Karnataka High Court
C Surendra Hegde @ C.S. Hegde vs The State Of Karnataka on 11 February, 2025
Author: V Srishananda
Bench: V Srishananda
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NC: 2025:KHC:6018
CRL.A No. 696 of 2012
C/W CRL.A No. 676 of 2013
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 11TH DAY OF FEBRUARY, 2025
BEFORE
THE HON'BLE MR JUSTICE V SRISHANANDA
CRIMINAL APPEAL NO. 696 OF 2012
C/W
CRIMINAL APPEAL NO. 676 OF 2013
IN CRL.A No. 696/2012
BETWEEN:
1. C. SURENDRA HEGDE @ C.S. HEGDE
S/O KRISHNAIAH SHETTY
AGED ABOUT 48 YEARS
R/AT CHERKADDY VILLAGE,
BHARMAVARA TALUK,
UDUPI DISTRICT,
SOUTH CANARA, KARNATAKA.
2. SMT. VIJAYALAKSHMI,
Digitally W/O C. SURENDRA HEGDE,
signed by
MALATESH AGED ABOUT 40 YEARS,
KC OCC: HOUSE WIFE,
Location: R/AT CHERKADDY VILLAGE,
HIGH BHARMAVARA TALUK,
COURT OF UDUPI DISTRICT,
KARNATAKA
SOUTH CANARA, KARNATAKA.
...APPELLANTS
(BY SRI. DINESH KUMAR K RAO, ADVOCATE FOR A1;
SMT. POOJA KATTIMANI, ADVOCATE FOR A2)
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CRL.A No. 696 of 2012
C/W CRL.A No. 676 of 2013
AND:
THE STATE OF KARNATAKA
BY INSPECTOR OF POLICE,
CBI/ACB,
BANGALORE
...RESPONDENT
(BY SRI. P. PRASANNA KUMAR, ADVOCATE FOR R/CBI)
THIS CRIMINAL APPEAL IS FILED U/S.374(2) OF CR.P.C
PRAYING TO SET ASIDE THE CONVICTION AND SENTENCE
DATED 08.06.2012 PASSED BY THE XXXII ADDL. CITY CIVIL &
SESSIONS JUDGE & SPL. JUDGE FOR CBI CASES, BANGALORE
IN SPL. C.C.NO.67/2010 - CONVICTING THE APPELLANTS/
CCUSED FOR THE OFFENCE P/U/S 120 (B), 468, 471,409,420
OF IPC. BESIDES APPELLANT/ACCUSED NO.1 IS FOUND
GUILTY FOR THE OFFENCE P/U/S 13(1)(D) R/W 13(2) OF
PREVENTION OF CORRUPTION ACT, 1988.
IN CRL.A NO. 676/2013
BETWEEN:
STATE BY INSPECTOR OF POLICE,
CENTRAL BUREAU OF INVESTIGATION,
ANTI CORRUPTION BRANCH,
NO.35, BELLARY ROAD, GANGANAGAR,
BANGALORE-560 032
...APPELLANT
(BY SRI. PRASANNA KUMAR P., ADVOCATE)
AND:
1. C. SURENDRA HEGDE @ C S HEGDE,
S/O. KRISHNAIAH SHETTY,
AGED ABOUT 48 YEARS,
OCCUPATION: BRANCH MANAGER,
M/S PRAGATHI GRAMINA BANK,
HOLEHONNUR BRANCH,
DISTRICT SHIMOGA-577 201,
KARNATAKA,
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CRL.A No. 696 of 2012
C/W CRL.A No. 676 of 2013
PRESENT ADDRESS
DISHA, NO.5152/1A,
4TH MAIN ROAD, 5TH CROSS,
S.S. LAYOUT, 'B' BLOCK,
DIST. DAVANAGERE-577 001,
KARNATAKA.
PERMANENT ADDRESS
CHERKADDY VILLAGE
BHRAMAVARA, TALUK UDUPI -576 101,
DISTRICT SOUTH CANARA,
KARNATAKA.
2. SMT. VIJAYALAKSHMI
W/O C. SURENDRA HEGDE,
AGED ABOUT 39 YEARS,
HOUSE WIFE.
PRESENT ADDRESS
DISHA NO. 5152/A,
4TH MAIN ROAD, 5TH CROSS,
DIST. DAVANAGERE-577 001,
KARNATAKA.
PERMANENT ADDRESS
CHERKADDY VILLAGE,
BHRAMAVARA TALUK UDUPI-576 101,
DISTRICT SOUTH CANARA,
KARNATAKA.
...RESPONDENTS
(BY SRI. DINESH KUMAR K RAO, ADVOCATE FOR R1;
SMT. POOJA KATTIMANI, ADVOCATE FOR R2)
THIS CRIMINAL APPEAL IS FILED U/S.377(2) OF CR.P.C
PRAYING TO MODIFY THE INADEQUATE SENTENCE DATED
08.06.2012 PASSED BY THE XXXII ADDL. CITY CIVIL &
SESSIONS JUDGE & SPL. JUDGE FOR CBI CASES, BANGALORE
IN SPL. C.C.NO.67/2010 AND AWARD ADEQUATE SENTENCE
ON THE RESPONDENTS/ ACCUSED FOR THE OFFENCE P/U/S
468,471,409,420 OF IPC AND SEC. 13(1)(D) R/W 13(2) OF
PREVENTION OF CORRUPTION ACT, 1988.
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CRL.A No. 696 of 2012
C/W CRL.A No. 676 of 2013
THESE APPEALS, COMING ON FOR FURTHER HEARING,
THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE V SRISHANANDA
ORAL JUDGMENT
Heard Sri. Dinesh Kumar K. Rao, learned counsel for
appellant No.1 and Smt. Pooja Kattimani, learned counsel
for appellant No.2 in Crl.A.No.696/2012 and respondents
in Crl.A.No.676/2013 and Sri. Prasanna Kumar, learned
counsel for the respondent/CBI in Crl.A.No.696/2012 and
appellant in Crl.A.No.676/2013.
2. Accused Nos.1 and 2 who suffered an order of
conviction in Special C.C.No.67/2010, on the file of the
XXXII Addl. City Civil and Sessions Judge and Special
Judge for CBI Cases, Bengaluru (CCH-34) and sentenced
as under, have preferred the present appeal:
1) The accused No.1 and 2 are convicted and
sentenced to undergo simple imprisonment for
one year for the offence punishable U/s 120B
of IPC.
2) The accused No.1 and 2 are convicted and
sentenced to undergo SI for one year for the
offence punishable U/s 468 IPC and shall pay
fine of Rs.10,000/- each and in default of fine,
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they shall under go simple imprisonment for 6
months.
3) The accused No.1 and 2 are convicted and
sentenced to undergo SI for one year for the
offence punishable U/s 471 IPC and shall pay
fine of Rs.10,000/- each and in default of fine,
they shall under go simple imprisonment for 6
months.
4) The accused No.1 and 2 are convicted and
sentenced to undergo SI for one year for the
offence punishable U/s 409 IPC and shall pay
fine of Rs.10,000/- each and in default of fine,
they shall under go simple imprisonment for 6
months.
5) The accused No.1 and 2 are convicted and
sentenced to undergo SI for one year for the
offence punishable U/s 420 IPC and shall pay
fine of Rs.10,000/- each and in default of fine,
they shall under go simple imprisonment for 6
months.
6) For the offence punishable U/s 13(2) r/w
13(1)(d) of Prevention of Corruption Act 1988,
the accused No.1 shall undergo SI for 1 year
and shall also pay fine of Rs.10,000/- and in
default of payment of fine, he shall undergo
imprisonment for 6 months.
3. Facts in the nutshell for disposal of the present
appeal are as under:
3.1. CBI filed charge sheet against the appellants
herein for the offences punishable under Sections 120B,
468, 471, 409 and 420 of IPC and under Sections 13(2)
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read with Section 13(1)(d) of the Prevention of Corruption
Act, 1988 ('the PC Act' for short) against accused No.1
only.
3.2. Material facts which ultimately culminated in
filing the charge sheet by CBI against the appellants are
as under:
Accused No.1 being the Branch Manager of M/s.
Pragathi Gramina Bank, Harihara, during 16.06.2004 to
06.07.2007 and at Holehonnur, during 07.07.2007 to
31.05.2008, entered into a criminal conspiracy with his
wife accused No.2, whereby they caused wrongful loss to
the Pragathi Gramina Bank and corresponding wrongful
gain to them by forging the documents and making use of
the forged documents as genuine documents to the tune
of Rs.1,45,12,326/-.
3.3. The details of amounts siphoned by the illegal
acts of accused No.1 in the account of his wife accused
No.2 are as under:
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Nature of the deposit and
Sl. No. Date Amount
A/c No.
Recurring Deposit
1 25.6.2004 8,00,000
Fixed Deposit
2 17.9.2004 10,00,000
Fixed Deposit
3 15.4.2005 20,00,000
Recurring Deposit
4 2.6.2005 20,00,000
3.4. Accused No.1 also sanctioned following loans in
the name of accused No.2 in furtherance of their
conspiracy:
Details of
enhancement of
Term limits
Sl. Loan A/c Date of Amount
Deposit
No. No. Sanction (in Rs.)
A/c. No.
Amount
Date
(in Rs.)
1 VSL OD 28.6.04 500,000 RD A/c 5.8.04 100,000
No.1/04 (renewed 17.9.04 100,000
RD
No.14/200 23.10.04 100,000
6)
9.8.06 500,000
18.12.06 949,000
20.2.07 400,000
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2 VSL A/c 28.12.0 250,000 RD A/c 13.1.06 301,000
05 27.01.06 145,000
3 VSL A/c 23.2.06 1,500,0 RD A/c
N.A. N.A.
4 VSL A/c 31.3.06 1,400,0 RD A/c.
N.A. N.A.
RD A/c.
5 VSL A/c 29.4.06 450,000 RD A/c 8.5.06 100,000
17.5.06 450,000
1,300,00
20.5.06
6 VSL OD 31.7.06 3,980,0 RD A/c
NO.2237
RD A/c
N.A. N.A.
RD A/c
RD A/c
3.5. Those loans were not applied by the concerned
lonees, but the applications and other necessary documents
were forged by accused No.1. Accused No.1 further
fraudulently and dishonestly forged the documents for
obtaining a Savings Bank Account bearing No.6335 in the name
of Rajeshwari by affixing the photograph of some other lady.
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Likewise, two cheques were issued in a sum of Rs.13.5 lakhs
favouring account No.496013 which is in the name of accused
No.2 Smt. Vijayalakshmi. An intra-bank advice was also raised
in a sum of Rs.23,33,760/- to close the account which was
existing in the name of his wife by accused No.1. Further,
accused No.1 granted loan of Rs.2.5 lakhs in VSL account
No.60/05 dated 20.08.2005 against the RD account No.863/05
to enhance two times raising the limits to Rs.6.96 lakhs, for
routing the said amount through SB A/c No.6335 and to close
the account on 23.03.2006 by bringing Rs.7,01,280/- from VSL
A/c No.1056 for sanctioning VSL loan of Rs.15 lakhs in VSL A/c
No.1056 on 23.02.2006 against RD A/c No.858/05 to transfer
Rs.7,98,720/- to SB A/c No.6335 through the cheque bearing
No.825001 dated 23.02.2006 and said amount was transferred
to the Trading A/c of accused No.2. Accused No.2 thereafter
encashed 11 cheques to the tune of Rs.17,88,688/-.
3.6. Further, one B. Mallikarjuna had invested a sum of
Rs.20 lakhs in RD A/c No.840/05 and Rs.10.5 lakhs in RD A/c
No.13/06. Accused No.1 renewed them periodically and
fraudulently sanctioned the following loans:
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Sl. Loan A/c Date of Amount Term Details of enhancement
No. No. Sanction (in Rs.) Deposit of limits
A/c No. Date Amount
(in Rs.)
1 VSL A/c 31.03.06 1,400,00 RD A/c 20.07.0 1,141,000
2 VSL A/c 23.05.06 1,300,00 Nil Nil Nil
3 VSL OD 01.08.06 2,378,00 RD A/c NA NA
A/c No. 0 No.
RD A/c
3.7. B. Mallikarjuna held SB A/c No.32333, but accused
No.1 routed the loan proceeds to the above account by forging
his signature and consequently closed the account on
01.08.2006 by bringing Rs.10,58,581/- and created documents
in that regard.
3.8. He further created documents in the name of
B.Mallikarjuna and forged the loan documents and sanctioned
the following two loans:
Sl. Loan A/c Date of Amount Term Details of enhancement
No. No. Sanction (in Rs.) Deposit of limits
A/c No. Date Amount
(in Rs.)
1 VSL A/c 13.04.05 200,000 RD A/c 18.05.0 25,000
829/04 23.05.0 125,000
17.06.0 100,000
24.06.0 230,000
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12.08.0 125,000
22.11.0 170,000
2 VSL A/c 05.04.07 855,300 RD A/c Nil Nil
3.9. Yet another allegation found against accused No.1 is
that he opened a SB account in the name of K.A.Sharief by
forging the documents and through that account also, he made
fraudulent transactions.
3.10. Sri. L. Kumar invested a sum of Rs.2 lakhs in
Kamadhenu Deposit KDR A/c No.560/05 on 23.03.2005 and a
sum for Rs.3 lakhs in KDR A/c No.597/05 dated 06.06.2005.
Even in respect of these two deposits, accused No.1 created
fraudulent documents and sanctioned VSL loan and
misappropriated the proceeds thereof. Similar fraudulent acts
were also noticed in respect of account holders by name
Lakshmi, Ansar Khan and Afroz Khan.
3.11. Accused No.1 is said to have disbursed
Rs.46,85,000/- from VSL-OD A/c No.2431 as against the
sanctioned limit of Rs.42 lakhs and keeping an outstanding of
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Rs.1,44,12,326/- in respect of 12 loan accounts as per the
following details:
Sl. Loan A/c No. Name of the A/c Outstanding
No. Holder amount as on
28.2.2009
(in Rs.)
1. VSL No.2480 Sri.B.Mallikarjuna 648,277
2. VSL No.2508 - do - 2,400,000
3. VSL No.2509 - do - 2,325,000
4. VSL No.2531 - do - 3,006,425
5. VSL No.2439 Sri.K.A.Sheriff 2,544,318
6. VSL No.2440 Sri.L.Kumar 350,000
7. PL No.2571 Sri.Ansar Khan 443,055
8. PL No.2594 Sri.Irfan Khan 113,838
9. PL No.2626 - do - 500,000
10. KOD No.2739 Sri. Ansar Khan 181,423
11. PL No.2715 Sri. Afroz Khan 1,000,000
12. PL No.2742 Sri. Imtiaz Khan 1,000,000
Total 14,512,326
3.12. Accused No.2 in entering into criminal conspiracy
with accused No.1, helped accused No.1 in all these activities.
3.13. When these illegalities came to light, a complaint
was filed to the CBI and case came to be registered. After
thorough investigation, CBI filed charge sheet against the
appellants for the aforesaid offences.
4. Learned Special Judge took cognizance of the
offences alleged in the charge sheet and thereafter secured the
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presence of the appellants and on compliance of Section 207 of
Cr.P.C., framed the charges for the aforesaid offences.
5. Appellants/accused pleaded not guilty, therefore
trial was held.
6. In order to bring home the guilt of the accused,
prosecution proceeded to examine 55 witnesses as PW-1 to
PW-55 comprising of Bank officials, account holders namely
Sherif, Kumar, Ansar Khan, Irfan Khan, Imthiaz, Mallikarjuna,
sanctioning authority - Basavaraj. Prosecution also placed on
record voluminous documentary evidence, which were
exhibited and marked as Exs.P1 to P989, comprising of relevant
debit and credit slips, bank vouchers, intra-bank credit slips,
original fixed deposit held by Mallikarjuna and others as
referred to supra, facilities sanctioned in their names by forging
necessary applications, creating transfer slips by forging
signatures of the deposit holders, handwriting expert reports.
7. On behalf of the defence, three witnesses by name
T. Mudalagiriyappa, S. Bhaskar and S. Vittal Rao were
examined as DW-1 to DW-3. On behalf of the defence, 43
documents were marked as Exs.D1 to D43.
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8. On conclusion of recording of prosecution evidence,
learned Sessions Judge proceeded to record the accused
statement as is contemplated under Section 313 of the Cr.P.C.,
wherein the accused denied all the incriminatory circumstances
put to them which were found in the case of the prosecution
and they have examined the witnesses on their behalf as
aforesaid.
9. Subsequent thereto, learned Trial Judge heard the
arguments of the parties in detail and on cumulative
consideration of the oral and documentary evidence placed on
record by the prosecution in a cumulative manner, convicted
accused Nos.1 and 2 and sentenced as referred to supra.
10. Being aggrieved by the same, accused Nos.1 and 2
are before this Court in Crl.A.No.696/2012 and the CBI has
sought for enhancement of the sentence by filing a separate
appeal in Crl.A.No.676/2013.
11. Sri. Dinesh Kumar K. Rao and Smt. Pooja
Kattimani, learned counsel representing the appellants 1 and 2
in Crl.A.No.696/2012, reiterated the grounds urged in the
appeal and contended that the learned Trial Judge failed to
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notice that majority of the transactions were within the powers
of the appellant No.1 being the Manager of Pragathi Gramina
Bank at Harihara and Holehonnur, which, at best, can be traced
as an irregularity and not an illegality.
12. Sri. Dinesh Kumar Rao further contended that there
is no pecuniary loss that has occurred to the Bank inasmuch as
the entire amount has been repaid to the Bank.
13. It is also his case that the transactions as is noticed
by the prosecution in the form of collection of documentary
evidence, majority of it are generated in the usual banking
transactions and PW-54, Balasami, who is the handwriting
expert, has given a report with regard to the disputed
documents that some of the signatures are tallying and some of
them are not tallying. Therefore, the material evidence on
record are not sufficient to conclusively hold that it is the
appellant No.1 or appellant No.2 who have forged the disputed
signatures.
14. Therefore, the finding recorded by the learned Trial
Judge that by using the forged documents, appellant No.1 has
siphoned away the money from the accounts of the aforesaid
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account holders into the account of accused No.2 and thus, the
impugned judgment is suffering from legal infirmities and
perversity and thus calls for interference and sought for
allowing the appeal.
15. Sri. Dinesh Kumar Rao would also contend that to
establish that the accused No.1 is responsible for transferring
the proceeds to different VSL accounts with an intention to
cheat the bank, no material is available, which has been
ignored by the learned Trial Judge while passing the impugned
judgment and sought for allowing the appeal.
16. Smt. Pooja Kattimani, adopting the arguments of
accused No.1, contended that the only fact that the Trial Judge
has taken into consideration is, accused No.2 is the wife of
accused No.1 and there is no other material on record to
convict accused No.2 for the offences as alleged against her.
17. She would further point out that to prove the
offence of conspiracy, no positive material is placed on record.
Just because accused No.2 is the wife of accused No.1 and she
had an account in the very same bank, would not ipso facto
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make out a case of criminal conspiracy and thus sought for
allowing the appeal.
18. Alternatively, both the appellants submitted that in
the event of this Court upholding the order of conviction, this
Court may consider the question of setting aside the
imprisonment as ordered by the learned Trial Judge.
19. In that regard, appellant No.1 being the public
servant, has also filed an affidavit, which reads as under:
"Herein, I, Surendra Hegde @ C.S.Hegde, S/o Krishnaiah
Shetty, aged about 63 years, R/at cherkady village,
Bharmavara Taluk, Udupi district, South canara, 576213
Karnataka today at Bengaluru do hereby solemnly affirm and
state on oath as follows:
1. I state that I am the appellant no.1/ respondent no.1 in the
above appeals. I know the facts of this case hence, I am
swearing to this affidavit.
2. I state that as appellant no.1 I had challenged the judgment
and order dated 8/6/2012 passed by the XXXII Additional City
Civil and Sessions Judge and special judge for CBI cases,
Bengaluru (CCH-34) in SPL.CC.NO.67/2010 convicting me for
offences punishable under sections 120B, 468, 471, 409, 420
of IPC and under sections 13(2) R/W 13 (1) (d) of PC Act and
sentences accordingly.
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3. I state that I will not claim any past service benefits from
the date of my dismissal from service till date. I state that this
Hon'ble High Court may be pleased to consider the same in the
facts and circumstances of the case.
4. This is my name and signature and contents stated above
are true to the best of my knowledge, information and belief
and I believe them to be true and correct."
20. Per contra, Sri. Prasanna Kumar, learned counsel
for the respondent/CBI in Crl.A.No.696/2012 and appellant in
Crl.A.No.676/2013 contended that the material evidence placed
on record is sufficient enough to maintain the order of
conviction. He contended further that in fact, learned Trial
Judge after holding that the appellants are guilty of the
aforesaid offences, has not granted proper sentence for the
proved offences resulting in miscarriage of justice and therefore
sought for enhanced punishment for the proved offences by
allowing the appeal of the CBI.
21. He would further contend that, admittedly,
appellant No.2 is a house-wife and there is no material on
record to establish and to sustain the deposits made into her
SB account. What is the source of income for appellant No.2 to
maintain such huge balance in her account and later on
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withdrawal of the same, is not even whispered by the
appellants at the time of recording the accused statement.
22. He would also contend that mere examination of
DW-1 to DW-3 was not sufficient enough to establish that
appellant No.1 did not make any fraudulent entries and
transferred the amount to the account of accused No.2.
23. Therefore, Sri. Prasanna Kumar would contend that
the appeal of the accused is to be dismissed and the appeal of
CBI must be allowed by enhancing the jail sentence as well as
fine amount.
24. Having heard the arguments of learned counsel for
the parties in detail, this Court perused the material on record
meticulously. On such perusal, the following points arise for
consideration in these appeals:
(i) Whether the material evidence placed on record would
be sufficient enough to maintain the conviction of the
appellants for the offence punishable under Sections
120B, 46, 471, 409 and 420 of IPC and insofar as
appellant No.1 is concerned, for the offence under
Section 13(1)(d) r/w Section 13(2) of the PC Act?
(ii) Whether the accused/appellants make out a case of
legal infirmity and perversity in the findings recorded
by the learned Trial Judge in convicting the
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appellants for the aforesaid offence and thus calls for
interference?
(iii) Whether the appellants in both the appeals would
make out a case that the sentence needs
modification?
(iv) What Order?
25. REGARDING POINT NOS.1 AND 2: In the cases on
hand, accused No.1 being the Manager of Pragathi Gramina
Bank, Harihara and Holehonnur at relevant point of time, is not
in dispute and therefore, he being a public servant, is not in
dispute. Having held the post of Branch Manager of the said
Bank, there was automatic entrustment of the assets of the
Bank to appellant No.1. Appellant No.2 being the wife of
appellant No.1 is not in dispute, so also she obtaining an
account in the said Bank, is not in dispute.
26. PW-4 Smt. Rajeshwari having an account in the
very same bank, so also Sri. Mallikarjuna, Imthiyaz, Irfan Khan,
Ansar Khan, having fixed deposits in the said Bank, is not in
dispute.
27. The core allegations as could be seen from the
charge sheet material is that accused No.1 taking advantage of
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his position as the Manager, created false documents as against
the real deposits which were existing in the Bank and drew
money as against those accounts as loans and proceeds thereof
were transferred to the account of his wife and thereafter the
amounts were withdrawn from his wife's account and
misutilized the same.
28. To substantiate those allegations, not only
necessary documents were seized by the CBI, but also recorded
the statement of real account holders as to whether they had
made any such loan against the deposits made by them. The
statements of the real account holders recorded by the CBI did
not tally with the documentary evidence collected by the CBI
where under, admittedly, loans were drawn on the strength of
the fixed deposits. Then, the fraud came into light as to who
must have been responsible for creating such documents.
29. No doubt, PW-54 Balasami, who is the handwriting
expert who compared the admitted signatures of the appellant
No.1 and the other account holders, gave an opinion that the
signatures of the appellant No.1 is tallying as the Branch
Manager on the disputed documents, but the signatures of the
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account holders did not tally with the supporting vouchers for
creating the advances and loans.
30. Accused No.1 being the Manager, was therefore
responsible for not verifying the signatures of the account
holders. If he had entertained any doubt about the
genuineness of those documents, he should have summoned
the account holders and got verified and then disbursed the
amount of the Bank as loans referred to supra in the tabular
columns.
31. No such effort is made by appellant No.1.
Therefore, even though there is some force in the arguments
put forth on behalf of the appellants that by the evidence of
PW-54, it cannot be conclusively held that it is the appellant
No.1 who forged the necessary applications in the name of the
account holders to raise the loan as against the fixed deposits,
as a Manager of the Bank, there was dereliction of duty on his
part in not properly verifying and lending the loans.
32. Material documents also would establish that there
is siphoning away of the proceeds of the loan into the account
of accused No.2. On that score, necessary documentary
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evidence is placed on record, for which, no explanation is
forthcoming on record and even for the prosecution witnesses,
there is no suggestions made on behalf of the accused that
accused No.1 had no role in it. More so, when accused No.2 is
only a housewife and did not have any independent source of
income.
33. Therefore, the mere suggestions that accused No.1
is no way responsible for such siphoning away of the funds of
the Bank in the account of accused No.2, which have been
denied. The material on record, especially documentary
evidence, therefore, predominantly establishes that there is
siphoning away of the money by accused No.1 into the account
of accused No.2, who is none other than his wife.
34. Admittedly, accused No.2 being a house-wife, did
not have source of money for her to get so much deposited in
her account. There is no whisper by accused No.2 while
recording the accused statement in this regard.
35. DW-1 T. Mudalagiriyappa is examined on behalf of
accused Nos.1 and 2, who deposed before the Court that he
was working as Income Tax Officer, Ward No.1, Davanagere.
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He has been asked to produce the income-tax returns of PW-5
Mallikarjuna and accordingly, he produced the same. The
income tax returns for the years 2004-05, 2005-06 and 2006-
07 were placed before the Court and marked as Ex.D1 to D4.
In his cross-examination on behalf of the prosecution, he
admits that he had no personal acquaintance with Mallikarjuna
and he has answered that he do not know for what purpose
Ex.D1 to D4 are placed before the Court.
36. DW-2 S. Bhaskar, yet another Income Tax Officer
who has also produced the income tax returns of PW-4
Rajeshwari, which were marked as Ex.D5 to D7. Similar
answers are elicited in his cross-examination also.
37. DW-3 S. Vittal Rao, Chief Public Information Officer,
Pragathi Gramina Bank deposed before the Court that he was
required to produce the copy of the inspection report, Dual
Custody Registers, external audit reports and inspection reports
which were produced and marked as Ex.D8 to D41. He further
deposed that the departmental enquiry proceedings against
B.S.Naik was produced and marked as Ex.D42. In his cross-
examination, he admits that he does not know the relevancy of
producing those documents.
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38. The prosecution evidence in comparison with the
evidence placed on record through DW-1 to DW-3 would only
establish that Mallikarjuna was filing the income tax returns
regularly. So also Rajeshwari.
39. DW-3 being the Chief Public Information Officer,
Pragathi Gramina Bank, has produced documents which would
establish that not only accused No.1 was the person who was
required to have the entries passed in the relevant books, but
also there were others. Ex.D42 is the departmental enquiry
report of the co-employee of Pragathi Gramina Bank.
40. On perusal of the prosecution evidence, vis-à-vis
the documents placed on record through DW-1 to DW-3,
accused No.1 wanted to establish that he was not the whole
and sole insofar as Pragathi Gramina Bank in handling the
accounts of the said Bank, but there were also other
employees. In other words, the line of defence that has been
taken and tried to be canvassed before the court below was to
the effect that for all the fraudulent transactions that are
attributed to him by the CBI, he is not the person responsible
for the same.
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41. Had that been so, accused No.1 being the Branch
Manager should have taken necessary care and caution while
passing the sanction orders for the loans against fixed deposits.
What are the precautions he has taken while processing such
applications is not even whispered by accused No.1 while
recording the accused statement.
42. Crowning all these things, the beneficiary of the
misdeeds being the accused No.2, the entire line of defence
that had been sought to be canvassed before the trial court
that he is no way responsible for the alleged fraud, cannot be
countenanced in law. More so, when accused No.2 is a house-
wife.
43. Further, there are withdrawals from the account of
accused No.2 in the form of cheques and where that money has
gone is to be explained by accused Nos.1 and 2.
44. The next limb of argument that has been put
forward on behalf of the appellants is that there is no actual
loss caused to the Bank and therefore, the element of lawful
loss caused to the Bank and wrongful gain to the accused is not
at all present in the case on hand.
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45. To buttress this argument, Sri. Dinesh Kumar Rao
contends that neither Mallikarjuna nor Rajeshwari or for that
matter, any other account holder complained to the Bank that
there were loss caused to their account.
46. But, mere repayment of the money into the
respective accounts itself would not efface the criminal liability
as is held in the case of GIAN SINGH VS. STATE OF PUNJAB1.
Further, the very fact that the amount of the Bank has been
siphoned away to the account of accused No.2 by active
conspiracy existed between accused Nos.1 and 2, would
complete the offence under Section 409 of the IPC in as much
as a temporary misappropriation is equivalent to the
misappropriation. Therefore, contentions urged on behalf of
the appellants that there was no financial loss caused to the
Bank, cannot also be countenanced in law.
47. Further, use of the money that has been transferred
to the accused No.2 by fraudulent method for which accused
No.1 is responsible, itself would complete the necessary
ingredients for the offence under Section 420 of IPC, even
(2012) 10 SCC 303
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though the same is repaid over a period of time. Necessarily,
documents are being created to transfer the proceeds into the
name of accused No.2 by passing fraudulent/false vouchers and
intra-bank credit vouchers, would complete the ingredients of
the offence under Section 468 and 471 of IPC.
48. Thus, from the material on record, it is crystal clear
that the material evidence would be sufficient enough to uphold
the conviction of the appellants for the offence under Section
120B, 468, 471, 409 and 420 of IPC insofar as the accused
No.1 is concerned. Since the offence under Section 120B of
IPC is established on account of transfer of money to account of
accused No.2, needless to emphasize that conviction of the
accused No.2 is also to be maintained, insofar as aforesaid
offence is concerned.
49. This would take this Court to the question of,
whether the offence under Section 13(1)(d) r/w 13(2) of the PC
Act is to be maintained based on the material evidence on
record. There is no doubt that accused No.1 was a public
servant. Only on the ground that he is a public servant ipso
facto would not attract the offence under Section 13(1)(d)
punishable under Section 13(2) of the PC Act. Prosecution has
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to place such material evidence on record to maintain the
conviction of accused No.1 for the offence under Section
13(1)(d) punishable under Section 13(2) of the PC Act.
50. The material evidence in this regard is not so clear
so as to establish that there was a pecuniary gain to the
accused No.1. What is that pecuniary gain which he made by
transferring the money, is not even spoken to by the
prosecution witnesses. No doubt money has been transferred
to the account of accused No.2. Accused Nos.1 and 2 being
convicted for the offence under Section 120B of IPC, that itself
cannot be treated as a pecuniary advantage gained by accused
No.1, especially in the absence of any other beneficiary, other
than his own wife.
51. Therefore, the pecuniary advantage, if any, that has
been obtained by accused No.1, is in the form of the amount
that has been transferred to accused No.2 for which this Court
has already taken into consideration the offence under Section
120B, 420 and 409 of IPC. Therefore, separate conviction for
the offence under Section 13(1)(d) r/w 13(2) of the PC Act
cannot be sustained. Therefore, conviction of accused No.1 for
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the offence under Section 13(1)(d) r/w 13(2) of the PC Act
need to be set aside.
52. In view of the foregoing discussion, point No.1 and
2 are answered partly in the affirmative.
53. REG. POINT NO.3: Learned counsel for the
appellants made an alternate submission taking note of the fact
that accused No.1 has been removed from the service of the
Bank and accused No.2 being the housewife and only lent her
money for the misdeeds committed by accused No.1 and
accused No.2 being a lady and both the appellants are first
time offenders, this Court may consider setting aside the
imprisonment ordered by the learned Trial Judge for the
aforesaid offences, as referred to supra, by enhancing the fine
amount reasonably.
54. CBI, on the contrary, has sought for enhanced
sentence to be awarded for the proved offences.
55. What is an appropriate punishment in a given case,
is always a moot question to be decided based on the
dependent facts and circumstances of the case.
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56. CBI also expressed their apprehension that if this
Court having acquitted the accused for the offence under
Section 13(1)(d) r/w 13(2) of the PC Act, appellant No.1 may
make a claim for payment of the arrears of salary and future
benefits pertaining to his job by filing separate proceedings and
therefore, this Court may clarify with regard to the
disqualification of the appellant No.1 laying such a claim.
57. To quell such an apprehension of the prosecution,
appellant No.1 has filed an affidavit referred to supra. On close
reading of the contents of the affidavit, it is crystal clear that
the apprehensions of the prosecution with regard to monetary
benefits that the appellant No.1 may claim, gets quelled.
58. Taking note of the fact that appellant No.1 is now
aged 63 years and appellant No.2 is aged 55 years and being a
lady, this Court is of the considered opinion that the sentence
of imprisonment is modified by directing them to undergo
simple imprisonment for a day till the raising of the Court, by
enhancing the fine amount in a sum of Rs.1,00,000/- each,
would meet the ends of justice, in the facts and circumstances
of the case on hand.
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59. In view of the discussion made above, the appeal
made by the CBI seeking enhancement of the sentence would
no longer be available for further consideration. Accordingly,
point No.3 is answered partly in the affirmative in favour of
accused Nos1 and 2.
60. REG. POINT NO.4: In view of the findings of this
Court on point Nos.1 to 3 as above, I proceed to pass the
following:
ORDER
i) Crl.A.No.696/2012 filed by the accused is
allowed in part;
ii) Crl.A.No.676/2013 filed by the CBI is hereby
dismissed.
iii) Appellant No.1 in Crl.A.No.696/2012 (accused
No.1) is acquitted for the offence under
Section 13(1)(d) r/w 13(2) of the PC Act.
Conviction of both the appellants in
Crl.A.No.696/2012 for the offence punishable
under Sections 120B, 468, 471, 409 and 420
of IPC is maintained and sentence ordered by
the learned Trial Judge is modified as under:
Appellants 1 and 2 (accused Nos.1
and 2) are directed to undergo simple
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imprisonment for the day, till the raising
of the Court, and to pay enhanced fine
of Rs.1,00,000/- each, on or before
15.03.2025, before the trial court, failing
which, they shall undergo simple
imprisonment for one year for the
aforesaid offences.
Office is directed to return the Trial Court records with a
copy of this judgment, for passing the modified conviction
warrant, forthwith.
Ordered accordingly.
Sd/-
(V SRISHANANDA)
JUDGE
KA/RD
