Madras High Court
P.V.Rajah @ Varadharaj vs State Represented By on 12 October, 2022
Crl.RC.Nos.1266, 1283 & 1284 of 2019
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 12.10.2022
CORAM:
THE HONOURABLE MR. JUSTICE G.K.ILANTHIRAIYAN
Crl.RC.Nos.1266, 1283 & 1284 of 2019
Crl.RC.No.1266 of 2019
1.P.V.Rajah @ Varadharaj
2.V.Usha @ Usharani ... Petitioners
Versus
State Represented by
Inspector of Police,
Crime Branch CID,
Namakkal District ... Respondent
PRAYER: Criminal Revision has been filed under Sections 397 and 401 r/w
Section 482 of the Code of Criminal Procedure to set aside the judgment in
criminal appeal No.19 of 2019 passed by the learned Additional District and
Sessions Judge, Namakkal dated 18.10.2019 confirming the judgment of the
learned Chief Judicial Magistrate, Namakkal in CC.No.56 of 2008 dated
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04.06.2019.
For Petitioners : Mr.N.Manoharan
For Respondent : Mr.A.Gopinath,
Government Advocate(crl.side)
Crl.RC.No.1283 of 2019
Sachithanandan ... Petitioner/A3
Versus
State Represented by
The Inspector of Police,
District Crime Branch CID,
Namakkal,
Namakkal District
crime No.1 of 2000 ... Respondent
PRAYER: Criminal Revision has been filed under Sections 397 r/w 401 of
the Code of Criminal Procedure to call for the records in Crl.A.No.20 of 2019
dated 18.10.2019 on the file of the learned Additional District and Sessions
Judge, Namakkal and confirmed in CC.No.56 of 2008 dated 04.06.2019 on
the file of the learned Chief Judicial Magistrate, Namakkal and to set aside
the same.
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Crl.RC.Nos.1266, 1283 & 1284 of 2019
For Petitioner : Mr.R.Vivekananthan
for Mr.K.T.S.Sivakumar
For Respondent : Mr.A.Gopinath,
Government Advocate(crl.side)
Crl.RC.No.1284 of 2019
Kathirvelu ... Petitioner/A4
Versus
State Represented by
The Inspector of Police,
District Crime Branch CID,
Namakkal,
Namakkal District
crime No.1 of 2000 ... Respondent
PRAYER: Criminal Revision has been filed under Sections 397 r/w 401 of
the Code of Criminal Procedure to call for the records in Crl.A.No.20 of 2019
dated 18.10.2019 on the file of the learned Additional District and Sessions
Judge, Namakkal and confirmed in CC.No.56 of 2008 dated 04.06.2019 on
the file of the learned Chief Judicial Magistrate, Namakkal and to set aside
the same.
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Crl.RC.Nos.1266, 1283 & 1284 of 2019
For Petitioner : Mr.R.Vivekananthan
for Mr.K.T.S.Sivakumar
For Respondent : Mr.A.Gopinath,
Government Advocate(crl.side)
COMMON ORDER
The criminal revision in Crl.RC.No.1266 of 2019 has been filed
against the judgment in criminal appeal No.19 of 2019 passed by the learned
Additional District and Sessions Judge, Namakkal dated 18.10.2019
confirming the judgment of the learned Chief Judicial Magistrate, Namakkal
in CC.No.56 of 2008 dated 04.06.2019; the criminal revisions in
Crl.RC.Nos.1283 & 1284 of 2019 have been filed against the judgment
passed in Crl.A.No.20 of 2019 dated 18.10.2019 on the file of the learned
Additional District and Sessions Judge, Namakkal which confirmed the
judgment passed in CC.No.56 of 2008 dated 04.06.2019 on the file of the
learned Chief Judicial Magistrate, Namakkal.
2. The case of the prosecution is that the Managing Director, State
Industries Promotion Corporation of Tamilnadu Limited, No.19-A, Rukhmani
Lakshmipathi Road, Egmore, Chennai-8 preferred a complaint on 21.12.1999
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to the effect that the promoters of M/s.Sri Prasanna Vinayagar Textiles
Private Limited, Komarapalayam by name (1) Thiru.R.Srinivasan, (2)
Tmt.Usha and the Chief Executive (3) Thiru P.V. Raj @ Varadharaj had
applied for the loan for Rs.100.00 lakhs for putting up their unit at
SF.No.240/5, Vattamalai Main Road, Katheri Village, Salem District for the
manufacture of cotton woven fabrics. The said company was having its
registered office at No.6/261, Manikandan Illam, Gandhi Nagar, Pallipalayam
Road, Komarapalayam. The Board of SIPCOT at its meeting held on
12.12.1996 sanctioned a term loan of Rs.100.00 lakhs to the company. The
company accepted the terms and conditions of sanction and executed the
security documents viz., Equitable Mortgage, Deed of Hypothecation on
20.02.1997 and all the fixed assets of the company had been mortgaged by
way of security for the loan sanctioned. Apart from the security documents,
the company had also offered collateral securities comprising of the
properties stood in the name of the Directors of the company. At the request
of the company, SIPCOT disbursed loan in instalments amounting to
Rs.100.00 lakhs for acquisition of land, building and plant and machinery.
2.1 The further case of the prosecution is that as agreed by the
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company, they did not meet the commitments and defaulted in repayment. On
16.07.1999 at the review meeting held by SIPCOT, Tmt.V.Usha, Managing
Director and Thiru.P.V.Raj, the Executive of the company confessed that
they had purchased the machinery from CIMMCO, Gwalior and not from
M/s.Sunrise Industries, Bangalore, as claimed by their invoices. Therefore,
the Directors were instructed to settle the entire loan amount with interest
immediately. In the review meeting, they pleaded guilty and promised to
settle the entire term loan with interest within six months time. As they did
not settle the amount as promised, a foreclosure and recall order was issued
to the company and its Directors on 08.09.1999 and then mortgaged assets of
the company was taken possession by SIPCOT on 19.09.1999 as per law.
While taking inventory of the mortgaged assets of the company, it was found
that certain mortgaged machinery of the company for the value considered for
the disbursement of Rs.31.37 lakhs were illegally removed from the factory
premises by the promoters of the company. Thus, with a view to cause
monetary loss to SIPCOT and with a fraudulent and dishonest intention,
deceived SIPCOT to sanction and disburse a sum of Rs.100.00 lakhs together
with interest on the pretext for acquiring land, building, plant and machinery
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for the company M/s.Sri Prasanna Vinayagar Textiles Private Limited, which
was promoted by the promoters of the company. Thus, they have committed
various offences punishable in accordance with law.
3. The prosecution examined PW1 to PW47 and marked Ex.P1 to
Ex.P291 and produced the material objects MO1 to MO5. On the side of the
petitioners, no one was examined and marked Ex.D1. On perusal of oral and
material evidence, the trial court found the petitioners guilty and convicted as
follows:
(i) A1 was convicted for the offences under Sections 120(b), 468, 471,
420, 419, 424 of IPC, wherein under Sections 120(b), 468, 420, 419 of IPC
sentenced to undergo three years simple imprisonment each section and to
pay a fine of Rs.9,000/- each section, in default to undergo one month simple
imprisonment; under Section 471 of IPC sentenced to undergo two years
simple imprisonment and to pay a fine of Rs.9,000/-, in default to undergo
one month simple imprisonment; under Section 424 of IPC sentenced to
undergo two years simple imprisonment and to pay a fine of Rs.5,000/-, in
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default to undergo one month simple imprisonment.
(ii) A2 was convicted for the offences under Sections 120(b), 468, 471,
420, 419 of IPC, wherein under Sections 120(b), 468, 420, 419 of IPC
sentenced to undergo three years simple imprisonment each section and to
pay a fine of Rs.9,000/- each section, in default to undergo one month simple
imprisonment; under Section 471 of IPC sentenced to undergo two years
simple imprisonment and to pay a fine of Rs.9,000/-, in default to undergo
one month simple imprisonment;
(iii) A3 was convicted for the offences under Sections 420 r/w 120(b),
419, 468, 471 r/w 109 of IPC, wherein under Sections 420 r/w 120(b), 468 of
IPC sentenced to undergo three years simple imprisonment each section and
to pay a fine of Rs.7,000/- each section, in default to undergo one month
simple imprisonment; under Section 419 of IPC sentenced to undergo three
years simple imprisonment and to pay a fine of Rs.6,000/-, in default to
undergo one month simple imprisonment; under Section 471 r/w 109 of IPC
sentenced to undergo two years simple imprisonment and to pay a fine of
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Rs.5,000/-, in default to undergo one month simple imprisonment;
(iv) A4 was convicted for the offences under Sections 420 r/w 120(b),
419, 468, 471 r/w 109 of IPC, wherein under Sections 420 r/w 120(b), 468 of
IPC sentenced to undergo three years simple imprisonment each section and
to pay a fine of Rs.7,000/- each section, in default to undergo one month
simple imprisonment; under Section 419 of IPC sentenced to undergo three
years simple imprisonment and to pay a fine of Rs.6,000/-, in default to
undergo one month simple imprisonment; under Section 471 r/w 109 of IPC
sentenced to undergo two years simple imprisonment and to pay a fine of
Rs.5,000/-, in default to undergo one month simple imprisonment. Aggrieved
by the same, the petitioners preferred appeal and the appellate court
dismissed the appeal and confirmed the conviction of the trial court.
4. The learned counsel for the petitioners/A1 & A2 in
Crl.RC.No.1266 of 2019 submitted that the entire transactions said to have
taken place on behalf of the company called Sri Prasanna Vinayagar Textiles
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Private Limited, but the company is not at all arrayed as an accused. Without
arraying the principal accused, the vicarious liability cannot be attributed to
the Directors i.e. A1 and A2. In fact, most of the documents which are
marked in support of the case of the prosecution were xerox copies. The
original copies of those documents were not at all produced before the trial
court. Those documents were not certified that they were copies of the
original by the authorities concerned. Therefore, those documents cannot be
looked into by the trial court.
4.1 He further submitted that the prosecution did not prove that one,
Srinivasan is a fictitious person and PW24 only impersonated himself as the
said Srinivasan for obtaining loan from SIPCOT. PW47-investigation officer
deposed that he had seen the said Srinivasan in the house of the first accused
often and denied that he did not live in the house of the first accused. Further,
he deposed that the said Srinivasan did not sign in the loan application.
Therefore, there is no question of impersonation. The crux of the allegation is
that Simco Auto Looms machineries were purchased and operated instead of
Sunrise Auto Looms Machineries and the Auto Looms sold alleged to have
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sold to the petitioners' company under invoices Exs.131, 132, 133 and 134.
Therefore, A1 and A2 did not obtain loan by showing second hand Simco
machineries and during the time of inspection only, Sunrise auto looms are
used in the company. Therefore, there is no loss occurred to the SIPCOT and
the entire allegations are also not proved by the prosecution.
4.2 He further submitted that in connected matter, this Court in
Crl.RC.No.659 of 2019 filed by the petitioners herein, this Court dismissed
the revision and aggrieved by the same, they preferred appeal before the
Hon'ble Supreme Court of India in Crl.A.No.537 of 2022 and by order dated
01.04.2022, the Hon'ble Supreme Court of India reduced the sentence to six
months rigorous imprisonment to run concurrently and ordered that the period
already undergone shall be set off.
5. The learned counsel for the petitioners/A3 & A4 in
Crl.RC.Nos.1283 & 1284 of 2019 submitted that there is no material to
implicate the petitioners for conviction under Section 120(b) of IPC. The
ingredients of conspiracy are that there should be an agreement between the
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two persons, who are alleged to conspire and the said agreement should be
for doing of all illegal acts or for doing, by illegal means, an act which by
itself may not be illegal. However in the case on hand, 47 witnesses have
been examined and none of the witnesses had spoken about specific
allegations of the role played by the petitioners with regard to conspiracy.
PW1 to PW3 deposed that the loan application of A1 and A2 was processed
in the year 1996 by a team of officials and documents were scrutinised by
legal department. The company property was inspected by the competent
officials from SIPCOT. Only thereafter, the loan was sanctioned in favour of
A1 and A2.
5.1 He further submitted that insofar the purchase of machinery, the
petitioners verified the chartered accountant certificate for machineries and
invoices and had sent report. Loan was sanctioned on 01.03.1997 and
30.04.1997. The loans were disbursed only on verification of documents,
inspection report, bank statement and legal opinion. Whereas the third
accused inspected the premises only on 31.10.1998. In fact, the third accused
found irregularities and misappropriation of funds and lodged complaint on
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21.12.1999. Therefore, there is no allegation as against the third and fourth
accused to substantiate the charges as alleged by the prosecution. PW4 had
sent report as against the fourth accused to the Managing Director, SIPCOT
about their inspection and said report has not been placed before the trial
court.
5.2 He further submitted that the loan application was filed on
15.07.1996. On receipt of the loan application, on 03.11.1996, the members
of the screening committee conducted spot inspection on the A1 and A2's
company. By the communication dated 30.11.1996, the screening committee
recommended for sanctioning the loan in favour of A1 and A2. On
12.12.1996, after approval of the loan by the Board, sanctioned
Rs.1,00,00,000/- and disbursed Rs.91,76,676/-, in which on 01.03.1997 the
first instalment was disbursed to the tune of Rs.54,00,000/-. The second
instalment of loan was disbursed to the tune of Rs.15.80 lakhs on 30.04.1997.
The third accused had taken charge in operation department of SIPCOT only
on 01.05.1997. Before that, he was working in a development department and
he was no way connected with the operation department. Insofar as the fourth
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accused, he was transferred from account department and posted in incentive
department on 09.04.1996 and as such he was also nothing to do with the
loan transaction between the SIPCOT and A1 & A2. The third accused
inspected the A1 and A2's company on 31.07.1997 and submitted inspection
report which was marked as Ex.P41. In fact, trust receipt submitted by the
first accused was clearly approved by the Managing Director, SIPCOT.
Thereafter, the third disbursal of loan to the tune of Rs.26,00,000/- was
approved by the Managing Director based on the trust receipt submitted by
the first accused on 04.09.1997.
5.3 He further submitted that again on 29.11.1997, the third accused
conducted inspection and submitted report, which was marked as Ex.P49. On
05.10.1998, further requisition was received for additional loan amount of
Rs.40,00,000/-. However, the said request was rejected on the inspection
report by the third accused. Subsequently, the third accused lodged complaint
on 21.12.1999 as against A1 and A2 before the Superintendent of Police,
Namakkal. Therefore, there is absolutely no material to convict the third and
fourth accused for the offence punishable under Sections 420 r/w 120(b),
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419, 468 and 471 r/w 109 of IPC.
6. The learned Government Advocate(crl.side) appearing for the
respondent / police submitted that A1 and A2 with connivance of A3 and A4
who were officers of SIPCOT had prepared false documents which were
marked as Exs.41, 42, 49, 59, 258, inspections reports prepared by the third
accused to show that Sri Prasanna Vinayagar Textiles Private Limited
company was having power loom machineries purchased from Sunrise
industrials. After furnishing false documents, authorities of SIPCOT had
issued Ex.P16 loan sanction letter and accordingly availed Rs.54,00,000/-
under Ex.P24 by way of demand draft and availed Rs.22,02,046/- by way of
demand draft and availed Rs.15,18,000/- under Ex.P28 by way of demand
draft, totally A1 and A2 availed Rs.100,00,000/- including tax.
6.1 He further submitted that the loan disbursal amount is
corroborated evidence of PW1. Thereafter, they failed to repay the said loan
amount and thereby they gained Rs.100,00,000/- from SIPCOT by making
false documents with having dishonest intention to defraud the availed loan
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amount. That apart while taking inventory of the mortgaged assets, certain
mortgaged machinery of the company were illegally removed from the factory
premises. It is also categorically proved by the prosecution by examining
PW28 who deposed that he is running a workshop in the name and style of
Palaniandavar in Coimbatore, thereby he purchased generator from the
accused persons. Therefore, the prosecution proved the case beyond any
doubt and the trial court rightly convicted the petitioners and confirmed by
the first appellate court. Therefore, the conviction imposed on the petitioners
does not require any interference by this Court.
7. Heard, Mr.N.Manoharan, the learned counsel for the petitioners
in Crl.RC.No.1266 of 2019, Mr.R.Vivekananthan, the learned counsel for the
petitioner in Crl.RC.Nos.1283 & 1284 of 2019 and Mr.A.Gopinath,
Government Advocate(crl.side) appearing for the respondent / police.
8. There are totally four accused, in which the petitioners are
arrayed as A1 to A4. A1 and A2 are Directors of M/s.Sri Prasanna Vinayagar
Textiles Private Limited, Komarapalayam. A3 and A4 are Manager and
Assistant Manager of the complainant-SIPCOT who disbursed the amount.
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On perusal of records revealed that the second accused had applied for
industrial loan to the tune of Rs.1,15,00,000/- to SIPCOT. The loan
application was marked as Ex.P1, which was rejected by the communication
dated 14.08.1996, which was marked as Ex.P5. Again, a representation was
submitted to reconsider the loan application which was marked as Ex.P6.
Accordingly, the first and second accused and one, Srinivasan had given
consent letter for collateral security for sanctioning of loan. They also
submitted valuation report and submitted bio-data of Director Mr.Srinivasan.
9. On verification of the documents by the screening committee of
the SIPCOT, they forwarded the recommendation for sanction of loan.
Accordingly, the loan was sanctioned in favour of A1 and A2 by the loan
sanction letter, which was marked as Ex.P16 and Ex.P18, to the tune of
Rs.1,00,00,000/- subject to the condition that collateral security should be
given to the 50% of the loan. Accordingly, the first instalment of the loan was
disbursed to the tune of Rs.54,00,000/- on 01.03.1997, which was marked as
Ex.P24. The second instalment of the loan was disbursed to the tune of
Rs.15,80,000/- on 30.04.1997 which was marked as Ex.P28. After disbursal
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of the said amount, the Assistant Manager of SIPCOT had inspected the
factory premises and submitted report, which was marked as Ex.P31.
10. Thereafter, A1 and A2 requested to disburse the loan amount to
the tune of Rs.23,00,000/-. On the said request, the third accused inspected
the premises and filed his inspector report which was marked as Ex.P41. It
revealed that he categorically pointed out so many defects in the factories and
just forwarded the report. Accordingly, he never recommended for any
disbursal of loan. In fact, he pointed so many discrepancies and certain
defects to be carried out by A1 and A2. On such report, the SIPCOT directed
A1 and A2 to carry out the defects pointed out by the third accused.
Thereafter, A1 and A2 demanded disbursal of another instalment towards
value of machineries by the trust receipt which was marked as Ex.P45.
Though the third accused pointed out defects on his inspection, the SIPCOT
had disbursed another sum of Rs.26,00,000/- by way of demand draft which
was marked as Ex.P46.
11. Again on 16.10.1997, A1 and A2 had demanded additional loan
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amount of Rs.25,00,000/-. Subsequently, General Manager and Deputy
General Manager along with Manager had inspected the company premises
and found six more power looms and one additional building. Thereafter the
accused were issued show cause notice. After receipt of explanation, the
SIPCOT again disbursed loan amount to the tune of Rs.4,20,000/-. Further,
by the letter dated 11.05.1998, the SIPCOT also granted permission to
sanction additional loan. On the said direction, the third accused had
inspected the premises and submitted his report which was marked as Ex.P49
dated 30.06.1998. On perusal of the inspection report, revealed that A1 and
A2 failed to erect humidification plant and components of the same were kept
at the factory site. They have informed that though they have purchased
humidification plant during January, 1998, they have not erected plant so far
due to the directors pre occupation with marketing tie up for their fabrics with
Bangladesh. They have assured that they will be completing the erection of
the plant before July 1998 and requested to disburse the eligible term loan
and adjust the same towards the interest over dues.
12. Thus it is clear that the third accused never recommended for any
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disbursal of loan amount. He just inspected the premises and submitted his
report and also pointed out so many defects in the factory premises. Again A1
and A2 requested additional loan amount of Rs.40,00,000/-. Therefore, on
13.10.1998, A3 had inspected the premises. On the preliminary report, A1
and A2 had submitted required documents, which was placed before the
screening committee of the SIPCOT and recommended for further loan.
Accordingly, they were sanctioned loan of Rs.40,00,000/-. Finally, inspection
report was submitted by A3 on 25.03.1999, which was marked as Ex.P59. On
perusal of the said report also, revealed that the company have not erected
humidification plant so far. Only based on the undertaking letter furnished by
the company, the SIPCOT released eligible term loan to the tune of Rs.4.20
lakhs. Therefore, company was advised to complete the erection of
humidification plant and furnish the report to SIPCOT immediately. The said
report also does not recommend for disbursal of any loan amount, since only
after report submitted by the screening committee and recommended for
disbursal of loan. Therefore, A3 and A4 were nothing to do with the disbursal
of any loan amount.
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13. However, insofar as A1 and A2, they had created false document
with dishonest intention to defraud the loan amount, thereby they committed
forgery of documents and used the same as if they are original and
dishonestly induced the officials of SIPCOT and availed loan. Thereafter,
they defaulted the same for which they committed offence. They also had
committed offence of impersonation through PW24-Srinivasan as if qualified
engineer and then they had concealed valuable movable properties of the
company from seizure of SIPCOT. Therefore, both the courts below rightly
convicted A1 for the offences under Sections 120(b), 468, 471, 420, 419 &
424 of IPC and convicted A2 for the offences under Sections 120(b), 468,
471, 420 & 419 of IPC. However, both the courts below erroneously
concluded that A3 and A4 also connived with A1 and A2 and submitted
forged documents.
14. As discussed above, no documents were produced by A3 and
A4. As per the inspection report submitted by A3, he never recommended for
disbursal of any loan amount in favour of A1 and A2. Therefore, the
prosecution failed to prove any of the charge as alleged in the charge against
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A3 and A4.
15. In view of the above, the Criminal Revisions filed by A3 and A4
in Crl.RC.Nos.1283 & 1284 of 2019 are allowed and the judgment of
conviction and sentence imposed by the learned Chief Judicial Magistrate,
Namakkal in CC.No.56 of 2008 dated 04.06.2019, which was confirmed by
the learned Additional District and Sessions Judge, Namakkal in Crl.A.No.20
of 2019 dated 18.10.2019 in respect of A3 & A4 for the offences under
Sections 420 r/w 120(b), 419, 468, 471 r/w 109 of IPC is set aside. The
petitioners / A3 & A4 are acquitted of all charges in CC.No.56 of 2008 on the
file of the learned Chief Judicial Magistrate, Namakkal. Fine amount, if any
paid, shall be refunded to the petitioners/ A3 & A4 forthwith and the bail
bonds, if any executed, shall stand cancelled.
16. Insofar as A1 and A2, this Court finds no infirmity or illegality in
the conviction by the courts below. However, in a connected matter in
Crl.A.No.537 of 2022, the Hon'ble Supreme Court of India, considering the
facts and circumstances of the case, reduced the sentence to six months
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rigorous imprisonment to run concurrently and also ordered that the period
already undergone shall be set off. As such, the judgment in criminal appeal
No.19 of 2019 passed by the learned Additional District and Sessions Judge,
Namakkal dated 18.10.2019 confirming the judgment of the learned Chief
Judicial Magistrate, Namakkal in CC.No.56 of 2008 dated 04.06.2019 is
modified as follows:
(i) The conviction rendered for the offences under
Sections 120(b), 468, 471, 420, 419, 424 of IPC in
respect of A1 and for the offences under Sections
120(b), 468, 471, 420, 419 of IPC in respect of A2
is confirmed.
(ii) The sentence of imprisonment imposed by the
courts below is reduced to the period already
undergone by the petitioners/A1 & A2.
(iii) The fine imposed by the courts below are hereby
confirmed.
(iv) The petitioners/A1 & A2 are directed to be set at
liberty forthwith, unless their custody are required
in connection with any other case. The bail bond, if
any executed by the petitioners, shall stand
cancelled.
17. Accordingly, the criminal revision in Crl.RC.No.1266 of 2019 is
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partly allowed.
12.10.2022
Internet:Yes
Index:Yes/No
Speaking/Non speaking order
lok
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G.K.ILANTHIRAIYAN. J,
lok
To
1.The learned Additional District and Sessions Judge,
Namakkal
2.The learned Chief Judicial Magistrate,
Namakkal
3.Inspector of Police,
Crime Branch CID,
Namakkal District
4.The Public Prosecutor,
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High Court of Madras
Crl.RC.Nos.1266, 1283 & 1284 of 2019
12.10.2022
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