[Cites 32, Cited by 0]
Delhi High Court
Champat Rai Jain vs C.B.I on 2 April, 2026
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Reserved on: 24.03.2026
Judgment pronounced on: 02.04.2026
+ CRL.A. 715/2003
CHAMPAT RAI JAIN .....Appellant
Through: Mr. Rakesh Khana, Sr. Advocate with
Mr. Rajiv K. Garg and Mr. Ashish Garg and Ms.
Arushi Jindal, Advocates.
versus
C.B.I. .....Respondent
Through: Mr. Atul Guleria, SPP with Mr.
Aryan Rakesh, Advocate for CBI.
CORAM:
HON'BLE MS. JUSTICE CHANDRASEKHARAN SUDHA
JUDGMENT
CHANDRASEKHARAN SUDHA, J.
1. In this appeal filed under Section 374 of the Code of
Criminal Procedure, 1973, (the Cr.PC), accused no. 2 (A2) in C.C.
No. 73/99 on the file of the Special Judge, Tis Hazari Court, Delhi,
assails the judgment dated 25.09.2003 and order on sentence dated
08.10.2003 as per which he has been convicted and sentenced for
the offences punishable under Section 120B of the Indian Penal
Code, 1860 (the IPC) read with Section 13(1)(d) read with Section
13(2) of the Prevention of Corruption Act, 1988 (the PC Act).
2. The prosecution case is that the first accused (A1),
during the period from December 1989 to May 1990, while posted
as Senior Manager, UCO Bank, Sadar Bazar Branch, entered into a
criminal conspiracy with A2/ the appellant herein, proprietor of
M/s Jayvee Sales Corporation, and in furtherance thereof abused
his official position by deliberately not debiting certain cheques
issued by A2 from the account of the said Firm, despite the
account reflecting a debit balance. It is alleged that A1 retained the
said cheques in his personal custody and facilitated the clearance
of the amounts and issuance of demand drafts in favour of M/s
Bindal Agro Chem Ltd., thereby causing wrongful loss of
approximately ₹16 lakhs to the bank and corresponding wrongful
gain to A2. Hence, as per the charge sheet/final report dated
18.02.1993, the accused persons were alleged to have committed
the offences punishable under Sections 120B and 420 IPC and
Section 13(1)(d) read with Section 13(2) of the PC Act.
3. Sanction for prosecution was accorded by the
competent authority under Section 19(1)(c) of the PC Act to
prosecute A1, being a public servant. Charge against A2 was that
he conspired with A1 to cause wrongful gain to himself and
corresponding wrongful loss to the bank.
4. Crime No. RC 46(A)/92-DLI, i.e., Exbt. PW19/A FIR,
was registered on the basis of source information received by the
respondent/CBI. After completion of investigation by PW19, a
charge-sheet/final report dated 18.02.1993 was filed against the
appellant/A2 as well as A1 alleging the commission of the
offences punishable under aforementioned Sections.
5. On appearance of A1 and A2 before the trial court,
copies of the prosecution documents were supplied to them in
compliance with Section 207 Cr.PC Thereafter, upon hearing both
sides, the trial Court, vide order dated 26.11.1994, held that no
offence under Section 420 IPC was made out and accordingly the
said charge was dropped. Subsequently, vide order dated
14.07.1997, the trial court framed a Charge against A1 for the
offence punishable under Section 13(2) read with Section 13(1)(d)
of the PC Act, and against both A1 and A2 for the offence
punishable under Section 120B IPC read with the aforesaid
substantive offence, which was read over and explained to the
accused persons, to which they pleaded not guilty.
6. On behalf of the prosecution, PWs. 1 to 21 were
examined and Exbts. PW1/A, PW2/C, PW2/D, PW3/A-P,
PW3/DA-DK, PW3/F1-F42, PW4/A-B, PW6/A, PW7/DA-DE,
Mark D1, PW9/DA, PW10/A-X, PW12/A-J, PW18/A, PW19/A-D,
PW20/A-E, Exp-1 and Exp-3 were marked in support of the case.
7. After the close of the prosecution evidence, the accused
persons were questioned under Section 313(1)(b) Cr.PC regarding
the incriminating circumstances appearing against them in the
evidence of the prosecution. Both the accused persons denied all
those circumstances and maintained their innocence.
8. On behalf of A1 and A2, DW1 was examined and
Exbts. DW1/A and DW1/B were marked.
9. On consideration of the oral and documentary evidence
on record and after hearing both sides, the trial court vide the
impugned judgment dated 25.09.2003 held A1 guilty of the
offences punishable under Section 13(1)(d) read with Section
13(2) of the PC Act, and Section 120B IPC read with Section
13(1)(d) read with Section 13(2) of the PC Act. Vide order on
sentence dated 08.10.2003, A1 has been sentenced to simple
imprisonment for a period of one year each and fine of ₹5,000/-
each and in default of payment of fine to undergo simple
imprisonment for a period of two months each for the offences
punishable under Section 13(2) read with Section 13(1)(d) of the
PC Act and Section 120B IPC read with Section 13(2) read with
Section 13(1)(d) of the PC Act and the sentences have been
directed to run concurrently.
9.1. A2/the appellant herein has been found guilty of having
committed the offence punishable under Section 120B IPC read
with Section 13(1)(d) read with Section 13(2) of the PC Act. He
has been sentenced to undergo simple imprisonment for a period of
one year along with fine of ₹10,000/-, and in default of payment of
fine, to undergo simple imprisonment for two months for the
offence. Aggrieved, A2 has preferred this appeal.
10. When this appeal was taken up for hearing, the learned
Special Public Prosecutor submitted that A1 had also preferred an
appeal against the impugned judgment, i.e., CRL.A. 724/2003
(Vijay Kumar Chaudhary v. The State through C.B.I.). However, it
was further submitted that A1 is no more and that the death has
been verified and drew my attention to the order dated 21.01.2022,
which reads thus:-
"1. Learned counsel for the appellant submits that the
appellant has expired and his near relatives/legal heirs are
not desirous of continuing with the appeal.
2. Learned SPP for the respondent/CBI submits that the
factum of death of the appellant has been verified.
3. In view of the above, the present appeal stands abated and
the same is disposed of accordingly. Miscellaneous
application is disposed of as infructuous."
Accordingly, it was submitted that the aforesaid fact of
abatement of the appeal qua A1 may also be considered as an
additional circumstance while granting appropriate relief to the
appellant herein/A2.
11. It was submitted by the learned senior counsel for the
appellant/A2 that the impugned judgment is unsustainable both on
facts and in law, inasmuch as the prosecution has failed to
establish any element of criminality and the conviction rested
merely on surmises and presumptions. It was submitted that the
entire amount allegedly constituting loss to the bank stood repaid
along with interest and the bank itself had certified that nothing
remained due, thereby extinguishing the substratum of the
prosecution case and leaving no surviving "live issue" between the
parties. Reliance was placed on the dictum in CBI v. B.B.
Agarwal & Ors., (2019) 15 SCC 522, to contend that where
disputes arising out of commercial transactions stand settled and
liabilities are discharged with no independent element of
criminality surviving, continuation of criminal proceedings would
amount to an abuse of the process of law. Reliance was also placed
on the dictum in N.S. Gnaneshwaran v. Inspector of Police,
2025 SCC OnLine SC 1257, to submit that even in cases
involving allegations of fraud or conspiracy, criminal proceedings
may be terminated where the underlying dispute stands resolved
through a full and final settlement and no subsisting claim remains,
rendering continuation of prosecution devoid of public interest.
11.1. It was further submitted that the present case arose
purely out of commercial and banking transactions, and the
allegations pertained to non-debit of certain cheques in a running
account, which at the highest constituted procedural or accounting
irregularities. It was submitted that the prosecution evidence itself
established heavy workload, staff shortage, and delayed posting of
entries in the branch concerned, thereby ruling out any deliberate
or dishonest design. It was contended that criminal law could not
be invoked to give a colour of criminality to what was essentially a
civil or administrative lapse, particularly when the financial
liability stood fully discharged.
11.2. It was further submitted that the essential ingredient of
mens rea was wholly absent. It was contended that there was no
material to show dishonest intention, inducement, or wrongful gain
retained by the appellant. Reliance was placed on State of U.P. v.
R.K. Srivastava, (1989) 4 SCC 59, wherein it has been held that
if the allegations, even when taken at face value, do not disclose
the necessary ingredients of an offence, the proceedings are liable
to be quashed as an abuse of process. It was further submitted that
even under the PC Act, the prosecution was required to establish
foundational facts constituting criminal misconduct, including
abuse of position to obtain pecuniary advantage. Reliance was
placed on the dictum in Rajiv Kumar v. State of U.P., (2017) 8
SCC 791, to submit that mere procedural irregularity or deviation,
in the absence of proof of obtaining pecuniary advantage by abuse
of official position, would not amount to criminal misconduct.
11.3. It was further submitted that the prosecution had failed
to establish the foundational requirements necessary to invoke
criminal liability. Reliance was placed on State of Karnataka v.
Chandrasha, 2024 SCC OnLine SC 3469, wherein it has been
held that demand is sine qua non for sustaining conviction under
the PC Act and mere recovery is insufficient, and the statutory
presumption arises only upon proof of such demand. By analogy, it
was submitted that in the present case, in the absence of proof of
dishonest intent or prior agreement, no presumption of criminality
could arise. Reliance was also placed on CBI v. Duncans Agro
Industries Ltd., (1996) 5 SCC 591, to submit that at the
threshold, the Court is required to examine whether the allegations,
taken at face value, constitute the commission of an offence, and
where they do not, the proceedings cannot be sustained.
11.4. It was further submitted that the charge of criminal
conspiracy was wholly unsubstantiated and unsupported by any
cogent evidence. It was contended that there was no material to
establish any meeting of minds or prior agreement between the
appellant and the co-accused. Reliance was placed on the dictum
in State v. Uttamchand Bohra, (2022) 16 SCC 663, wherein it
has been held that conspiracy cannot be inferred on the basis of
mere suspicion or conjecture and must be proved by clear and
convincing evidence of agreement to commit an illegal act. It was
lastly submitted that even in Hemant S. Hathi v. CBI, 2024 SCC
OnLine SC 5758, the Apex Court has recognized that financial
disputes involving substantial monetary components may be
addressed through undertakings and conditional arrangements,
thereby underscoring the primacy of restitution; and thus, where
liability stands discharged, continuation of coercive criminal
proceedings would be unwarranted. Accordingly, it was submitted
that in the absence of mens rea, wrongful gain, or proof of
conspiracy, and in view of full repayment, the continuation of
proceedings amounted to abuse of process and the impugned
judgment deserves to be set aside.
11.5. It was further submitted that in Naresh Chandra &
Anr. v. CBI, 2003 DHC 9582, the Coordinate Bench of this
Court, in similar circumstances arising out of a banking
transaction, held that where the dispute is predominantly civil in
nature and the complainant bank has been fully compensated
pursuant to a settlement, continuation of criminal proceedings
would not be justified, particularly in the absence of any direct or
specific allegations of fraud or criminal misconduct. It was
submitted that once the commercial transaction stood settled and
the bank had recovered its dues, the matter ought to be given a
quietus, and the continuation of criminal proceedings would serve
no useful purpose.
12. It was submitted by the learned Special Public
Prosecutor that the conviction recorded by the trial court was well-
founded and based on cogent evidence, and therefore did not
warrant any interference. It was contended that the essential
ingredients of the offences stood duly proved and the findings of
guilt were liable to be upheld. However, it was submitted that the
question of sentence stood on a different footing and could be
considered independently in light of settled principles.
12.1. It was further submitted that even though the appellant
had not undergone prolonged physical incarceration, the law
recognizes the concept of deemed or constructive custody, and
therefore the period during which the appellant remained subject to
the jurisdiction of the Court ought to be taken into consideration.
Reliance was placed on Sundeep Kumar Bafna v. State of
Maharashtra, (2014) 16 SCC 623, wherein it has been held that a
person is deemed to be in custody once he surrenders before the
Court and submits to its directions, and that custody is not
confined to actual physical detention but includes control over the
liberty of the accused. It was further submitted, placing reliance on
Surendra Kumar v. CBI, 2025 SCC OnLine Del 4788, that
participation in trial and submission to the jurisdiction of the Court
constitute relevant factors while considering the quantum of
sentence.
12.2. It was further submitted that the Hon'ble Supreme
Court in K. Pounammal v. State, 2025 SCC OnLine SC 1014,
has recognized that prolonged criminal proceedings and the
attendant mental stress operate as a form of continuing restraint on
personal liberty. It was thus contended that while the conviction
deserved to be upheld, the appellant having remained under the
control of the judicial process for a considerable period, the
sentence may be suitably modified to the period already
undergone, taking into account the principle of deemed custody
and the passage of time.
12.3. It was lastly submitted by the learned Special Public
Prosecutor that the conduct of the appellant itself reflects a pointer
towards criminality, inasmuch as the appellant had presented three
cheques, one in January 1991 and two in May 1991. It was
contended that while the appellant had sufficient balance in his
account to honour the cheque presented in January 1991, he did
not have sufficient balance at the time of presentation of the
cheques in May 1991. It was submitted that despite such
insufficiency, the cheques were honoured, which indicates that the
appellant/A2 was aware that the cheques would be cleared owing
to the involvement of A1, thereby giving rise to a reasonable
inference of prior understanding and conspiracy between the
accused persons.
13. Heard both sides and perused the records.
14. The only point that arises for consideration in the
present appeal are:
a. Whether the offence of criminal conspiracy under
Section 120B IPC, as recorded by the trial court, stands
established on the basis of the material on record,
particularly in the absence of any charge under Section
420 IPC and in the backdrop of the settlement of the
underlying transaction.
or
b. Whether, in the peculiar facts and circumstances where
the underlying financial dispute stood settled during the
pendency of trial and the entire amount was repaid, this
Court can, without entering into the merits of the
conviction, extend any relief to the appellant on the
question of sentence within the confines of the statutory
mandate.
15. This Court has considered the submissions advanced on
behalf of both sides and the judgments relied upon. At the outset, it
is required to be noted that the reliance placed by the learned
senior counsel for the appellant on B.B. Agarwal (supra), N.S.
Gnaneshwaran (supra) as well as Naresh Chandra (supra), is
clearly distinguishable, inasmuch as in B.B. Agarwal (supra), the
proceedings were quashed by the High Court in exercise of
jurisdiction under Section 482 Cr.PC at a pre-trial stage, which
was affirmed by the Hon'ble Supreme Court, on the ground that in
view of settlement between the parties, no surviving criminality
remained and continuation of proceedings would amount to abuse
of process. In Naresh Chandra (supra), a Coordinate Bench of
this Court proceeded to quash the proceedings on the premise that
the dispute was essentially civil in nature and the complainant
bank had been fully compensated pursuant to settlement. However,
in the present case, despite the settlement before the Debts
Recovery Tribunal on 15.03.2000, no steps were taken by the
appellant to seek quashing of proceedings at the appropriate stage
and the trial was allowed to proceed to its conclusion, culminating
in conviction. Therefore, the said judgments cannot be invoked at
the appellate stage to set aside a conviction already recorded.
Similarly, in R.K. Srivastava (supra) and Duncans Agro
Industries (supra), which lay down the principles governing
quashing of proceedings where no offence is made out on the face
of allegations, are also distinguishable, as the present matter has
travelled beyond the stage of testing the allegations at threshold
and stands concluded by a full-fledged trial. This Court, in the
present appeal, is not exercising jurisdiction under Section 482
Cr.PC and therefore the said principles cannot be directly applied
for setting aside the conviction. The reliance placed on Rajiv
Kumar (supra) and Chandrasha (supra) pertains to the
requirement of establishing foundational facts and mens rea for
offences under the PC Act. The reliance placed on Hemant S.
Hathi (supra), also does not advance the case of the appellant,
inasmuch as the said judgment pertains to interim arrangements
and conditional protection granted by the Apex Court in peculiar
facts involving financial undertakings, and does not lay down any
binding principle for setting aside a conviction after trial.
16. Insofar as the submissions advanced by the learned
Prosecutor are concerned, reliance on Sundeep Kumar Bafna
(supra), Surendra Kumar (supra), and K. Pounammal (supra),
is apposite only to the limited extent. The said judgments elucidate
the concept of "custody" as not being confined merely to physical
incarceration but extending to deemed or constructive custody,
including situations where the accused has surrendered to the
jurisdiction of the Court and remained subject to its control
throughout the trial and appellate proceedings. They further
recognize that prolonged pendency of criminal proceedings and the
attendant restraints on personal liberty may constitute relevant
mitigating factors while considering the question of sentence.
However, the applicability of these judgments is confined only to
the aspect of sentencing, and does not in any manner dilute the
statutory mandate governing minimum punishment.
17. At the same time, this Court is bound by the law laid
down by the Apex Court in State of Madhya Pradesh v. Vikram
Das, AIR 2019 SC 835, and A. Karunanithi v. State, 2025 INSC
967, wherein it has been unequivocally held that where a statute
prescribes a minimum sentence, the same is mandatory and cannot
be reduced below the statutory mandate. The Apex Court in
Vikram Das (supra) has categorically observed that:
"... It is also held that provisions of Article 142 of the
Constitution cannot be resorted to impose sentence less than
the minimum sentence.
9. The conviction has not been disputed by the respondent
before the High Court as the quantum of punishment alone
was disputed. Thus, the High Court could not award sentence
less than the minimum sentence contemplated by the Statute
in view of the judgments referred to above."
(Emphasis supplied)
18. It has been further held that even the extraordinary
powers of constitutional courts cannot be invoked in a manner
which defeats an express statutory prescription. Thus, once the
conviction stands, the sentence must necessarily conform to the
minimum prescribed and cannot be reduced to the period already
undergone or otherwise diluted on equitable considerations.
19. In the present case, it is an admitted position on record
that the Charge under Section 420 IPC was dropped at the stage of
charge vide order dated 26.11.1994, and the matter proceeded only
in respect of the offence punishable under Section 120B IPC read
with Section 13(1)(d) read with Section 13(2) of the PC Act. It is
further evident that the parties had settled the dispute before the
Debts Recovery Tribunal on 15.03.2000 and the entire amount
stood paid, as reflected in the order of the DRT which reads thus:
"Today the case is fixed for consideration of withdrawal
application No.01/2000.
Applicant bank has also filed another application under
order 23 Rule 3 read with sec. 151 CPC for withdrawal of
the present OA.
The application is taken on record. It is marked as IA No.
Heard, both the parties, on the applications.
As the matter is settled between the parties and the
compromise amount of Rs.4.27 lacs, as stated by both the
parties, is already deposited by the defendants with the
applicant bank, nothing remains to be recovered therefore,
both the IAs No.01/2000 filed by the defendants and IA
No.02/2000 filed by the applicant bank area allowed.
Present OA stands withdrawn as fully satisfied.
Copy of this order be given "Dasti" to both the parties."
20. It is also borne out from the record that PW1 to PW9
were examined between 28.10.1997 and 14.01.2000, i.e., prior to
the settlement, whereas PW10 to PW21 were examined thereafter
between 15.09.2000 and 30.10.2001, indicating that the trial
continued despite full satisfaction of the financial liability. In this
backdrop, the core question that arises is whether the essential
ingredients of criminal conspiracy stand established. It is trite that
to sustain a conviction under Section 120B IPC, there must be
materials to show an agreement between the accused persons to
commit an illegal act or a legal act by illegal means.
21. In order to sustain a conviction under Section 120B
IPC, it is imperative for the prosecution to establish the essential
ingredients of criminal conspiracy, namely, the existence of an
agreement between two or more persons to commit an illegal act
or a legal act by illegal means, which necessarily presupposes a
definite unlawful object and a meeting of minds. In Saju v. State
of Kerala, (2001) 1 SCC 378, it has been held that the essence of
criminal conspiracy lies in the agreement to commit an illegal act
or a legal act by illegal means, and that the object of such
agreement is immaterial so long as the agreement itself is
established. Further, in Vijayan v. State of Kerala, (1999) 3 SCC
54, it has been held that though conspiracy may be proved by
circumstantial evidence, there must exist material from which a
reasonable inference of agreement can be drawn.
22. In the case on hand, it is an admitted position that the
charge under Section 420 IPC, which constituted the foundation of
the allegation of wrongful gain, was dropped at the stage of charge
vide order dated 26.11.1994. Consequently, the allegation of
cheating, and with it the element of dishonest inducement and
wrongful gain, does not survive. In such circumstances, the very
object or purpose of the alleged conspiracy becomes unclear.
There is no material on record to indicate what illegal act the
appellant/A2 is alleged to have agreed to commit so as to attract
the offence under Section 120B IPC. The prosecution has
primarily relied on the sequence of transactions and surrounding
circumstances to allege prior understanding between the accused
persons; however, in the absence of clear evidence pointing
towards a meeting of minds or a definite agreement, such
circumstances, by themselves, are insufficient to sustain a
conviction. At best, the material raises a suspicion; but suspicion,
howsoever strong, cannot take the place of proof. In this regard, it
would be apposite to refer to the judgment of the Apex Court in
Uttamchand Bohra (supra), wherein it has been held that the
offence of criminal conspiracy requires a clear agreement between
the parties to commit an illegal act or a legal act by illegal means,
and that such agreement must be established either by direct
evidence or by circumstances which are incapable of any
reasonable explanation other than the existence of such agreement.
It has further been held that conspiracy cannot be inferred merely
on the basis of suspicion, surmises or conjectures, in the absence
of cogent and acceptable evidence linking the accused to such
agreement. Though the said judgment was rendered at the stage of
consideration of discharge and framing of charge, the principles
enunciated therein, insofar as they relate to the essential
ingredients and proof of criminal conspiracy, are of general
application and equally relevant while examining whether the
conviction under Section 120B IPC can be sustained.
23. It was also submitted by the learned senior counsel for
the appellant/A2 that during the relevant period, the bank
concerned was functioning under considerable operational strain
on account of heavy workload and shortage of staff, resulting in
substantial pendency of posting work, and that the alleged acts
were at best inadvertent or procedural lapses arising in such
circumstances. This submission finds some support from the
record. In this backdrop, the materials on record, at best, indicates
irregularities in banking procedure, which, in the absence of any
cogent evidence of a prior agreement or definite unlawful object,
cannot give rise to an inference of criminal conspiracy. Thus, the
essential ingredients of Section 120B IPC are not made out.
24. Having regard to the fact that the underlying transaction
stood settled, the amount was repaid, and the charge of cheating
itself was not found to be made out, this Court is of the view that
the prosecution has failed to establish the essential ingredients of
criminal conspiracy beyond reasonable doubt.
25. This Court is conscious that the present case arises in a
peculiar factual backdrop where the underlying transaction stood
settled and the charge of cheating itself was not found to be made
out. It is also not in dispute that the appellant/A2 has already
deposited the fine amount as directed by the trial court. However,
even dehors the said aspects, the material on record does not
disclose the essential ingredients of criminal conspiracy,
particularly the existence of any prior agreement or definite
unlawful object. In these circumstances, and on an overall
appreciation of the material on record, I find that the appellant/A2
is entitled to the benefit of doubt. Accordingly, the conviction
recorded against the appellant cannot be sustained.
26. In view of the aforesaid circumstances, the conviction
and sentence awarded to the appellant/A2 by the trial court are
hereby set aside. The appellant/A2 is acquitted under Section
248(1) Cr.PC of the charge under Section 120B IPC read with
Section 13(1)(d) read with Section 13(2) of the PC Act. He shall
be set at liberty and his bail bond shall stand cancelled.
27. In the result, the appeal is allowed.
28. Application(s), if any, pending, shall stand closed.
CHANDRASEKHARAN SUDHA
(JUDGE)
APRIL 02, 2026/rs
