit-61, which would prove that an
amount of Rs.95.83 crore has been credited into the account of NHB on
31st January 1992.
204. A BR signed by Accused No.1-Ravikumar for the transaction dated
31st January 1992 has been issued in the name of BOI Finance, which is
marked as Exhibit-59. The BR is prepared by Accused No.2-Suresh Babu
and it is signed by Accused No.1-Ravikumar, (Deposition of PW-14
Sivaraman - page Nos.3 and 4, para 3).
205. Voucher No.8 dated 31st January 1992 prepared by Accused No.2-
Suresh Babu and signed by Accused No.2-Suresh Babu and PW-30 B.
Muralidharan is at Exhibit-58. The above document would show that there
is sale of 7 crore Units @ Rs.13.69 for Rs.95,83,00,000/- as Deal No.157,
to BOI Finance, which is to be matured on 30th April 1992. The document
is identified by PW-1 Manojkumar Rakshit, (Deposition - page 22, para
23), and PW-15 Basant Sheth (Deposition - page 3 para 3).
206. A Cost Memo at Exhibit-57 has also been issued in the name of BOI
Finance. PW-64 Madhusudanlal Sharma (GEQD) opined that the
handwriting marked as "Q-270" and the initial marked as "Q-271" in
Exhibit-57 are that of Accused No.2-Suresh Babu (Para 5 of Exhibit-613
Colly).
207. In the Deal Diary at Exhibit-56, there is a transaction showing BOI
Finance for Rs.95.83 crore, which is in the handwriting of Accused No.2-
Suresh Babu.
208. (Page 643 of the Investment Register of NHB shows that there is a
sale on 31st January 1992 - BOI Finance, which is to be reversed on 30 th
April 1992 - not marked, and Page No.649 of the Charge-Sheet, which is
RBI Scroll dated 31st January 1992, shows that there is an entry on BOI
RF for Rs.95.83 crore).
209. PW-2 A.V. Meenakshisundaram further deposed that, on 5th May
1992, NHB failed to meet the commitment and hence he met Accused
No.1-Ravikumar and their ED Shri. Parthasarathi. Finally they got Rs.7.85
crore from NHB on 2nd June 1992 along with letter at Exhibit-108. The
letter Exhibit-108 refers to Exhibit-59 i.e. the BR issued by NHB towards
the transaction dated 31st January 1992. It is also mentioned in Exhibit-
108 that, "we enclose our RBI Cheque No.225705 dated 2nd June 1992 for
Rs.7,85,00,000/- in part adjustment of the principal amount owed in
respect of the captioned Bank Receipt. The interest on this transaction will
be settled and decided by mutual consent in due course." The above letter
would confirm that NHB has failed to make payment on due date i.e. 5th
May 1992.
210. PW-2 A.V. Meenakshisundaram further deposed that, "Exhibit-59
bears endorsement on the reverse that this has been discharged at the
time of reversal, when we received the full payment on 9th July 1992."
211. As far as evidence of PW-2 A.V. Meenakshisundaram is concerned,
the transaction with NHB for purchase of Units of Rs. 7 crore have not
been denied. The credit amount of Rs.95.83 crore also not denied. It is
also not challenged that NHB has not fulfilled its commitment to BOI
Finance to repay the amount on 5th May 1992.
16th March 1992
212. On 16th March 1992, NHB sold 1 crore Units @ Rs.14.9825 and 2
crore Units @ Rs.14.9850, total Rs.44,95,25,000/-, to State Bank of
Patiala. Deal Diary Entry dated 16th March 1992 for the said transaction is
marked as Exhibit-62, which is in the handwriting of Accused No.1-
Ravikumar, (Deposition - page 24 para 28).
213. Cost Memo for 1 crore Units @ Rs.14.9825 for Rs.14,98,25,000/- is
Exhibit-63. (Reversal of the transaction shown as 28th March 1992 in Cost
Memo Exhibit-63). It is written by Accused No.1-Ravikumar, which is
proved by deposition of PW-1 Manojkumar Rakshit, on page 24,
paragraph 29. In Exhibit-613 Colly, PW-64 Madhusudanlal Sharma opined
that the handwriting at Exhibit-63 (marked as "Q-293") is of Accused No.1.
214. Cost Memo for 2 crore Units @ Rs.14.9850 for Rs.29,97,00,000/- is
Exhibit-64. (Reversal of the transaction is shown as 28 th March 1992 in
Cost Memo Exhibit-64). It is in the handwriting of Accused No.1-
Ravikumar, (Deposition of PW-14-Sivaraman, page 4 para 4). In Exhibit-
613 Colly, PW-64 Madhusudanlal Sharma opined that the handwriting at
Exhibit-64 (marked as "Q-291") is of Accused No.1-Ravikumar.
215. Voucher dated 16th March 1992, signed by Accused No.2-Suresh
Babu, would show that there is a deal of 1 crore Units @ Rs.14.9825 with
State Bank of Patiala, the date of deal was 16th March 1992; the date of
maturity was 28th March 1992 and the amount was Rs.14,98,25,000/-. The
Voucher is at Exhibit-65. The Deal Number is "210".
216. Banker's Receipt for Rs.14,98,25,000/- dated 16th March 1992
signed by Accused No.1-Ravikumar in favour of State Bank of Patiala is at
Exhibit-67.
217. Voucher dated 16th March 1992 signed by Accused No.2-Suresh
Babu would show that there is a Deal No.211 for 2 crore Units @
Rs.14.9850 with State Bank of Patiala. The date of deal was 16 th March
1992; the date of maturity was 28th March 1992 and the amount was
Rs.29,97,00,000/-. The Deal Number is "211". The Voucher is at Exhibit-
66. Exhibit-65 and Exhibit-66 are in the handwriting of PW-14 Sivaraman,
(Deposition - page 4 para 4).
218. Banker's Receipt for Rs.29,97,00,000/- dated 16th March 1992
signed by Accused No.1-Ravikumar in favour of State Bank of Patiala is at
Exhibit-68. Exhibit-67 and Exhibit-68 are in the handwriting of Accused
No.1-Ravikumar and signed by Accused No.1-Ravikumar, (Deposition of
PW-14 Sivaraman - page 4 para 4).
219. Cheque for Rs.44,95,25,000/- issued by State Bank of Patiala is
marked as Exhibit-125. The above cheque is deposited in the Current A/c.
of NHB on 16th March 1992 (entry is not separately marked). At Exhibit 60,
there is a credit entry, made on 16th March 1992, showing credit of
Rs.44,95,25,000/- in the account of NHB with RBI.
220. Investment Register of NHB dated 16th March 1992 would show that
there are sale of securities as "Deal Nos.210 and 211" to State Bank of
Patiala on 16th March 1992. The entry would show that 1 crore Units have
been sold @ Rs.14.9825 and 2 crore Units have been sold @ Rs.14.985.
The entry is in the handwriting of PW-14 Sivaraman and it is marked as
Exhibit-161, (Deposition of PW-14 Sivaraman - page Nos.4 and 5, para
4).
221. Page No.643 of the Investment Register shows that there is a sale
of 3 crore Units to State Bank of Patiala on 16 th March 1992 (not
separately marked), which is to be reversed on 28 th March 1992. At Page
No.653 of RBI Scroll - there is an entry made on 16th march 1992 "To SBP
Units" and in the Deposit Column "Rs.44,95,25,000/-".
222. Evidence of PW-4 Surinder Khurana would show that the deal for 1
crore Units @ Rs.14.9825 was entered with NHB through Accused No.4-
HSM. Exhibit-124 is the Contract Note dated 16 th March 1992 issued by
Accused No.4-HSM in favour of State Bank of Patiala towards the said
transaction.
223. PW-4 Surinder Khurana has explained the transaction for the deal
of 1 crore Units with NHB. Deposition of PW-4 Surinder Khurana, in para
3 and 4 on page Nos.3, 4, 5, 6 and 7, would prove the same. PW-4
Surinder Khurana has explained that, on 14th March 1992, they have
entered into a deal for purchase of 4 crore Units of US 64 @ 14.99, but he
received a Contract Note and Delivery Note on 14 th March 1992 from
Accused No.4-HSM to settle 3 crore Units @ Rs.14.9925. The Units were
to be purchased from NHB. Hence, the balance 1 crore Units were
purchased on 16th March 1992 @ Rs.14.9825.
224. Evidence of PW-4 Surinder Khurana would further show that the
deal for 2 crore Units @ Rs.14.9850 was entered with NHB through M/s.
V. B Desai. Exhibit-123 is the letter written by PW-31 Shrawankumar
Jindal to the Manager, Funds Department of SBP, regarding the
transaction.
225. The principal amount of the transactions were received from NHB in
July 1992. Interest was not received.
ig 14th March 1992
226. On 14th March 1992, NHB sold 3 crore Units @ Rs.14.99250 for
Rs.44,97,75,000/- to the State Bank of Patiala. There is no entry in the
Deal Diary on 14th March 1992, showing sale of 3 crore Units to the State
Bank of Patiala on 14th March 1992. Evidence of PW-1 Manojkumar
Rakshit would show that there is an entry in the Deal Diary dated 14 th
March 1992, which would show sale of securities to the State Bank of
Patiala for Rs.44,97,95,000/-, which was struck-off after writing. PW-1
Manojkumar Rakshit deposed that, 14th March 1992 was a Saturday and
Saturdays are not working for NHB. Hence, the entry has been repeated
on 16th March 1992, which was Monday. The entry dated 16 th March 1992
was also struck-off. Hence, there is no record on the part of the NHB that
a deal was entered with State Bank of Patiala on that date.
227. Exhibit-70 is the Cost Memo issued by NHB dated 14 th March 1992
for Rs.44,97,75,000/- in favour of State Bank of Patiala.
228. No cheque has been issued by the State Bank of Patiala on 14 th
March 1992.
229. BR dated 14th March 1992 signed by Accused No.1-Ravikumar in
favour of State Bank of Patiala for Rs.44,97,75,000/- is at Exhibit-69. The
handwriting in Exhibit-69 is of PW-14 Sivaraman, (Deposition - page 5
para 5).
230. However, PW-1 Manojkumar Rakshit deposed that Exhibit-69 is the
BR issued for the said transaction, which was originally written as "16 th
March 1992" by overwriting, changed to "14th March 1992". Exhibit-70 is
the Cost Memo issued by NHB for the said transaction, which was also
originally written as "16th March 1992", but, later, changed to "14th March
1992". PW-1 Manojkumar Rakshit deposed that, "Cost Memo (Exhibit-70)
is in favour of State Bank of Patiala and it is clearly written that the
Contract Date was "14th March 1992" for sale of 3 crore Inits of UTI
Scheme 1964". So, there was absolutely no record to show in the Books
of NHB that they have sold Units for face value of Rs.30 crore on 14 th
March 1992 to the State Bank of Patiala. In order to falsify the accounts,
the entry made in the Deal Diary has been struck off-by the accused
persons.
State Bank of Patiala
231. On 14th March 1992, the State Bank of Patiala has entered into a
contract with Accused No.4-HSM for purchase of 3 crore Units @
Rs.14.99250 with delivery date as "14th March 1992". Exhibit-121 is the
Contract Note issued by Accused No.4-HSM, signed by Accused No.5-
Atul and Accused No.7-Sudhir for sale of 3 crore Units @ Rs.14.99250 in
the name of "State Bank of Patiala" with delivery date as "14 th March
1992".
232. Evidence of PW-4 Surinder Khurana would show that, on 13 th March
1992, he received a letter from PW-31 Sharwankumar Jindal, which is at
Exhibit-119. The contents of the letter would show that the State Bank of
Patiala had entered into a contract through Broker Accused No.4-HSM for
purchase of 4 crore Units. Evidence of PW-4 Surinder Khurana, in para 3
on page Nos.3 and 4, would prove the same. "This is regarding the
settlement of evidence of PW-31 Sharwankumar Jindar, in para 4 on page
Nos.2 and 3. The calculations were written by PW-31 Sharwankumar
Jindal on the reverse of the letter Exhibit-119, which is at Exhibit-120. PW-
4 Surinder Khurana would further depose that the purchase was an
outright transaction. Evidence of PW-31 Sharwankumar Jindal, on page
Nos.2 and 3 in para 4, would show that PW-31 Sharwankumar Jindal had
entered into a deal for purchase of 4 crore Units through the Broker
Accused No.4-HSM. He would further depose that, "this deal had been
settled by me on behalf of State Bank of Patiala. Mr. Pankaj Shah, Mr.
Atul Parikh and one Smt. Poonam used to contact me on phone in
connection with this deal." Exhibit-121 has been signed by Accused No.5-
Atul and Accused No.7-Sudhir as per the GEQD.
233. Exhibit-122 is the Cheque No.331295 dt. 14 th March 1992 issued by
State Bank of Patiala for Rs.44,97,75,000/- under the signature of PW-4
Surinder Khurana. The cheque was in the name of SBI. Exhibit-69 would
show that, on 14th March 1992, NHB has received an amount of
Rs.44,97,75,000/- for Units, face value, Rs.30 crore @ Rs.14.99250.
234. PW-4 Surinder Khurana, in his deposition on page 4 in para 3, has
deposed that he has received Exhibit-121 from Accused No.4-HSM with
Delivery Order Exhibit-481. Exhibit-481 shows that delivery instruction has
been given by Accused No.4-HSM to the State Bank of Patiala for
receiving the securities mentioned in Exhibit-121 from NHB.
235. Exhibit-70 is the Cost Memo received by State Bank of Patiala
towards the transaction and Exhibit-69 is the Banker's Receipt received by
the State Bank of Patiala, (Evidence of PW-4 Surinder Khurana - para 3
page 4). Exhibit-70 signed by Accused No.1-Ravikumar would show the
security as Units for face value, total Rs.30,00,00,000/-, @ Rs.14.99250.
According to PW-4 Surinder Khurana, the BR bears his signature and
endorsement Exhibit-69 shows that the BR was discharged on 6 th July
1992 i.e. after the scam broke out. Evidence of PW-4 Surinder Khurana, in
para 3 on page Nos.5 and 6, would state that, "we were supposed to get
the Units within 90 days, but we did not get those Units. Finally, we got
the amount in June for this transaction, but we discharged the BR on 6 th
July 1992. After 90 days, Head Office wrote to the NHB and I also
followed-up, but, since the scam broke out, the deliveries did not come".
The above statements would prove the fact that NHB entered into the deal
with State Bank of Patiala without having securities and failed to deliver
the securities in time, as per the deal, which will fortify the case of that
prosecution that it was a 'structured transaction'.
236. Now, we may see the reason for issuance of cheque by State Bank
of Patiala towards the above transaction :
237. PW-4 Surinder Kumar Khurana deposed in para 3 page 3 as : "The
transaction dated 14th March 1992 arose, because, on 13th March 1992, I
received a letter dated 12th March 1992 from Shri. S.K. Jindal informing
me that he has entered into a deal of purchase of 4 crore Units of US 64
@ 14.99 per Unit through the Broker Harshad Mehta...... On 14 th March
1992, I received a Contract Note and Delivery Order from Broker Harshad
Mehta stating that I have to settle for 3 crore of Units @ Rs.14.9925. This
transaction was settled on 14th March 1992 itself. There, Units were to be
purchased from NHB. The Contract Note is same, now shown to me. It is
marked as Exhibit-121. Representative of NHB came to me with Banker's
Receipt and Cost Memo".
21st February 1992
238. On 21st February 1992, NHB sold Treasury Bills, for face value of
Rs.50 crores, to the State Bank of Patiala for Rs.48 crores. Deal Diary
dtd. 21st February 1992 of NHB shows that there is a sale of Treasury Bills
of State Bank of Patiala for Rs.48 crores. The entry is marked as Exhibit-
71. The above transaction is proved through PW-1 Manojkumar Rakshit.
In his deposition, on page 29 in para 38, PW-1 Manojkumar Rakshit
deposed that, it is in the handwriting of Accused No.2-Suresh Babu.
239. The Cost Memo of the said transaction for Rs.48 crores is at
Exhibit-73. The above documents are in the handwriting of PW-14
Sivaraman. (Evidence of PW-1 Manojkumar Rakshit and PW-14
Sivaraman - Deposition of PW 14 - page 6 para 6). The Cost Memo has
not been signed by anybody.
240. State Bank of Patiala has issued an RBI Cheque for Rs.48 crores
dtd. 21st February 1992 in favour of NHB, which is at Exhibit-76.
241. The above cheque has been deposited with NHB in the Current
Account through RBI pay-in-slip dtd. 21st February 1992, which is marked
as Exhibit-75. The above amount is credited in the account of NHB on 21 st
February 1992.
242. RBI Scroll - Page No.656 of the Charge-Sheet shows that there is
deposit of Rs.48 crores in the account of State Bank of Patiala on 21 st
February 1992.
243. Vide Exhibit-60, there is an entry made on 21 st February 1992 for
Rs.48,00,00,000/-, showing credit in the account of NHB with RBI. PW-33
Venkatchalapathy V.G., in his deposition on page 7 para 19, deposed that
"the cheque (Exhibit 76) has been drawn by SBP in favour of NHB. The
amount has been credited in the account of NHB on the same day i.e. 21 st
February 1991."
244. NHB has issued BR dtd. 21 st February 1992 for Rs.48 crores in
favour of State Bank of Patiala, which is at Exhibit-72. BR at Exhibit-72
has been signed by Accused No.1-Ravikumar and it is prepared by PW-14
Sivaraman. (Evidence of PW-1 Manojkumar Rakshit and PW-14
Sivaraman - Deposition on page Nos.5 and 6, para 6).
245. Exhibit-74 is the Voucher No.26 dated 21st February 1992 signed by
Accused No.2-Suresh Babu for Rs.48 crore, which shows that the NHB
has sold Treasury Bills, face value 50 crore @ 96%. The voucher is partly
written by Accused No.2-Suresh Babu, (Deposition of PW-1 Manojkumar
Rakshit - page 31 para 41). Exhibit-74 would show that the Deal Number
was "2"; date of the deal was "21st February 1992", and the counter-party
as "State Bank of Patiala".
246. PW-4 Surinder Khurana was the Chief Manager (Investment) of
State Bank of Patiala. Evidence of PW-4 Surinder Khurana would show
that the State Bank of Patiala had entered into a deal for purchase of
Treasury Bills with NHB for face value of Rs.50 crore, which was an
outright purchase. Exhibit-76 was the Cheque for Rs.48 crore, issued by
the State Bank of Patiala towards the transaction to NHB. State Bank of
Patiala received Exhibit-72 the Cost Memo and Exhibit-73 the BR from
NHB, but NHB did not give the securities. Evidence of PW-4 Surinder
Khurana would further show that they got the amount only in July 1992 i.e.
after the scam broke out.
22nd February 1992
247. On 22nd February 1992, there were two sale transactions by NHB.
First transaction is for sale of "GOI Loan - 2007", for face value of Rs.50
crore, total Rs.51,57,21,633=44, to the Bank of Karad @ 99.85%, with
interest of Rs.1,64,71,633=44; and second sale is for "GOI Loan - 2008",
for face value of Rs.100 crore, total Rs.100,62,01,100=56, to M/s. SBI
Capital Market Ltd. @ Rs.98.48, with interest Rs.2,14,01,100=56. The
Deal Diary of NHB dtd. 22nd February 1992 shows the above transactions,
which is marked as Exhibit-77. The entries are in the handwriting of
Accused No.2-Suresh Babu, (Deposition of PW-14 Sivaraman - on page
6, para 6).
248. Bank of Karad issued a cheque for Rs.51,57,21,633=44 in favour of
NHB on 22nd February 1992, which is marked as Exhibit-129.
249. The above cheque was deposited to Current Account of NHB with
RBI on the same date, through RBI pay-in-slip, which is marked as
Exhibit-80.
250. In Exhibit-60, there is an entry, made on 22nd February 1992,
showing credit of Rs.51,57,21,633=44 in the account of NHB with RBI.
251. NHB has prepared a voucher dt. 22nd February 1992 for
Rs.152,19,22,734/- signed by Accused No.2-Suresh Babu for transactions
with State Bank of Patiala and Bank of Karad. The voucher is in the
handwriting of PW-14 Sivaraman, (Deposition of PW-14 Sivaraman -
page 7 para 7). Exhibit-82 is the Voucher prepared for the said transaction
(for both the transactions). Voucher shows that the reversal of transaction
was on 7th March 1992.
252. NHB issued a Cost Memo dtd. 22nd February 1992 in favour of Bank
of Karad for Rs.51,57,21,633=44, which is marked as Exhibit-79. The
Cost Memo shows that the reversal of transaction was on 7th March 1992.
253. NHB has issued BR dtd. 22nd February 1992 in favour of Bank of
Karad for Rs.51,57,21,633=44 signed by Accused No.2-Suresh Babu,
which is marked as Exhibit-78. It has come in the evidence of PW-1
Manojkumar Rakshit, on page No.33 para No.45, that Accused No.2-
Suresh Babu was not authorized to sign Banker's Receipt on behalf of
NHB. Evidence of PW-14 Sivaraman would show that Exhibit-78 is in his
handwriting and signed by Accused No.2-Suresh Babu, (Deposition -
page Nos.6 and 7, para 7).
254. Evidence of PW-6 Mukund Kher would show that they have been
issued Cheque Exhibit-129 by debiting the account of M/s. V.B. Desai,
which shows that the transaction was with M/s. V.B. Desai. In turn, there is
a Credit Voucher Exhibit-131 dt. 22nd February 1992, crediting an amount
of Rs.51,57,21,633=44 in the account of M/s. V.B. Desai, which would
show that, on the same day, they have sold the same securities to the
Punjab National Bank and received payment. This would show that, on
22nd February 1992, M/s. V.B. Desai had purchased securities from NHB
and sold to Punjab National Bank. However, it may be seen that Exhibit-
78 and Exhibit-79 have been issued in the name of Bank of Karad.
255. Exhibit-81 is the Banker's Receipt issued by NHB in favour of M/s.
SBI Cap for Rs.100,62,01,100=56, signed by Accused No.2-Suresh Babu.
BR Exhibit-81 is written by PW-14 Mr. Sivaraman, (Deposition of PW-14
Sivaraman - page 7 para 7). No Cost Memo has been issued in favour of
M/s. SBI Cap for the said transaction.
256. The cheque issued by M/s. SBI Cap for Rs.100,52,01,100=56 is
exhibited as Exhibit-396 and the pay-in-slip, by which the cheque has
been deposited with RBI Current Account, is marked as Exhibit-83. The
total amount in the pay-in-slip is Rs.210,52,01,100=56, which includes
Exhibit-129 cheque.
257. In Exhibit-60, there is a credit entry for Rs.210,52,01,100=56 made
on 22nd February 1992.
258. Exhibit-82 is the Voucher No.18 prepared and signed by Accused
No.2-Suresh Babu dated 22nd February 1992, evidencing sale of
"Government of India Loan - 2007 and 2008" to M/s. SBI Cap Market Ltd.
and Bank of Karad. The date of deal was 22 nd February 1992 and the
amount shown in the voucher was Rs.152,19,22,734/-. The date of
reversal was 7th March 1992. The amount for SBI was
Rs.100,62,01,100=56 and the amount for Bank of Karad was
Rs.51,57,21,633=44.
SBI Cap
259. Exhibit-288 is a Deal Ticket No.1860 dated 22nd February 1992, by
which M/s. SBI Cap had entered into a contract for purchase of 11.5%
GOI 2008, face value for 100 crore Units @ Rs.98.48. The total amount
was Rs.100,62,01,100=56. The transaction was an outright deal. The
above deal was proved by the evidence of PW-26 Janardan
Bandopadhyay in his deposition on page 2 para Nos.3 and 4. However,
PW-26 Janardan Bandopadhyay stated that, they did not receive the
securities mentioned in the Deal Ticket from NHB. The Banker's Receipt
was, subsequently, discharged i.e. after the scam broke out.
260. Exhibit-289 is the Contract Note issued by Accused No.4-HSM in
favour of M/s. SBI Cap for the said deal. Hence, the Broker in the deal
was Accused No.4-HSM, which reveals from Exhibit-289 as well as
Exhibit-288. Exhibit-288 also mentioned the name of the Broker as
'Accused No.4-HSM'. The voucher of NHB would show that, it is a Ready-
Forward Transaction with reversal on 7th March 1992. However, Deal
Ticket of M/s. SBI Cap would not show that it was a Ready-Forward Deal
and the witness deposed that from the document, it appears that it is an
outright sale/purchase transaction.
7th March 1992
261. On 7th March 1992, there is a sale of 11.5% Central Loan 2007 to
the Standard Chartered Bank for Rs.101,88,50,194=56.
262. Deal Diary dtd. 7th March 1992 shows that there is a sale of
securities for Rs.101,88,50,194=56 in the handwriting of Accused No.2-
Suresh Babu, which is marked as Exhibit-84, (Deposition of PW-14
Sivaraman - page 3 para 2).
263. Exhibit-85 is a Voucher prepared and signed by Accused No.2-
Suresh Babu for the sale of securities to Standard Chartered Bank dtd. 7 th
March 1992. Evidence of PW-1 Manojkumar Rakshit (Deposition para 51)
and PW-14 Sivaraman (Deposition - page 9 para 8) would prove the
same. The voucher number is '17' and the amount is
Rs.101,88,50,194=56. The said voucher was issued by NHB in favour of
Standard Chartered Bank, which is exhibited as Exhibit-86. Exhibit-86 is in
the handwriting of Accused No.2-Suresh Babu, (Deposition of PW-1
Manojkumar Rakshit - para 51). However, the Cost Memo shows the date
is "16th March 1992" instead of "7th March 1992".
264. Exhibit-87 is the BR issued by NHB, which is signed by Accused
No.1-Ravikumar for Rs.101,88,50,194=56 in favour of Standard Chartered
Bank, (Deposition of PW-1 Manojkumar Rakshit - para 51). Exhibit-87 is in
the handwriting of PW-14 Sivaraman, (Deposition of PW-14 Sivaraman -
page 7 para 8).
265. Standard Chartered Bank had issued a cheque for
Rs.101,88,50,194=56 in favour of NHB, which was marked as Exhibit-382.
266. The above cheque was deposited with Current A/c. of NHB
maintained with RBI, through pay-in-slip dtd. 7th March 1992. Pay-in-slip
dtd. 7th March 1992 is marked as Exhibit-88.
267. In RBI Scroll, the entry for Rs.101,88,50,194=56 was appearing on
7th March 1992, which is at Exhibit-89. RBI Scroll Entry is in the
handwriting of Accused No.2-Suresh Babu, (Deposition of PW-1
Manojkumar Rakshit - para 51).
268. Exhibit-381 is a Deal Slip dated 7th March 1992 for Deal Nos.196
and 197 for purchase of 11.50% Central Loan 2007, face value Rs.100
crore @ Rs.98.23. The Broker in the deal is shown as Accused No.4-HSM
and the amount paid is shown as Rs.101,88,50,194=56.
269. Exhibit-380 is the Contract Note dated 7th March 1992, issued by
M/s. HSM for the 11.5% Central Loan 2007, face value Rs.100 crore @
Rs.98.23.
270. Exhibit-382 is the Cheque No.960075 dated 7 th March 1992 for
Rs.101,88,50,194=56 issued in the name of NHB by the Standard
Chartered Bank.
271. PW-32 V.R. Srinivasan, in his deposition on page 3 para 6, has
deposed that, "I remember that normally, one Pankaj Shah used to deal
with us on behalf of M/s. Harshad Mehta. In this case also, he was the
person who was co-ordinating on behalf of the Broker."
272. At Exhibit-60, there is a credit entry, made on 7 th March 1992,
showing Rs.101,88,50,194=56 in the account of NHB with RBI.
273. All the Exhibits, except Exhibit-86, show the date of transaction as
"7th March 1992". However, the Cost Memo Exhibit-86 would show the
date of transaction as "16th March 1992". However, the Cost Memo tallies
with all other details, such as, nature of securities, name of the Institution,
amount, face-value, price etc. Hence, Cost Memo probably might have
issued at a later stage for the same transaction.
30th March 1992
UCO Bank
274. On 30th March 1992, NHB sold 9% IRFC Bonds on the outright
basis to UCO Bank. However, there is no entry for such a sale of
securities to UCO Bank in the Deal Diary on that date.
275. Exhibit-90 is the Voucher dtd. 30th March 1992 for
Rs.145,63,97,260=27, which is in the handwriting of Accused No.2-Suresh
Babu and signed by him, (Evidence of PW-1 Manojkumar Rakshit -
Deposition - paragraph 53; and PW-14 Sivaraman Deposition - page 8
para 9). The voucher evidences sale of "IRFC Bonds" to the UCO Bank by
NHB and the voucher number is "1" and the date of deal was "30 th March
1992".
276. Exhibit-112 is the cheque dtd. 30th March 1992 for
Rs.145,63,97,260=27 issued by UCO Bank towards the above
transaction.
277. Exhibit-94 is the entry in the RBI Pay Scroll of NHB, which shows
the credit of Rs.145,63,97,270=27 on 30th March 1992.
278. NHB issued a BR dt. 30 th March 1992 for Rs.70,63,97,270=34 in
favour of UCO Bank, written and signed by Accused No.2-Suresh Babu,
which is marked as Exhibit-91.
279. NHB issued another BR dt. 30th March 1992 for Rs.75 crore in
favour of UCO Bank, written and signed by Accused No.2-Suresh Babu,
which is marked as Exhibit-92.
280. Exhibit-93 is the pay-in-slip for crediting the cheque amount of
Rs.145,63,97,260=27 in the account of NHB with RBI.
281. Vide Exhibit-60, there is a credit entry, made on 30 th March 1992,
showing credit of Rs.145,63,97,260=27 in the account of NHB with RBI.
282. PW-3 Ranjeetsingh Anjaria, who was the Chief Manager at Hamam
Street Branch of UCO Bank, has proved the Debit Voucher Exhibit-110, by
which an amount of Rs.145,63,97,260=27 was debited from the Head
Office Account and vide Exhibit-111, the said amount was credited to the
D.N. Road Account for issuing RBI Cheque for Rs.145,63,97,260=27
Exhibit-112.
283. Exhibit-113 and Exhibit-114 are the Receipt Memos prepared by
UCO Bank for the transaction dated 30th March 1992. Exhibit-113 and
Exhibit-114 would show that the transaction dt. 30 th March 1992 with NHB
was an outright purchase transaction and not a Ready-Forward
Transaction. PW-3 Ranjeetsingh Anjaria further deposes that, he received
Voucher Exhibit-91 and Voucher Exhibit-92 for the said transaction from
NHB, out of which, Voucher Exhibit-92 was discharged by him, after
receiving payment from NHB and Voucher Exhibit-91 was not discharged.
284. Exhibit-115 is the copy of the letter dated 17 th June 1992, written by
PW-3 Ranjeetsingh Anjaria addressed to NHB for getting the physical
securities.
285. Exhibit-116 is a copy of the letter written by UCO Bank to NHB and
Exhibit-117 is a covering letter, by which UCO Bank received
Rs.90,45,53,603=27 towards the transaction dated 30th March 1992 from
NHB.
286. PW-5 Pradip Karkhanis, Senior Manager of UCO Bank, Investment
Department at HO, deposed before the Court that UCO Bank had
purchased 17% Power Finance Corporation Bonds for
Rs.145,63,97,260=27 from NHB through the Broker Accused No.4-HSM.
The securities were sold to M/s. PNB Capital Ltd.
16th November 1991
287. On 16th November 1992, NHB sold 2 crore Units for Rs.27.09 crore
to the State Bank of Saurashtra. NHB received a cheque of Rs.27.09
crore from SBI, which is marked as Exhibit-393. The above cheque has
been deposited in the Current Account of NHB, along with RBI pay-in-slip
dt. 16th November 1991, which is marked as Exhibit-95.
288. Exhibit-96 is the entry in RBI Scroll for receipt of cheque of
Rs.27,09,00,000/-.
289. Vide Exhibit-60, there is a credit of Rs.27,09,00,000/- in the account
of NHB with RBI on 16th November 1991.
290. "D-165" is the BR issued by NHB dated 16 th November 1991
towards the transaction. (Deal Diary Entry dated 16th November 1991 for
Rs.27.09 crore has not been marked).
Marshalling Of Evidence - Facts Not In Dispute
291. At the outset, it should be mentioned that the purchase and sale
transactions having taken place on the respective dates between
respective Financial Institutions is not under dispute. There is also no
dispute as to the documents, which are produced on record, in respect of
these purchase and sale transactions, which are otherwise also stand
proved on record. There is also no dispute with regard to the purchase
transactions, that RBI cheques were issued under the signature of
Accused No.1-Ravikumar and other Authorized Officer of the NHB in
favour of SBI and those cheques were deposited in RBI. As a result, the
account of NHB with RBI was debited with the amount of the cheques and
SBI's account with RBI was credited with that amount and on the same
day, credit vouchers were prepared in SBI and the amount of the cheques
was credited to the Current Account of Accused No.4-HSM with SBI. It is
not in dispute that Accused No.4-HSM was holding Current Account with
the SBI Personal Banking Division and his Current Account Number was
"4/8710". The account was in the name of the Firm "M/s. Harshad S.
Mehta". It is not in dispute that Accused No.5-Atul and Accused No.6-
Pankaj were working in Accused No.4-HSM's Firm, which was situate in
Makers Chamber, Nariman Point, Mumbai. Accused No.5-Atul had
admitted in his statement, recorded u/s. 313 Cr.P.C., that the Contract
Notes at Exhibits "289", "380" and "483 to 496" bear his initials and
Contract Notes at Exhibits "121" and "124" bear his signatures. Accused
No.6-Pankaj has admitted in his statement, recorded u/s. 313 Cr.P.C., that
the letter Exhibit-154 seeking 'Single Point Clearance Facility' bears his
signature and he has delivered it personally to PW-38 Anil Padhye. It is
also not in dispute that Accused No.7-Sudhir, who is the younger brother
of Accused No.4-HSM, was his Constituted Attorney, who used to sign on
behalf of him. He has not disputed his signature on the Contract Notes
Exhibits "121", "124", "289", "380" and "383 to 495". Accused No.7-Sudhir
has stated in his statement, recorded u/s. 313 of Cr.P.C., that he was
holding a Power of Attorney from Accused No.4-HSM and used to work on
behalf of Accused No.4-HSM in his absence.
292. There is also no dispute regarding the transactions of sale. With
regard to sale transactions, BRs were issued by Accused No.1-Ravikumar
and one BR by Accused No.2-Suresh Babu. The counter-party Banks
have issued cheques in favour of NHB and those cheques have been
deposited with RBI and the amount of cheques have been credited to the
account of NHB with RBI and debited from the counter-party Bank's
account with RBI.
293. There is also oral evidence of PW-14 Sivaraman and PW-1
Manojkumar Rakshit to prove those transactions. Undisputedly, PW-14
Sivaraman was working with NHB at the relevant time. After having retired
on superannuation from the Accountant General's office, he joined NHB in
January 1992 as 'Assistant' in FMG. His evidence shows that, at that time,
Accused No.1-Ravikumar was in-charge of Funds Management
Department and Accused No.2-Suresh Babu was assisting Accused No.1-
Ravikumar. Accused No.1-Ravikumar used to sit in one cabin and he
himself and Accused No.2-Suresh Babu used to sit outside Accused No.1-
Ravikumar's cabin. It is undisputed that the people, who were working in
FMG, were only Accused No.1-Ravikumar, who was Assistant General
Manager, Accused No.2-Suresh Babu, who was Assistant Manager, and
PW-14 Sivaraman. According to the evidence of PW-14 Sivaraman,
Accused No.1-Ravikumar used to enter into all the transactions, the deal
slip used to be prepared on the basis of it and as per the instructions of
Accused No.1-Ravikumar, PW-14 Sivaraman and Accused No.2-Suresh
Babu used to make entries in Deal Diary, Investment Register, prepare
vouchers, prepare RBI Cheque, make entry in RBI Scroll, prepare RBI
pay-in-slip and forward the cheque to counter-party Bank in case of
transactions of purchase of securities, after getting the signature of
Accused No.1-Ravikumar and the signature of other authorized officer on
the cheque. There is no dispute with regard to this procedure followed in
FMG of NHB in case of transaction of purchase of securities.
294. As can be gathered from the evidence in this set of transactions,
there are two parts of the conspiracy, which were hatched between March
1992 and May-June 1992. In the first part, the conspiracy was to transfer
NHB's fund with the intervention of Accused No.4-HSM or his
representatives to SBI, where Accused No.4-HSM had an account, and
with the help and connivance of the Officer working in the SBI, namely,
Accused No.3-Sitaraman, to get that amount credited to the running
account of Accused No.4-HSM. The second part of the conspiracy, which
was hatched during the same period, was to generate funds by showing
the transaction of sale of securities by NHB to other Financial Institutions
with the help of Accused No.4-HSM or his representatives and get the
funds from those Financial Institutions in the name of NHB and in that
process, cheating the other Financial Institutions to send those funds to
NHB on the basis of the BRs issued by NHB, when those BRs were not
backed by the securities. In the first part, the involvement was of Accused
Nos.1 to 7, i.e. Accused No.1-Ravikumar and Accused No.2-Suresh Babu
working with the NHB, Accused No.4-HSM and Accused No.5-Atul,
Accused No.6-Pankaj and Accused No.7-Sudhir working with Accused
No.4-HSM's Firm and Accused No.3-Sitaraman working in SBI, with
whose help the cheques issued by NHB in favour of SBI were credited to
the SBI account with the RBI and immediately transferred to the Current
Account of Accused No.4-HSM by issuing credit vouchers. In the second
part, the involvement was only of Accused No.1-Ravikumar and Accused
No.2-Suresh Babu, working in NHB, and Accused No.4-HSM and
Accused No.5-Atul, Accused No.6-Pankaj and Accused No.7-Sudhir
working with Accused No.4-HSM's Firm.
295. As the aforesaid entire evidence is not seriously challenged, it is
clear that in respect of the transactions of purchase of securities, nine
cheques were issued under the signature of Accused No.1-Ravikumar on
behalf of NHB in favour of SBI. It is further clear from the aforesaid
documents that, in respect of the purchase transactions, the cheques
were received by SBI and they were deposited with RBI and the amounts
of those cheques were deposited in NHB's account with RBI and at the
same time, the amounts were credited to the SBI account with the RBI. It
is further established that in the SBI, Credit Vouchers were prepared in
respect of those nine cheques, favouring the Current Account of Accused
No.4-HSM and then amounts of those nine cheques were credited to the
Current Account of Accused No.4-HSM with SBI.
296. The evidence of PW-1 Manojkumar Rakshit and PW-14 Sivaraman
proves that neither the physical securities nor the BRs, in lieu of the
physical securities, were ever received in NHB from SBI.
297. The above evidence, thus, relating to sale and purchase of
transactions clearly goes to show that NHB Officers viz. Accused No.1-
Ravikumar and Accused No.2-Suresh Babu were issuing the cheques for
sale of securities, but without having the securities either in the physical
form or Bank Receipts to that effect. The transactions entered into by NHB
proved that they were for securities worth more than crores of rupees.
Though it is true that, as per the Note Exhibit-99, NHB was permitted to
deal with Ready-Forward Transactions, the Note makes it clear that, only
the surplus funds were to be deployed for those deals. It is admitted
position on record that NHB had very limited funds of their own available
for deployment in securities. Therefore, entering into such transactions
without having surplus funds was itself a gross irregularity and illegality in
the financial matters. Secondly, it was done by sale of non-existing
securities with NHB. In all the sale transactions, it can been seen that
there was no security available with NHB. However, the records were
created and securities were sold to other Financial Institutions and Banks.
In all the said transactions, the Broker for counter-party was either
Accused No.4-HSM himself or some other Broker from his Firm acting on
his behalf. Thus, it is apparent that, by utilizing the funds received from
Banks or Financial Institutions, NHB Officials viz. Accused No.1-
Ravikumar and Accused No.2-Suresh Babu had falsified records by
showing purchase of securities from SBI and transferred the funds for the
use of Accused No.4-HSM.
298. It is pertinent to note that whenever there is purchase of securities
from SBI, there is corresponding sale shown in the Books of NHB, thereby
clearly proving that the sale transactions were made only to obtain funds
from other Banks, which were utilized by NHB for issuing cheques in the
name of SBI. In this respect, it will also be useful to note whether the
requisite procedure was followed by the NHB Officials while purchase of
securities. PW-1 Manojkumar Rakshit has categorically deposed that, for
purchase of securities, FMG of NHB was required to contact the
concerned Banks and Financial Institutions or their authorized Brokers or
Representatives. After getting most favourable rate, the rate would be
agreed and the deal would be finalized. After the deal was finalized, it
would be entered into Deal Diary Register, the voucher and cheque would
be prepared and the entry of the same would be taken in the Investment
Register. The cheque would be actually handed over to the counter-party,
only after the Cost Memo, Sale Memo, actual securities or the Bank
Receipts would be received by the FMG of NHB. There is nothing on
record to show that NHB Officials in-charge of FMG, namely, Accused
No.1-Ravikumar and Accused No.2-Suresh Babu, have ever contacted
anyone from SBI to finalize the deals. Further, no Bank Receipt, Cost
Memo or Sale Memo were received from SBI for the said transactions, as
per the procedure explained by PW-1 Manojkumar Rakshit and also by
PW-14 Sivaraman. According to the evidence of PW-14 Sivaraman, in
case of sale of securities by SBI, the position would be reversed i.e. SBI
would be issuing the Cost Memo along with Bank Receipt, SGL, or, would
be forwarding actual securities. According to his evidence, in this case,
there was no transaction of sale of securities by SBI to NHB on the given
date. According to him, if there had been such transaction, SBI would
have issued Cost Memo along with some other form of delivery, such as
Bank Receipt, SGL, transfer form, or, actual physical delivery.
299. Thus, as rightly submitted by the Senior P.P., this entire evidence
needs to be read in conjunction with evidence relating to sale transactions
done by NHB on the corresponding dates. It shows that actually there was
no security available with NHB, still Accused No.1-Ravikumar and
Accused No.2-Suresh Babu have made sale of securities and accepted
amount from the Financial Institutions. When, as per the Note Exhibit-99,
there was a decision to deploy only their own surplus funds in the security
transactions, there is no explanation offered by Accused No.1-Ravikumar
as to why he sold securities of other Banks or Financial Institutions and
deployed the said funds for purchase of securities from SBI. The utilization
of the said funds at SBI in the account of Accused No.4-HSM makes it
clear that the cheques were actually issued for the purpose and use of
Accused No.4-HSM and not for the purchase of securities from SBI. The
evidence of PW-26 Janardan Bandopadhyay in this respect fortifies this
inference. His evidence reveals that the cheque Exhibit-49 issued by NHB
on 30th March 1992 for the amount of Rs.90,45,53,602=20 was utilized
directly for making payment to M/s. SBI Caps for reversal of four
transactions, which they had made through Accused No.4-HSM. However,
there is no record in the Deal Diary of NHB with regard to the said deal.
His evidence further reveals that the cheque for the amount of
Rs.14,62,12,000/- issued by NHB on 24th March 1992 has been utilized for
making payment to M/s. SBI Cap for reversal of two deals, which they had
made with M/s. Canfina through Accused No.4-HSM.
300. Thus, the evidence relating to all these transactions, if considered in
the proper perspective, is more than sufficient to reveal that Accused
No.1-Ravikumar and Accused No.2-Suresh Babu have entered into the
transactions with SBI without having physical securities. No case is made
out either on behalf of Accused No.1-Ravikumar or Accused No.2-Suresh
Babu, who were in-charge of FMG, that the physical securities or BRs in
respect of the securities concerning the purchase transactions were
exchanged between NHB and SBI, although the documents were
prepared in NHB showing the transaction of purchase of securities on the
aforesaid dates. It is pertinent to note that SBI has disowned such
transactions, as also the responsibility to reverse the same. The stand of
SBI had been that, it had no transaction of sale of securities to NHB. This
further makes it clear that the securities shown to have been purchased
were never received by NHB and, thus, could not be with NHB. Hence, as
submitted by the Senior P.P., all these transactions, in that way, were
structured or fake transactions. The evidence of PW-1 Manojkumar
Rakshit also clearly goes to prove that, after the scam broke out, they had
carried out inspection of the record of NHB and found that the securities
concerning the above said purchase transactions were not found with
NHB. Even the BRs were also not found. The monies were, however,
found transferred from NHB to SBI by way of various RBI cheques issued
by NHB under the signature of Accused No.1-Ravikumar in favour of SBI.
301. On behalf of Accused No.1-Ravikumar, a submission is advanced
that, after the scam broke out, some securities were found in the office of
NHB, however, the details of those securities were not disclosed. The
evidence of PW-1 Manojkumar Rakshit reveals that, in those securities,
the securities in question were not found. It is significant to note that it is
also not the defence of Accused No.1-Ravikumar and Accused No.2-
Suresh Babu that the securities were, in fact, received and they were kept
somewhere and no entries with regard thereto were ever made.
Admittedly, no Register for holding of securities was maintained in FMG.
As Accused No.1-Ravikumar and Accused No.2-Suresh Babu were in-
charge of FMG, the responsibility was on them to maintain such Register.
Therefore, they cannot now raise the contention that there was no
Register and hence non-receipt of the securities cannot be proved.
Moreover, as stated above, the SBI is also not admitting the sale or
purchase of such securities. In such situation, the inference is inevitable
that, without there being the backing of securities in physical form or the
BRs, the cheques were issued towards the alleged purchase of securities.
Role of Accused No.1-Ravikumar
302. The evidence on record categorically goes to prove that Accused
No.1-Ravikumar was in-charge of FMG at the relevant time. It is also not
disputed that only three persons were working in the FMG, namely,
Accused No.1-Ravikumar, who was the Assistant General Manager,
Accused No.2-Suresh Babu, the Assistant Manager, and PW-14
Sivaraman as 'Assistant'. Though, by Office Order dated 31 st May 1991,
one Muralidharan was appointed in place of Accused No.1-Ravikumar, the
Office Order itself indicates that Accused No.1-Ravikumar was to continue
to oversee the work of FMG till completion of the audit for the year 1990-
1991 and the said order of appointing Muralidharan in place of Accused
No.1-Ravikumar never came into actual effect. Though Accused No.1-
Ravikumar has tried to contend that he was never in-charge of the funds
of FMG and Shri. S.D. Hosangadi, Chief General Manager, was the only
official of NHB who had complete domain over the funds, the evidence of
PW-1 Manojkumar Rakshit and PW-14 Sivaraman borne out that even
after completion of the audit for the year 1990-1991, Accused No.1-
Ravikumar continued to hold charge of FMG, despite the Office Order
dated 31st May 1991. The evidence on record that of PW-1 Manojkumar
Rakshit and PW-14 Sivaraman also go to prove that all the transactions
carried out in FMG were by the Officer-in-charge of the FMG and the
Officer-in-charge of FMG was Accused No.1-Ravikumar, who was
entering into the deal and authorizing the deal. As deposed by PW-14
Sivaraman, it was at the instance of Accused No.1-Ravikumar that the
entries in the Deal Diary used to be made and other documents used to
be prepared like vouchers, RBI Scroll, entry in Investment Register etc.
These entries used to be made either by Accused No.2-Suresh Babu or
by PW-14 Sivaraman in his absence. Thus, the evidence on record proves
that Accused No.1-Ravikumar was, in fact, in-charge of the FMG.
303. It is pertinent again to note that Accused No.1-Ravikumar has not
denied having entered into any of these transactions. He has also not
denied that he has signed all the cheques in respect of these transactions.
Though he has contended that there is no evidence to show that who has
collected these cheques, in my opinion, it is totally irrelevant as to who
has collected the cheques drawn on RBI in favour of SBI, because the
fact remains that the cheques had actually reached SBI and on the basis
of those cheques, the amounts have been debited from the account of
NHB with RBI and credited to the account of SBI with RBI. The evidence
of PW-1 Manojkumar Rakshit clearly shows that the cheques were to be
handed over against the physical securities or BRs. However, in this case,
no such securities are produced on record. Hence, the liability of Accused
No.1-Ravikumar for these structured or fake transactions is required to be
held as proved.
Role of Accused No.2-Suresh Babu
304. As regards Accused No.2-Suresh Babu, though he has tried to
contend that he was merely a glorified clerk, being the lowest in the official
hierarchy at NHB and above him there were several other Officers, the
evidence on record clearly goes to show that it was Accused No.2-Suresh
Babu, who used to write the cheques and make necessary entries in the
record. Thus, he was, in fact, assisting Accused No.1-Ravikumar in every
way. The evidence on record categorically proves that it is Accused No.1-
Ravikumar and Accused No.2-Suresh Babu, who were the only two
persons-in-charge of FMG. Hence, it was their joint responsibility to
ensure that the securities were received as and when the cheques were
handed over. It was for Accused No.2-Suresh Babu to ensure the said
fact, as it was his duty to prepare cheques and make necessary entries in
the record. He cannot throw his hands in the air to contend that his duty
was only to record the transactions and act according to the instructions of
his superiors.
305. It is pertinent to note that, both, Accused No.1-Ravikumar and
Accused No.2-Suresh Babu are playing blame-game in this respect.
According to Accused No.1-Ravikumar, it was the job of back-office,
namely, that of Accused No.2-Suresh Babu, to maintain the record
pertaining to securities and BRs and there is no evidence that he was
informed that back-office had not received securities. As against it, it is the
contention of Accused No.2-Suresh Babu that his job was only clerical, of
maintaining the record, making entries etc. Thus, it is clear that both of
them are trying to shift blame on each other. However, the fact remains
that, as only two of them were working as in-charge of FMG, without their
knowledge and connivance, these transactions could not have seen the
light. Hence, both of them become equally liable. The evidence on record
goes to prove that the cheques had gone out of NHB without receipt of the
physical securities or BRs. It cannot be accepted that it was without the
knowledge of Accused No.1-Ravikumar and Accused No.2-Suresh Babu
that the cheques had gone out without receipt of the purchase securities
or BRs in lieu thereof. Hence, the necessary connivance or collusion
between Accused No.1-Ravikumar and Accused No.2-Suresh Babu can
be easily inferred from the evidence on record in respect of all these
transactions.
306. The contention of Accused No.1-Ravikumar and Accused No.2-
Suresh Babu is that the cheques used to be signed by the two signatories
and, therefore, they alone cannot be held liable for issuance of the
cheques. However, the evidence of PW-1 Manojkumar Rakshit clearly
goes to prove that Officer working in the Department, from which the
cheque was issued, was required to sign the cheque first and thereafter
the second signatory would sign the same. It may be true that, by simply
looking at the cheque, it cannot be made out as to which of the two
signatories had put his signature first; however, the fact that the cheques
were issued from FMG and it was Accused No.1-Ravikumar, who was in-
charge of FMG, makes it necessary to hold that Accused No.1-Ravikumar
was the first signatory and hence the responsibility for issuance of
cheques lies squarely on the shoulders of Accused No.1-Ravikumar.
Role of Accused No.3-Sitaraman
307. Now coming to the role of Accused No.3-Sitaraman, who was, at
the relevant time, in-charge of SBI's Investment Cell of Security Division of
SBI, Mumbai Main Branch. The evidence on record proves that he had
signed all the vouchers for making credit / debit of the accounts. The
Waste Book and the Vouchers prepared at the end of SBI unequivocally
prove that the proceeds of the cheques had been utilized as per the
directions of Accused No.4-HSM. The evidence of PW-25 Harsha Shah
proves that she has prepared the vouchers as per the directions of
Accused No.3-Sitaraman and it was Accused No.3-Sitaraman, who used
to tell her to prepare particular vouchers and she used to do accordingly.
PW-29 Prakash Kanchan has also deposed that the officer-in-charge of
Bank's Investment Cell was Accused No.3-Sitaraman. The nature of his
duties, while working as 'Clerk-cum-Cashier', was to maintain the Sale
Slip Book, Purchase Slip Book and prepare cheques, as instructed by the
officer-in-charge, namely, Accused No.3-Sitaraman. PW-40 Arun
Bavdekar has also, in his deposition, stated that Accused No.3-Sitaraman
was in-charge of the Bank's Investment Cell in the Security Department at
the relevant time. According to him, as all the Bankers' Cheques
exceeding Rs.25,000/- were required to be signed by, at-least, two
Officers, some of the vouchers and the Bankers' cheques used to come to
him for second signature. However, those cheques used to be already
signed by Accused No.3-Sitaraman. He has further stated that the
transactions taking place in Bank's Investment Cell were known to
Accused No.3-Sitaraman only and the vouchers and Banker's cheques
used to be given to the other Officers in a routine manner for counter
signature only.
308. Thus, there is more than sufficient evidence produced on record to
prove that, at the relevant time, Accused No.3-Sitaraman was heading the
Bank's Investment Cell of Mumbai Main Branch of SBI and looking after
the sale and purchase of Government Securities. The evidence of PW-58
Santosh Indulkar, the Peon from M/s. Growmore, also proves that, when
he used to take RBI cheques to SBI, Accused No.3-Sitaraman used to
instruct him to deposit the cheques in RBI directly. Accordingly, after
depositing the cheques, he used to give counter-foils to Accused No.3-
Sitaraman. The credits of the said cheque amounts with SBI are not
disputed by Accused No.3-Sitaraman. The evidence on record goes to
prove that, after the credit of the said amount in the account of SBI, the
proceeds thereof have been utilized for making payments as per the
directions of Accused No.4-HSM, by preparing various vouchers, as
described earlier, in transaction wise analysis. Accused No.3-Sitaraman
has also not disputed the said fact.
309. The only defence of Accused No.3-Sitaraman is that all these
cheques were intended for Accused No.4-HSM and that was the reason
the proceeds of the cheques were utilized as per the directions of
Accused No.4-HSM. In this respect, Accused No.3-Sitaraman has relied
upon the "Single Point Clearance Facility" allegedly granted to Accused
No.4-HSM. According to Accused No.3-Sitaraman, the endorsement on
letter Exhibit-154, by which a 'Single Point Clearance Facility' was sought
by Accused No.4-HSM, reveals that such facility was, in fact,
recommended by the Committee headed by late Shri. Goiporia, the then
Chairman of SBI, and, therefore, it was not at all his brain-child, as alleged
by the prosecution, or, even the brain-child of Accused No.4-HSM. In this
respect, Accused No.3-Sitaraman has relied upon the evidence of PW-38
Anil Padhye, Assistant General Manager of SBI, and PW-10 Madan
Sharma, DGM of SBI, to contend that so many Officers in the Personal
Banking Division of SBI had discussed as to whether such facility should
be granted to Accused No.4-HSM or not and they were enthusiastic about
the proposal, as it would bring float funds for SBI to use without any costs
to it. It is submitted that PW-38 Anil Padhye, Assistant General Manager of
SBI, has admitted that such facility was, in fact, granted to Accused No.4-
HSM. It is submitted that none of those Officers, who participated and
agreed to the request of Accused No.4-HSM, are either accused or
pardoned approvers. Moreover, the letter Exhibit-154 was addressed to
the Personal Banking Division of SBI and not to Securities Division, where
he was working. Hence it is urged that, unless some one from Personal
Banking Division had communicated to him about such facility, he could
not have granted to Accused No.4-HSM the facility for crediting the
proceeds of the cheques issued in favour of SBI to the account of
Accused No.4-HSM.
310. Further, it is submitted by Accused No.3-Sitaraman that once the
funds are received into the accounts of SBI, SBI can appropriate them as
it deems fit and, therefore, there is absolutely no question of
misappropriation of the funds or of committing criminal breach of trust. It is
urged that the charge under Section 409 IPC is itself self-contradictory,
since there were no transactions by SBI with NHB, as alleged by the
prosecution. The funds in question were the funds of SBI. Accused No.3-
Sitaraman can, at the highest, be said to have dominion over the funds of
SBI and not of NHB. Since there were no transactions with NHB, the
funds were of the beneficial ownership of SBI and hence they could be
allocated, as directed by the persons bringing the cheques, namely,
Accused No.4-HSM or his representative. Thus, according to Accused
No.4-HSM, the entire set of allegation made against him falls on the
ground.
311. However, in my considered opinion, in this respect it would be
essential to refer to the evidence of PW-10 Madan Sharma and PW-38
Anil Padhye. PW-10 Madan Sharma has categorically deposed that he
had never granted this facility of 'Single Point Clearance' to Accused No.4-
HSM and he came to know that the facility had already been extended to
Accused No.4-HSM without his approval. PW-38 Anil Padhye has also
deposed that he did not get any approval in writing regarding the request
of 'Single Point Clearance Facility' made in the letter Exhibit-154.
Therefore, there is nothing on record to show that, in reality, such facility
was actually granted by the competent authority of SBI to Accused No.4-
HSM. Despite that, it is clear that Accused No.3-Sitaraman has credited
the proceeds of the cheques issued in favour of SBI directly to the
account of Accused No.4-HSM. In such situation, Accused No.3-
Sitaraman cannot escape from the criminal liability of misappropriation of
funds of the SBI, which were received from the cheques issued by NHB.
312. Accused No.3-Sitaraman has also raised contention that it was a
market practice at that time to give routing facility to the brokers and,
therefore, the proceeds of the cheques issued in favour of SBI are
credited to the account of Accused No.4-HSM. However, in this respect,
the prosecution has relied upon the circular dated 1st September 1988
Exhibit-397 issued by RBI prohibiting the issuance of cheques on behalf
of private parties. So there was no legal backing for granting such a
facility to Accused No.4-HSM. In the said circular, it was specifically stated
that the current account of the Banks with RBI was being misused by
some of the Banks by violating the stipulations laid down while opening
the current account that the account is not to be treated as an ordinary
account and cheques on behalf or in favour of third parties are not to be
issued on this account. The said accounts were meant only for the
purpose of the payments to RBI and Government Departments on behalf
of Banks only and not on account of other parties by using RBI cheques.
Thus, this circular clearly prohibited the practice adopted by some Banks
to issue cheques on behalf of private Banks. In view thereof, it also does
not appear probable that SBI will allow such facility to Accused No.4-HSM
and if such a facility was allowed by Accused No.3-Sitaraman, it has no
legal backing at all and it was clear abuse of his official position. As there
was no underlying transaction with NHB, SBI should have returned the
cheques to issuing Bank or should have sought clarification from NHB.
Instead of that, Accused No.3-Sitaraman credited the proceeds of the
cheque amounts to the account of Accused No.4-HSM. In such situation,
Accused No.3-Sitaraman cannot take shelter behind, what is described as
market practice. The Hon'ble Apex Court in the case of Ram Narain Poply
Vs. Central Bureau of Investigation, AIR 2003 SC 2748, has occasion to
deal with such market practices behind which the accused persons in the
said case had taken the shelter and it was held in paragraph No.377 as
follows :-
"377. The accused persons have tried to take shelter behind
what they have described as "market practices". Such
practices even if existing, cannot take the place of
statutory and regulatory functions. There is no public
interest involved in such practices and they cannot be a
substitute for compliance with the regulatory or statutory
prescriptions. An attempt was made to show that there
was subsequent disapproval of the market practices : at
the point of time when the transactions took place there
was no embargo. It is their stand that the practices were
a part of accepted norms. We do not find anything
plausible in these explanations. A practice even if was
prevailing, if wrong, is not to be approved. The
subsequent clarifications do not in any way put seal the
approval of the practices adopted on the part on the
other hand it contemns it." [Emphasis Supplied]
313. Thus, by rejecting the said contention, it was held that the offences
charged against those accused were made out in the said case. In the
instant case also, this contention, therefore, raised by Accused No.3-
Sitaraman cannot be accepted.
314. In the case of Vinayak Narayan Deosthali (supra) also, in paragraph
No.15, it was held that the patent illegality cannot be defended in the
name of market practice or direction of a higher authorities. Mens rea is
established from the fact that false BRs were issued for non-existent
securities.
315. Accused No.3-Sitaraman in the instant case also cannot raise
contention that there was no fund exposure to SBI and no risk was
involved as the evidence on record clearly goes to prove that the SBI had
suffered loss in the scam due to the facility given by Accused No.3-
Sitaraman unauthorizedly to Accused No.4-HSM. The cheques were
collected by SBI not as a collecting banker but as payee, so the protection
under section 128 of the Negotiable Instruments Act was also not
available. The said act was also against Section 10 of the Negotiable
Instruments Act. In the case of Ram Narain Poply (supra), the Hon'ble
Apex Court was pleased to hold in paragraph No.333 that, "a Bank cannot
act as a broker under the Banking Act. It is not one of the permitted acts.
There is also not a question of paying of any commission on purchase or
sale of transactions. The transactions are, therefore, not transparent."
316. At this juncture, it may be useful to consider the evidence relating to
sale transactions. Normally, the sale and purchase of transactions are
independent ones. In this case, however, the evidence on record proves
that same securities were sold to different Financial Institutions on the
same day and almost for the same consideration, which makes it clear
that both Accused No.1-Ravikumar and Accused No.2-Suresh Babu knew
that although there were purchase transactions, the securities or Bank
Receipts in lieu thereof had not been received on the respective dates. It
was also to their knowledge that although they had entered into
transaction of sale of some securities that were purchased from the
different Banks and Financial Institutions, the said securities were not in
their custodies, nor the Bank Receipts in lieu thereof were in their custody.
It is, therefore, clear that both, Accused No.1-Ravikumar and Accused
No.2-Suresh Babu, had acted in collusion and connivance with each other
for entering into not only the purchase transactions but also the sale
transactions, with full knowledge that the securities in the purchase
transactions were not received and without being in possession of the
same, they issued Bank Receipts in sale transactions. Mere fact that all
the sale transactions were reversed by NHB and all the Bank Receipts
were issued by the authorized officers of the NHB, is of no help. The
authority in Accused No.1-Ravikumar and Accused No.2-Suresh Babu of
issuing Bank Receipts presupposes that the Bank Receipts were backed
by the physical securities and while issuing Bank Receipts, the physical
securities were available. Neither Accused No.1-Ravikumar, nor Accused
No.2-Suresh Babu had any authority to issue Bank Receipts, which were
not backed by physical securities.
317. The submission of learned counsel for Accused No.1-Ravikumar
and Accused No.2-Suresh Babu in this respect is that the Bank Receipts
could be issued even in expectation of receipt of securities. The specific
contents of the formats of the Bank Receipt are pointed out by them,
which are to the effect that, "the units / bonds of the face value of Rs.....
will be delivered as soon as they are ready in exchange for this receipt
duly discharged and in the meantime, the same will be held on A/c. of
........ (name of the Bank)". Thus, it is urged that these contents make it
clear that Bank Receipts can be issued even in the absence of physical
securities, which can be delivered subsequently. However, to accept this
contention, there should be such physical securities. However, in the
present case, it was to the knowledge of Accused No.1-Ravikumar that he
could not have discharged this undertaking or liability when he issued the
Bank Receipts as physical securities were not available with him, nor
were likely to be received later or during the course of the day or even
subsequent thereto. It is, therefore, clear that even with regard to the sale
transactions, Accused No.1-Ravikumar and Accused No.2-Suresh Babu
had acted in connivance with each other.
Charge of Criminal Conspiracy
318. To prove the charge of criminal conspiracy, the learned Senior P.P.
has relied upon the landmark decision of the Hon'ble Apex Court in the
case of Ram Narain Poply Vs. Central Bureau of Investigation, AIR 2003
SC 2748, wherein the Hon'ble Apex Court has, at length, dealt with the
said charge, in the backdrop of the similar allegations, in a case arising
out of the decision of the Special Court in the matter of Harshad Mehta
and others. While dealing with the essential ingredients of the offence of
criminal conspiracy, punishable u/s. 120B IPC, the Hon'ble Apex Court
was, in paragraph No.349 of its Judgment, pleased to hold that,
"349. Privacy and secrecy are more characteristics of a
conspiracy, than of a loud discussion in an elevated
place open to public view. Direct evidence in proof of
a conspiracy is seldom available, offence of
conspiracy can be proved by either direct or
circumstantial evidence. It is not always possible to
give affirmative evidence about the date of the
formation of the criminal conspiracy, about the
persons who took part in the formation of the
conspiracy, about the object, which the objectors set
before themselves as the object of conspiracy, and
about the manner in which the object of conspiracy is
to be carried out, all this is necessarily a matter of
inference."
319. In paragraph No.345, while dealing with the ingredients of the
offence of criminal conspiracy, the Hon'ble Apex Court was pleased to
hold that,
"345. ................ There should be an agreement between
the persons who are alleged to have conspired and
the said agreement should be for doing an illegal act
or for doing illegal means an act which itself may not
be illegal. Therefore, the essence of criminal
conspiracy is an agreement to do an illegal act and
such an agreement can be proved either by direct
evidence or by circumstantial evidence or by both
and it is a matter of common experience that direct
evidence to prove conspiracy is rarely available.
Therefore, the circumstances proved before, during
and after the occurrence have to be considered to
decide about the complicity of the accused."
320. Learned Senior P.P. has also placed reliance on another landmark
decision of the Hon'ble Apex Court in the case of State of Maharashtra
Vs. Som Nath Thapa, (1996) 4 SCC 659, wherein the Apex Court was
pleased to observe as follows :-
"356. After referring to some judgments of the United
States Supreme Court and of this Court in Yash Pal
Mittal Vs. State of Punjab, (1977) 4 SCC 540, and
Ajay Aggarwal Vs. Union of India, (1993) 3 SCC 609,
the Court in State of Maharashtra Vs. Som Nath
Thapa, (1996) 4 SCC 659, summarized the position
of law and the requirements to establish the charge of
conspiracy, as under : (SCC p. 668, para 24)
"24. The aforesaid decisions, weighty as they are,
lead us to conclude that to establish a charge of
conspiracy knowledge about indulgence in
either an illegal act or a legal act by illegal
means is necessary. In some cases, intent of
unlawful use being made of the goods or
services in question may be inferred from the
knowledge itself. This apart, the prosecution has
not to establish that a particular unlawful use
was intended, so long as the goods or service in
question could not be put to any lawful use.
Finally, when the ultimate offence consists of a
chain of actions, it would not be necessary for
the prosecution to establish, to bring home the
charge of conspiracy, that each of the
conspirators had the knowledge of what the
collaborator would do, so long as it is known
that the collaborator would put the goods or
service to an unlawful use." [See State of Kerala
v. P. Sugathan, (2000) 8 SCC 203, SCC p. 212,
para 14]"."
321. While dealing with the offence of criminal conspiracy in respect of
the financial frauds, the Hon'ble Apex Court in the case of Ram Narain
Poply (supra), in paragraph No.344, was pleased to observe that,
"344. .................... The law making conspiracy a crime, is
designed to curb immoderate power to do mischief,
which is gained by a combination of the means. The
encouragement and support which co-conspirators
give to one another rendering enterprises possible
which, if left to individual effort, would have been
impossible, furnish the ground for visiting
conspirators and abettors with condign punishment.
The conspiracy is held to be continued and renewed
as to all its members wherever and whenever any
member of the conspiracy acts in furtherance of the
common design."
322. In the context of Section 10 of the Indian Evidence Act, it was held
by the Hon'ble Apex Court, in paragraph No.348, that, the expression "in
furtherance to their common intention" in Section 10 is very
comprehensive and appears to have been designedly used to give it a
wider scope than the words "in furtherance of" used in the English Law :
with the result anything said, done or written by co-conspirator after the
conspiracy was formed, will be evidence against the other before he
entered the field of conspiracy or after he left it. Anything said, done or
written is a relevant fact only.
323. In this authority, while dealing with the diversion of the funds of the
public body, it was observed by the Hon'ble Apex Court, in paragraph
Nos.380 and 381, that,
"380. The offences in these cases were not of the
conventional or traditional type. The ultimate
objective was to use public money in a carefully
planned manner for personal use with no right to do
it.
381. Funds of public bodies were utilized as if they were
private funds. There was no legitimacy in the
transactions. Huge funds running into hundreds of
crores of MUL a Government Company, were
diverted and all the concerned accused persons A1,
A3 and A5 played dubious roles in these illegitimate
transactions. Their acts had serious repercussions on
the economic system of the country and the
magnitude of financial impact involved in the present
appeal is only tip of the iceberg. There were several
connected cases and interestingly some of the
prosecution witnesses in the present case are stated
to be accused in those cases. That itself explains the
thread of self-perseverance running through their
testimony. Therefore, the need to pierce the facadial
smoke screen to unravel the truth to lift the veil so
that the apparent, which is not real can be avoided.
The proverbial red herrings are to be ignored, to find
out the guilt of the accused. [Emphasis Supplied]
324. In the instant case, the evidence on record, discussed above,
clearly goes to prove that without the active connivance and collusion of
Accused No.1-Ravikumar and Accused No.2-Suresh Babu at the NHB
end and Accused No.3-Sitaraman at the SBI office, the crores of funds
from the Financial Institutions would not have been diverted to the
account of Accused No.4-HSM. The evidence on record also goes to
prove that there was blatant violation of all the canons and rules and
regulations of the Banking Institutions and financial transactions. Without
having securities or Bank Receipts in hand, the cheques were issued and
the sale proceeds of the same were then credited to the account of
Accused No.4-HSM without there being such mandate by NHB to SBI,
which clearly goes to prove that all these three officers, Accused No.1-
Ravikumar, Accused No.2-Suresh Babu and Accused No.3-Sitaraman,
have acted hand-in-gloves for the benefit of Accused No.4-HSM.
325. Hence, the contention raised by Accused No.1-Ravikumar and
Accused No.2-Suresh Babu that, all the cheques issued were account
payee and on none of the cheques any endorsement in favour of any
individual, much less, Accused No.4-HSM was made; they were also
credited to the SBI account maintained with RBI and if thereafter they
were diverted to account of Accused No.4-HSM, they are not in any way
responsible for the same, cannot be accepted. Their further contention
that SBI should have returned those cheques if there were no securities
transactions with them, therefore, the scam originated at the end of SBI;
hence, Accused No.3-Sitaraman alone is responsible for the diversion of
funds to account of Accused No.4-HSM also cannot be accepted. It is a
sort of a game of shifting the blame, which, as observed by the Hon'ble
Apex Court in the case of Ram Narain Poply (supra), is the outcome of
the thread of self-preservance running through their defences. The
criminality on the part of Accused No.1-Ravikumar and Accused No.2-
Suresh Babu was to issue the cheques without there being securities or
BRs and the criminality on the part of Accused No.3-Sitaraman was
accepting such cheques, encashing them, knowing fully that there were
no transactions of SBI with NHB and thereafter diverting those funds to
the account of Accused No.4-HSM. Unless and until all these three
accused had played their individual parts in tandem, which parts were
supplementary and complementary to each other, this scam would not
have taken place. The entire sequence of transactions thus clearly proves
that Accused No.1-Ravikumar, Accused No.2-Suresh Babu and Accused
No.3-Sitaraman had acted in collusion, every one playing his part towards
achieving the common object of criminal conspiracy. There need not be
any direct link or proof to establish this criminal conspiracy, as contended
by these accused. As per the well settled position of law, such conspiracy
can be rarely established by the direct evidence. Hence, the prosecution
and this Court has to draw the inference of this conspiracy from the facts,
circumstances and documents elucided above, which are more than self-
speaking.
326. The Hon'ble Apex Court has occasion to deal with similar such
submissions and also the charge of criminal conspiracy in the recent
decision of R. Venkatkrishnan Vs. Central Bureau of Investigation, (2009)
11 SC 737. It was an appeal against the decision of this Special Court,
pertaining to the call money transaction between NHB and UCO Bank.
While dealing with the offence of criminal conspiracy in the said case, the
Hon'ble Apex Court has quoted with approval the above referred
paragraph No.344 in the case of Ram Narain Poply (supra) to reiterate
that, "the law making conspiracy a crime, is designed to curb immoderate
power to do mischief, which is gained by a combination of the means. The
encouragement and support which co-conspirators give to one another
rendering enterprises possible, which, if left to individual effort, would
have been impossible, furnish the ground for visiting conspirators and
abettors with condign punishment."
327. The Hon'ble Apex Court has further quoted with approval in
paragraph No.101 the observations in State (NCT of Delhi) Vs. Navjot
Sandhu @ Afsan Guru, (2005) 11 SCC 600, wherein it was held that, "the
cumulative effect of the proved circumstances should be taken into
account in determining the guilt of the accused rather than adopting an
isolated approach to each of the circumstances."
328. Here, in this case, both, Accused No.1-Ravikumar and Accused
No.2-Suresh Babu at the one end and Accused No.3-Sitaraman at other
end have indulged into shifting blame on each other. Accused No.1-
Ravikumar and Accused No.2-Suresh Babu are saying that the scam was
originated at SBI as Accused No.3-Sitaraman had without mandate or any
direction from NHB credited the proceeds of the cheque issued in favour
of SBI in the account of Accused No.4-HSM. Whereas, according to
Accused No.3-Sitaraman, there was no reason at all for Accused No.1-
Ravikumar to issue the cheques when there were no transactions of sale
or purchase of securities with SBI, therefore, fault lies with the officers of
NHB. As discussed above, the fault not only lies at one end but at both the
ends, as can be seen from the blame game played by Accused No.1-
Ravikumar and Accused No.2-Suresh Babu on one hand and Accused
No.3-Sitaraman on the other hand. There were gross illegalities
committed in these entire transactions, which ultimately ended into
siphoning off crores of funds of the public Bank like NHB or SBI to the
account of a broker like Accused No.4-HSM. These illegalities would not
have taken place without there being some active connivance between
these two sets of accused. It was due to only the encouragement and
support which the co-conspirators, like, Accused No.1-Ravikumar,
Accused No.2-Suresh Babu and Accused No.3-Sitaraman gave to each
other, that the siphoning of funds of the Banks was rendered possible,
which, if left to individual effort of Accused No.1-Ravikumar, Accused
No.2-Suresh Babu and Accused No.3-Sitaraman, would have been
impossible and, therefore, it furnishes the ground for proving the charge of
criminal conspiracy. Hence, in this case, I have no hesitation in holding the
charge under Section 120B of IPC proved against Accused No.1-
Ravikumar, Accused No.2-Suresh Babu and Accused No.3-Sitaraman.
Charge of Criminal Breach of Trust
329. As regards the charge of criminal breach of trust and dishonest
misappropriation of property, punishable under Section 409 of IPC, in the
case of Ram Narain Poply (supra), the Hon'ble Apex Court was pleased to
observe in paragraph No.361 as follows :-
"361. To constitute an offence of criminal breach of trust,
there must be an entrustment, there must be
misappropriation or conversion to one's own use,
or use in violation of a legal direction or of any
legal contract : and the misappropriation or
conversion or disposal must be with a dishonest
intention. When a person allows others to
misappropriate the money entrusted to him that
amounts to a criminal appropriation of trust as
defined by Section 405. The Section relatable to
property in a positive part and a negative part. The
positive part deals with criminal misappropriation or
conversion of the property and the negative part
consists of dishonestly using or disposing of the
property in violation of any direction and of law or
any contract touching the discharge of trust."
330. In this decision, the Hon'ble Apex Court quoted with approval its
earlier decision in Jaswantrai Manilal Akhaney Vs. The State of Bombay,
AIR 1956 SC 575, to the effect that, "if the Managing Director of the Bank
entrusted with securities owned by the pledger disposes of their securities
against the stipulated terms of the contract entered into by the parties with
an intent to cause wrongful loss to the pledger and wrongful gain to the
bank, there can be no question but that the Managing Director has
necessarily mens rea required by Section 405."
331. According to the Hon'ble Apex Court, "the term 'entrustment' is not
necessarily a term of law. It may have different implications in different
context. In its most general signification all it imports is the handing over
possession for some purpose which may not imply this conferring of any
proprietary right at all."
332. In this decision, the Hon'ble Apex Court has further categorically
held that, "when a person misappropriates to his own use the property
that does not belong to him, the misappropriation is dishonest even
though there was an intention to restore it at some future point of time".
333. According to Hon'ble Apex Court, "to establish the charge of
criminal breach of trust, the prosecution is not obliged to prove the precise
mode of conversion, misappropriation or misapplication by the accused of
the property entrusted to him or over which he has dominion. The
principal ingredient of the offence being dishonest misappropriation or
conversion, which may not ordinarily be a matter of direct proof,
entrustment of property and failure in breach of an obligation to account
for the property entrusted, if proved, may in the light of other
circumstances, justifiably lead to an inference of dishonest
misappropriation or conversion."
334. While dealing with similar such charge of criminal breach of trust in
the context of this very Accused No.1-Ravikumar himself, in the case of R.
Venkatakrishnan Vs. Central Bureau of Investigation, AIR 2010 SC 1812,
wherein present Accused No.1-Ravikumar (Accused No.6 in that case)
had allowed the diversion of huge sum meant to be used for specific
purpose, namely, call money to be lent to another Nationalized Bank, the
Hon'ble Apex Court, in paragraph No.152 was pleased to hold that, "if the
transaction was illegal as a result whereof, a private person who was not
meant to be expected to reap the fruit of "call money" was allowed to
retain the same for a period to make an unlawful gain therefrom, offence
of criminal breach of trust must be held to have been committed. It is for
the same reason the submission that as nobody ultimately suffered any
loss, an offence under Section 409 of IPC was not made out, cannot be
accepted."
335. In paragraph No.153 of its Judgment, the Hon'ble Apex Court,
further held that,
"153. A Bank or Financial Institution may not suffer ultimate
loss, but if the money has been allowed to be used
by another person illegally for illegal purposes, the
ingredients of Section 405 of the Penal Code would
get attracted. A case involving temporary
embezzlement also attracts the ingredients of
Section 405 of the Penal Code".
336. In this case, Accused No.1-Ravikumar and Accused No.2-Suresh
Babu in connivance with Accused No.3-Sitaraman has allowed the funds
of the Bank on which they had dominion and entrustment to be used for
the benefit of Accused No.4-HSM a private person, who was not
expected to reap the fruits of the said money. He was allowed to retain the
same, to make an unlawful gain therefrom. Hence, there is no reason but
to hold that the offence of criminal breach of trust has been made out
against Accused No.1-Ravikumar, Accused No.2-Suresh Babu and
Accused No.3-Sitaraman. In the present case, as also in the case of R.
Venkatakrishnan (supra), Accused No.1-Ravikumar parted with money of
NHB, which was entrusted to him, so that Accused No.4-HSM could get it,
although not entitled therefor in law. The conduct of Accused No.1-
Ravikumar, Accused No.2-Suresh Babu and Accused No.3-Sitaraman
therefore, being dishonest, they are liable to be held guilty for the offence
of criminal breach of trust.
337. The next contention raised by Accused No.1-Ravikumar, Accused
No.2-Suresh Babu and Accused No.3-Sitaraman is that the entire amount
of Rs.700,07,56,39,000/- has already been paid by SBI to NHB as per the
directions of RBI, by debiting the account of Accused No.4-HSM. Hence,
as the repayment has already been made, there is no question of any
offence being committed as such. However, this contention is also
considered by the Hon'ble Apex Court in the case of Ram Narain Poply
(supra) and effectively dealt with in paragraph No.358 by observing as
follows :-
"358. Much has also been submitted that repayment has
been made. That itself is not an indication of lack
of dishonest intention. Some times, it so happens
that with a view to create confidence the
repayments are made so that for the future
transactions the money can be dishonestly
misappropriated. This is a part of the scheme and
the factum of repayment cannot be considered in
isolation. The repayment as has been rightly
contended by the Solicitor General can be a factor
to be considered while awarding sentence, but
cannot be a ground for proving innocence of the
accused."
338. In this case, in the face of gross violation of the various rules,
guidelines, when the funds have been transferred, the mere fact that
ultimately under the direction of RBI, the repayment of the said funds was
made, that too under protest, does not dilute, in any way, the nature of the
offence.
339. As observed by the Hon'ble Apex Court in another such latest
decision of Vinayak Narayan Deosthali Vs. Central Bureau of
Investigation, (2015) 2 SCC 553, in paragraph No.15, while dealing with
the contention of the accused therein, which contention is raised by
accused persons in this case also, that they had not derived any benefit or
caused any loss to the Bank that, " it was not necessary to prove that the
accused had derived any benefit or caused any loss to the Bank. The fact
remains that action of the appellant involved unauthorized conversion of
public funds to private funds of an individual. Issuing of Bank Receipts for
securities without existence of securities could not be justified except for
illegal benefit to a private individual. Patent illegality cannot be defended
in the name of practice or direction of higher authorities. Mens rea is
established from the fact that false Bank Receipts were issued for non-
existent securities."
340. By holding thus, in the said case, the offences of conspiracy,
forgery, misappropriation and corruption were held established against the
accused. In the instant case also, this contention raised by accused that
they have not received any individual benefit has to be rejected in toto.
Charge u/s. 13(1)(c) and (d) r/w. Section 13(2) of the
Prevention of Corruption Act, 1988
341. As to the offences under Section 13(1)(d) r/w. Section 13(2) of the
Prevention of Corruption Act, 1988, it was held in the authority of R.
Venkatakrishnan (supra), in which, as stated above, present Accused
No.1-Ravikumar was involved in respect of call money transaction with
UCO Bank, the Hon'ble Apex Court held that, "the essential ingredients of
sub-clause (iii) of Section 13(1)(d) are that accused should be a public
servant; he should use some corrupt or illegal means or otherwise abuse
his position as a public servant, that he should have obtained any
valuable thing or pecuniary advantage for himself or for any other person;
then he would be guilty of "criminal misconduct", for which punishment is
provided in Section 13(2) of the Prevention of Corruption Act, 1988. It was
held in this case that as Accused No.1-Ravikumar, who was Accused No.6
therein, had misused his position as a public servant, so that Accused
No.4-HSM gets some pecuniary advantage, he was guilty of "criminal
misconduct", under the Prevention of Corruption Act, 1988. It was further
held that, "along with Accused No.1, other officers of UCO Bank, who
were Accused Nos.1 to 3 therein, at the relevant time, were public
servants, each of them had played a specific role in diversion of funds
from NHB to the account of Accused No.4, all ostensibly under a call
money transaction, they thereby, in our opinion, facilitated Harshad Mehta
to obtain pecuniary advantage within the meaning of the section. The acts
were anything but intended to be in public interest. On the contrary, the
public loss and suffering occasioned thereby was immeasurable. Though
it is true, as has been argued before us, that all the funds diverted have
subsequently been returned to NHB and no actual loss has been
occasioned thereby either to UCO Bank or NHB, it must not be forgotten
that white collared crimes of such nature affect the whole society even
though they may not have any immediate victims."
342. The Hon'ble Apex Court has, accordingly, in this decision held
Accused Nos.1 to 3, the officers from UCO Bank, and Accused No.6, i.e.
present Accused No.1-Ravikumar from NHB, liable for criminal
misconduct under Section 13(1)(d)(iii) of the Prevention of Corruption Act,
1988.
343. In the instant case also, the evidence on record clearly goes to
prove that Accused No.1-Ravikumar, Accused No.2-Suresh Babu and
Accused No.3-Sitaraman, who, at the relevant time, were admittedly the
public servants, have by misusing their positions as public servants,
played a specific role in diversion of funds from NHB to the account of
Accused No.4-HSM, all ostensibly under the structured transactions of
sale and purchase of securities. They have thereby facilitated Accused
No.4-HSM to obtain pecuniary advantage, within the meaning of Section
13(1)(c) and (d) of the Prevention of Corruption Act, 1988. These acts
were anything but intended to be in public interest. On the contrary, the
public loss and suffering occasioned thereby was immeasurable in this
case also, as in the above said case. Ultimately, though the funds diverted
have been returned to NHB and it may be true that, no actual loss has
been occasioned thereby either to NHB, it cannot be forgotten that these
white collared crimes of such nature affect the whole society, even though
they may not have any immediate victim. Therefore, Accused No.1-
Ravikumar, Accused No.2-Suresh Babu and Accused No.3-Sitaraman are
required to be held guilty of criminal misconduct under Section 13(1)(c)
and (d) of Prevention of Corruption Act, 1988.
344. At this stage, it is also necessary to deal with the contention raised
by Accused No.1-Ravikumar and Accused No.2-Suresh Babu as to the
validity of the sanction order. The accused have challenged the same on
the count that PW-56 Ravi Gupta, who has issued the sanction orders for
prosecution of Accused No.1-Ravikumar and Accused No.2-Suresh Babu
vide Exhibits 545 and 546, was not the competent authority to do so. The
second ground on which the sanction orders are challenged is about the
non-application of mind. It is pertinent to note that the similar contentions
were raised by Accused No.1-Ravikumar and Accused No.2-Suresh Babu
for challenging the sanction orders issued by PW-56 Ravi Gupta for their
prosecution in the case of R. Venkatakrishnan (supra) also. In that case,
the present Accused No.1-Ravikumar and Accused No.2-Suresh Babu
were Accused Nos.6 and 7. While dealing with similar contentions therein,
as to the competency of PW-56 Ravi Gupta, the Chairman and Managing
Director of NHB, to issue the sanction orders, it was observed in
paragraph Nos.58 and 59 by the Hon'ble Apex Court, as follows :-
"58. It is contended by Accused 6 C. Ravikumar that he had
come to NHB on deputation from RBI, and, therefore,
the conditions of his service were governed by the RBI
Regulations and not those of the NHB Act. According to
him, the Governor of RBI was the only competent
sanctioning authority.
69. Indisputably, Accused 6 was initially appointed by
Reserve Bank of India and was sent to NHB on
deputation in the year 1988. He was, however,
permanently absorbed there in 1992 and the order of
sanction in respect of him was passed on 26-2-1993. It
is a fundamental principle of service jurisprudence that
an employee, subject to statutory interdict, cannot have
two masters. If from the date of his absorption the
relationship of employer and employee came into being
between him and NHB, it is fallacious to suggest that
Reserve Bank of India continued to be his employer. It
is not in dispute that if accused 6 is treated to be an
officer of the Bank, the Chairman-cum-Managing
Director, being its highest authority would be competent
to pass the order of sanction."
345. While dealing with the similar contentions raised by present
Accused No.2-Suresh Babu herein, who was Accused No.7 in that case,
the Hon'ble Apex Court was pleased to observe in paragraph Nos.60 and
61 of its Judgment, as under :-
"60. Next it was urged before us on behalf of Accused 7 S.
Suresh Babu that since the terms and conditions of
service of the employees of NHB till as late as 1995
used to be governed by the Service Regulations framed
by Reserve Bank of India, Shri. R.V. Gupta, the
Chairman-cum-Managing Director, NHB had no
authority to issue the sanctioning order. It was argued
that NHB's own staff regulations governing conduct and
discipline came into effect only in the year 1995.
61. The said contention in our opinion is wholly
misconceived. Even if till the framing of regulations by
NHB, it adopted the Service Regulations governing the
employees of Reserve Bank of India, the same would
not mean that the appointing authority would also be an
officer of Reserve Bank of India and not the appropriate
authority of NHB. The Chairman-cum-Managing
Director of NHB being a highest executive authority,
would be, subject to any delegation of powers conferred
in terms of the regulations or through resolutions
adopted by the Board of Directors, the appointing
authority. As an appointing authority, therefore, he will
have the requisite jurisdiction to accord sanction for
prosecution of the employees."
346. So, this issue relating to competency of PW-56 Ravi Gupta for
issuance of sanction orders for prosecution of Accused No.1-Ravikumar
and Accused No.2-Suresh Babu being already settled at the Hon'ble Apex
Court level itself, it can no more be agitated further.
347. There is also no reason or any material elicited to show that the
sanction given was without any application of mind. Merely saying so, is
not sufficient in that respect.
348. As regards Accused No.3-Sitaraman, the sanction order Exhibit-568
for his prosecution is properly proved by the prosecution by examining
PW-60 Govardhan Kathuria, the Chief General Manager of SBI, Local
Head Office, Mumbai and Accused No.3-Sitaraman has not challenged its
legality or validity in any way.
349. The next submission advanced by learned counsel for Accused
No.1-Ravikumar and Accused No.2-Suresh Babu, in-person, is that no
departmental proceedings were initiated against them so far as these
transactions are concerned. It is urged that if no case was made out for
institution of the departmental proceedings, then it follows that there was
no case even for the institution of criminal proceedings. However, as
rightly submitted by learned Senior P.P., this aspect is also dealt with by
the Hon'ble Apex Court in the case of R. Venkatakrishnan (supra), in
paragraph No.150, as follows :-
"Non-Institution of Departmental Proceedings
150. In this regard, it must be emphasized that the
submission of the learned counsel that the Banks
have not initiated any proceedings and suffered any
loss and thus the judgment of conviction and
sentence of criminal breach of trust is wholly
unsustainable, cannot be accepted for more than one
reason. It is not the law that complaint petition under
all circumstances must be made by the banks and
financial institutions, whose money had been the
subject-matter of offence. It is also not the law that
suffering of loss is a sine qua non for recording a
judgment of conviction. It is now trite that criminal law
can be set in motion by anybody. The prosecution
was initiated on the basis of the information received
by the Central Bureau of Investigation. It would be
entitled to do so not only in regard to its statutory
powers contained in the Delhi Special Police Act but
it was also entitled to take cognizance in terms of the
report submitted by the Janakiraman Committee. The
money involved in the transfer is public money
belonging to public sector banks."
350. Therefore, this contention fails in this case also.
351. Thus, all the contentions which have been raised by Accused No.1-
Ravikumar, Accused No.2-Suresh Babu and Accused No.3-Sitaraman in
this case have already been raised, considered and rejected by the
Hon'ble Apex Court in the very cases pertaining to these accused and
other cases in which similar questions of facts and law were involved in
the appeals preferred against the Judgment of this Special Court. Now
those contentions cannot be reopened again in this case because the
same reasoning and the laws will apply to them, even if they are
reopened. This Court being bound by the decisions of the Hon'ble Apex
Court, there is no need to state that this Court cannot take any divergent
view. Even otherwise, nothing is brought on record to distinguish the
above said decisions even on facts, far remain on law.
352. As to the evidence of PW-53 Sunil Majithia and PW-55 Mani
Acharya relied upon by the prosecution to show that Accused No.3-
Sitaraman has received an amount of foreign remittance in 1991 under an
Immunity Scheme pertaining to foreign exchange and the said amount
was from Accused No.4-HSM, routed through the foreign channels, as
illegal gratification for crediting the cheques in the account of Accused
No.4-HSM, which were not meant for him, there is no charge framed to
that effect in this case. The reason may be because Accused No.3-
Sitaraman was prosecuted separately for the same under Section 13(1)(e)
of Prevention of Corruption Act, 1988, in Special Case No.48 of 1994 and
he was acquitted therein. Hence, now in view of Section 300 Cr.P.C., he
cannot be prosecuted again for the same offence or for any other offence
based on the same facts for which he might have been charged earlier, for
being in possession of assets disproportionate to known source of
income.
353. Learned counsel for Accused No.1-Ravikumar and Accused No.3-
Sitaraman have then relied upon the decision of the Hon'ble Apex Court in
the case of Central Bureau of Investigation, ACB, Mumbai Vs. Narendra
Lal Jain and Ors., (2014) 5 SCC 364, to submit that when the matter is
amicably settled between the parties and financial liability is satisfied,
then, in this authority, the Hon'ble Apex Court was even pleased to quash
the criminal prosecution against the accused for the offences punishable
under Sections 120B and 420 of IPC and Section 5(2) r/w. Section 5(1)(d)
of Prevention of Corruption Act, 1988. It is submitted that in the present
case also the entire amount has been paid by SBI to NHB. Hence, no
cause remains to proceed further with the prosecution. However, in my
considered opinion, neither this submission nor this authority can be made
applicable to the facts of the present case as in that case, the prosecution
was quashed under Section 482 of Cr.P.C., thereby implying that the trial
was not conducted and mere the F.I.R.s were recorded. In this case, that
stage is already over. The trial is conducted and the guilt of Accused No.1-
Ravikumar, Accused No.2-Suresh Babu and Accused No.3-Sitaraman
clearly stands established. So, there is no question of quashing the F.I.R.
filed against them, by exercising powers under Section 482 of Cr.P.C.
Secondly, the facts of the said authority reveal that the Civil Suit for
recovery of the amount was disposed of on account of compromise
relating to payment of the claims. Moreover, the offence of cheating was
compoundable and no substantive grievance of the Bank had been
brought to the notice of the Court. In the instant case, the matter is not at
all mutually settled amicably. Even if SBI has paid the amount to NHB, it is
under protest. Therefore, it cannot be said that there is no subsisting
grievance of SBI in this regard. In view thereof, the reliance placed on this
authority of the Hon'ble Apex Court, in my considered opinion, is
misplaced.
354. Thus, as regards Accused No.1-Ravikumar, Accused No.2-Suresh
Babu and Accused No.3-Sitaraman, I have no hesitation in coming to the
conclusion that prosecution has proved its case against them in respect of
above said transactions for the offence punishable under Section 409 r/w.
Section 120B of IPC and also Section 13(1)(c) and (d) r/w. Section 13(2)
of Prevention of Corruption Act, 1988.
Charge of Forgery and Falsification of Documents and Cheating
355. The evidence on record also proves the offence of forgery
punishable under Section 467 r/w. 120B of IPC against Accused No.1-
Ravikumar and Accused No.2-Suresh Babu, as it is proved that these
accused have prepared the Bank Receipts in respect of the sale
transactions when those Bank Receipts were not backed by the
securities, but shown them to have been sold in sale transactions with
clear intention that the Banks which have entered into sale transaction
with NHB would part with the money and in fact they had issued various
cheques in favour of NHB and those cheques were debited in the NHB's
account with the RBI. As a result, the charge under Section 471 r/w.
section 467 r/w. Section 120B of IPC also stands proved against these
Accused No.1-Ravikumar and Accused No.2-Suresh Babu. In respect of
the purchase transactions, the charge under Section 477A r/w. 120B of
IPC also stands proved against Accused No.1-Ravikumar and Accused
No.2-Suresh Babu as they had falsified the documents like Investment
Register, Deal Diary and vouchers by making entries therein in respect of
the fake or structured transactions and it was clearly done with intent to
defraud NHB. The same charge also stands proved in respect of the sale
of securities as the sale transactions were entered into without being
backed by Bank Receipts or physical securities. The knowledge that there
were no such securities available with NHB was exclusively with Accused
No.1-Ravikumar and Accused No.2-Suresh Babu. However, the
representation that was made to the purchasing Banks in the form of Bank
Receipts was a false representation that Bank Receipts were backed by
securities. Thus, Accused No.1-Ravikumar and Accused No.2-Suresh
Babu stand guilty for the offences punishable under Sections 467, 471 r/w.
467, 477A r/w. 120B of IPC and Section 420 r/w, Section 120B of IPC.
Prosecution Case Against Accused No5-Atul,
Accused No.6-Pankaj and Accused No.7-Sudhir
356. As regards the prosecution case against Accused No.5-Atul,
Accused No.6-Pankaj and Accused No.7-Sudhir, who fall in the category
of the persons working with Accused No.4-HSM in his Firm, as per
prosecution case, there is evidence on record to show that there was
meeting of minds between Accused No.5-Atul, Accused No.6-Pankaj and
Accused No.7-Sudhir with other accused persons for entering into
contracts with the Banks and Financial Institutions for purchase of
securities from NHB. It is urged that NHB could not have issued the
cheques in favour of SBI for the utilization of Accused No.4-HSM, unless
the sale transactions were not entered into. It would show that Accused
No.5-Atul, Accused No.6-Pankaj and Accused No.7-Sudhir acted in
conspiracy with other accused to procure the funds from Banks and
Financial Institutions by way of purchase of securities from NHB.
According to Senior P.P., evidence has come to the effect that Accused
No.5-Atul, Accused No.6-Pankaj and Accused No.7-Sudhir were dealing
on behalf of Accused No.4-HSM. Accused No.5-Atul has admitted that all
the contract notes entered on behalf of Accused No.4-HSM were initialed
by him and Accused No.7-Sudhir has admitted that they were signed by
him. According to learned Senior P.P., the contract note is a primary
document in proof of a deal. The fact that Accused No.5-Atul and Accused
No.7-Sudhir were authorized to sign the contract notes itself proves the
fact that they were authorized to enter into the contract on behalf of
Accused No.4-HSM. Hence, without the help of these accused persons,
Accused No.4-HSM could not have achieved the diversion of money from
NHB for his private gain. According to learned Senior P.P., prosecution
has already established the conspiracy between the accused persons for
issuance of cheques by NHB and sale of securities by NHB without
having securities in possession. Hence, once the conspiracy is
established, the acts of these accused persons, in pursuance of the
conspiracy, would be covered under Section 10 of the Indian Evidence
Act. In this respect, reliance is placed by learned Senior P.P. on the
celebrated decision of the Hon'ble Apex Court in the case of Kehar Singh
and Others Vs. The State (Delhi Admin.), AIR 1988 SC 1883, wherein it
was held that,
"This section mainly could be divided into two; the first
part talks of where there is reasonable ground to believe
that two or more persons have conspired to commit an
offence or actionable wrong, and it is only when this
condition precedent is satisfied that the subsequent part
of the section comes into operation and it is material to
note that this part of the section talks of reasonable
grounds to believe that two or more persons have
conspired together and this evidently has reference to
section 120A where it is provided, "when two ore more
persons agree to do, or cause to be done". This further
has been safeguarded by providing a proviso that no
agreement except an agreement to commit an offence
shall amount to criminal conspiracy. It will be, therefore,
necessary that a prima facie case of conspiracy has to be
established for application of Section 10. The second part
of Section talks of anything said, done or written by any
one of such persons in reference to the common intention
after the time when such intention was first entertained by
any one of them is relevant fact against each of the
persons believed to be so conspiring as well for the
purpose for proving the existence of the conspiracy as for
the purpose of showing that any such person was a party
to it. It is clear that this second part permits the use of
evidence which otherwise could not be used against the
accused person. It is well settled that act or action of one
of the accused could not be used as evidence against the
other. But an exception has been carved out in Section 10
in cases of conspiracy. The second part operates only
when the first part of the section is clearly established i.e.
there must be reasonable ground to believe that two or
more persons have conspired together in the light of the
language of Section 120A. It is only then the evidence of
action or statements made by one of the accused could
be used as evidence against the other."
357. Learned Senior P.P. has also relied upon the decision of the Hon'ble
Apex Court on similar lines in the case of Saju Vs. State of Kerala, 2001
CRI.L.J. 102. As per learned Senior P.P., having regard to the law laid
down in these authorities, including that of Ram Narain Poply (supra), R.
Venkatakrishnan (supra), Accused No.5-Atul, Accused No.6-Pankaj and
Accused No.7-Sudhir cannot escape from the criminal liability for the acts
committed by them.
358. As against it, the contention of Accused No.5-Atul is to the effect
that he was merely an employee of one of the companies of Accused
No.4-HSM. The only allegation against him is that of signing few contract
notes issued by the Firm of Accused No.4-HSM. It is urged that the
material on record will bear out that he has not signed any contract notes.
Only his initials appear on the left side bottom corner of few contract notes
issued by the Firm of Accused No.4-HSM, to certain Banks from whom
NHB received RBI cheques for credit to its own account maintained with
RBI. It is urged that the evidence of PW-48 Vijay Palande clearly shows
that the authority to sign contract notes was only with Accused No.4-HSM,
Accused No.7-Sudhir and their brother Ashwin Mehta, who is not
implicated in this case. Accused No.5-Atul had no authority to sign
contract notes and he has actually not signed any contract notes. His role
was only to confirm the data on the hard copy of the Contract Note with
the same in the computer maintained by the Firm of Accused No.4-HSM.
Such practice was not only in the Firm of Accused No.4-HSM, but was
also prevalent with other brokers in the market. In this respect, Accused
No.5-Atul has placed reliance on the evidence of PW-20 Ramnathan
Ganesh, wherein he has admitted that;
"It is correct that normally in the transactions relating to
shares and securities, the broker contracts for both the
parties and prepares a 'deal slip'. Such 'deal slip' gives
the details, such as name of the contracting party, the
security involved, the amount and date of the transaction
etc. Based on this 'deal slip', the data is fed in computer
and from this data, the contract note is generated. Such
contract note would usually be verified by some person
from the broker's office before it is brought to the person
who would sign the same."
359. It is urged that contracting parties are bound by the contract only
with signatures by authorized persons and as Accused No.5-Atul was not
an authorized person at any given point of time, he cannot be held liable
in any way.
360. As regards the evidence of PW-31 Sharwankumar Jindal, on which
the prosecution has also relied upon, it is urged by learned counsel for
Accused No.5-Atul that PW-31 Sharwankumar Jindal mentions three
names, that of Accused No.5-Atul, Accused No.6-Pankaj and one Ms.
Poonam Khanna, who used to contact him in connection with the deal.
However, prosecution has not examined Ms. Poonam Khanna. If she was
examined, it would have come to light that it was she who finally
concluded that deal. It is urged that PW-31 Sharwankumar Jindal has
admitted that he has not seen any of these three persons and he was in
contact with them only telephonically and therefore, his evidence cannot
be of much help to the prosecution.
361. Further it is submitted by Accused No.5-Atul that the prosecution
has referred to five transactions, but only four contract notes are produced
being Exhibits 121, 124, 289 and 380 for transactions at Serial Nos.1, 2, 3
and 4, respectively, at page 89. For transaction at serial No.5, the
prosecution has not referred to any contract note. Conversely, it is
categorically admitted by the prosecution that in the remaining cases,
prosecution could not establish a direct link of Accused No.4-HSM with
the transactions due to non-availability of documents and witnesses. It is
urged that the perusal of the entries in NHB's account with RBI produced
at Exhibit-60 would show that there are hundreds of crores of rupees
credited to the account of NHB, which facilitated payment to SBI and,
therefore, it is only the conjecture that because of these four transactions,
NHB could issue cheques to SBI.
362. It is urged that for the similar functions performed by Accused No.5-
Atul that of initialing on the left side bottom corner of the contract notes,
he has been made witness for prosecution in many cases filed by the
prosecution. He has given a chart of the cases in which he has given
evidence as witness for prosecution, which shows that in Special Case
No.6 of 1996, he has given evidence as PW-11 Sudhir Raokadnur; in
Special Case No.1 of 2003, his evidence was recorded as PW-27 Girish
Patel; in Special Case No.4 of 1994 registered in Special Court at New
Delhi, he was PW-100; whereas, in Special Case No.4 of 1998, his
evidence is recorded as PW-29 Prakash Kanchan.
363. In fact, according to him, in Special Case No.4 of 1998, on the basis
of his deposition, Accused No.7-Sudhir was acquitted by this Court though
he has signed many contract notes, as had been signed by him in this
case. Furthermore, for similar functions performed by Accused No.5-Atul,
this Court was pleased to acquit him in Special Case No.1 of 1996. Thus,
in sum and substance, the contention of Accused No.5-Atul is that none of
the charge can be said to have been remotely also proved against him.
364. As regards Accused No.7-Sudhir, he is the brother of Accused No.4-
HSM. According to him, he used to work in capital market and manage
Jyoti Mehta's card, who had membership in the stock market. He used to
sit in another office bearing Room No.1018; while, Accused No.4-HSM
used to sit in Room Nos.1205 / 1206. It is his contention also that as a
constituted attorney of Accused No.4-HSM, he used to sign on his behalf
on few contract notes. According to him, he used to see the initials on
contract notes as he would not know whether the contract notes are
correct. The initials used to be made by a person from the back office,
who was verifying the contents of the contract notes. According to him,
though his signatures are appearing on other contract notes also, he has
signed thereon only as a constituted attorney of Accused No.4-HSM and
nothing more. Thus, according to him also, he is not at all involved in the
entire transactions.
365. In my considered opinion, as rightly submitted by learned Senior
P.P., the Contract Note being the primary document in proof of a deal and
Accused No.5-Atul having initialed the Contract Notes and Delivery
Orders and Accused No.7-Sudhir, having singed them as Constituted
Attorney of Accused No.4-HSM, both of them cannot escape from their
liability. It is significant to note that both of them are trying to evade their
liability by shifting it upon one another. According to Accused No.5-Atul, he
was not an authorized signatory on the Contract Notes. He has merely
initialed the same in token of verification of its contents. Whereas,
according to Accused No.7-Sudhir, he used to see the initials of Accused
No.5-Atul on the Contract Notes in token of the verification of its contents
and signed thereon as Constituted Attorney of Accused No.4-HSM, as he
would not know personally whether the contents of the Contract Notes
were correct or not. Thus, it is clear that their role is supplementary and
complementary to each other. If Accused No.5-Atul has not initialed on
Contract Notes, Accused No.7-Sudhir would not have signed on them and
without his signature, the Contract Notes would not have been accepted.
As without such Contract Notes and Delivery Orders, the transactions
could not have taken place, the involvement and participation in criminal
conspiracy of diverting the funds of the Banks and Financial Institutions to
the account of Accused No.4-HSM of, both, Accused No.5-Atul and
Accused No.7-Sudhir, is clearly proved on record. Hence, both of them
are required to be held guilty for the offences punishable under Sections
409 r/w. 120B IPC.
366. However, so far as Accused No.6-Pankaj is concerned, as rightly
submitted by him, except a general statement that Accused No.6-Pankaj
was dealing on behalf of Accused No.4-HSM with PW-32 V.R. Srinivasan,
Manager of Standard Chartered Bank, no other role is attributed by the
prosecution to him. The evidence of PW-31 Sharwankumar Jindal is quite
vague on this point, as he has mentioned the names of Accused No.5-Atul
and Accused No.6-Pankaj and Ms. Punam Khanna, who used to contact
him in connection with the deals. However, he has not seen any of them.
Hence, Accused No.6-Pankaj need to be acquitted of all the charges
levelled against him by extending him benefit of doubt.
Second Set of Transactions
367. This brings me to the second set of transactions, which pertain to
Accused No.1-Ravikumar, Accused No.2-Suresh Babu, Accused No.3-
Sitaraman, Accused No.8-Hiten and Accused No.9-Deepak and Accused
No.10-Virendra. As per prosecution case, during the course of
investigation, it was found that the two cheques bearing No.212157 dated
21st February 1992 for the amount of Rs.2,50,000/- Exhibit-38 and
No.21267 dated 22nd February 1992 for the amount of Rs.13,00,000/-
Exhibit-43 issued by NHB for purchase of securities from SBI have not
gone to the account of SBI. The investigation revealed that apart from
these two cheques, there was one more cheque No.173926 dated 1 st
February 1992 issued by NHB in favour of SBI on the count that NHB had
received an excess amount of Rs.8,98,972/- from SBI, which amount they
had returned to SBI by this cheque. However, according to prosecution,
there was no such excess amount, as claimed by NHB. The prosecution
has tried to explain the origin of this cheque Exhibit-138 for the amount of
Rs.8,98,912/- by stating that there were two transactions on 14 th January
1992, which were to be reversed on 21st January 1992. Further, on 16th
January 1992 and 17th January 1992, there was one more transaction
each and the same were to be reversed on 31 st January 1992. According
to Accused No.1-Ravikumar and Accused No.2-Suresh Babu, they had
received the excess amount of Rs.8,98,912/- in respect of these four
transactions, which was to be returned to SBI and hence the cheque was
issued. The prosecution has in this respect relied on Exhibit-102 the Deal
Memorandum singed by Accused No.2-Suresh Babu, Exhibit-446/4 the
entry dated 14th January 1992 in the Books of Accused No.4-HSM
showing that "SBI BRT" sold two crore units @ Rs.13.50 to NHB and the
delivery dated 14th January 1992 and entry Exhibit-447/3 to that effect
along with evidence of PW-41 Vishwesh Bhatt that both these entries
relate to one and the same transaction.
368. Prosecution has then relied on the Deal Memorandum Exhibit-368
signed by Accused No.2-Suresh Babu to prove that on 14 th August 1992,
NHB had entered into a deal with SBI as Deal No.123 for purchase of
securities of 15,00,000 units @ Rs.13.54 for Rs.6,77,00,000/-, which was
reversible on 21st September 1992. There is corresponding entry in the
Books of Account of Accused No.4-HSM Exhibit-446/3 and Exhibit-447/2
in the NHB with the evidence of PW-41 Vishwesh Bhatt that both the
entries relate to one and the same transaction.
369. To prove the reversal of Deal Nos.121 and 123, prosecution has
again relied on the voucher Exhibit-371 bearing signature of Accused
No.2-Suresh Babu and PW-13 Bhushan Raut dated 29th January 1992,
the entry in the Books of Account of Accused No.4-HSM Exhibits 446/2
and 446/5 and the print-out from the computer of Accused No.4-HSM
Exhibit-448/1 dated 29th January 1992. The prosecution has further relied
upon the entry Exhibit-446/6 and Exhibit-448/2 to show that there was an
excess amount of Rs.6,08,912/-. In the said reversal deal, which was kept
in the Sundry Deposit by voucher Exhibit-371. The prosecution has further
relied upon the relevant entries Exhibits "103", "446/7" & "447/4" and the
evidence of PW-41 Vishwesh Bhatt to prove Deal No.128 and the voucher
signed by Accused No.2-Suresh Babu Exhibit-364, the entry Exhibit-446/9
in the Books of Account of Accused No.4-HSM and entry Exhibit-447/5,
coupled with the evidence of PW-41 Vishwesh Bhatt, to prove the Deal
No.139. Thus, according to prosecution, in both the deals, counter parties
were SBI. There are further entries to that effect, like, Deal Diary dated
31st January 1992 Exhibit-365 and Exhibit-366, coupled with the entry in
the RBI Scroll Book Exhibit 367. It is urged that these entries clearly
reveal that there was no excess amount received from SBI; despite that
the cheque for the amount of Rs.8,98,912/- was issued only with an
intention to benefit Accused No.9-Deepak. According to Senior P.P., the
voucher Exhibit-364 was prepared for it. It is urged that if the NHB had
purchased the Bond @ Rs.85/-, why it has sold the same @ Rs.84.96216,
when reversal always will be on a higher rate compared to the first leg.
370. It is urged by the prosecution that all the above three cheques were
bearing the signature of Accused No.1-Ravikumar and P.
Jambukeshwaran. They were all drawn on RBI. However, they were
presented in the account of Accused No.9-Deepak, along with three credit
advises, requesting the proceeds of the cheques to be credited into the
account of Deepak Mehta bearing Account No.005660. Exhibits "137" and
"141" are the credit advises pertaining to the cheque for the amount of
Rs.8,98,902/- and Rs.2,50,000/- directing SBI that the sale proceeds of
these cheques be credited to the account of Accused No.9-Deepak.
Exhibit-144 is a credit advise purportedly signed by only one officer from
NHB, namely, P. Jambukeshwaran again giving mandate to SBI to credit
the proceeds thereof to the account of Accused No.9-Deepak. As per
prosecution, all these three cheques are forged as the signatures
appearing thereon are not of authorized signatories of NHB. It is urged
that there was a conspiracy to credit the amount of these cheques to the
account of Accused No.9-Deepak. As the cheques were drawn in favour
of SBI, the proceeds of the cheques could not have been credited into the
account of Accused No.9-Deepak in some other Bank. Hence, for this
particular purpose only, the account was opened in the name of Accused
No.9-Deepak at SBI Mumbai Main Branch, with the help of Accused No.3-
Sitaraman.
371. As regards the documents produced on record at Exhibit-446, the
submission of learned counsel for Accused No.1-Ravikumar is that these
are the computer printouts, which are not authenticate documents and
hence cannot be said to have been proved as per the provisions of
Section 65B of the Indian Evidence Act. Hence, they cannot be admissible
at all. According to him, these computer printouts do not constitute Books
of Account as these are loose sheets. Moreover, prosecution had not
complied with the provisions of Section 65B of Indian Evidence Act, which
lays down the conditions to be complied with for admissibility of electronic
evidence. It is urged that though the said section was introduced by way
of an amendment with effect from 17th October 2000, still, being the
procedural law, it operates retrospectively.
372. In this respect, learned counsel for Accused No.1-Ravikumar has
also drawn attention of this Court to Section 34 of Indian Evidence Act,
which pertains to the entries in the Books of Account, including those
maintained in an electric form, kept regularly in the course of business. It
is urged that as per this Section, these entries are relevant but the
statements made therein shall not alone be sufficient to charge any
person with liability. To substantiate this submission, learned counsel for
Accused No.1-Ravikumar has relied upon the landmark decision of the
Hon'ble Apex Court in the case of Central Bureau of Investigation Vs.
DCS, 1988 Cri.L.J. 480, which examines the scope of Section 34 of
Evidence Act. It is urged that in this decision, the Hon'ble Apex Court has
also considered its earlier decision in Chandradhar Goswami and Ors. Vs.
Gauhati Bank Ltd., (1967) 1 SCR 898, and held that entries in Books of
Accounts are not by themselves sufficient to charge any person with
liability, the reason being that a person cannot be allowed to make
evidence for himself by what he chooses to write in his own Books behind
the back of the parties. There must be independent evidence of the
transaction to which the entries relate and in the absence of such
evidence, no relief can be given to the party, who relies upon such entries
to support his claim.
373. It is urged that in view of the conspectus of these decisions, it is
clear that even correct and authentic entries in the Books of Account
cannot, without independent evidence of their trustworthiness, fix any
liability upon a person. Here in the case, it is urged that Exhibit-446 are
loose sheets. Moreover, they are computer printouts, but, no certificate, as
required under Section 65B of Indian Evidence Act, is attached to prove
their authenticity. There is also no evidence of the person, who has made
entries in computer in respect of these sheets and there is no independent
evidence also to back these entries. Hence, it is urged that on the basis of
Exhibit-446, no liability can be fixed on any of the accused persons.
374. However, as rightly submitted by learned Senior P.P., these entries
are not the sole piece of evidence, on which the prosecution is relying, but
these entries are fully supported with the other documentary evidence on
record, like, entries in Deal Diary, RBI Scroll Book etc. and hence the
above said submission of learned counsel for Accused No.1-Ravikumar
cannot be accepted.
375. As per the contention of Accused No.2-Suresh Babu, whose
signatures are appearing on these three cheques, the proceeds of these
cheques were credited by SBI into the account of Accused No.9-Deepak
on the basis of forged and fabricated covering letters. It is submitted that
there is evidence to that effect of PW-64 Madhusudanlal Sharma,
Government Examiner, proving that the covering letter Exhibit-141 and
pay-in-slip at Exhibit-140 of Cheque No.38 is in the handwriting of
Accused No.9-Deepak, whereas covering letter Exhibit-144 and pay-in-
slip Exibit-143 of cheque at Exhibit-43 is also in the handwriting of
Accused No.9-Deepak. Similarly, pay-in-slip at Exhibit-36 and covering
letter Exhibit-137 of cheque Exhibit-130 is again in the handwriting of
Accused No.9-Deepak. It is urged that if on the basis of such false and
fabricated documents, Accused No.9-Deepak has got some amount
credited to his account, then, again Accused No.2-Suresh Babu cannot be
held responsible for the same. Accused No.9-Deepak in this respect was
assisted by Accused No.3-Sitaraman in opening the account in the Bank
only on 3rd February 1992 and closing immediately on 19th June 1992
merely for the purpose of getting the proceeds of the said cheques
collected in his account.
376. It is urged that as regards the amount of Rs.8,98,902/- of the
cheque Exhibit-138, NHB had no claim to that amount because, according
to the Books of Account of NHB, it was an excess amount received from
SBI and hence it was kept in Sundry Deposit Account till it was paid to SBI
vide cheque at Exhibit-138. According to Accused No.2-Suresh Babu, if
there was no claim made by SBI to that account, then, the cheque ought
to have been returned to NHB. That amount, in any way, cannot,
therefore, become payable to Accused No.9-Deepak.
377. It is urged by Accused No.2-Suresh Babu that the claim of Accused
No.9-Deepak that the said cheques were issued by NHB for purchase of
shares by Mr. M.J. Pherwani is false and totally baseless. It is urged that if
shares had been purchased by Mr. M.J. Pherwani, the then Chairman of
NHB, then, the cheques should have been taken from him. Why would
NHB issue cheques for purchase of shares by Mr. Pherwani? Moreover,
the cheques should have been taken from Mr. Pherwani, in favour of M/s.
M/s. Extol Investment. It is urged that the claim made by Accused No.9-
Deepak that due to non-payment of balance amount of Rs.8,39,000/-, he
has exercised his right of lien and retained the said shares worth
Rs.32,88,000/- with himself, is also not tenable as no sub-broker can
retain shares worth Rs.32,88,000/- when the amount in default is only
Rs.8,39,000/-. Further the fact that the shares allegedly purchased on
behalf of Mr. M.J. Pherwani had been transferred subsequently in the
family members' name of Accused No.9-Deepak and Accused No.10-
Virendra, is also not tenable. It is submitted that in none of the three
letters Exhibits "576", "577" and "578", allegedly sent by Accused No.9-
Deepak and/or Accused No.10-Virendra to Mr. Pherwani, there is mention
of the balance amount payable by him. Moreover, those letters do not
have any acknowledgement from Mr. Pherwani. This further proves that
the said letters are only fabricated documents. Thus, according to
Accused No.2-Suresh Babu, in respect of these transactions involving
Accused No.9-Deepak and Accused No.10-Virendra also, there is nothing
to implicate him.
378. It is a matter of record that Accused No.3-Sitaraman has not
disputed that he has identified Accused No.9-Deepak for opening of the
said account. The account opening form Exhibit-436, pay-in-slip Exhibit-43
and Ledger Sheet Exhibit-437 are the relevant documents, which are not
disputed by Accused No.9-Deepak also. Exhibit-436 proves that the
account was opened as per the introduction of Accused No.9-Deepak by
Accused No.3-Sitaraman. The handwriting thereon is proved to be of
Accused No.3-Sitaraman, coupled with the signature thereon, as is opined
by the handwriting expert PW-64 Madhusudanlal Sharma. As a matter of
fact, Accused No.3-Sitaraman has also not disputed the said fact, but,
according to him, it was purely an innocuous act and prosecution is
deriving unwanted and unnecessary inference therefrom.
379. However, this contention of Accused No.3-Sitaraman cannot be
accepted for the simple reason that the account in the name of Accused
No.9-Deepak appears to be opened merely for the purpose of credit of
these three cheques. It is pertinent to note that the proceeds of the
cheque Exhibit-138 was credited into the account of Accused No.9-
Deepak on 14th February 1992; whereas, the credit of the cheques
Exhibits "38" and "43" was given in his account on 26th February 1992.
The pay-in-slips are produced on record to that effect. Accused No.9-
Deepak has admitted his handwriting and signatures on these pay-in-slips
in his statement recorded under Section 313 of Cr.P.C. Prosecution has
given the details of how the proceeds of these cheques were utilized from
the account of Accused No.9-Deepak towards issuance of cheques in
favour of M/s. D.M. Investments and M/s. Extol Investment. It is pertinent
to note that the account was closed immediately on 19th June 1992 vide
Exhibit 439 by Accused No.9-Deepak, after the balance amount of
Rs.6,482/- was paid by SBI in his account vide Cheque No.071752 dated
19th June 1992. According to prosecution, the amount from the account of
Accused No.9-Deepak went into the account of TMS Board towards
purchase of shares in the name of Accused No.9-Deepak; whereas, the
amount of Rs.4,50,000/- was transferred to the account of D.M.
Investment, which was, later on, transferred to the account of M/s. Extol
Investment. M/s. D.M. Investment is a Proprietary Concern, in which
Accused No.9-Deepak is a Proprietor. The documentary evidence is
produced on record to that effect vide Exhibit-207 to 210 and Accused
No.9-Deepak has not disputed the said fact.
380. Prosecution has examined PW-37 T. P. Nageswara Rao to prove
that several cheques were issued from this account to PW-37 T. P.
Nageswara Rao towards purchase of the securities. Some of the cheques
were issued in favour of M.B. Mehta from the account of M/s. Extol
Investment during the said period. None of these facts is disputed by
Accused No.9-Deepak and Accused No.10-Virendra also.
381. According to prosecution, the pay-in-slips, along with these three
cheques viz. "137", "141" and "144", were forged for crediting the said
amount of the cheques to the account of Accused No.9-Deepak. In this
respect, reliance is placed on the evidence of PW-9 Girdhar Hargunani,
who has stated that though in respect of these three cheques, payee was
SBI, they were credited to the account of Accused No.9-Deepak, because
along with these cheques they had received the credit advises issued by
NHB stating that the amount be credited to the account of Accused No.9-
Deepak. As per the prosecution case, the alleged signatures of P.
Jambukeshwaran on these Exhibits "137", "141" and "144" were sent to
PW-64 Madhusudanlal Sharma, Hand Writing Expert for comparison as
the signatures thereon were not found to be that of P. Jambukeshwaran.
382. It is urged that PW-64 Madhusudanlal Sharma, the Government
Examiner, has in his deposition and in his report categorically stated that
the person i.e. P. Jambukeshwaran, who wrote the specimen writing and
signatures marked as Exhibit-542 collectively and Exhibit-542A
collectively, did not write the questioned signatures marked as "Q-2"
Exhibit-137, "Q-7" Exhibit-141 and "Q-8" Exhibit-144. Thus, according to
prosecution, these documents are categorically proved to be the forged
documents, which were used by Accused No.9-Deepak in connivance
with Accused No.3-Sitaraman for the purpose of getting the proceeds of
these three cheques. Learned Senior P.P. in this respect has relied on the
decision of the Hon'ble Apex Court in Alamgir Vs. State (NCT, Delhi), AIR
2003 SC 282, wherein relying on the decision in Murari Lal Vs. State of
M.P., AIR 1980 SC 531, it was held that the evidence of handwriting
expert alone can also be relied upon without any corroboration to prove
the offence of forgery. It is submitted that, as observed by the Apex Court,
there is no rule of law or any rule of prudence, which has crystallized into
a rule of law that opinion evidence of a handwriting expert can never be
acted upon unless substantially corroborated.
383. As against it, learned counsel for Accused No.9-Deepak has
challenged the evidence and opinion of handwriting expert on the count
that he has not retained the pencil notes on the basis of which he has
prepared the final notes, as he has admitted in his evidence that the said
pencil notes were destroyed. It is, therefore, submitted that the primary
evidence is not before the Court and therefore, defence has been
seriously prejudiced in its ability to cross-examine the expert to determine
the veracity of his opinion.
384. However, in my considered opinion, this contention cannot be
accepted because the pencil notes, as admitted by PW-64 Madhusudanlal
Sharma, were prepared in the course of examination of the documents.
Thereafter, the reasons were prepared giving salient features and then the
pencil notes were destroyed, as they were rough notes. Therefore, it
cannot be said that rough pencil notes were the primary evidence. The
evidence of handwriting expert clearly reveals that he has subjected the
disputed handwriting and the signatures to all the necessary examination
by using various equipments. He has noted similarities and dis-similarities
in the general writing habits, such as, writing movements, writing skill, line
quality, writing slant, writing speed, spacing, size and proportions, style of
writing, alignment, formation, nature of commencing and terminating the
specs, combination of various strokes, alignment, simplification etc. and
thereafter only he has given his opinion. There is no reason at all to
challenge the same in any way.
385. Moreover, in this case, the evidence of Handwriting Expert PW-64
Madhusudanlal Sharma stands fully corroborated from other
circumstantial evidence, like, the amount being credited to the account of
Accused No.9-Deepak on the basis of Exhibit-137. The details written in
Exhibit-137, the pay-in-slip are the details of the account of Accused No.9-
Deepak and, therefore, exclusively within his knowledge. Hence, an
outsider could not have been aware about the same. It is not the case of
Accused No.9-Deepak that anyone else has filled those details.
386. The defence of Accused No.9-Deepak in respect of these three
cheques is very specific. According to Accused No.9-Deepak, he was a
small time sub-broker. He was not knowing Mr. Pherwani personally.
According to written statement filed by him under Section 313 of Cr.P.C.,
his cousin brother Accused No.4-HSM had given the said three cheques
to him for purchasing the shares for Mr. M.J. Pherwani. Those shares
were of Apollo Tyres Ltd., Mazda Packaging Ltd. and Gujrat Cycles Ltd.
He has purchased those shares through sub-broker PW-57 Sundardas
Kankal. Delivery of the shares was given to his Partner Accused No.10-
Virendra. He has purchased these shares through his Firm M/s. Extol
Investment, for Rs.32,88,490/-. The bill was sent to Mr. Pherwani by
Accused No.10-Virendra. As he had received money from Mr. Pherwani
only to the extent of Rs.24,00,000/- and the balance amount was not
received, he had kept the shares with him. As the Book Closure Date for
M/s. Apollo Tyres Ltd. was approaching in July - August, 1992, he and
Accused No.10-Virendra decided to transfer shares in the name of his
family members in order to prevent the shares becoming a bad delivery.
The idea was to re-transfer the shares in the name of Mr. Pherwani on
receiving full payment; so that his interests would also be secured.
According to Accused No.9-Deepak, after the scam broke out, he has
voluntarily surrendered the shares of M/s. Gujarat Cycles Ltd. and M/s.
Mazda Packaging Ltd. to C.B.I. and suffered a great financial loss.
387. As regards the three cheques, according to Accused No.9-Deepak,
on the instructions of Accused No.4-HSM, he opened the Bank Account
and deposited them in his account genuinely believing that those cheques
were issued for and on behalf of Mr. Pherwani.
388. Learned Senior P.P. has analyzed this contention of Accused No.9-
Deepak threadbare and rightly so. Admittedly, Mr. Pherwani was the
Chairman of UTI for almost five years. He was also the Chairman of Stock
Holding Corporation of India and Infrastructure Leasing and Finance
Company, India. He had, therefore, no reason for purchasing the shares
from Accused No.9-Deepak, who was, admittedly, a small time sub-broker.
Moreover, if the shares were purchased on behalf of Mr. M.J. Pherwani,
then, there was no reason for NHB to issue the cheques for purchase of
those shares. The prosecution has also led the evidence of PW-68 P.K.
Jacob to show that during the course of investigation, considering that Mr.
Pherwani has met with an unfortunate death on 21st May 1992, a thorough
investigation was carried out to ascertain whether this claim made by
Accused No.9-Deepak that the cheques were issued towards the price of
the shares purchased by Mr. Pherwani was true. PW-68 P.K. Jacob, the
Chief Investigating Officer has, in this respect, deposed that the search of
the house of Mr. Pherwani was conducted to find out his involvement.
However, even after extensive investigation, they could not get any
evidence of Mr. Pherwani's involvement. The originals of these shares,
which were allegedly purchased on the basis of the copies of bills
mentioned in Exhibits "576", "577" and "578" were never found in spite of
extensive search and it was also revealed that no such shares were ever
transferred in the name of Mr. Pherwani.
389. As against it, the evidence on record shows that as per Exhibit 576,
577 and 578, the total amount due from Mr. M.J. Pherwani, if at all he has
purchased the shares, was Rs.32,88,490/-. However, the amount paid by
him vide Exhibits "148", "38" and "43" was only Rs.24,49,000/-. The first
cheque of Rs.8,98,912/- was collected by Accused No.9-Deepak on 14 th
February 1992. The other two cheques for Rs.13,00,000/- and
Rs.2,50,000/- were credited into his account on 26 th February 1992.
However, in none of the Exhibits "576", "577" and "578", which are the
letters issued by M/s. Extoll Investments and addressed to Mr. M.J.
Pherwani, dated 15th March 1992, 7th March 1992 and 28th March 1992,
there is mention about the amount of Rs.24,49,000/- paid by Mr.
Pherwani. Moreover, in none of these letters, the balance amount is
claimed from him.
390. Moreover, the Cash Book of M/s. Extol Investment Exhibit-582
shows that Mazda Packaging Shares were purchased from Manjula
Mehta and other shares from M/s. D.M. Investment. However, the letters
Exhibits "576", "577" and "578" show that shares were purchased by M/s.
Extol Investments. Admittedly, the shares were purchased by Accused
No.9-Deepak from M/s. S.K. Kankal, a share-broker Firm and the
documents show that there was a huge difference between the buying
price and selling price of the shares. The prosecution has given the details
about the same vide Exhibit-551 to show that Manjula Mehta sold the
alleged shares of Mazda Packaging to Mr. Pherwani for almost the double
price. It is also a matter of record that the original shares were never
handed over to Mr. Pherwani. Though it is claimed by Accused No.9-
Deepak that as some amount was due from Mr. Pherwani, he had
retained those shares, the evidence of PW-57 Sundardas Kankal reveals
that broker cannot exercise general lien / particular line. There was also
no mandate from Mr. Phewani to purchase the shares and then to
purchase them for such an exorbitant rate.
391. It is pertinent to note that these shares were subsequently
transferred vide letter Exhibit-585 dated 24th July 1992 in the name of
family members of Accused No.10-Virendra, without giving any notice of
the transfer to the family members of Mr. Pherwani.
392. Thus, in this case, as regards these transactions, the evidence on
record clearly establishes the fact that Accused No.9-Deepak had not
given any satisfactory explanation as to why he had accepted the
cheques issued in the name of SBI when the shares were to be
purchased on behalf of Mr. Pherwani; especially, when Accused No.9-
Deepak did not have any account with SBI. There are no documents to
prove that Mr. Pherwani had given any instructions for purchase of the
shares or they were actually purchased in the name of Mr. Pherwani.
Conversely, the shares allegedly purchased in the name of Mr. Pherwani
were registered in the name of Accused No.9-Deepak and Accused
No.10-Virendra or their relatives. No explanation is offered in the letters
Exhibits 576, 577 and 578 as to why the fact that some amount remained
to be received from Mr. Pherwani was not mentioned therein. There is
also no explanation as to variation in the price for sale and purchase of
the shares. Moreover, if the Mazda Packaging shares were purchased
from Mr. Ms. Manjula Mehta and Apollo Tyres and Gujrat Cycle shares
were purchased by M/s. D.M. Investment, there is no explanation why the
letters were sent from M/s. Extol Investment, showing purchase of shares
by them. All these points and the discussion above, make it clear that the
case put up by Accused No.9-Deepak that this amount was towards
shares purchased for Mr. Pherwani, is totally false and put up only as an
afterthought, taking advantage of death of Mr. Pherwani.
393. The next defence taken by Accused No.9-Deepak that the cheques
were given by Accused No.4-HSM along with advises is also required to
be rejected, as it is taken only in view of the death of Accused No.4-HSM.
It is raised for the first time, only when his statement was recorded under
Section 313 of Cr.P.C. Therefore, so far as liability of Accused No.9-
Deepak is concerned, there cannot be any shred of doubt about his
involvement in the various offences punishable under Sections 409, 467
and 471 r/w. 120B of IPC. His contention that only evidence against him is
that of the handwriting expert and there can be no offence of criminal
breach of trust, as the said amount did not belong either to NHB or SBI
and none of them had claimed it, cannot be accepted.
394. The contention of Accused No.9-Deepak is also to the effect that he
is already de-notified by the custodian. To support this contention,
Accused No.9-Deepak has also filed Miscellaneous Application No.68 of
2015 u/s. 294 Cr.P.C. for the production of certified copy of proceedings
leading to his notification. In my considered opinion, however, as the
liability under Criminal Law is different from civil liability, such de-
notification of Accused No.9-Deepak by custodian will not have any
bearing or effect on his liability under Criminal Law, which prosecution has
succeeded in establishing in this case against him beyond reasonable
doubt.
395. In respect of these transactions for issuance of these three
cheques, Accused No.1-Ravikumar, Accused No.2-Suresh Babu and
Accused No.3-Sitaraman also, therefore, cannot escape from the liability.
Role of Accused No.8-Hiten
396. As regards Accused No.8-Hiten, however, except for the evidence
and opinion of the handwriting expert relating to the forgery in respect of
Exhibit-137, there has been absolutely no evidence on record, as
admitted by the prosecution itself. Hence, it becomes difficult to hold that
the prosecution case is proved against him beyond reasonable doubt.
There is no evidence brought on record by the prosecution that he was
either in any way connected with M/s. Extol Investments, the Firm of
Accused No.9-Deepak and Accused No.10-Virendra or he has in any way
become the part of the conspiracy. Hence, he deserves to be acquitted
from this case.
Role of Accused No.10-Virendra
397. Similarly, as regards Accused No.10-Virendra, who was, admittedly,
not an employee of the company of Accused No.4-HSM, there is no
sufficient evidence on record to prove the charges levelled against him.
He is charged only because he is the partner of M/s. Extol Investments
and because certain shares of the companies like M/s. Apollo Tyres Ltd.
were claimed to be purchased for Mr. Pherwani and subsequently
transferred in the name of his family members. Prosecution has failed to
prove that he has played any role in obtaining the cheques from NHB or
the said cheques being credited to the account of Accused No.9-Deepak.
In view thereof, it has to be held that the benefit of doubt has to be
extended to him also.
398. Of-shot of the above-said discussion is that, the prosecution has
succeeded in proving its case against Accused No.1-Ravikumar, Accused
No.2-Suresh Babu, Accused No.3-Sitaraman, Accused No.5-Atul,
Accused No.7-Sudhir and Accused No.9-Deepak for the offences
punishable under Sections 120B of IPC. The prosecution has also
succeeded in proving the guilt of Accused No.1-Ravikumar, Accused
No.2-Suresh Babu and Accused No.3-Sitaraman beyond reasonable
doubt for the offences punishable under Section 409 r/w. Section 120B of
IPC and Section 13(1)(c) and 13(1)(d) of Prevention of Corruption Act,
1988 r/w. Section 120B of IPC.
399. Prosecution has further succeeded in proving the offences
punishable under Sections 403, 467, 471, 477A and 420 r/w. Section
120B of IPC against Accused No.1-Ravikumar and Accused No.2-Suresh
Babu.
400. Prosecution has also succeeded in proving its case against
Accused No.5-Atul and Accused No.7-Sudhir for the offence punishable
under Section 409 r/w. Sections 109 and 120B of IPC.
401. Prosecution has also succeeded in proving its case against
Accused No.9-Deepak for the offence punishable under Sections 403,
409, 411, 467 and 471 r/w. Section 120B of IPC and Sections 13(1)(c),
13(1)(d) of Prevention of Corruption Act, 1988 r/w. Sections 109 and 120B
of IPC.
402. Accordingly, I hold the accused guilty for the offences as stated
above.
403. At this stage, I stop dictation of Judgment in order to hear the
accused on the question of sentence.
[Dr. Shalini Phansalkar-Joshi, J.]
404. As regards the question of sentence, it is submitted by Accused
No.1-Ravikumar in person that he has undergone the sufferings of
pending cases since the year 1992. He has lost his job during the said
period and has also suffered mentally and physically on account of the
liver failure. It is urged that, totally, in six cases, he was prosecuted, out of
which, in one case, he is discharged; in another case, he is acquitted.
Totally, he has undergone the imprisonment of twenty-four months and in
this case, he has undergone the imprisonment of four months and twenty-
six days (total "146" days). In view thereof, it is submitted by Accused
No.1-Ravikumar in person and his counsel Shri. Satyanarayanan that
Accused No.1-Ravikumar has been regularly attending this Court since
last twenty-four years; there is nothing to take any deterrent view of the
matter and, therefore, by adopting a lenient view, most minimal sentence
be imposed.
405. Accused No.2-Suresh Babu, who appears in person, has also
submitted that the role attributed to him, considering the nature of his
duties, was very minimal. He has only obeyed the orders of his superiors.
He has personally not entered into any contract or deals as such. He has
also submitted that, since last twenty-four years, he is undergoing this
investigation and trial process. During the said period, he has suffered
mentally and physically also. He has been regular in attending this Court.
According to him, totally, six cases were filed against him also. Out of
them, in one case, he was acquitted by the Special Court; in another
case, he was discharged; in third case, he was convicted by the Special
Court, but acquitted by the Hon'ble Supreme Court; and, in fourth case,
his conviction was upheld, but he was released on the punishment
already undergone. It is submitted that, as he has already spent in the jail
the period of twenty-five days totally, a lenient view be taken and minimal
punishment be imposed.
406. It is his further submission that, in Special Case No.4 of 1994, which
also deal with similar offences and arising out of the same F.I.R., though
some accused were convicted, the punishment imposed on them was
merely of S.I. till rising of the Court and that may be considered in his
case also. He has also submitted that he is having no financial support, as
he is not employed. His wife is also unemployed and, therefore, even
while considering imposition of fine amount, this fact needs to be taken
into account.
407. Accused No.3-Sitaraman, who is also appearing in person, has
submitted that, since last twenty-four years, he is also undergoing the
rigors of the investigation and trial process. Totally, six cases were filed
against him; out of which, four have ended into conviction. However, vide
order passed by the Hon'ble Supreme Court in Criminal Appeal No.536 of
2016 on 27th April 2016, the punishment in all these cases is reduced to
the sentence already undergone in the jail. He has urged that, he was in
jail, in all, for two months. He has urged that he is also having no financial
support since last twenty-four years. While in the job of attending the
Court in these various cases, he could not be even gainfully employed
and hence a minimal sentence be imposed on him. He has further
submitted that, in addition to these six cases, he is also prosecuted in four
more cases, which are filed in the Sessions Court at Mumbai and one
case in the Sessions Court at Delhi. It is submitted by him that, out of the
four cases filed in the Sessions Court at Mumbai, in two cases, he has
been acquitted. Other cases are pending. He is attending those cases
also.
408. Further, he has pointed out to the Judgment of this Court in Special
Case No.4 of 1994, to submit that, for the similar role played by Accused
No.6 in the said case, namely, Smt. Mohana Subramanyam, who was
from Grindlays Bank, she has been sentenced only to suffer S.I. till rising
of the Court and to pay fine of Rs.15,000/- only. According to him, as his
role is similar to the role played by Accused No.6 Smt. Mohana
Subramanyam in Special Case No.4 of 1994, he also cannot be
sentenced to suffer more imprisonment than the one imposed on her. He
has further urged that he is also suffering from the medical problems, like,
High Blood Pressure at the advanced age of 64 years. Therefore,
according to him, this is a fit case where the lenient view needs to be
adopted.
409. So far as Accused No.5-Atul is concerned, submission is advanced
on his behalf by his learned counsel Shri. D.U. Mirajkar that the similar
role for which Accused No.5-Atul is held guilty in this case, he was
examined as witness in Special Case No.4 of 1998. Secondly, he has
urged that Accused No.5-Atul has already been in jail for a period of
Fourteen, Fifteen and Nineteen days in three other cases. According to
learned counsel for Accused No.5-Atul, Accused No.5-Atul is running the
age of 60 years and suffering from Diabetes and the initial stage of renal
problem. He has urged that, as the verdict in this case is being delivered
after a period of twenty-four years, that fact should also be considered;
especially, having regard to the role attributed to him and also considering
the fact that in Special Case No.4 of 1994, though he was convicted by
this Court, for the similar offence and the same role, he was sentenced
only to the S.I. till rising of the Court and some fine amount. Thus, it is
submitted by learned counsel, for Accused No.5-Atul, Shri. Mirajkar that,
similar approach and sentence may be justified in this case also, adopting
a lenient view of the matter.
410. As regards Accused No.6-Pankaj, it is submitted by him that merely
because he was the brother and Constituted Attorney of Accused No.4-
HSM, he has been implicated. The only role attributed to him is of making
the signatures on the Contract Notes. He has not received any monetary
gain. That is not the allegation of the prosecution also. Further, it is
submitted that, though several cases are instituted against him, in more
than one case he is acquitted and in one case, though he is convicted, he
is sentenced to suffer S.I. only till rising of the Court. Further, he has
submitted that in the year 1992, when the scam broke out, he was only 24
years of age. Now, he is 52 years. His prime youth had undergone in the
trial process in various Courts. Now, his two daughters, who are engaged,
are about to be married and hence it is urged by him that minimal
punishment be imposed, taking a lenient view of the matter.
411. His learned counsel has submitted that in all the cases which are
decided by this Special Court, when they reached to the Hon'ble Supreme
Court in Appeals, the Hon'ble Supreme Court has taken the most lenient
view and released the accused on the punishment which they had already
undergone. Here in the case also, he has submitted that this accused has
totally undergone the imprisonment of forty-five days and that may be
considered sufficient so as to release him on the punishment already
undergone.
412. As regard Accused No.9-Deepak, it is submitted by his learned
counsel that he is prosecuted only in one case i.e. the present case.
There is no other case filed against him. It is further submitted that he has
not received any pecuniary gains in the entire transaction. He has
voluntarily surrendered the shares to the C.B.I. and it is not that C.B.I. has
seized those shares or recovered them from him. Further, it is urged that
for the offence for which he is charged and convicted, there is no
mandatory period of sentence and considering that his age at the time of
incident about 24 years back, the benefit of the provisions of Section 4 of
Probation of Offender's Act also deserves to be extended to him, as it is
his first offence. Further, it is submitted that he is suffering physically and
mentally during this period of last twenty-four years. He has Diabetes and
also suffering from Arthritis. The marriage of his daughter is also on the
card and hence, according to his learned counsel, whatever minimal
punishment, which can be imposed by this Court, needs to be considered
and awarded.
413. All these submissions, advanced by the accused in person and their
learned counsels, are strongly controverted and resisted by learned
Senior P.P. by submitting that the offences in this case are of very serious
nature, having wide repercussions and implications. It is urged that the
scam of the year 1992 has rocked the economy of the entire country.
Some Banks went into liquidation, whereas, several persons lost their
money and committed suicide. Therefore, according to him, this case
does not deserve any lenient view. Learned Senior P.P. has also pointed
out to the decisions of the Hon'ble Supreme Court in the case of Ram
Narain Poply and Vinayak Deosthali (supra) to submit that the offences of
economic nature and economic fraud cannot be viewed leniently. He has
urged that the fact that the accused are involved in various cases clearly
indicate that some deterrent punishment needs to be awarded to them.
Even as regards Accused No.9-Deepak, it is urged that he is the
beneficiary of Rs.25,00,000/-. Moreover, he has not surrendered the
shares to the legal heirs of Mr. Pherwani, according to his defence, but,
only when the C.B.I. registered the case, he has surrendered those
shares to C.B.I. Therefore, according to learned Senior P.P., the benefit of
Probation of Offender's Act cannot be invoked or extended to Accused
No.9-Deepak. Further, according to learned Senior P.P., the punishment,
which was imposed on Accused No.8-Mohana in Special Case No.4 of
1994, cannot be imposed in this case, as she was a lady and having small
child; therefore, different considerations, were prevailing before the
concerned Court at that time. There cannot be any parallel or precedent
on that aspect and hence in his opinion, having regard to the gravity of the
offence, this is a fit case where this Court should adopt a deterrent
approach.
414. I have given my thoughtful consideration to the submissions
advanced by the accused in person, their learned counsels and learned
Senior P.P.
415. It is true that, in this case, the offence has taken place, way back in
the year 1992, and about twenty-four years have lapsed since then, as
this verdict is coming in the year 2016. It is also true that during this period
of twenty-four years, the accused persons have undergone both, the
physical and mental sufferings, not only of attending the Court regularly,
which they are doing, as can be seen from the record of this case also,
but also because the sword of conviction and sentence was always
hanging on their heads. It is also true that the approach, which is adopted
by the Hon'ble Supreme Court while considering the appeal preferred by
them, is of leniency, in the sense that they are released on the punishment
already undergone by them in some of the cases.
416. However, at the same time, it is also true that the offence, which is
committed by them; especially, Accused No.1-Ravikumar, Accused No.2-
Suresh Babu and Accused No.3-Sitaraman is of a grave and serious
nature, it is of siphoning of crores of funds of the Nationalized Bank,
Financial Institutions to the account of some third person, who was not
entitled thereto, like Accused No.4-HSM. The country has witnessed the
repercussions of the said offence in the sense that the economy of the
country was totally shattered on account of this scam. The Hon'ble Apex
Court is also serious as regards the economic offences and that can be
viewed from the observations of the Hon'ble Apex Court in the case of
Ram Narain Poply (supra), as follows :-
"380. The offences in these cases were not of the
conventional or traditional type. The ultimate
objective was to use public money in a carefully
planned manner for personal use with no right to do
it.
381. Funds of public bodies were utilized as if they were
private funds. There was no legitimacy in the
transactions. Huge funds running into hundreds of
crores of MUL a Government Company, were
diverted and all the concerned accused persons A1,
A3 and A5 played dubious roles in these illegitimate
transactions. Their acts had serious repercussions on
the economic system of the country and the
magnitude of financial impact involved in the present
appeal is only tip of the iceberg."
417. Even in the case of Vinayak Deosthali (supra) also, the Hon'ble
Apex Court has not reduced the sentence to the punishment already
undergone when the accused were implicated and convicted with the
similar offences.
418. Therefore, while awarding the sentence, the Court has to do the
balancing act and in such situation, the principle of proportionality
assumes significance. The sentence has to be proportionate to the
offence committed by the accused and at the same time the Court has to
take into account all the relevant factors, like, the delay in pronouncement
of the verdict, the period during which the accused has undergone this
entire trial process, then the physical and financial conditions of the
accused and their liabilities, coupled with their age and the ailments,
which they may be suffering. If all these facts are kept in mind, it is
needless to state that, though it is first offence and the only conviction of
Accused No.9-Deepak, the benefit of the provisions of the Probation of
Offender's Act cannot be invoked for his offence; especially when his
conviction is for the offence punishable under Section 409 r/w. Sections
109 and 120B of IPC and, therefore, that is out of question.
419. So far as remaining accused, like Accused No.1-Ravikumar,
Accused No.2-Suresh Babu and Accused No.3-Sitaraman, are concerned,
as they are charged for committing the offence of misusing their position
as public servants and, therefore, for the offence punishable under
Section 409 of IPC and Section 13(2) of the Prevention of Corruption Act,
1988, it cannot be accepted that undue lenient view should be taken, so
as to release them on the punishment already undergone; especially
when except for Accused No.1-Ravikumar, none of the remaining accused
had spent a single day in the jail, as far as this case is concerned. They
were released on the bail on the same day they were produced before this
Court. Even as regards Accused No.1-Ravikumar, he was in jail, in this
case, hardly for five to six months. Hence, there is no question of
releasing them on the sentence already undergone or simple
imprisonment till rising of the Court.
420. Even in respect of Accused No.5-Atul and Accused No.7-Sudhir,
having regard to the fact that they have played a crucial role in the sense
that one has initialed the Contract Notes and other has signed them.
Contract Note, being the primary document, their submission that they
may be released on S.I. till rising of the Court, also cannot be accepted.
421. Thus, having regard to all the factors of the case, the submissions
advanced by the accused, their learned counsels and learned Senior P.P.,
in my considered opinion, following punishment will meet the ends of
justice. Hence the order :-
"O R D E R"
(A) Accused No.1-Ravikumar is convicted for the
offences punishable under Sections 120B, 409, 403,
420, 467, 471 and 477A of IPC and under Section
13(1)(c) and 13(1)(d) r/w. Section 13(2) of the
Prevention of Corruption Act, 1988.
Accused No.1-Ravikumar is sentenced to suffer
R.I. for four years and to pay fine of Rs.1,50,000/-,
in default, to suffer R.I. for six months for the
offence punishable under Section 409 r/w. Section
120B of IPC.
Accused No.1 is further sentenced to suffer R.I. for
three years and to pay fine of Rs.25,000/-, in
default, to suffer R.I. for one month for the offence
punishable under Section 403 of IPC.
Accused No.1-Ravikumar is further sentenced to
suffer R.I. for two years and to pay fine of
Rs.25,000/-, in default, to suffer R.I. for one month
for the offence punishable under Section 420 of
IPC.
Accused No.1-Ravikumar is further sentenced to
suffer R.I. for three years and to pay fine of
Rs.25,000/-, in default to suffer R.I. for one month
for the offence punishable under Section 471 of
IPC. However, no separate sentence is awarded for
the offence punishable under Section 467 of IPC.
Accused No.1-Ravikumar is further sentenced to
suffer R.I. for three years and to pay fine of
Rs.25,000/-, in default to suffer R.I. for one month
for the offence punishable under Section 477A of
IPC.
Accused No.1-Ravikumar is also sentenced to
suffer R.I. three years and to pay fine of
Rs.50,000/-, in default to suffer R.I. for three
months for the offence punishable under Section
13(2) r/w. Sections 13(1)(c) and 13(1)(d) of the
Prevention of Corruption Act, 1988.
No separate sentence is awarded for the offence
punishable under Section 120B of IPC.
All the substantive sentences of imprisonments, as
regards Accused No.1-Ravikumar is concerned,
are to run concurrently.
Accused No.1-Ravikumar is also entitled to set-off
for the imprisonment already undergone in jail from
9th October 2009 to 4th March 2010.
(B) Accused No.2-Suresh Babu is convicted for the
offences punishable under Sections 409 r/w. Section
120B, 403, 420, 471 and 477A of IPC and under
Section 13(2) r/w. Sections 13(1)(c) and 13(1)(d) of
the Prevention of Corruption Act, 1988.
However, having regard to the role played by him and
keeping in mind the role attributed and proved against
him;
Accused No.2-Suresh Babu is sentenced to suffer
R.I. for two years for the offence punishable under
Section 409 r/w. Section 120B IPC and to pay fine
of Rs.50,000/-, in default to suffer R.I. for two
months.
Accused No.2-Suresh Babu is further sentenced to
suffer R.I. for one year for the offence punishable
under Section 403 of IPC and to pay fine of
Rs.25,000/-, in default to suffer R.I. for one month.
Accused No.2-Suresh Babu is also sentenced to
suffer R.I. for one year for the offence punishable
under Section 420 of IPC and to pay fine of
Rs.25,000/-, in default, to suffer R.I. for one month.
Accused No.2-Suresh Babu is further sentenced to
suffer R.I. for one year and to pay fine of
Rs.25,000/-, in default to suffer R.I. for one month
for the offence punishable under Section 471 of
IPC.
No separate sentence is awarded for the offence
punishable under Section 467 of IPC.
Accused No.2-Suresh Babu is further sentenced to
suffer R.I. for one year and to pay fine of
Rs.20,000/-, in default to suffer R.I. for fifteen days
for the offence punishable under Section 477A of
IPC.
Lastly, Accused No.2-Suresh Babu is sentenced to
suffer R.I. for three years and to pay fine of
Rs.50,000/-, in default to suffer R.I. for three
months for the offence punishable under Section
13(2) r/w. Sections 13(1)(c) and 13(1)(d) of
Prevention of Corruption Act, 1988.
No separate sentence is awarded for the offence
punishable under Section 120B of IPC.
All the substantive sentences of imprisonments, as
regards Accused No.2-Suresh Babu is concerned,
are to run concurrently.
(C)
Accused No.3-Sitaraman is convicted for the offences
punishable under Sections 409 r/w. Section 120B of
IPC and under Section 13(2) r/w. Sections 13(1)(c)
and 13(1)(d) of the Prevention of Corruption Act,
1988.
Accused No.3-Sitaraman is sentenced to suffer R.I.
for four years and to pay fine of Rs.2,00,000/-, in
default, to suffer R.I. for six months for the offence
punishable under Section 409 r/w. Section 120B
IPC.
Accused No.3-Sitaraman is sentenced to suffer R.I.
for three years and to pay fine of Rs.1,00,000/-, in
default, to suffer R.I. for two months for the offence
punishable under Section 13(2) r/w. Sections 13(1)
(c) and 13(1)(d) of Prevention of Corruption Act,
1988.
No separate sentence is awarded to him for the
offence punishable under Section 120B of IPC.
All the substantive sentences of imprisonments, as
regards Accused No.3-Sitaraman is concerned, are
to run concurrently.
(C) Accused No.5-Atul and Accused No.7-Sudhir are
convicted for the offence punishable under Section
409 r/w. Section 109 and 120B of IPC and both of
them are sentenced to suffer R.I. for six months,
each, and to pay fine of Rs.50,000/-, each, in default,
to suffer R.I. for one month.
No separate sentence is awarded to them for the
offence punishable under Section 120B of IPC.
(D) Lastly, Accused No.9-Deepak is convicted for the
offences punishable under Sections 409, 403, 420,
411, 467 and 471 r/w. Section 120B of IPC and under
Section 13(2) r/w. Sections 13(1)(c) and 13(1)(d) of
the Prevention of Corruption Act, 1988, r/w. Sections
109 and 120B of IPC.
Accused No.9-Deepak is sentenced to suffer R.I.
for four years and to pay fine of Rs.1,00,000/-, in
default to suffer R.I. for one year for the offence
punishable under Section 409 r/w. Section 120B
IPC.
Accused No.9-Deepak is further sentenced to
suffer R.I. for six months and to pay fine of
Rs.50,000/-, in default, to suffer R.I. for one month
for the offence punishable under Section 403 r/w.
Section 120B of IPC.
Accused No.9-Deepak is also sentenced to suffer
R.I. for one year and to pay fine of Rs.25,000/-, in
default, to suffer R.I. for one month for the offence
punishable under Section 420 of IPC.
Accused No.9-Deepak is further sentenced to
suffer R.I. for one year and to pay fine of
Rs.50,000/-, in default, to suffer R.I. for one month
for the offence punishable under Section 411 of
IPC.
Accused No.9-Deepak is further sentenced to
suffer R.I. for one year and to pay fine of
Rs.25,000/-, in default, to suffer R.I. for three
months for the offence punishable under Section
471 of IPC.
No separate sentence is awarded for the offences
punishable under Sections 467 and 120B of IPC.
Lastly, Accused No.9-Deepak is sentenced to
suffer R.I. for three years and to pay fine of
Rs.50,000/-, in default, to suffer R.I. for three
months for the offence punishable under Section
13(2) r/w. Sections 13(1)(c) and 13(1)(d) of
Prevention of Corruption Act, 1988, r/w. Sections
109 and 120B of IPC.
All the substantive sentences of imprisonments, as
regards Accused No.9-Deepak is concerned, are to
run concurrently.
422. Except for Accused No.1-Ravikumar, who was in jail for a period
from 9th October 2009 to 4th March 2010 in this case, no other accused
was in jail as regards this case is concerned. All these accused were
released on bail on the same day when they were produced before the
Court. They were not even remanded to Police Custody Remand. Hence,
except Accused No.1-Ravikumar, none of the accused are entitled to set-
off for the period of imprisonment already undergone in this case.
423. Accused No.1-Ravikumar is, however, entitled to the set-off for the
period undergone by him in jail from 9th October 2009 to 4th March 2010.
424. Accused No.1-Ravikumar, Accused No.2-Suresh Babu and Accused
No.3-Sitaraman stand acquitted for the offence punishable under Section
411 r/w. 120B of IPC on benefit of doubt.
425. Accused No.6-Pankaj, Accused No.8-Hiten and Accused No.10-
Virendra are acquitted on the benefit of doubt of all the charges levelled
against them.
426. The certified copy of this Judgment be provided to Accused No.1-
Ravikumar, Accused No.2-Suresh Babu, Accused No.3-Sitaraman,
Accused No.5-Atul, Accused No.7-Sudhir and Accused No.9-Deepak
forthwith free of costs.
427. At this stage, before parting with the Judgment, this Court would like
to place on record its profound sense of appreciation and gratitude for the
enormous efforts taken by learned Senior P.P. and learned counsels for all
the accused, in apprising this Court and taking this Court through the
entire evidence, which was recorded in this case, before my learned
predecessor.
428. With these observations, the Judgment is concluded.
429. At this stage, a submission is advanced on behalf of Accused No.1-
Ravikumar, Accused No.3-Sitaraman and Accused No.9-Deepak, who are
sentenced to suffer imprisonment above three years, that though u/s.
389(3) Cr.P.C., they may not be entitled to be released on bail on
conviction by this Court, they may be released on bail by suspending their
substantive sentences of imprisonments by this Court by exercising its
power u/s. 9(4) of the Special Court (Trial of Offences Relating to
Transaction in Securities) Act, in order to enable them to approach the
Hon'ble Supreme Court. It is submitted that this Court has repeatedly and
on several occasions, while convicting the accused for such offences, has
exercised its powers under Section 9(4) of the Special Court (Trial of
Offences Relating to Transaction in Securities) Act; according to which,
this Court is empowered to adopt such procedure as it deems fit
consistent with the principles of natural justice. This Court has, for e.g. in
Special Case No.7 of 1994, decided on 14th August 1998, has observed
that,
"Normally, the accused would have been able to
approach a higher Court in this city without any difficulty.
However, by virtue of the Special Court (Trial of Offences
Relating to Transaction in Securities) Act, the accused
can only approach the Hon'ble Supreme Court. Hence,
this Court must take note that some time would be
required for the accused to approach the Hon'ble
Supreme Court. Hence, in view of the principles of
natural justice, in cases like this, where personal liberty
is at stake, some time must be given to the accused to
effectively exercise their right of appeal. In my view,
Section 9(4) of the said Act will empower this Court to
suspend the sentence of imprisonment and fine for some
time."
430. Considering the above-said observations made by this Court in
Special Case No.7 of 1994 and in subsequent cases thereto, and the
consistent practice followed by this Court in such cases, it is necessary,
having regard also to the fact that Accused No.1-Ravikumar, Accused
No.3-Sitaraman and Accused No.9-Deepak will require some time to
approach the Hon'ble Supreme Court against the Judgment of this Court,
that the sentence of the accused be suspended for a reasonable period.
Similarly, having regard to the fine imposed by this Court, which accused
are unable to raise immediately, so as to deposit the same in this Court,
some reasonable time needs to be given, as requested by them, for
deposit of the fine amount also. Accordingly, the substantive sentence of
imprisonment and fine amount needs to be suspended for a period of
reasonable time. According to learned Senior P.P., reasonable time may
be four weeks. However, learned counsel for accused points out that,
considering the Winter Vacation to the Hon'ble Apex Court commencing
from 17th December 2016 onwards and considering the present situation
created due to demonetization, it is urged that, these accused may require
some more time to raise such a substantial amount of fine. Thus, having
regard to the difficulties in the way of the accused persons, the
substantive sentence of imprisonment and fine of Accused No.1-
Ravikumar, Accused No.3-Sitaraman and Accused No.9-Deepak is
suspended for a period of eight weeks from today.
431. So far as remaining Accused No.2-Suresh Babu, Accused No.5-Atul
and Accused No.7-Sudhir are concerned, as they are sentenced to suffer
the imprisonment for a period of less than three years, their sentence of
imprisonment and payment of fine for the reasons stated above, is also
suspended u/s. 389(3) Cr.P.C. for a period of eight weeks from today in
order to enable them to approach the Hon'ble Supreme Court against this
Judgment.
432. Accused No.1-Ravikumar, Accused No.2-Suresh Babu, Accused
No.3-Sitaraman, Accused No.5-Atul, Accused No.7-Sudhir and Accused
No.9-Deepak are released on P.R. Bond of Rs.10,000/-, with one or two
solvent surety in the like amount, on the same terms and conditions, as
were imposed earlier and on further execution of the Bond, laid down in
Form 44A in pursuance of Section 424(1)(b) Cr.P.C. regarding payment of
fine amount.
433. On the request of the accused, time of one week is granted to
furnish the Surety Bond.
[DR. SHALINI PHANSALKAR-JOSHI, J.]
