Shri V.S. Murthy vs The State (C.B.I.) [Along With ...
2005 Latest Caselaw 918 Del

JUDGMENT

Manju Goel, J.

1. These are three revision petitions arising out of the same impugned orders dated 7.5.1999 & 11.8.1999 whereby the three petitioners were charged under various sections of Indian Penal Code (in short `IPC') and the Prevention of Corruption Act. The story of the prosecution is as under:

2. The accused No. 4, V.S. Murthy (petitioner in Crl.Rev. No. 432/99) at the relevant time was the Director (Finance), Bharat Dynamics Limited (in short `BDL') and was the Chairman of the Investment Committee of the BDL. During February and March, 1994, the BDL, Hyderabad had surplus funds to the extent of Rs. 100 crores which could be invested. This was disclosed by A-4 to Dr. R.S.A. Dhani (A-5), petitioner in Crl. Revision Petition No. 434/99), who in turn conveyed the same to accused Mohan Gupta (A-6), petitioner in Crl. Revision Petition No. 52/2000, who was a finance broker. Around that time, John Daniel (A-3), a NRI from Kuwait was in New Delhi and was contemplating to start an air taxi service in the name and style of Wens Airways Corporation. Y.K.Sharma, Accused No. 2, came in contact with John Daniel (A-3), who wanted the help of A-2 for opening a bank account in some South Delhi Bank. A-2 used his acquaintance with Ranbir Sharma (A-1), who was the Deputy Manager of State Bank of India (in short `SBI'), Green Park, New Delhi. A-1 introduced A-3 to the Chief Manager, SBI, Green Park and a current account No. 965 was opened in the SBI, Green park on 11.2.1994 in the name and style of M/s. Jaydees International with the introduction of A-2. A-2 at the instance of A-3 contacted A-6 for arranging funds for the project of Air Taxi service. On 3.3.1994, A-6 informed A-2 that BDL, Hyderabad had surplus funds amounting to Rs. 100 crores and that they were interested in investing the same with some nationalized bank on interest ranging from 14% to 15%. From the residence of A-6, A-2 talked with A-5 and thereafter A-6 and A-2 discussed plan with A-3 at Hotel Taj. Pradeep Goel, a close associate of A-2, was sent to the residence of A-6 by A-3 and A-2 to explain the mode by which interest of 14.5% on deposits could be provided to BDL besides a service charge of 2%. Pradeep Goel met Mohan Gupta and explained the proposal. Mohan Gupta, A-6, in turn passed on the information to A-5 and a couple of days later A-6 with Pradeep Goel called on A-5 in his office at Maya Puri and explained the proposal and the whole plan was passed on to A-4, V.S. Murthy on telephone. Pradeep Goel thereafter visited Hyderabed for seeking the deposit of surplus funds and inter alia explained to V.S. Murthy, A-4, that bank would pay interest @ 14.5% by issuing two FDRs for one year period and that one of the FDR would be for the amount deposited @ 10% for the period of one year and another FDR of the maturity value to the extent of 4.5% interest on the actual deposit to be provided by BDL, Hyderabad. However, although A-4 was satisfied at the proposal, the General Manager (Finance) and Deputy General Manager (Finance) of BDL were not satisfied with the proposition and inter alia expressed the view that such transaction would be against the RBI guidelines and could be questioned by the audit and would be bad in accounting. Nonetheless, A-4 told Pradeep Goel that after taking approval of the competent authority he (A-4) would inform A-5, Dr. RSA Dhani. In pursuance to the criminal conspiracy to provide the surplus funds of BDL, Hyderabad to A-3, A-4 put the matter of investment of surplus funds before the Investment Committee of BDL and sought the advice from V.K.Bhandarkar, Additional Financial Advisor and Joint Secretary, Ministry of defense vide letter dated 6.4.1994. Till then A-4 had not even approached the SBI, Green Park, New Delhi nor did the bank offer to give any undertaking. A-4 informed in his letter that BDL approached SBI, Green Park to deposit a sum of Rs. 100 crores and bank agreed to give 14.5% by issuing two FDRs as well as an undertaking assuring that the funds would not be deployed under the Port-folio Management Scheme (PMS) and payment of interest @ 14.5% would not contravene RBI guidelines. In order to convince Shri V.K.Bhandarkar, Additional Financial Advisor of BDL, on phone he falsely informed that the SBI had a number of schemes whereby the bank could pay higher interest than what was stipulated by the RBI, although there was no such scheme in existence. Mr. Bhandarkar in his letter dated 12.4.1999 expressed his concern and doubt about the proposed arrangement and wanted a more clear statement in order to ensure that the funds were not deployed under the PMS and payment of interest would not contravene RBI guidelines.

3. It is further alleged that on 15.4.1994, V.S. Murthy visited New Delhi and called on P.M.Nair, Joint Secretary, Department of defense Production and Supplies, who was Chairman of Staff and Finance Sub-Committee of the Board of Directors of BDL and requested for passing a resolution for immediate deployment of surplus funds with SBI, Green Park, New Delhi on the pretext that otherwise BDL would lose heavy interest. P.M.Nair called on the Additional Advisor, Somi Tandon, Co-Chairman of the Committee, and the matter was taken up for discussion without any agenda note prepared by A-4. A-4 deliberately refrained from apprising both these persons about the procedure followed by BDL in respect of deployment of surplus funds. Nor did he tell them about the delegation of powers to Investment Committee which has been formed for deposit of surplus funds of BDL with nationalized banks, etc. By concealing such facts he obtained a resolution dated 15.4.1994 from the Committee for deployment of surplus funds with the SBI emphasizing the same conditions as stipulated by Shri V.K.Bhandarkar in his letter dated 12.4.1994.

4. V.S. Murthy instead of taking steps to ensure the implementation of instructions of the Staff and Finance Sub-Committee informed A-5 about the approval taken from the Government and directed him to depute bank officials for collection of cheques. A-5 informed A-3 as well as A-1 and A-2 so that the funds could be collected from Hyderbad. At the instance of A-1, A-2 prepared a proforma undertaking to be given by SBI and faxed the same to V.S. Murthy, A-4, on 20.4.1994 stating therein that the funds would not be deployed under the PMS and that the payment of interest @ 14.5% would be within the RBI guidelines. A-3 sent A-1 & A-2 to Hyderabad on 3.5.1994 for collection of cheques in question and both of them called on V.S. Murthy. The proforma undertaking to be given by the Bank was finalized by A-4 in consultation with A-1 & A-2. The amount to be deposited was reduced to Rs. 60 crores as on 3.5.1994 only that much amount was available for investment. A-4 also prepared a letter to be given by the BDL to the bank for converting the funds into fixed deposits receipts @ 14.% for one year. The General manager (Finance) and Deputy General Manager (Finance) advised A-4 about the absence of any authority letter with A-1 or any identification. A-4, however, went ahead with the investment and after obtaining the undertaking he handed over a post dated cheque No. 586092 dated 6.5.1994 for Rs. 60 crores drawn on Andhra Bank, Connaught Place, New Delhi to accused No. 1, Y.K.Sharma along with covering letter addressed to Manager, Green Park, New Delhi and obtained the signatures of Y.K.Sharma on office copy of cheque as well as on cheque issue voucher in token of his having received the cheque. At the instance of A-1, the revised undertaking was prepared to add the words "CA-965" and the words "as per the RBI rules as on date". Accused No. 2, Y.K.Sharma, also added the words "Both STDRs" on the revised undertakings. Similarly the draft letter addressed to Manager, SBI, Green Park was corrected by A-1 by adding the words "to the credit of CA-965" and issue of STDRs for a period of one year with maturity value of Rs. _____ as per the existing RBI rules as on date". However, these words were subsequently scored out by A-4 before preparing the fair copy. On their return A-1 & A-2 came to A-3 and the covering letter given by BDL was replaced with a letter written by A-3 on behalf of M/s. Jaydees International for crediting the proceeds of the cheque to CA-965 of his firm. However, R.K.Arora, Chief Manager of SBI, Green Park refused to deposit the cheque in the account of M/s. Jaydees International in the absence of clear title in favor of that firm. Thereafter A-3 and A-2 again visited Hyderabad on 5.5.1994 and obtained the words "FDR A/c 965"on the aforesaid cheque despite the fact that on earlier occasion at the time of drafting the undertaking of the bank, he had scored out the words CA-965. V.S. Murthy also signed FDR account opening form as well as term deposit pay-in slip against the suggestion of Deputy General Manager (Finance). The cheque was returned to Y.K.Sharma with the aforesaid amendment. On receipt of the cheque, R.B.Sharma, A-1, prepared a clearing schedule for presenting the cheque in high value clearing and dishonestly and fraudulently mentioned CA-965 in the column Account No. , although he was aware that the cheque was in favor of SBI, Green Park and that no FDR Account No. 965 had been opened in favor of BDL, Hyderabad. The cheque was eventually passed and the amount was credited to the account of M/s. Jaydees International. On the basis of the letter given by John Danial, A-3. R.B.Sharma, A-1, got the funds converted into three short term deposit receipts of Rs. 20 crores each in favor of M/s. Jaydees International. At the same time, against the debit to the account of M/s. Jaydees International STDR No. 492506 for Rs. 2,67,80,000/- was prepared in the name of BDL. This created a doubt in the mind of Mr. Rakesh Rastogi, an employee of SBI, and he informed the Regional Manager of the deposit and sanction of the demand loan for a sum of Rs. 15 crores in favor of M/s. Jaydees International. Mr. Rakesh Rastogi also advised not to allow any cash withdrawal without proper sanction of the competent authority. A-1 and A-3 approached the bank on 7.5.1994 for withdrawal of 1.25 crores and when the withdrawal was not allowed by Rakesh Rastogi, they approached the Regional Manager. However, the fraud was detected when John Daniel could not explain the source as well as the purpose for which the BDL, Hyderabad had made the funds available to him.

5. On examining the prosecution case and the documents in support of the case the Additional Sessions Judge dealing with the matter framed charges under Sections 120-B IPC read with Section 420/477A IPC and Section 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 1988 against all the accused persons and further Ranbir Sharma was charged with substantive offence under Section 420 and 477A IPC as also under Sections 13(2) & 13(1)(d) of Prevention of Corruption Act. Charge under section 420 IPC and 13(2) read with 13(1)(d) of Prevention of Corruption Act was framed against accused Y.K.Sharma. John Daniel was also charged for offence under Sections 120-B/420 IPC. Against V.S. Murthy charge under Section 420 IPC as well under Section 13(2) read with 13(1)(d) of Prevention of Corruption Act was also framed.

6. The three revision petitions can now be taken up one by one. On behalf of accused No. 4, V.S. Murthy (petitioner in Crl.Rev. No. 432/99), it is submitted that the investment had been made with the sole intention of earning maximum interest for the BDL. It is further submitted that only after the investment scheme explained by SBI officials disclosing that the interest would not contravene RBI rules and money would not be utilized in PMS that the investment was made in SBI. About the arrangement of issuing FDRs also A-4 wants to say that it was for the bank to ensure than the interest was paid and to decide upon the mode of payment. He, however, claims that the Board of Directors had delegated full powers to him and the Investment Committee was only a recommendatory committee and not a body to authorize investment. He denies the charge of conspiracy by saying that the words written by him on the cheque was "FDR A/c No. 965" which categorically meant that it was for the FDR of BDL. According to him the trial court has acted on conjecture and surmises and there was no sufficient evidence to frame charge against him.

7. At the time of hearing the learned counsel for V.S. Murthy submitted that it was he who first discovered that the BDL was about to be defrauded and it was also about to lose the money to A-3 and it was on his effort that actual transfer of funds from the account of BDL to A-3 could not take place. At the moment it is only the prosecution case and the evidence on record that can be examined to scrutinize if there was enough evidence to proceed against A-4. The story of the prosecution is supported by evidence at every stage and there can be no doubt that there was a full conspiracy to transfer the amount of Rs. 60 crores from the account of BDL to that of John Daniel, A-3. Documents evidencing the development of the story from stage to stage have been collected. The amount of Rs. 60 crores was actually transferred from BDL to that of John Danial who had made 3 FDRs for Rs. 20 crores each. In fact, the entire transaction of transfer had actually taken place but before disbursement of cash the fraud had come to notice and, therefore, the BDL did not actually suffer any loss. It is true that V.S. Murthy wrote the words "FDR A/c No. 965" but why the words were written have got to be explained. Apparently the involvement of A-4 is evidenced by this document. Undoubtedly it was with his approval that the words "FDR A/c No. 965" were added to the cheque which was earlier in the name of SBI, Green Park. When this was done at Hyderabad the cheque had been brought back by none other than A-3. The story of the prosecution mentioned earlier clearly shows that A-4 repeatedly insisted that the amount be invested with SBI and created a sense of urgency for the deposit by showing that the interest earned would be big and the delay would cause loss. There is sufficient documentary evidence on record to show that A-4 was being cautioned by other senior officials about the investment turning out to be objectionable on account of violation of RBI guidelines. The method of creating two FDRs, one for the interest of 4.5% and another FDR for the interest @ 10%, also raises a doubt that the interest of 14.5% would have been against the RBI guidelines. As mentioned in the story the other officers of the BDL with whom the A-4 had any interaction about the proposed transaction had all advised him against violating the RBI guidelines. His enthusiasm to transfer BDL's money to SBI, Green Park, is clear from the fact he ignored the advise of other members of the Investment Committee and while taking the advice of Staff and Finance Sub- Committee did not disclose the disagreement with other members of the Investment Committee. Whether the intention of A-4 was genuine and honest or whether he was misled by the undertaking received from the SBI (a document which is alleged to be fake) is a question which A-4 can prove only in defense. At the moment his involvement is clear and categorical. The transfer of money from the account of the BDL and to that of M/s. Jaydees International had been established and the only player in the side of BDL is A-4. There is a strong suspicion that A-4 was actually involved in the offence of cheating. A strong suspicion is sufficient to frame charge. I do not find anything wrong in the trial court's approach in framing charge against A-4.

8. The other two petitioners, Dr. R.S.A. Dhani and Mohan Gupta, are not officially associated either with BDL or with the SBI. Nonetheless the prosecution story indicates that the two were links without whom the impugned transaction could not have taken place at all. It was because of Dr. R.S.A. Dhani, accused No. 5, and Mohan Gupta, accused No. 6 that the availability of funds with BDL was brought to the notice of A-2, who was an employee of SBI Airforce Station, Hindon. A-2 on his turn was able to influence A-1 who later introduced John Daniel to the Chief Manager, SBI and was instrumental in opening the account of John Daniel under the name and style of M/s. Jaydees International to which the sum of Rs. 60 crores was actually deposited. It was no part of the business of A-2 to request A-1 for opening an account. It was around February-March, 1994 that the availability of money and its investment had been assured by A-4 to A-5 and it was around that time that the bank account was opened. It was Mr. Mohan Gupta, A-6, who posing as the finance broker offered to help A-3 for arranging the funds and it was Dr. R.S.A. Dhani from whom Mohan Gupta had collected the information. As per the prosecution case A-2 reportedly contacted A-5 and A-6 and discussed the matter. The story of the prosecution about the involvement of Mohan Gupta and Dr. R.S.A. Dhani at various stages has been sufficiently explained in the earlier part of this order. A-4 also allegedly directly contacted Dr. R.S.A. Dhani about the developments after taking approval from the competent authority. Apart from this A-4 also informed A-5 after having taken approval from the Government. It was A-4 who talked to Dr. R.S.A. Dhani to depute a bank official for the collection of cheque.

9. The prosecution relies upon the statement of Pradeep Goel. He has stated that it was in his presence that Mohan Gupta explained the plans to Dr. R.S.A. Dhani and Dr. R.S.A. Dhani had said that he had understood the procedure and would inform V.S. Murthy, A-4, about the same. Neither Dr. R.S.A. Dhani nor Mohan Gupta can be discharged in view of the evidence available with the prosecution. Mohan Gupta and Dr. R.S.A. Dhani have been important links between A-4, V.S. Murthy and A-3, John Daniel. They are, therefore, involved in the conspiracy to cheat. The trial court has made no mistake in framing charges against them.

10. I am, therefore, of the opinion that none of the three revision petitions has any merit. All the three are, therefore, dismissed. Nothing herein will be taken as expression of opinion on merit of the case.