State Thr. Cbi vs K. Rangachari & Ors.
2017 Latest Caselaw 5055 Del

*        IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                           Reserved on: 24.08.2017
                                            Delivered on: 14.09.2017

+ CRL.REV.P. 499/1997

STATE THR. CBI                                    ..... Petitioner

                          versus

K. RANGACHARI & ORS.                              ..... Respondents

Advocates who appeared in this case:
For the Petitioner : Mr.Narender Mann, SPP with Mr.Manoj Pant.
For the Respondents: Mr.Ravi Gupta, Sr.Adv. with Mr. Swastik Singh
                     and Mr. Sachin Jain.

CORAM:-
HON'BLE MR JUSTICE ASHUTOSH KUMAR

                             JUDGMENT

ASHUTOSH KUMAR, J

1. The State/CBI has challenged the order dated 30.08.1997 passed in Sessions Case No.CC-286/1984 by the learned Special Judge, Delhi whereby the respondents have been discharged as no offence was found to have been made out against them.

2. RC 1(A)/90-SIU(X) was registered on 09.03.1990 on the basis of source information against the respondents. It was alleged that respondent No.1, K.Rangachari while working as branch manager, Indian Overseas Bank, Model Town branch, Delhi during the year 1989, entered into a criminal conspiracy with the respondents and one

Mr.Handa, proprietor of M/s.Handa Enterprises (since deceased) for the purposes of cheating the bank. He is alleged to have introduced respondents Nos.2 & 3 to respondent No.4 as respondent No.4 had some contact with an officer of Standard Chartered Bank, Daryaganj branch, New Delhi and Mr.Handa who was proprietor of M/s.Handa Enterprises. An account was opened in the Indian Overseas Bank (hereinafter called as „IOB‟), Model Town in the name of Ashwani Kapoor on deposit of Rs.1000/-. Aforesaid K.Rangachari is alleged to have co-accepted a false hundi No.HK/1 dated 23.06.1989 without recording the same in the bank records. Aforesaid K.Rangachari was not authorized to co-accept the hundi of such a big amount. It was also alleged that for oblique purposes, it was falsely represented to the Standard Chartered Bank through letter dated 23.06.1989 that respondent Nos.2 & 3 were valued constituents of IOB. Thus what was alleged was that K.Rangachari had accepted a hundi of the value of Rs.5 crores in an unauthorized manner and did not create any record for the same with the bank. No commissionage was charged for the aforesaid co-acceptance and no security was also obtained. This was nothing less than the offence of showing favour to respondent Nos.2 & 3 and M/s.Handa Enterprises by misusing the official position as a banker, in criminal conspiracy with them.

3. The learned Trial Court after hearing the parties and analyzing the materials on record, by order dated 30.08.1997 discharged the respondents, holding that there was no fraud or dishonest inducement by respondent No.1 nor any forgery was found to have been committed. The Court was of the view that the prosecution could not

establish that loan was granted by corrupt or illegal means or by dishonestly misusing the official position as a public servant. No dishonest intention of the other respondents also could be discerned.

4. The challenge to the aforesaid order of discharge is primarily on the ground that materials which were highly incriminating and cogent for bringing home the charges against the respondents for them to be tried, have been completely ignored by the learned Trial Court.

5. Mr.Narender Mann, learned Special Public Prosecutor, CBI argued that the Court below did not take into account that respondent No.1 had misrepresented to the management of the Standard Chartered Bank about his competence to co-accept a bill of such a high amount. The incriminating document in question was the bill of exchange No.HK/1 dated 23.06.1989 for a sum of Rs.5 crores, under the signatures of Late Mr.Handa, in favour of M/s Ashwani Kapoor & Associates. Over the aforesaid document, there were signatures of Ashwani Kapoor of having accepted the same and respondent No.1, K.Rangachari, on behalf of IOB, co-accepting the same for payment. At the time of attestation, it has been argued, the word "co-accept" was not available and was only subsequently added in the letter after the signatures were attested. This fact was proved by the opinion of GEQD and also by the deposition of A.Subaiya (PW-43).

6. It was further argued that the account books of M/s Handa Enterprises did not contain entries regarding debit note drawn on M/s Ashwani Kapoor & Associates, which fact also was proved by one Dev Vrat Mahindroo (PW-34).

7. It was, therefore, vehemently urged that in the event of K.Rangachari not being empowered to co-accept hundi of Rs.5 crores as he had the financial powers only to the extent of Rs.10,000/- and such co-acceptance was not entered in the record of IOB, there were good enough evidences for putting the respondents on trial. The respondent No.1, it has been alleged, had not obtained prior approval of the Head office before co-accepting the aforesaid hundi. These facts coupled with relevant evidence indicating no genuine trade transaction as per the said hundi between M/s Handa Enterprises and respondent Nos.2 & 3, clearly made out a case against the respondents.

8. It has further been argued that respondent Nos.2 & 3 and respondent No.1 were neighbours. The aforesaid relationship was the motivating factor for misusing the official position of respondent No.1. Evidence also revealed that there was unlawful gain to the other respondents and corresponding loss to the IOB.

9. Mr.Mann, learned SPP, drew the attention of this Court to the RBI circulars dated 23.11.1983 and 12.02.1985 whereby all the banks have been advised, in cases of discounting/accepting bills or co- accepting them for the value exceeding Rs.25,000/- for a single party, to obtain information/written confirmation from the Head office/controlling office of the accepting bank and to keep a record of the same.

10. Since no approval was obtained by respondent No.1 prior to the acceptance of hundi in question, the order of discharge by the learned Court below, it was argued, was unwarranted and not sustainable in the eyes of law.

11. As opposed to the aforesaid contentions on behalf of the CBI, it was urged that with respect to the allegation regarding interpolation in the letter of co-acceptance, there is no allegation of tampering of any figure/amount. The allegation of tampering has been made by one Mr.A.Subaiya, Manager of IOB, Janpath branch who had verified the signature of respondent No.1 on the said letter dated 23.06.1989. The testimony of Mr.A.Subaiya (PW-43) could not have been relied upon as he has made different statements regarding such interpolation during the course of investigation. It has been submitted that in his letter dated 02.08.1989, Mr.A.Subaiya had stated that there was no interpolation whereas on other occasion he contended that he did not remember about the same. Later, he is said to have given a statement that interpolation was done in the letter.

12. It was thus argued that on the deposition of such a prevaricating witness, the respondents could not have been put on trial.

13. With respect to the competence of respondent No.1 of co- accepting a hundi of Rs.5 crores, it has been stated that the power of attorney does not anywhere enumerate such a restriction on respondent No.1. It has further been argued that in the course of banking, decisions are made in the interest of the bank after assessing the credibility of the customer. Had it not been the case, the Standard Chartered Bank also would have obtained necessary approval from its headquarter/zonal office before acting upon such hundi. It was contended that the respondent No.1 acted in good faith, in the interest of the bank, and with full confidence that a genuine trade transaction had been entered into between respondent Nos.2 & 3 and M/s Handa

Enterprises. It was further argued that after the revocation of the contingent liability by the IOB, money was paid back and, therefore, no loss was occasioned to IOB. Loss was not even intended by the accused persons. It has further been argued that as collateral security, the respondent Nos.2 & 3 were directed to deposit the original title deeds of all their properties with the IOB.

14. More or less similar defence have been made on behalf of the other respondents. A common thread in the defence/stand of the respondents is lack of any dishonest intention and any loss having been occasioned.

15. From the perusal of the records, it appears that the CBI filed chargesheet on 30.10.1992 under Section 120B read with Section 420/467 and 471 of the IPC and Sections 13(1) read with Section 13(1)(d)(2) of the Prevention of Corruption Act. After the filing of the chargesheet one of the accused Mr.Handa expired and the proceedings against him and M/s Handa Enterprises stood abated as the firm of Mr.Handa was a sole proprietorship concern.

16. For the purposes of ascertaining whether there was any conspiracy between the accused persons for causing wrongful gain to them and corresponding loss to the bank, it would be necessary to examine whether the respondent No.1 had the capacity to co-accept a hundi of such huge amount. The RBI circulars which have been shown to this Court do indicate that in cases of discounting/accepting bills of a singular party beyond Rs.25,000/-, necessary clarifications are needed to be obtained from the controlling office/zonal office. The requirement is true for both, the co-accepting bank and the discounting

bank. The evidence on record do not indicate that respondent No.1 had the knowledge of the aforesaid circulars. True it is that a banker cannot claim ignorance of RBI circulars; but non-compliance of the aforesaid requirement by the Manager of Standard Chartered Bank, Daryaganj branch also gives an indication that such circulars were not to the knowledge of all the bankers. Mr.Sanjeev Saxena, the manager of Standard Chartered Bank has clearly stated that he had not sought any confirmation from the Head office of IOB. According to him, the transaction was in order.

17. There is no complaint from the Standard Chartered Bank of any deception or any fraud or dishonest inducement to them for delivering any property.

18. The offence of cheating punishable under Section 415 of the IPC necessarily implies that there should be a deception by fraud or dishonest means for the delivery of any property or consent for the offence to be brought home. It is not the case of the prosecution that Standard Chartered Bank was deceived into discounting the bill on the co-acceptance of the hundi by the IOB at the instance of respondent No.1. There is nothing on record to suggest that IOB or the Standard Chartered Bank has been cheated and has been put to any loss. The only allegation is of co-accepting a hundi without observing the requisite formalities.

19. The evidence of Mr.A.Subaiya (PW-43) is too weak for attracting the mischief of the offence of forgery which has been alleged against the respondent. The aforesaid witness has not stated in certain terms that the words "co-accept" did not exist at all on the

document in question. He has only stated that according to his memory, the words were not there in the beginning. Whatever be the import of the statement of Mr.A.Subaiya, what is not disputed is that the bill of exchange was annexed with the letter which contained the concerned endorsements.

20. For the reasons stated above, no offence under Section 13(1)(d)

(ii) or conspiracy for committing such offence has prima facie been established for the respondents to be put on trial.

21. There is no evidence with respect to any conspiracy or use of any corrupt or illegal means or of dishonest misuse of the position of a public servant.

22. The Supreme Court in M.Narayanan Nambiar vs. State of Kerala, AIR 1963 SC 1116 interpreted Section 5(1)(d) of the Prevention of Corruption Act, 1947 which is akin to Section 13(1)(d) of the 1988 Act and held as hereunder:-

"10. ... First taking the phraseology used in the clause, the case of a public servant causing wrongful loss to the Government by benefiting a third party squarely falls within it. Let us look at the clause „by otherwise abusing the position of a public servant‟, for the argument mainly turns upon the said clause. The phraseology is very comprehensive. It covers acts done „otherwise‟ than by corrupt or illegal means by an officer abusing his position. The gist of the offence under this clause is, that a public officer abusing his position as a public servant obtains for himself or for any other person any valuable thing or pecuniary advantage. „Abuse‟ means misuse i.e. using his position for something for which it is not intended. That abuse may be by corrupt or illegal means or otherwise than those means. The word „otherwise‟ has wide connotation. ... The juxtaposition of the word or „otherwise‟ with the words

„corrupt or illegal means‟, and the dishonesty implicit in the word „abuse‟ indicate the necessity for a dishonest intention on his part to bring him within the meaning of the clause. Whether he abused his position or not depends upon the facts of each case; nor can the word „obtains‟ be sought in aid to limit the express words of the section. „Obtain‟ means acquire or get. If a corrupt officer by the said means obtains a valuable thing or a pecuniary advantage, he can certainly be said to obtain the said thing or a pecuniary advantage; ... On a plain reading of the express words used in the clause, we have no doubt that every benefit obtained by a public servant for himself or for any other person by abusing his position as a public servant falls within the mischief of the said clause."

23. Thereafter, in Major S.K.Kale vs. State of Maharashtra, (1977) 2 SCC 394, the Supreme Court clearly held that abuse of position by a public servant must necessarily be dishonest and it must be proved that the accused caused deliberate loss to the department.

"9. ... The abuse of position, as held by this Court, must necessarily be dishonest so that it may be proved that the appellant caused deliberately wrongful loss to the Army by obtaining pecuniary benefit for PW 2."

24. These views were further approved by the Supreme Court in S.P.Bhatnagar vs. State of Maharashtra, (1979) 1 SCC 535. In the aforesaid judgment, importance of the element of dishonest intention was reiterated.

25. For respondent No.1 to be prosecuted, it was necessary for the CBI to bring in materials to suggest that the official position was abused with a dishonest intention.

26. No such dishonest intention has even prima facie been drawn up.

27. It is no longer in dispute that strong suspicion against an accused is required for him to be put on trial.

28. In Union of India vs. Prafulla Kumar Samal, (1979) 3 SCC 4, the Supreme Court, after adverting to various decisions of the Supreme Court enunciated the following principles:-

"(1) That the Judge while considering the question of framing the charges under Section 227 of the Code has the undoubted power to sift and weigh the evidence for the limited purpose of finding out whether or not a prima facie case against the accused has been made out. (2) Where the materials placed before the court disclose grave suspicion against the accused which has not been properly explained the court will be fully justified in framing a charge and proceeding with the trial. (3) The test to determine a prima facie case would naturally depend upon the facts of each case and it is difficult to lay down a rule of universal application. By and large however if two views are equally possible and the Judge is satisfied that the evidence produced before him while giving rise to some suspicion but not grave suspicion against the accused, he will be fully within his right to discharge the accused. (4) That in exercising his jurisdiction under Section 227 of the Code the Judge which under the present Code is a senior and experienced court cannot act merely as a post office or a mouthpiece of the prosecution, but has to consider the broad probabilities of the case, the total effect of the evidence and the documents produced before the Court, any basic infirmities appearing in the case and so on. This however does not mean that the Judge should make a roving enquiry into the pros and cons of the matter and weigh the evidence as if he was conducting a trial."

29. In Niranjan Singh Karam Singh Punjabi vs. Jitendra Bhimraj Bijjaya, (1990) 4 SCC 76, the Supreme Court has clarified that in

assessing the facts at the initial stage it is not necessary for the Court to enter into the pros and cons of the matter or into weighing and balancing of evidence and probabilities but the Court can and should evaluate the materials to find out if the facts emerging therefrom taken at their face value establish the ingredients constituting the offence.

30. In another decision rendered in Soma Chakravarty vs. State, (2007) 5 SCC 403, the Supreme Court has held as hereunder:-

"The settled legal position is that if on the basis of material on record the court could form an opinion that the accused might have committed the offence it can frame the charge, though for conviction the conclusion is required to be proved beyond reasonable doubt that the accused has committed the offence. At the time of framing of the charges the probative value of the material on record cannot be gone into, and the material brought on record by the prosecution has to be accepted as true ... Before framing a charge the court must apply its judicial mind on the material placed on record and must be satisfied that the commission of offence by the accused was possible. Whether, in fact, the accused committed the offence, can only be decided in the trial.

                                                          (Para 10)
              *             *                    *

Charge may although be directed to be framed when there exists a strong suspicion but it is also trite that the court must come to a prima facie finding that there exist some materials therefor. Suspicion alone, without anything more, cannot form the basis therefor or held to be sufficient for framing charge.

(Para 19)"

(emphasis in original)

31. Thus the prosecution has really failed to bring in necessary materials for justifying the trial of the respondents. As such the order of discharge passed by the Court below cannot be interfered with.

32. The revision petition is thus dismissed.

Crl.M.A.No. 2040/2000 (Directions)

1. In view of the petition having been dismissed, the application has become infructuous.

2. The application is disposed of accordingly.

ASHUTOSH KUMAR, J SEPTEMBER 14, 2017 k