REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 1477 OF 2004

Mir Nagvi Askari …Appellant

Versus

C.B.I. …Respondent

WITH

CRIMINAL APPEAL NOs. 1525, 1526 OF 2004, 5 AND 121 OF 2005

J U D G M E N T  

S.B. SINHA, J :

These  five  appeals,  arising  out  of  a  judgment  and  order  dated  

19/10/2004 passed by the Special Court constituted under the Special Court  

(Trial and Offences related to Securities) Act, 1992 (for short “the Act”),  

were  taken  up  for  hearing  together  and  are  being  disposed  of  by  this  

common judgment.

BACKGROUND FACTS

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Andhra Bank is a Scheduled Nationalised Bank.  It has a branch at  

Mumbai  known  as  the  Fort  Branch.   Out  of  five  appellants  before  us,  

Accused Nos. 1, 2, 4 and 5 were officers of the said Branch of the Andhra  

Bank.  Accused No. 1 was the Manager of Funds, Accused Nos. 2 and 4  

were Junior Management Officers of the Funds Department, and Accused  

No.  5  was  the  Assistant  Manager,  Debit  Section.   Accused  No.3,  Hiten  

Dalal, was at all relevant times and still is a broker and, inter alia, deals in  

securities.

Accused Nos. 1, 2, 4 and 5, in their capacity as public servants, were  

working in the Fort Branch of Andhra Bank.   

They were charged with abuse of their position and acting dishonestly  

and fraudulently, as a result whereof undue pecuniary advantage is said to  

have been procured by Accused No. 3 by way of crediting bankers’ cheques  

without them having been presented or sent for clearance and, thus, cheating  

Andhra Bank and dishonestly permitting substantial withdrawals from his  

current account by the Accused No. 3.  They are said to have prepared false  

documents and used them as genuine ones, with the intention to defraud and  

falsify entries in the books of accounts of the Bank.  They are also charged  

with entering into the criminal conspiracy, as they, having been entrusted  

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with the property of the Andhra Bank, prepared credit and debit vouchers in  

favour of Accused No. 3 authorizing credit of amounts of various cheques to  

the account of Accused No. 3 without having actually received any bankers’  

cheques.  

Indisputably,  the  Reserve  Bank  of  India  appointed  a  Committee  

known as the Jankiraman Committee whence the alleged security scam came  

to light.  It submitted a report, a portion of which was marked as Exhibit 334  

before  the  learned  Special  Judge  wherein  certain  irregularities  in  the  

functions of Andhra Bank were pointed out, the relevant portion whereof  

reads as under :

“(6) It was observed on a scrutiny of the current  account  of  H.P.  Dalal  that  the  branch  has  accommodated  the  broker  by  affording  credit  of  some of the banker’s cheques received from other  banks to his account one working day prior to the  day  on  which  the  instruments  were  sent  for  clearing, with a view to avoiding overdrawings in  the account on these days.  The funds so credited  have  been  utilized  by  the  broker  either  for  purchase  of  securities  or  making  some  other  payments.   Instances  noticed  are  given  in  the  annexure.  It will be seen therefrom that in the case  of item No. (i) the branch had afforded the credit  even before the actual date of the instrument.”

(Emphasis added)

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It  was  also  pointed  out  how Accused  No.3  had  received  financial  

benefit out of the said transactions.

FIRST INFORMATION REPORT

Relying on, or on the basis of, the Jankiraman Committee Report, a  

First Information Report was lodged by PW-25 Sitaram Premaram Paladia  

on or about 02/06/1993 (Exhibit 333), initially against the accused Nos. 1, 2  

and 3.

No further preliminary inquiry was conducted before lodging the said  

First Information Report.  Ten instances of grant of credit to Accused No. 3  

were detailed therein, in respect of the cheques received or those yet to be  

received from four banks,  namely Bank of Karad,  ANZ Grindlays Bank,  

Canara Bank and Standard Chartered Bank (hereinafter referred to as “the  

drawer banks”), without presenting or sending them for clearance.   

PW-26  Mr.  Waydande  while  making  investigation  into  the  said  

offence, allegedly found involvement of Accused Nos. 4 and 5 as well, who  

had prepared  debit  and credit  vouchers,  and made entries  in  the  transfer  

scroll, BCR Registers, Cheque Clearing and Receiving Registers, etc.  They  

were thereafter made accused in the said case.

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PROSECUTION CASE

The  prosecution  contends  that  the  appellants  herein  entered  into  a  

conspiracy  with  each  other  with  the  object  of  giving  undue  pecuniary  

advantage to Accused No. 3, and for the said purpose, the bank officers had  

misused their position as public servants, forged documents and used them  

as genuine ones for the purpose of falsification of accounts.   

The prosecution case is that such credits should not have been given  

until the amount of the cheques was realized.  It was furthermore alleged  

that credit had been given even though the said cheques had not actually  

been received in the Fort Branch of Andhra Bank.  The aforementioned acts  

on the part of the officers of Andhra Bank constituted criminal breach of  

trust  and forgery, as well  as offences under the Prevention of Corruption  

Act, 1981.

PROCEEDING BEFORE THE SPECIAL COURT

As many as ten transactions were in question before the learned judge.  

Separate charges were framed in respect of each of the aforementioned ten  

transactions.  Before the learned Special Court, 26 witnesses were examined  

by the prosecution.  

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PWs 1 to  10 were  employees/officers  working in  the  drawer  bank  

along with four officers from the Funds and Investment Department.  

PWs 11 to 19 and 22 to 24 were working in the Andhra Bank.  PW-11  

Hemlala G. Nair and PW-12 Rajinderkumar and one Rane, were working as  

clerks in the Funds and Investment Department, Andhra Bank. Rane died in  

1993 and thus, could not be examined as a witness. PW-13 Sunil Pore and  

PW-14  Dilip  Gursahani  were  working  as  typist  and  Clerk-cum-Cashier  

respectively in the Clearing Department, Andhra Bank.  PW-17 Katta Hari  

Babu and PW-18 Ramesh G. Ramteke were officers in the Current Account  

Department,  Andhra  Bank.   PW-19 S.  Ganavinayagam was the  Manager  

(Operational) in the Current Account Department and PW-22 J.S. Sastry was  

working as Chief Officer, at the Head Office of Andhra Bank, Hyderabad.  

PW-23 G.D. Bhalla was working as Chief Manager in Fort Branch, Andhra  

Bank,  Mumbai.   PW-24  C.  Raja  Rao  was  working  as  General  Manager  

(Personnel) at the Head Office, Andhra Bank, Hyderabad. PW – 20 Anand  

Sinha and PW-21 M. Mahajan were officers working in the Reserve Bank of  

India.    

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JUDGMENT OF THE SPECIAL COURT  .   

In  respect  of  transaction  no.  1,  the  Special  Court  noted  that  the  

account  of  A3 was credited  on 18/05/1991,  whereas  the  cheque is  dated  

20/05/1991. As Accused No.1 and 2 authorized the credit vouchers to the  

Current Accounts Department, allowing it to credit an amount of Rs.2 crores  

indicated  therein  to  the  account  of  Accused  3,  without  having  in  their  

possession  the  cheque  for  the  said  amount,  A1  and  A2  were  guilty  of  

criminal breach of trust as also for creating false documents.

In  respect  of  transactions  no.  2  and 3,  the  Special  Court  held  that  

though the cheque dated  05/07/1991 was received on 06/07/1991, the credit  

therefor had been given on 05/07/1991; the cheque amount was realized only  

on  06/07/1991.  As  A1  and  A2  prepared  debit  and  credit  vouchers  and  

ensured credit to the account of A3, even without having in their possession  

the corresponding cheque and, thus, they were guilty of criminal breach of  

trust and also falsifying documents.

In respect of transaction No. 4, the Special Court held that though the  

cheque dated 17/09/1991 was received on 18/09/1991, the credit was given  

one  day  prior  thereto,  i.e.,  on  17/09/1991  and  the  cheque  amount  was  

realized only on 18/09/1991.  Hence,  on the day on which the credit  was  

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given, the cheque was not in possession of the A1 and A2, and, thus, by  

issuing credit voucher on 17/09/1991, A1 and A2 committed criminal breach  

of trust and falsification of documents.

In respect of transactions no. 5 and 6, it was held by the Special Court  

that  the  cheque  dated  06/11/1991  was  supposed  to  have  received  on  

06/11/1991, but credit thereof was availed by him on 06/11/1991 although  

the cheque was realized on 08/11/1991; 07/11/1991 being a holiday. Hence,  

on the day on which the credit was given, the cheque was not in the hands of  

the A2 and A4; and by issuing the credit voucher on 06/11/91, they have  

committed the offence of  criminal breach of  trust  as also falsification of  

documents.

It was also held in respect of transaction no. 7, that the cheque dated  

13/11/1991  was  received  on  that  date  and  the  credit  was  given  on  

13/11/1991, although the cheque amount was realized only on 14/11/1991.  

The  cheque  was  not  sent  for  clearing  on  13/11/1991  and  therefore,  by  

issuing credit voucher on that day, A1, A2 and A4 had committed criminal  

breach of trust and were also guilty of preparing false documents.

So far as transaction No.8 is concerned, the Special Court held that the  

cheque dated 04/12/1991 was received on 05/12/1991 and the credit  was  

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given on 04/12/1991, despite the amount was realized only on 05/12/1991.  

Evidence on record has clearly proved that the cheque in question was not  

received  in  the  Funds  Department   on  04/12/1991,  although A1 and A5  

authorised crediting the cheque amount into A3’s account on that day and  

therefore A1 and A5 were guilty of criminal breach of trust as also making  

of false documents in respect of the said transaction.

In respect of transaction no. 9, it was held by the Special Court that  

the cheque dated 16/12/1991 was received on 16/12/1991, the credit is given  

and availed on 16/12/1991 and the cheque was actually realized only on  

17/12/1991.  The  cheque  was  not  sent  for  clearing  on  16/12/1991  and  

therefore, by issuing credit voucher on that day, A1 and A2 were guilty of  

criminal breach of trust and of making of false documents in furtherance  

thereof.

In respect of transaction no. 10, the Special Court held that the cheque  

dated 07/04/1992 was received on 08/04/1992, and the credit was given on  

07/04/1992 even though the cheque was realized only on 08/04/1992. As on  

the day on which the credit was given, the cheque was not in the hands of  

A2, by issuing the credit voucher on 07/04/1992, A2 was guilty of criminal  

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breach of trust and also guilty of making false documents in furtherance of  

this transaction.

It was also recorded by the Special Court that the pecuniary advantage  

had illegally been given to A3, and thereby A2 and A4 have committed an  

offence  under  Section 13 (2)  read with  13 (1)  (c)  and 13 (1)  (d)  of  the  

Prevention  of  Corruption  Act.  It  was  also  held that  since  the  credit  was  

illegally given to A3, they have committed criminal breach of trust, and that  

by issuing a credit voucher without the cheque having been realized, A2 and  

A4 have prepared false documents and thereby committed forgery. It was  

also held that A2 and A4 entered into criminal conspiracy with A3 and other  

accused  persons  for  the  purpose  of  giving  illegal  credit  to  A3 and  thus  

securing a pecuniary advantage for him.

ADMITTED FACTS  :

Before  adverting  to  the  rival  contentions  raised  before  us  by  the  

parties, we may, at the outset, notice the following:

(i) All the cheques involved are banker’s cheques.

(ii) Payments under the banker’s cheques are guaranteed.

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(iii) Cheques  received  by  the  Bank  are  dealt  with  by  the  Funds  

Department,  Current  Account  Department,  Clearing  Department  

and Day Book Department.   

(iv) The  Current  Account,  Clearing  and  Day  Book  Departments  

operate  under  the  Operation  Department  of  the  Fort  Branch,  

Andhra Bank

(v) In addition thereto, there is a service centre of the Bank which is  

situated  in  separate  premises.   It  is  responsible  for  sending the  

banker’s cheques to the Reserve Bank of India for clearance.   

(vi) It  was not  proved that  the bank officers received any pecuniary  

advantages for themselves but by their action pecuniary advantages  

were received by Accused No. 3.

(vii) Whereas  there  are  no  guidelines  for  operation  of  the  Funds  

Department, guidelines have been issued by the Andhra Bank for  

other  connected departments,  viz.,  Current  Account Department,  

Clearing Department and Day Book Department.

(viii) It is also not in dispute that a machine known as Advance Ledger  

Posting  Machine  (ALPM) was  installed  in  the  Current  Account  

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Department which was possible to be operated manually.  We will  

highlight  the  operational  details  of  the  said  machine  at  an  

appropriate stage.   

SUBMISSIONS OF LEARNED SENIOR COUNSEL.  

Mr. Naphade, Mr. C. Mukund and Mr. Das, learned counsel appearing  

on behalf of the accused nos. 1, 2, 4 and 5 urged :

(i) Since the First Information Report was lodged only on the basis of  

the  report  of  the  Jankiraman  Committee  without  any  further  

preliminary enquiry, the entire proceeding is vitiated in law.

(ii) Jankiraman  Committee  having  only  pointed  out  irregularities  

committed both by the Current as well as the Clearing Department,  

appellants cannot be said to have been involved in commission of  

any offence, as alleged or at all.

(iii) There is no evidence to show that the appellants had any dominion  

over the property of the bank at any point of time, and/ or they  

were ultimately responsible for the disposal thereof in violation of  

any direction of law.

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(iv) Since the purported guidelines [Exhibit 322] have no force of law,  

no offence of criminal breach of trust  can be said to have been  

committed in terms of Section 405, read with Section 43 of the  

Indian Penal Code.   

(v) Further,  the  guidelines  purportedly  issued  by  the  Bank,  in  any  

event, have no nexus with the functioning of the Funds Department  

being applicable in respect of securities transactions; the impugned  

judgment of the Special Court is wholly unsustainable.   

(vi) Appellants,  having  scrupulously  followed  the  prevailing  bank  

practices and furthermore having complied with all the procedures  

laid down therefor, cannot be said to have committed any offence.

(vii) The job of the Funds Department was only to prepare credit and  

debit vouchers on receipt of the Banker’s Cheque and to forward  

the  same  to  the  Current  Accounts  Department  and  it  was  the  

officers of the Current Accounts Departrment have both a duty, as  

well  as  the  authority  to  scrutinize,  verify  and  process  these  

vouchers resulting in ultimate clearance thereof and in that view of  

the matter, no offence can be said to have been committed by the  

appellants alone.

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(viii) Even assuming that the appellants are party to any conspiracy but  

the same by itself cannot yield any result, viz., ultimate benefit to  

the  Accused No.  3,  as  the  clearance  of  the  cheques  was in  the  

hands of some other officers and as such the impugned judgment is  

liable to be set aside.

(ix) Since the banking practice in regard to grant of instant credit to the  

holder of a negotiable instrument is an accepted one, meant for the  

benefit  of  the  customers,  there  can  be  no  rationale  that  such  

benefits though required to be given to the customers, would be  

withheld unless the actual fund is received from the drawer bank.  

Although there  existed  guidelines  only  for  the  Current  Account  

and other Departments, there existed no guidelines as regards the  

grant of instant credit which had come to be established based on  

the internal practice followed by the banks.  Accordingly, no case  

for the commission of an offence of criminal breach of trust had  

been made out.   

(x) It  being  not  the  case  of  the  prosecution  that  the  procedures  in  

respect of the said transactions were totally disregarded and only  

because the scam broke out, faults were sought to be found without  

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rectifying the said procedure and in that view of the matter, the  

functionings of the appellants could not have been questioned.   

(xi) The veracity or the existence of the documents being not disputed,  

the judgment of the Special Court as regards actual date of receipt  

of the cheques were wholly unjustified, particularly in view of the  

statements  made  by  the  witnesses  examined  on  behalf  of  the  

drawer  banks  who had  categorically  stated  that  no  cheque  was  

ante-dated.

(xii) The Andhra Bank not being involved in the security transactions  

wherein only the drawer banks were involved, the Special Court  

had no jurisdiction to try the alleged offence.

(xiii) Even if the findings of the Special Court that some documents did  

not  contain  all  the  details  is  held  to  be  correct,  all  the  officers  

concerned,  from  receiving  the  cheque  to  clearance  thereof  

(including the clearance of the Funds Department) should be held  

to be liable therefor and not the appellants alone.

(xiv) In  view  of  the  pressure  of  work  on  all  the  employees  being  

admitted,  and as  all  entries  in the  registers  were required to  be  

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done on the same day which having substantially been complied  

with,  inadvertent  errors  on  the  part  of  employees  cannot  be  

considered to be acts of illegality.   

(xv) Since  the  current  account  credit  vouchers  were  released  by  the  

accused persons in discharge of their official duties, the allegation  

that they had prepared any false document and, thus, committed  

acts of forgery, must fail.   

(xvi) The banker’s  cheques  having  been admittedly  100% guaranteed  

and the bank having not suffered any monetory loss and having  

also not  filed any complaint,  the impugned judgment  cannot be  

sustained.

(xvii) Appellants  having  followed  the  established  and  longstanding  

banking  practices,  deviation  therefrom  would  only  amount  to  

misconduct, as no mens rea can be attributed to them.   

(xviii)The transactions  in  question  being  exceptional  in  nature,  which  

according  to  PW-17,  Katta  Hari  Babu,  would  mean   

“it  involves  large  credits  and  large  debits”;  some  priority  was  

required to be given thereto  

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(xix) When cheques are posted (which means the amount is credited into  

the account),  the customer  becomes entitled to utilize  the same,  

which  is  not  subject  to  the  clearance  of  the  banker’s  cheque  

wherewith  the  accused  had  no  role  to  play;  and  hence  the  

impugned judgment is wholly unsustainable.

(xx) In view of the fact that Sh. Ramesh G. Ramteke, PW-18, both had  

the  authority  to  verify  the  transaction,  as  well  as  discovered  

discrepancies in the date of the cheque and/or the credit and the  

debit voucher for which he went back to the Funds Department,  

but no action was taken therefor would clearly go to show that he  

satisfied himself that only a wrong date has been mentioned, which  

was otherwise usual.   

(xxi) Appellants not being the authorized officers of the bank, could not  

be said to have any dominion over the property of the bank and  

thus no offence can be said to have been committed.   

(xxii) PW-19,  S.  Ganavinayagam  having  testified  that  accused  No.3,  

Hiten Dalal used to receive preferential treatment and for whom  

only  the  guidelines  Ex.322  had  been  issued,  any  action  taken  

pursuant thereto or in furtherance thereof must be held to be legal  

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and within the framework of law particularly when in relation to  

bankers’ cheques,  as was admitted by PW-20,.  Anand Sinha, an  

officer of the Reserve Bank of India that no guidelines had been  

issued therefor.   

(xxiii)From the deposition of  prosecution witnesses,  particularly  those  

who are high ranking officers including PW-23, Sh.  G. Bhalla,  

Chief   Manger  of  Andhra  Bank,  it  would  be  evident  that  the  

appellants  had followed the usual  banking practice.   It  has also  

been  admitted  that  any  transaction  carried  out  was  subject  to  

scrutiny, as the Funds Department used to send a daily report to  

PW-23.   

(xxiv) Accused No.5 having been shown to be involved in respect of only  

two  transactions,  namely   transaction  Nos.  8  and  9,  and  as  in  

respect transaction of No.9, he had not been found guilty, for the  

self-same reasons he should have been found to be not involved in  

respect of transaction No.8 as well.

(xxv) There being no independent material on record to show conspiracy  

between A-1, A-2, A4 and A-5 on the one hand and A-3 on the  

other the appellants could not have been convicted for commission  

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of an offence under Sections 120-A and 120-B of the Indian Penal  

Code 1860.

(xxvi) As conspiracy is a separate and distinct offence under the Indian  

Penal Code, and the original agreement between the accused is a  

sine  qua  non  therefor,  mere  knowledge  of  conspiracy  by  itself  

cannot be said to be sufficient in arriving at a finding of guilt in  

respect thereof.  

Mr. U.U. Lalit, learned senior counsel appearing on behalf of accused  

No.3 would contend:

(i) As no material of either any meeting or any conversation having been  

brought on record, the question of holding him guilty of commission  

of an offence of conspiracy does not arise.   

(ii) The bankers’ cheques having been issued by the banks for utilization  

of  the  amounts  thereof  by  accused  No.3  and he  being  beneficiary  

thereof, there was no question of his being benefited by entering into  

any conspiracy with anyone.  

(iii) Charges  alleged  made  by  the  prosecution  being  confined  to  non  

realization of the bankers cheques from the Reserve Bank of India at  

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the  end  of  the  day,  although credit  thereof  had been  given  in  the  

account of accused No.3, the irregularity in respect thereof was to be  

dealt with by different branches of the banks wherewith accused No.3  

was not concerned and, thus, he cannot be said to have committed any  

offence.

(iv) Even assuming that irregularity had been committed in the matter of  

realization  of  the  amount  under  the  bankers’  cheques  from  the  

Reserve  Bank  of  India,  the  same  by  itself  would  not  lead  to  an  

inference of commission of an illegal act and consequently, an offence  

of conspiracy.   

Mr.  A.  Mariarputham,  learned  counsel  appearing  on  behalf  of  the  

Central Bureau of Investigation, on the other hand, submitted :

(i) Although there is  no direct  evidence of conspiracy,  in view of the  

materials brought on record by the prosecution, accused Nos. 1, 2, 4  

and  5,  who  authorized  crediting  of  the  amounts  of  the  bankers’  

cheques for the benefit of accused No.3 must be held to have misused  

their position so as to cause wrongful loss to the bank and wrongful  

gain to accused No.3, and, thus, have clearly committed the offence of  

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criminal  breach of trust within the meaning of  Section 405 of the  

Indian Penal Code 1860.

(ii) Circular dated 5th December, 1990 issued by the Andhra Bank (Ext.  

322) specifically providing that the transaction may be carried out in  

the  case  of  Hiten  Dalal  (accused No.3)  and the  commission  to  be  

charged  therefor  having  been  prescribed  and,  thus,  no  exception  

having been made granting him the facility of over draft, charging of  

interest on any advance or over draft etc., the officers of the banks  

having not taken the requisite precautions by them in regard to receipt  

of any cheque and, thus, have violated the directions as the account of  

accused No.3 was credited much before the Bank received credit in  

respect of the said cheques in the account maintained with the Reserve  

Bank of India.

(iii) The cheques/transactions would fall  into three categories,  namely –  

(1) post dated cheques and credit given therefor earlier ;  (2) cheques  

although not in physical possession of Andhra Bank, but credit was  

still given to the account of accused No.3; and (3) cheques presented  

for clearance the next day, but account of accused No.3 was credited  

the previous day, all of which were wholly illegal.

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(iv) From a bare perusal of the findings of the learned Special Court it  

would appear that in regard to transactions 1, 2, 3, 4, 7, 8 and 10 the  

cheques were not in physical possession of Andhra Bank at the time  

when the account of accused No.3 was credited, although in respect of  

transaction No.1 the cheque might have been with the Andhra Bank  

and, thus, the charge against the appellant must be held to have been  

established.

(vi) In so far as the first transaction is concerned, account of accused No.3  

was credited on 18th May, 1991 but the cheque was dated 20th May,  

1991 which clearly shows the intention on the part of the appellants to  

confer  an  illegal  benefit  to  accused  No.3,  to  which  he  was  not  

otherwise entitled to.   

(vii) In respect of transaction No.10, although the account of accused No.3  

was credited on 7th April,  1992 for an amount of Rs. 4 crores,  the  

materials on record clearly show that although the cheque was dated  

7th April, 1992, it was issued/forwarded only on 8th April, 1992 which  

is clearly demonstrative of the fact that the accused had dealt with the  

said cheque without there any forwarding letter having been issued by  

the  transferee  bank  stating  that  accused  No.3  was  the  beneficiary  

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thereof, the criminal misconduct on the part of the accused must be  

informed.

(viii) So far as transaction Nos. 2, 3, 4, 7 and 8 are concerned, it is borne  

out from the record that the cheques had not been received by the  

Andhra Bank and in  any event  the  same having not  been sent  for  

clearance on the dates  they were  purported to  have been received,  

wherefor the bank did not receive any credit from the Reserve Bank of  

India,  the  findings  in  the  impugned  judgment  in  this  behalf  are  

unassailable.

(ix) So far as transaction No.7 is concerned, it is established that a credit  

of Rs.1.5 crores had been given although the actual figure mentioned  

in  the  cheque  was  Rs.2,37,29,750/-  which  is  beyond  anybody’s  

comprehension  as  a  partial  credit  is  not  given  in  any  banking  

transactions.  

(x) The learned Special Judge having dealt with each of the transactions  

separately  showing  in  details  as  to  how,  and  on  what  basis  his  

conclusions  were  arrived  at  in  regard  to  the  fact  that  the  cheques  

involved in seven transactions were not with Andhra Bank when the  

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account of accused No.3 was credited; the impugned judgment should  

not be interfered with.

(xi) It is clear from the findings of the learned Special Judge that but for  

the credit given on the relevant dates, the account of accused No.3  

would have been overdrawn i.e. money in the account No.3 would not  

have been sufficient to honour cheques issued by him and presented  

for payment on these days, and thus, the appellants have rightly been  

found guilty for commission of the said offence.  

(xii) Even for a banking branch to grant immediate credit to the account of  

accused  No.3;  as  at  least  in  respect  of  5  cheques,  the  conditions  

required therefor, namely the physical availability of bankers’ cheques  

with the Andhra Bank, having been found to be missing at the point of  

time when the credit was given to the account of accused No.3, the  

appellants must be held to have committed the offence under Section  

409 read with Section 120-B of the Indian Penal Code.  

(xiii) When an account holder is permitted to draw money in excess of the  

amount in his account, it would be an over-draft or an advance or loan  

from the bank to the account holder, wherefor interest would become  

chargeable  and  as  no  interest  has  been  charged,  the  same  would  

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amount to giving undue benefit to the account holder, and loss to the  

bank, particularly when in the circular letter (Ext. 322) there was no  

exception made in favour of accused No.3.

(xiv) As  Accused  No.3  had  no  overdraft  facility  or  overdraft  limit  

sanctioned to him, he could not have indirectly obtained the facility at  

the behest of  accused Nos. 1, 2, 4 and 5.  

(xv) In a situation of this nature, the Court is required to take a holistic  

view of the mater and for the said purpose the materials brought on  

record  to  prove  the  ingredients  may  have  to  be  considered  from  

different angles, namely – (a) if a cheque had been received the entire  

procedure  for  grant  of  credit  had  been  rushed through beyond  the  

normal banking hours so that credit may be given to the account of  

accused No.3;  (b)  the  cheques  are  of  one date  and the  forwarding  

letters of the next date, the credit and debit vouchers in the name of  

accused  No.3  could  not  have  been  prepared  in  absence  of  the  

forwarding letters; (c) the requirements of accused No.3 must be held  

to be known to the officers of the bank, as against the cheque amount  

of Rs.2,37,29,750/- credit for a sum of Rs. 1.5 crores could not have  

been granted, which clearly goes to show that even if cheques were  

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received later the amounts were credited to the account of accused  

No.3 so as  to enable  him to meet  his  other  obligations  and in  the  

process,  money belonging to the bank was being used by Accused  

No.3 facilitated by officers of the bank using their authority.

(xvi) Appellants have not offered any explanation as to why details had not  

been  entered  in  such  a  large  number  of  documents,  although  the  

register must show as to who is the beneficiary of the cheques and the  

amount  therefor,  hence  the  impugned  judgment  should  not  be  

interfered with.  

(xvii) Banking norms, for the purpose of attracting ingredients of Section  

405  of  the  Indian  Penal  Code,  are  binding  on  its  officers  and  for  

giving any undue facility given to accused No.3, the appellants could  

be found guilty.  

JURSIDICTION OF THE SPECIAL COURT

It is well known that during the period for April 1992 to June 1992,  

certain large scale irregularities and malpractices were detected in certain  

security transactions which were alleged to have been carried on by some  

prominent  brokers  in  collusion  with  employees  of  various  public  sector  

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banks and financial institutions. To deal with the situation and to ensure the  

speedy recovery of the huge amount involved, the Parliament enacted the  

Special  Court (Trial  of offences relating to transaction in Securities)  Act,  

1992, “the Act” establishing the Special Courts from whose judgment this  

appeal comes before us.

The  question  which  now  arises  for  our  consideration  is  whether  

having regard to the peculiar facts and circumstances of the case the Special  

Courts so constituted had jurisdiction to try this matter.  

Indisputably Section 7, read with sub section 2 of Section 3 of the  

Special Courts Act, limits the jurisdiction of Special Courts only to offences  

relating  to  transactions  in  securities  after  the  1st day  of  April,  1991  and  

before 6 June 1992.

Further  Section  8  provides  that  the  special  courts  shall  have  

jurisdiction to try any person concerned for the offence referred to in sub  

section  2  of  Section  3  either  as  a  principal,  conspirator  or  abettor  and  

accused persons can be jointly tried at one time, in accordance with CrPC.

Since  we  have  already  dealt  with  the  issue  as  to  the  ambit  of  

jurisdiction of the Special courts in R Venkatkrishnan v. Central Bureau of  

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Investigation (Criminal  Appeal  No.  76  of  2004 decided  today), it  is  not  

necessary to deal with this aspect of the matter once again.

Indisputably the jurisdiction of the Special Court is wide in nature.  

The provisions of the Act need to be interpreted keeping in mind its object  

and purport. The Act being a special Act must be given its full effect.

It  would bear repetition  to  state  that  A3 was one of  the  clients  of  

Andhra Bank dealing with the purchase and sale of securities through the  

Funds  Department  and that  he had a  Current  Account  bearing No.  4819  

mainly for the said purpose.

While dealing with the securities transactions on behalf of A3, there  

used to be sale as well as purchase of securities. In case of transaction of sale  

of securities, Accused No. 3 used to receive his payments through Bankers  

Cheque which were deposited with the Funds Department, and the amount  

of the Cheque in relation to sale in securities. It is the undisputed position  

that  the  Funds  Department  of  the  Andhra  Bank  was  the  only  branch  

exclusively dealing with securities.

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Furthermore  it  must  be  noted  in  this  respect,  that  Exhibit  322  

Notification of the Andhra Bank dated 5.12.1990 authorized the Fort Branch  

of Andhra Bank to deal with A3 in regard to securities transactions.

Besides,  as  we have already noted,  there  is  ample evidence of  the  

officers  and the  staff  members  working  in  the  Bank of  Karad,  Standard  

Chartered Bank, Canara Bank and ANZ Grindleys Bank that they had issued  

these Bankers Cheque in regard to security transactions, especially in respect  

of Mr AD Narottam, who was dealing in securities.  

Officers who are accused in the present case A1, A2, A4 and A5 are  

officers in the Funds Department of the Andhra Bank at its Fort Branch. As  

stated  earlier,  the  said  branch  was  the  only  one  dealing  with  security  

transactions on behalf of the entire Andhra Bank.  

The submission of the learned counsel for the appellants that the trial  

of  offences  by  the  Special  Court  is  without  jurisdiction  and  without  the  

authority of law would, thus, have to be rejected and, in our opinion, the  

court  rightly  exercised  jurisdiction  in  the  present  matter.  We  affirm  the  

findings of the court in this regard.

PROCEDURES FOLLOWED BY THE VARIOUS DEPARTMENTS

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In  order  to  appreciate  the  issues  involved  in  the  present  case  it  is  

necessary  to  set  out  in  brief  the  working  modalities  of  the  various  

departments  of  the  Fort  Branch  of  Andhra  Bank,  Mumbai  which  were  

connected with transactions relating to bankers cheques. There are four such  

departments  to  which  we  must  pay  special  attention;  namely  Funds  and  

Investment Department (hereinafter “Funds Department”), Current Account  

Department, the Clearing Department and lastly Day Book Department. It is  

also to be noted that the Funds Department was an independent department  

whereas the other departments  namely Current Accounts Department,  the  

Clearing  Department  and  the  Day  Book  Department  were  under  the  

Operations Department of Fort Branch of Andhra Bank, Mumbai.  

The Funds Department which was functioning at the Fort Branch was  

exclusive to the said branch, and did not exist in any other branch of Andhra  

Bank  throughout  India.  This  department  was  dealing  in  call  money  and  

securities transactions on behalf of the bank as a whole. The functioning of  

the department was directly under the supervision of the head office of the  

bank, situated at Hyderabad.  

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For a proper analysis of the factual matrix of the case it  would be  

essential  to  take  a  close  look  at  the  procedure  followed  in  the  various  

departments of the Bank.

FUNDS DEPARTMENT

Bankers cheques used to first arrive at the Funds Department of the  

Bank.  These  cheques  which  were  received  from  the  drawer  bank  were  

accompanied with a forwarding letter indicating the nature of the beneficiary  

and the amount of the Cheque. On receipt of the Cheque, an entry used to be  

made  in  the  Bankers  Cheque  Receivable  Register  [BCR  Register].  The  

register contain all necessary particulars with regard to the Cheque, the name  

of  the  drawer  bank,  the  number,  the  date  and amount thereof  as  also  to  

whom the amount of the Cheque was to be credited.

Thereafter,  entries  used  to  be  made  in  the  transfer  scroll,  which  

contained credit as well as debit vouchers. The details of the credit voucher  

are entered in the transfer scroll on the credit side, and the details of the  

debit voucher are entered on the debit side. The entries in the transfer scroll  

used to be made on the same day on which the Cheque was received.  

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On the credit side, the particulars of the person in favour of whom the  

Cheque was received was entered, along with the amount of the cheque. On  

the debit side, debit voucher entries were made by debiting the BCR account  

with the amount of the cheque. Thereafter, the credit voucher used to be sent  

to the Current Account Department for posting, i.e., giving credit equal to  

the amount of  the cheque directly  to the account  of the beneficiary.  The  

debit voucher was however retained in the Funds Department.

All  these  vouchers  were  required  to  be  signed,  which  in  effect  

authorizes the credit to be given to the beneficiary of the cheque.

As  per  the  procedure  followed  by  the  department,  a  consolidated  

credit voucher and a consolidated debit voucher used to be prepared on the  

basis of the entries made in the BCR Register by about 2.30 to 2.45 pm.  

Accordingly the voucher contained the total of all the cheques received until  

then.

The  consolidated  credit  voucher  was  prepared,  along  with  a  slip  

bearing the amounts of all the cheques. The total of the vouchers and the  

total of all the cheques given on the slip should tally with the total of the  

BCR Register.

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Thereafter, the consolidated credit voucher so prepared along with the  

slip and all the cheques used to be sent to the Clearing Department of the  

Bank, whereas the consolidated debit voucher was sent directly to the Day  

Book Department.

CURRENT ACCOUNT DEPARTMENT

The Current  Account  Department  as  has  already  been noted  came  

under the Operations Department of Andhra Bank. The officers working in  

the Current Account Department would check the credit vouchers received  

from the Funds Department and then make posting on the computer which  

operated as per the Advanced Ledger Posting Machine [ALPM] programme.  

The amount  shown in the  credit  voucher  would,  through the posting,  be  

credited to the account of the client indicated on the credit voucher. At the  

end of the day two lists used to be generated through the ALPM system from  

the computer. The first list concerned Exceptional Transactions of the day  

which  were  transactions  involving  amounts  of  more  than  one  lakh.  The  

second  list,  namely  the  transaction  listing,  was  for  all  the  transactions  

handled by the Current Account Department on that day.  

CLEARING DEPARTMENT

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As has already been noted, the Clearing Department used to receive  

the consolidated credit vouchers along with the slip bearing the amounts of  

the  various  cheques,  along with  the  cheques  themselves  from the  Funds  

Department.  These  cheques,  thereafter,  were  bifurcated  bank-wise  and  

accordingly a bank-wise slip, for the purpose of preparing the bank schedule,  

was made. Mr Sarkar [PW 15] used to verify the entries made in the bank  

schedule along with the cheques before sending them to the service centre  

for clearance.

A clearing rubber stamp along with the date would be put on each  

Cheque as well as the consolidated credit voucher. The date of the stamp  

would  be  the  date  on  which  the  Cheque  was  received  in  the  Clearing  

Department and sent to the service centre for realization. It was the job of  

the service centre to send the cheques to the RBI where the amount of the  

cheque would be credited in the account of Andhra Bank with RBI.

The cheques would then go back to the drawer bank and the bank  

schedule would be sent back to the service centre.  In case a cheque was  

dishonored, it used to come back to the Clearing Department through the  

service centre. If no Cheque was received back by the Clearing Department  

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from the service centre by 4.00 pm, then it meant that all the cheques had  

been cleared.

Subsequently, the consolidated credit voucher would be sent from the  

clearing department to the Day Book Department.

DAY BOOK DEPARTMENT

Day  Book  Department  used  to  ultimately  receive  both  the  

consolidated  credit  voucher  as  well  as  the  consolidated  debit  voucher.  

Though it used to receive the credit voucher from the Clearing Department,  

the  debit  voucher  used  to  be  directly  received  by  it  from  the  Funds  

Departments. Since both the vouchers were prepared from the BCR Register  

they would both tally with each other. Accordingly it was in this department  

that all the transactions of the day of Fort Branch of Andhra Bank used to be  

consolidated. Mr Mukesh [PW 16] used to handle the consolidation.

It was his duty to consolidate the data in the Day Book Register. It  

must be noted that a day book register is like a balance sheet showing the  

assets and liabilities of the bank on that day. Accordingly a Bankers Cheque  

which remained to be realized at the end of the day would be shown as an  

debit excess under the head of ‘Bankers Cheque receivables’

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A similar balance sheet through the General Ledger Balance [GLB]  

used to be generated through the ALPM system. This GLB gave a snapshot  

of the assets and liabilities on a particular day.

GUDELINES FOR BANKERS CHEQUES

Let us now consider the relevant guidelines which relate to the dealing  

of the Bankers Cheques.  

Mr. Sastry, the Assistant General Manager and the Chief Officer in  

the   Central  Accounts  Department  at  the  head office  of  Andhra  Bank at  

Hyderabad, stated in his testimony that the head office had issued guidelines  

for the operation of securities transactions of constituents at Fort Branch ,  

Bombay dated 5.12.1990 [Exb. 322].

In his testimony, he further clarified that the intention behind issuing  

the guidelines was to ensure that the purchase price for the transaction would  

be made only after  ensuring that the sale proceeds of the transaction are  

credited in the RBI to Andhra Bank.

As per him, the Funds Department would receive the bankers cheques  

on account of sale transactions of the clients  and enter the particulars  of  

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these instruments and send them to the Service centre for being forwarded to  

the RBI for crediting the amount to Andhra Bank’s account.  

Guideline 12 of Exhibit 322 [Operations of Security Transactions for  

Constituents at Fort Branch, Bombay] specifically provides:

“Please ensure that all the cheques received towards sale  transactions  will  be  presented  in  Special  Clearing  for  interbank cheques and ensure that the credit is afforded to  our Bank with RBI on the same day.”

It had also been vehemently submitted before the Special Court that  

the  said guidelines  were  not  in  respect  of  the  Funds Department.  It  was  

furthermore contended that guideline itself does not indicate that they were  

pertaining  to  the  Funds  Department.  The  learned  special  judge  rightly  

rejected the said arguments.

These guidelines were issued by the Head Office. They were issued  

for the purpose of operation of security transaction at Fort, Bombay Branch  

of Andhra Bank. The guidelines moreover specify that permission had been  

granted to Hiten P Dalal (A3) for the purpose of securities transactions.

Therefore,  these  directions  were  obviously  binding  on  the  persons  

who  were  working  in  the  Funds  Department.  These  guidelines  were  

3 7

exclusively  meant  for  the  Funds  Department  for  handling  securities  

transactions, and there was no other department or branch of Andhra Bank  

anywhere in India which was handling such securities transactions. As such,  

they were binding on the accused persons.  

THE PRESENT CASE

In  the  aforementioned  backdrop  of  events,  let  us  now analyse  the  

transactions involved herein.  Ten transactions relating to drawer’s cheques  

are in question, the details whereof are as under:

Tran.  

NO.

Date  of  

Credit

Amt.  Credited  to  a/c of A3

Date  of  realisation  of cheque

Actual  date  of  cheque  

1 18.05.91 2 crore 20.05.91 20.05.91 2 05.07.91 29 lacs 06.07.91 05.07.91 3 05.07.91 71 lacs 06.07.91 05.07.91 4 17.09.91 61,84,925.59 18.09.91 17.09.91 5 06.11.91 86,62,500 08.11.91 06.11.91 6 06.11.91 75 lacs 08.11.91 06.11.91 7 13.11.91 1,50,00,000 14.11.91 13.11.91 8 04.12.91 7 crores 05.12.91 04.12.91 9 16.12.91 8,80,95,890 17.12.91 16.12.91 10 07.04.92 4 crore 08.04.92 07.04.92

Accused No.1 is involved in all the transactions ; Accused No.2 is  

said to be involved in eight transactions, i.e., transaction Nos. 1 to 6, 9 and  

10;  while  Accused  No.4  is  allegedly  involved  in  four  transactions,  

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transaction  Nos.4  to  7.   Accused  Nos.  2  and  4  are  jointly  involved  in  

transaction Nos. 4 to 7.   

Accused  No.5  has  not  authorised  any  payment.   He  is  said  to  be  

involved in transaction Nos.8 and 9 only.   However, Accused No.5 has been  

given benefit of doubt in respect of the 8th transaction.  We are, therefore,  

concerned herein with his involvements in the 8th transaction.

We have discussed the functioning of different departments at some  

length only to highlight the submissions of learned counsel appearing on  

behalf of the appellants that the prosecution has not been able to prove the  

charge of conspiracy as without involvement of other departments, it  was  

not possible for accused No.3 to obtain any pecuniary gain out of the said  

transactions at all, if any.   

We must also notice that the functioning of the different departments  

has not been seriously disputed.    

The functioning of the Funds Department has been proved by PW 2,  

Sampada  S.  Amre,  and  the  other  departments’  functionings  by  PW  11,  

Hemlata Nair.  The same would also be apparent from the entries made in  

the  BCR register,  marked  as  Ext.111.   So  far  as  the  functioning  of  the  

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Clearing Department is  concerned, the same has been proved by PW 13,  

Sunil Pore.  Therein, cheques are segregated bank-wise and amount wise.  

There appears to be some controversy as to at what time cheques are sent out  

for clearance.  According to the appellants, the Funds Department is bound  

to receive cheques up to 3.00 p.m.   However, according to the prosecution a  

consolidated  statement  of  the  cheques  received  upto  2.30  p.m.,  after  

preparing bank schedule by the Clearing Department are sent at about 2.45  

p.m. to the service centre and the R.B.I.  Appellants contend that any cheque  

received after the prescribed hours i.e. 2.30 – 2.45 p.m., is sent with a single  

voucher to another department.   

It is accepted by PW 13, Sunil Pore that any cheque received up to  

3.00 p.m. is also entertained wherefor a separate voucher is prepared, and  

the same is sent to the Current Account Department.  This voucher may not  

be sent on that date, but must be sent on the day after.   

It is also contended that in regard to the processing of the cheque for  

giving  credit  or  making  entries,  the  Funds  Department  evidently  had  no  

access.  It  is also admitted that the Funds Department personnel have no  

access to the ALPM machine.  It also appears from the evidence of PW-7, K.  

Hari  Babu,  that  the  crucial  function  of  operating  the  machine  is  of  the  

4 0

Current Account Department.  Before signing the document relating to the  

posting  of  the  cheque,  an officer  of  the  Current  Department  only  would  

verify the entries made in the computer on the basis of which a print out  

would be taken out which is considered to be a document authorization in  

respect thereof.   

The said witness further states that the credit granted are of two types,  

namely cleared credits and uncleared credits. This would be known from the  

vouchers received from the Funds Department.  

Before  us,  the  aforementioned  procedural  aspect  is  not  at  all  in  

dispute.  What is in dispute is what is meant by authorisation.  

Our  attention  has  also  been  drawn  to  certain  flaws  in  the  system  

pertaining to the working of the various departments but we are not much  

concerned with them herein   

According  to  the  prosecution,  as  instructions  are  received  by  the  

Current Account Department from the Funds Department by way of credit  

vouchers,  signing  of  the  same  by  the  officer  would  itself  amount  to  

authorization whereas according to the accused, posting of the vouchers for  

clearance would amount to authorization.

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The  learned  Special  Judge  in  his  judgment  has  dealt  with  each  

transaction in great details.  He has considered both the aspects of the matter  

in respect of each of the transactions.  The learned Judge, however, found  

that  apart  from  three  transactions,  being  transaction  Nos.  5,  6  and  9,  

physical  possession  of  the  cheques  might  have  been  established,  but  in  

respect  of  other  transactions  either  vouchers  had  been  prepared  before  

receipt of the cheques, or post dated cheques issued by the drawer banks  

have been entertained,  in violation of the guidelines  issued by the Bank.  

Credit  had been given on the basis of post dated cheques.   Two cheques  

were  not  in  the  physical  possession  of  the  Andhra  Bank.  Although  the  

cheques  were  presented  for  clearance  on  the  next  date,  the  account  of  

Accused No.3 was credited on a previous day.  

Although we have been taken through the depositions of all important  

witnesses, as regards the functioning of the Bank, which includes not only  

the  internal  functioning of  its  different  departments  but  also the  banking  

practice developed over the years for grant of instant credit to its customers  

including Accused No.3, it may not be necessary to delve thereto in details.   

In our considered opinion, we may proceed on the assumption that the  

transactions in question are exceptional transactions and a banking practice  

4 2

had developed for grant of advance credit to some of the customers of the  

Bank, including Accused No.3.  

It is not in dispute that the guidelines issued by Andhra Bank (Ext.  

322) do not relate to Bankers Cheques.  It  is also not in dispute that the  

payment  under  the  Bankers  Cheques  is  guaranteed.   It  is  furthermore  

admitted that the Funds Department used to receive cheques along with a  

forwarding letter mentioning in whose account the same it is to be credited  

and upon verification thereof, it would be sent to the Clearing Department.  

The cheques used to be received by the officer of the Funds Department and  

on  the  instructions  of  these  officers  that  the  credit  vouchers  were  to  be  

prepared.  After preparation,  the vouchers were to be handed over to the  

officers who, by signing them, used to authorise the transaction.  

As per PW 23, Mr. G.H Bhalla, the cheques used to be sent to the  

Clearing Department, which in turn was responsible for sending them to the  

service centre.

Similarly, according to PW 12, Mr. Rajinderkumar, the debit vouchers  

were retained in the Funds Department and credit vouchers were sent to the  

Operational Department. It was on the basis of credit vouchers that entries  

were made in the Current Account of the Customer.

4 3

Mr.  Katta  Hari  Babu’s  (PW  17)  responsibility  was  to  verify  the  

signature of the officer on the credit vouchers after they were received by  

him whereafter  he used to give it  to his  operator  with an instruction for  

posting.  

During daily proceedings, the Bank Schedules were made ready by  

2.30  p.m everyday.  Separate  vouchers  were  made  for  cheques  that  were  

received after the consolidated voucher had been prepared.  

The banker’s cheques, since they related to daily transactions would  

never be post dated. No credit was to be given on the basis of post dated  

Cheque.  Bankers  Cheques  used to  be accompanied  by  a  Covering letter,  

which  was  in  the  form of  a  letter  of  Authorization  of  the  issuing  bank  

containing details of the beneficiary of the said cheques.

PW 23,  Mr.  G.H.  Bhalla,  further  elaborates  that  giving  immediate  

credit  meant  preparing  the  credit  voucher  on  the  receipt  of  the  banker’s  

cheque and sending the said voucher to the Current Account department for  

posting  credit  to  the  customer’s  account.  However,  customers  who  had  

deposited banker’s cheques could not demand the credit as a right on the  

same day before the realization. Since Officers of the Funds Department had  

the ultimate responsibility to give credit, they used to exercise considerable  

4 4

discretion  in  the  matter.  It  was  the  concerned  officers’  responsibility  to  

satisfy himself that the credit should come on the same day.  

He  further  goes  on  to  say  that  Accused  No.3  had  only  a  Current  

Account in the Branch.  He did not enjoy any overdraft facility. It was the  

Funds  and  Investment  Department’s  responsibility  to  carry  out  sale  and  

purchase of received banker’s cheques on his behalf.

CRIMINAL CONSPIRACY

Appellants were charged for entering into a criminal conspiracy in the  

matter of commission of several offences.  

Criminal conspiracy, it must be noted in this regard, is an independent  

offence.  It is punishable separately. A criminal conspiracy must be put to  

action; for so long as a crime is generated in the mind of the accused, the  

same does not become punishable.   Thoughts even criminal  in character,  

often involuntary, are not crimes but when they take a concrete shape of an  

agreement to do or caused to be done an illegal act or an act which is not  

illegal, by illegal means then even if nothing further is done, the agreement  

would give rise to a criminal conspiracy.   

The ingredients of the offence of criminal conspiracy are:

4 5

(i) an agreement between two or more persons;

(ii) an agreement must relate to doing or causing to be done either (a)  

an illegal act; (b) an act which is not illegal in itself but is done by  

illegal means.

Condition precedent for holding the accused persons to be guilty of a  

charge of criminal conspiracy must, therefore, be considered on the anvil of  

the  fact  which  must  be  established  by  the  prosecution,  viz.,  meeting  of  

minds of two or more persons for doing or causing to be done an illegal act  

or an act by illegal means.

The courts, however, while drawing an inference from the materials  

brought on record to arrive at a finding as to whether the charges of the  

criminal conspiracy have been proved or not, must always bear in mind that  

a conspiracy is hatched in secrecy and it is difficult, if not impossible, to  

obtain direct evidence to establish the same.  The manner and circumstances  

in which the offences have  been committed and the accused persons took  

part  are relevant.   For the said purpose,  it  is  necessary to prove that the  

propounders had expressly agreed to it or caused it to be done, and it may  

also be proved by adduction of circumstantial evidence and/ or by necessary  

4 6

implication.  [See Mohammad Usman Mohammad Hussain Maniyar & Ors.  

v. State of Maharashtra (1981) 2 SCC 443]

The following passage from Russell on Crimes (12th Edn. Vol 1) cited  

by  Jagannatha  Shetty,  J  in  Kehar  Singh  and  Ors. v.  State  (Delhi  

Administration), [1988 (3) SCC 609 at 731] brings out the legal position  

succinctly:

“The gist of the offence of conspiracy then lies, not  in doing the act, or effecting the purpose for which  the conspiracy is formed, nor in attempting to do  them, nor in inciting others to do them, but in the  forming of the scheme or agreement between the  parties.  Agreement is essential. Mere knowledge,  or  even  discussion,  of  the  plan  is  not,  per  se  enough”

Further  it  was  noted  in  Kehar  Singh (supra)  that  to  establish  the  

offence of criminal conspiracy ‘[i]t is not required that a single agreement  

should be entered into by all the conspirators at one time. Each conspirator  

plays his  separate  part  in one integrated and united effort  to achieve the  

common purpose. Each one is aware that he has a part to play in a general  

conspiracy though he may not know all its secrets or the means by which the  

common purpose is to be accomplished.’  

4 7

In some cases,  intent  of  unlawful  use being made of  the goods or  

services in question may be inferred from the knowledge itself.   

This Court in State of Maharashtra v. Som Nath Thapa [(1996) 4 SCC  

659]  opined  that  it  is  necessary  for  the  prosecution  to  establish  that  a  

particular unlawful use was intended, so long as the goods or services in  

question could not be put to any lawful use, stating:

“24. The aforesaid decisions, weighty as they are,  lead us to conclude that  to establish a charge of  conspiracy knowledge about indulgence in either  an  illegal  act  or  a  legal  act  by  illegal  means  is  necessary.  In some cases,  intent  of  unlawful  use  being made of the goods or  services in question  may be  inferred  from the knowledge itself.  This  apart,  the  prosecution has  not  to  establish  that  a  particular  unlawful  use  was intended,  so long as  the goods or service in question could not be put to  any lawful use. Finally, when the ultimate offence  consists  of  a  chain  of  actions,  it  would  not  be  necessary for the prosecution to establish, to bring  home the  charge  of  conspiracy,  that  each of  the  conspirators  had  the  knowledge  of  what  the  collaborator would do, so long as it is known that  the collaborator would put the goods or service to  an unlawful use.”

[See also K.R. Purushothaman v. State of Kerala (2005) 12 SCC 631]

Since we have dealt with the law with respect to criminal conspiracy  

in detail in R. Venkatkrishnan v. Central Bureau of Investigation (Criminal  

4 8

Appeal  76 of  2004 decided today) we need not  deal  with it  hereat  once  

again.  

We may however  notice  that  this  court  most  recently  in  Mohmed  

Amin @ Amin Choteli Rahim Miyan Shaikh and Anr. v. C.B.I. through its  

Director, 2008 (14) SCALE 240 after taking recourse to law governing the  

field noted thus:

“55. The principles which can be deduced from the  above  noted  judgments  are  that  for  proving  a  charge of conspiracy, it is not necessary that all the  conspirators  know each  and  every  details  of  the  conspiracy so long as they are co-participators in  the  main  object  of  conspiracy.  It  is  also  not  necessary  that  all  the  conspirators  should  participate from the inception of conspiracy to its  end.  If  there  is  unity  of  object  or  purpose,  all  participating at different stages of the crime will be  guilty of conspiracy.”

TRANSACTIONS

To properly appreciate the prosecution’s case, we must deal with all  

the ten transactions in some details hereinafter.

FIRST TRANSACTION

4 9

The first transaction relates to a bankers cheque bearing No. 56643  

dated 20.05.1991 for a sum of Rs. 2 crores issued by the Bank of Karad in  

favour  of  Andhra  Bank.  Admittedly,  the  account  of  Accused  No.  3  was  

credited with the said amount on 18.05.1991 itself even though the Cheque  

bears the date the 20th, on the basis of the credit voucher signed by Accused  

1 and Accused 2.   

The said credit voucher had been prepared by Kamble (PW 12). Mr  

Ramtake  (PW 18)  who at  the  relevant  time was  working  in  the  Current  

Account  department  had  received  the  said  voucher  on  the  18th and  had  

accordingly made the posting of Rs. 2 crore in the account of Accused 3.

It  appears  that  while  making  the  posting in  the  current  account  of  

Accused No. 3, PW 18 entertained a doubt.  He verified from the Transfer  

Scroll  and from the consolidated credit  voucher the dates of the bankers  

cheques,  since  though  the  date  on  the  bankers  cheque  was  20/05/1991  

however the credit voucher had been received on the 18th itself.   

The learned Special Judge in his impugned judgment opined that the  

cheque was not in physical possession of Andhra Bank. Reference in this  

regard must also be made to Exhibit 27 which was prepared in the Bank of  

Karad, which also goes to show that the cheque was issued on 20/05/1991.  

5 0

This banker’s cheque had been issued at the instance of A.D. Narottam and  

his account was debited on 20/05/1991. If the Cheque had been issued by  

Andhra Bank on the 20th, serious doubt arises as to how the credit voucher  

for the same could have been prepared on 18/05/1991.

Mr.  Sastry  (PW  22)  in  his  evidence  categorically  stated  that  the  

bankers’  cheques  are  never  post-dated  since  they  relate  only  to  that  

particular days transaction. The evidence of Mr. Bhalla (PW-23) is in the  

following terms:

“Post  dated banker’s cheque cannot be issued as  per the practice followed in the Andhra Bank.”

Kamble  (PW  12)  in  his  evidence  stated  that  neither  in  the  BCR  

Register of 20/05/1991 nor in the Transfer Scroll of the said date, he found  

any entry made as regards the aforementioned cheque for the credit or debit  

voucher for Rs. 2.00 crores.  In the transfer scroll of 20/05/1991 as also the  

debit  voucher,  details  of the said cheque were  not  found.  They could be  

found only in the Transfer Scroll  of 18/05/1991.  The debit voucher also  

bore the same transfer scroll number being number 21.

Indisputably  the  Transfer  Scroll  Register  (Exhibit  140)  as  also  the  

credit voucher, show that the amount was to be credited to the account of  

5 1

Accused No. 3. The credit vouchers, therefore, were prepared on 18.05.1991  

although it bore the date 20.05.1991.  Even the BCR Register for 20.05.1991  

(Exhibit 139) does not show receipt of the cheque.   

Appellants,  however,  contend  that  although  the  cheque  was  dated  

20.05.1991, the same had been received on 18.05.1991 on the basis of which  

the credit voucher was prepared and sent for the purpose of posting, as per  

the practice of giving instant credit which, in our opinion, is not  worth any  

credence.  It is not in dispute that the normal banking practice is that an  

entry  of  each cheque  would  be  made  immediately  in  the  BCR Register.  

Had, thus, the cheque been received on 18.05.1991, mention of it  should  

have been found therein.  There are no details in the entry as to whom the  

credit should be given to or the name of the drawer bank, the cheque number  

or the date of the cheque, which admittedly are required to be entered into  

the register on receipt of a Bankers Cheque.  Such details were furnished  

only in the BCR Register dated 20.05.1991.  The credit and debit vouchers,  

thus,  should  have  contained  the  details  of  the  cheque.   Credit  Voucher  

(Exhibit  136) and Debit  Voucher (Exhibit  137),  however,  do not  contain  

such details, and even the name of the drawer bank does not find mention.  

5 2

The only thing which has been mentioned is that the amount of the bankers  

cheque is to be credited to the account of Accused No. 3 Hiten P. Dalal.

Mr. Raje (PW-3), who was heading the Securities Department in the  

Bank  of  Karad,  categorically  stated  that  the  cheque  was  issued  on  

20.05.1991, under his signature.  The credit voucher of Bank of Karad is  

also dated 20.05.1991.  Sampada Ambre (PW-2) in his evidence stated that  

the entry with regard to the said cheque was made in the DD Sold Register  

only on 20.05.1991.  Sarmalkar (PW-5), who was also an officer of Bank of  

Karad, and who had made an entry as regards the said cheque in the account  

of  Mr.  A.D.  Narottam (Exhibit  73(1))  made  a  similar  statement  that  his  

account had been debited for Rs. 2 crores on that date.

Our attention, however, was drawn to a purported admission made by  

Mr. Raje that sometimes, Mr. Narottam used to give post-dated cheques and  

the  staff  would  prepare  the  required  documents  on  the  next  day.   Mr.  

Narottam  has  not  been  examined  by  the  defence.   As  the  witness  

categorically  stated that  the said cheque was issued on 20.05.1991 itself,  

after making an entry in the DD Sold Register and debiting it in the account  

of Mr. Narottam, the question of issuance of the post dated cheque would  

5 3

not arise.   The said purported admission does not relate to the cheque in  

question.

Moreover,  as  indicated  hereinbefore,  the  entries  made  in  the  BCR  

register, consolidated credit voucher (Exhibit 132) are clear pointers to the  

fact that the cheque was received by Andhra Bank only on 20.05.1991.  The  

cheque for a sum of Rs. 2 crores of Bank of Karad also finds mention in the  

bank  schedule  dated  20.05.1991  and  not  in  the  Bank  Schedule  dated  

18.05.1991.   It  would  bear  repetition  to  state  that  PWs  22  and  23,  

furthermore stated that bankers cheques are never post dated.

Moreover, if an account is overdrawn, it amounts to and overdraft and  

for the same, the account holder is liable to pay interest.  No interest was  

charged from the account of A 3 in this regard. Loss to the bank on account  

of interest was Rs. 20,274/-

Therefore,  we are  of  the  opinion that  the  involvement  of  Accused  

Nos.  1,  2,  and  3  as  regards  the  said  transaction  has  sufficiently  been  

established by the prosecution.

SECOND AND THIRD TRANSACTION

5 4

So  far  as  the  2nd and  3rd transactions  are  concerned  they  involve  

bankers cheques bearing Nos. 664786 dated 5/7/1991 amounting to Rs.29  

lac and 664785 dated 5/7/1991 for Rs. 71 lac issued by the Bank of Karad in  

favour of Andhra Bank.   

Indipsutably a single credit  voucher for Rs. 1 crore authorising the  

crediting of the said amount into the account of accused No.3 was issued by  

accused No.2. The corresponding debit voucher dated 05.07.1991 was also  

for Rs. 1 crore and it was in the handwriting of Accussed No. 2 and signed  

by both accused  No. 1 and 2. This transaction was also included in the list  

of  exceptional  transactions  for  05.07.1991.  Therefore,  it  is  clear  that  on  

05.07.1991 Accused No.  2 authorised the current a/c department to give  

credit of the amount of Rs. 1 crore to the account of Accused No. 3.

The finding of the learned Special Judge, relying on or on the basis of  

the  evidence  of  PW-2,  Sampada  S.  Amre,  that  the  said  cheques  were  

received on only  6/7/1991 in the clearing department and sent for clearance  

on that day, even though the amount had been credited with A3 on the 5th  

itself, cannot be sustained.  

The question before the judge was whether the said Cheque had really  

been  received  by  the  Funds  department  on  the  07/07.1991.  For  this  the  

5 5

learned Special Judge also found that in the BCR Register dated 5/7/1991 as  

also  the  transfer  scroll,  no  details  of  the  said  cheques  had  been  given,  

although in the BCR Register  dated 6/7/1991 two separate  entries  of  the  

cheques giving details like name of the bank, cheque numbers, dates and  

amounts had been mentioned.  The forwarding letter of the drawer bank has  

not been exhibited.  From the daily register it appears that the cheque for Rs.  

29 lacs  and 71 lacs appear as the last entries [Exts. 28(1) and 28(2)].  The  

transfer scroll also show that the said banker cheques were sent at the end of  

the day.  They find mention in Exhibit 153 at the places marked Exts. 153(1)  

and 153(2).  Even in Ext. D-28 of Andhra Bank dated 5th July, 1991 they had  

been shown as the last entries.  From Exts. 153(1) and 153 (2) it  further  

appears that the transactions in relation to the said cheques were entered into  

on 5th July, 1991 as the last transactions of the day. They had been forwarded  

to  the  current  account  department  as  has  been  mentioned  earlier.   The  

amount of both the cheques were clubbed together to make it Rs. 1 crore in  

toto.  From these documents, it is evident that proceeds of the cheques were  

credited to the account of accused No.3 on 5th July, 1991 itself. From Ext. A-

1(14),  Current  A/c.  Register,  ALPM II,  it  would furthermore appear that  

posting of the cheques was done by the Current Department at Sl. 179.  

5 6

The fact that the cheques were dated 5th July, 1991 is not in dispute.  It  

is also not disputed that the voucher Ext.151 was prepared on 5th July, 1991.

PW-15,  Ragvinder Sarkar, stated :-

“Unless and until  the cheque issued in favour of  Party are cleared, in clearing and the account of the  drawee with the RBI is credited to the account of  that bank with RBI, credit of the amount of that  cheque is not given to the account of that party.”

Although  according  to  him,  the  said  cheques  were  not  sent  for  

clearance  on  that  date  as  per  the  schedule,  in  his  cross-examination  he  

stated:-  

“20. […]  The amount is credited to the account of  the client by making entry in his current account.  We  do  not  maintain  any  Clearing  Register  in  Clearing  Department  with  regard  to  the  cheques  received  from  the  Funds  and  Investment  Department. There was no procedure to maintain  such Register.”

He  further  accepted  that  there  was  no  practice  of  issuing  

acknowledgement to the Funds Department for receiving cheques from them  

or vice versa.   

5 7

According to him the Clearing Department does not accept cheque  

from the Funds Department once the bank schedule is sent to the Service  

Centre.  He furthermore stated :-

“Functioning  of  the  clearing  department  was  to  send  for  clearing  whatever  cheques  are  received  from  the  Funds  and  Investment  Department  or  from other department.  No department can get the  cheque  cleared  by  sending  them  directly  to  the  service  centre  by-passing  the  Clearing  Department.”

The Learned Special Judge should have given proper attention to the  

evidence of Mr Kher (PW 1) an agent, Mr Raju (PW 3) who was working as  

the Manager, and Sudhakar Ali (PW 4) the clerk working with the Bank of  

Karad which show that both these cheques had been prepared and issued as  

per  the  instrctions  of  AD Narottam  on  05.05.1991.  The  learned  Special  

Judge placed unnecessary reliance on the entries  in the BCR Register  of  

Andhra Bank to prove the fact that the cheques had not been received on  

05.05.1991.   

Only because the total amount of the cheques and the name of the  

drawer bank had been entered without the cheque numbers,  this by itself  

would not lead to the conclusion that the cheques were not received on the  

5 8

day as it has not been disputed that the cheques used to be received by the  

Funds Department upto 3.00 p.m.  The learned Special Judge in arriving at  

the said finding ignored the working of the Current Account Department.  It  

furthermore  failed  to  make  a  distinction  between  cleared  credit  and  

uncleared credit.  Those credits which come within the purview of cleared  

credit would be known only at the end of the day as all transfers which come  

within the purview of the “exceptional transactions” were known to the high  

ups of the bank.  The practice of instant credit stands accepted.   

The  current  account  officers  knew the  distinction  between  cleared  

credit and uncleared credit. If the credit was uncleared, it would be posted as  

such and no withdrawal would be permitted unless there was authorization  

by  officers  and  managers  of  the  operation.  The  funds  department  

indisputably  does  not  control  the  posting  of  credit  (both  as  cleared  and  

uncleared  credit)  and also  does  not  control  withdrawal  against  uncleared  

credit. These functions are discharged by the Current Account Department.

The guilt of the appellants must be adjudged on the basis of all the  

materials brought on record.  The only lacunae which has been pointed out  

that the details of the cheques had not been mentioned in the BCR Register  

and the amount of both the cheques had been clubbed together.   

5 9

PWs. 11 and 12 were the best persons to state before the Court as to  

whether the said cheques were received on those days or not.  PW-13, Sunil  

Pore,  Clerk  in  the  Clearing  Department  and  PW-15,  Ragvinder  Sarkar,  

Office in the Clearing Department stated that they had no knowledge as to  

when the cheques were received.  The prosecution, thus, failed to bring on  

record any clinching evidence to show that the cheques were received only  

on 6th July, 1991 and not a date prior thereto.   

We may at this stage also notice the statement of PW-4, Sudhakar A.  

Ail, Clerk in the Securities Department, Bank of Karad, which reads :-,   

“I  do not  know when Mr. Raje  handed over the  cheque and the covering letter,  Ex. 12 and 17 to  Mr. Narotam.  It is not correct to say that Mr. Raje  used to comply with the directions of Mr. Narotam  giving go by to the Banking rules and regulations.”

PW-12,  Rajendrakumar  V.  Kamble  had  made  the  said  entry.  

According  to  him it  came within  the  purview of  the  bank practice.   He  

further stated that as the Clearing Department refused to accept the cheques  

on 5th July, 1991 they were returned to the Funds Department where they  

were separately recorded and a separate BCR was prepared and sent to the  

Clearing Department.  According to the said witness it was a practice of the  

6 0

bank to send refused cheque through a separate voucher so as to make it  

distinct.   

It is furthermore important to note that because of the urgency, details,  

such as the cheque number, date and beneficiary remained to be entered in  

the BCR Register.

The learned Special Judge has also ignored the documents on record  

which  demonstrate  that  in  respect  of  several  other  transactions  the  

authenticity and bona fides of which are not in dispute, the details of the RBI  

cheque were not to be found in the BCR Register. This is apparent from  

Exhibits [141, 154, 146] and hence absence of certain details by itself may  

not give rise to an inference that the cheque had not been received.

Moreover  if  mere  absence  of  details  in  the  current  account  credit  

voucher was enough to give rise to an inference that the cheque in fact had  

not been received, the officers of the current account department would have  

raised a query thereabout and would not have authorized posting credit in  

the clients accounts.

In our opinion the learned judge erred in coming to the conclusion that  

the total amount of the two cheques was written in the BCR Register and in  

6 1

the  current  account  credit  voucher and the  two cheques  were  in  fact  not  

received on 05.07.1991. He ignored that some times, the total amount of the  

cheques was written without specifying the amount of the individual cheque.

It  has  been  ignored  by  the  special  judge  that  had  the  Funds  

Department sent the current account credit  voucher without there being a  

cheque,  the  same  could  have  been  easily  discovered  as  the  cheque  in  

question facilitated high value transactions. In respect of high value cheques  

a separate record in the form of “Exceptional transactions” is maintained.  

The Exceptional transactions are verified and signed by the Chief Manager,  

Bhalla and also verified and signed by the Current  Account officer.  Had  

there been any irregularity on the part of the Funds Department the same  

would have been noted both by the current account officers and the Chief  

Manager, Bhalla and they would obviously have raised an objection.  

The learned judge of the Special Court has wrongly not attached any  

importance to the exceptional transactions record on the ground that there  

are too many transactions and therefore officers concerned are not ecpected  

to scrutinize  the said list. This inference was against the evidence on record  

which show that there used to be only a few exceptional transactions every  

6 2

day (at the most 7 to 8 in a day) and it is impossible that the officer signing  

the said note would not note the transactions in question.

The learned judge seems to have mixed the exceptional transactions  

with the transaction listing, which contains all the transactions of the day  

sent to the current account department. However exceptional transactions are  

very few in number and the very purpose of maintaining separate vouchers  

for such transactions is to bring to the attention of the superior officers for  

their authorization.  

The  ALPM  manual  clearly  requires  the  manager  to  scrutinize  the  

exceptional transactions to ensure that there has been no unauthorized use of  

discretionary power and to sign the exceptional transactions list after proper  

scrutiny.

The Special Court, in our opinion, committed an error in opining that  

the cheques were not received on 5th July, 1991.  Furthermore the Current  

Account Department, could not have given credit for the two cheques since  

the computer system had an inbuilt mechanism which would not allow credit  

therefor  before  the  clearance.   It  was,  thus,  for  the  Current  Account  

Department to take necessary steps either for obtaining proper authorisation  

or to deny mutual operation in respect thereof.  

6 3

It is, therefore, evident that the prosecution has merely shown some  

irregularities.   The  learned  Special  Judge  has  drawn  inference,  although  

there exists a missing link as regards the date of receipt of the cheques and  

the date of preparation of the vouchers.   It must be borne in mind that we  

are dealing with a case where conspiracy is alleged.   

There  is  no  direct  evidence  of  conspiracy,  there  are  only  

circumstancial evidence.  The approach of this court for recording an order  

of guilt against an accused on the basis of circumstantial evidence is well  

known.   

In  C. Chenga Reddy  v.  State of A.P., [ (1996) 10 SCC 193 ], this  

Court held :-  

“46. […]In our opinion none of the circumstances  relied  upon  by  the  prosecution  connect  the  appellants  with  the  crime  alleged  against  them.  The circumstances have not been proved beyond a  reasonable  doubt  and  the  circumstances  taken  collectively cannot be said to be compatible only  with the hypothesis of the guilt  of the appellants  and  totally  incompatible  with  their  innocence.  Under the circumstances we are of the opinion that  the prosecution has not established the case against  the appellants beyond a reasonable doubt.  ”

This Court further held :-

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“52. […]  There  have  been  some  irregularities  committed in the matter  of allotment of work to  the  appellant  or  breach  of  codal  provisions,  circulars  and  departmental  instructions,  for  preparation  of  estimates  etc.  and  those  irregularities  give  rise  to  a  strong  suspicion  in  regard  to  the  bona  fides  of  the  officials  of  the  department and their  link with the appellant,  but  that suspicion cannot be a substitute of proof. The  courts below appear to have drawn inferences by  placing  the  burden  of  proving  innocence  on  the  appellant which is an impermissible course. In our  opinion none of the circumstances relied upon by  the prosecution against the appellant can be said to  have  been  proved  satisfactorily  and  all  those  circumstances,  which  are  not  of  any  clinching  nature, even if held to be proved do not complete  the chain of evidence so complete as to lead to an  irresistible  conclusion  consistent  only  with  the  hypothesis of the guilt of the appellant and wholly  inconsistent  with  his  innocence.  The  prosecution  has not established the case against the appellant  beyond a reasonable doubt.”

Thus, as the fact that the cheques were not received on 5th July, 1991  

has not been proved , there is no reason as to why benefit of doubt should  

not be given to the accused herein.  

Moreover in our opinion the practice of instant credit stands accepted.

The practice has been established though the evidence of Sastry (PW  

22) and of (PW 23) Bhalla. Thier evidence clearly shows that this practice  

6 5

was known to the head office and to all the superiors officers of the Bank. It  

is  also not in dispute that the payment against  Bankers cheques is 100%  

guaranteed. The accused have followed the practice that was in vogue for a  

long time.

The learned Special Judge has ignored and has not taken into account  

the  documentary  evidence  on  record,  which  shows  that  the  cheques  in  

respect  of  transaction 2 and 3,  were received on the dates  on which the  

transaction was made. We are therefore of the opinion of giving the benefit  

of  doubt  should  be given to all the accused as regards transaction Nos.2  

and 3.

FOURTH TRANSACTION

The  fourth  transaction  relates  to  bankers  cheque  No.078398  dated  

17.09.1991 amounting to Rs.61,84,925.59  ps. which was issued by Canbank  

Financial  Services Limited, a sister concern of Canara Bank in favour of  

Andhra  Bank.   As  per  the  evidence  of  PW 10  Vernekar  on  17.09.1991  

Canbank Financial Services Limited of Banglore purchased 11% Bihar Loan  

for a total amount of Rs. 6184925.59/- from the Andhra Bank, Fort Branch,  

Mumbai.  A  3  was  the  broker  for  this  transaction.  CANFIN  had  issued  

6 6

Bankers  Cheque dated  17.09.1991 for  the  aforesaid  amount  in  favour  of  

Andhra Bank; A3 being the beneficiary thereof.

The credit voucher for the said sum for the purpose of crediting the  

amount in the account of accused No.3 was signed by accused No.2.  The  

amount was credited in his account on the basis thereof.  Bankers cheque,  

however, was received in the Clearing Department on 18th September, 1991.  

The learned Special Judge noticed that there was no entry of the said  

cheque in the Bank Schedule dated 17th September, 1991 and entry of the  

said account is contained in Bank Schedule dated 18th September, 1991.  On  

the  basis  of  the  said  purported  irregularity  it  was  found  by  the  learned  

Special  Judge  that  the  bankers  cheque  in  question  was  not  in  physical  

possession of Andhra Bank.   

We  may,  however,  notice  that  PW-11,  Hemlata  G.  Nair,  in  her  

evidence categorically stated that entries in respect of bankers cheques were  

made  on that  date  and the  debit  and credit  vouchers  are  prepared and a  

consolidated  debit  voucher  was  also  prepared  on  that  date.   She  further  

stated that entries were made in due course of business on 17th September,  

1991.  Ext.163, the clearing schedule which was prepared on 18th September,  

1991 shows that the same was presented in high value clearing at 12 noon.  

6 7

The Special Judge ignored the practice that in the event the cheque had not  

been sent to the Service Centre for clearance the same used to be returned to  

the Funds Department and used to be sent again on the next  day with a  

separate voucher.   

The BCR Register dated 17.09.1991 indicated that there was an entry  

with regard to the said Cheque not only as to the amount of the Cheque but  

also of the Cheque number, date  and name of the A3 being the beneficiary  

thereof.  Furthermore  there  was  no  entry  of  the  said  Cheque  on  the  

18.09.1991.

The learned Special Judge could not have rejected the defence of the  

accused that the Cheque had in fact been received very late on 17.09.1991  

and was therefore sent along with a single credit  voucher to the clearing  

department but the clearing department returned it and therefore it was sent  

on 18.09.1991 i.e on the next day to the clearing department again with a  

single credit voucher. The only ground on which the learned judge rejected  

the  defence  was  that  in  the  normal  course  of  the  banking  business  the  

Cheque  should  have  been  included  in  the  very  first  consolidated  credit  

voucher which was sent to the clearing department on the 18.09.1991 but it  

6 8

was sent along with a single credit voucher which goes on to show that it  

had been received quite late on 18th itself.  

The said reasoning in our opinion is not acceptable.

The learned judge has overlooked the fact that the said cheque was  

sent in high value clearing i.e at 12 O’clock on 18.09.1991, i.e., before 2.45  

pm. The clearing schedule of the high value clearing is  at  [Exhibit  163].  

Therefore,  with  respect,  the  learned  Judge  wrongly  held  that  the  cheque  

dated 17.09.1991 was received on 18.09.1991 at 2.45 pm. The learned judge  

had also ignored the material brought on record that on 18.09.1991 there was  

no entry of the said cheque in the BCR Register,  and therefore it  stands  

established that the cheque was sent to clearing department on 17.09.1991.  

The clearing department could not present the said cheque on 17.09.1991 but  

had presented it on 18.09.1991 in the high value clearing. Hence, the single  

BCR  credit  voucher  was  resubmitted  on  18.09.1991  upon  intimation  by  

clearing  department  of  presentation  of  the  said  cheque  in  high  value  

clearing.   

We have noticed in some details hereto before the functionings of the  

departments of the bank and the banking practice. on the basis thereof the  

6 9

learned judge should have given benefit of doubt to the accused with respect  

to this transaction too.

FIFTH AND SIXTH TRANSACTIONS

These two transactions relate to the cheques for Rs. 75 lacs from the  

Bank of Karad and Rs. 86,62,500/- from ANZ grindleys Bank. Both the said  

cheques  are  dated 6.11.1991.  They were  realized only  on the  8.11.1991;  

7.11.1991, being a Bank holiday,  

PW2 Sampada Ambre states that the first bankers cheque was issued  

on 6.11.1991 at the request of Sri AD Narottam by debiting his account with  

Rs.  75  lacs  as  per  his  statement  of  account  pertaining  to  the  securities  

transaction.

To  the  similar  effect  is  the  evidence  of  Kanchan  (PW  9)  of  the  

Standard Chartered Bank which shows that the cheque for Rs.86,62,500/-  

was issued by the ANZ Grindlays Bank in favour of Andhra Bank relating to  

the transaction of Mr BR Chhada who had purchased five lacs equity shares  

of HCL limited from A3.

The  BCR Register  in  this  regard  discloses  all  the  requisite  details  

including the cheque number. The voucher made in regard to the said cheque  

7 0

was signed by accused No. 4. The debit voucher was signed by Accused  

Nos. 1 and 2.

We  need  not  go  into  the  details  of  the  said  transaction  since  the  

learned Special Judge has already given the benefit of doubt to the accussed  

that  the  said  cheques  had  been  received  in  the  funds  department  on  

06.11.1991 on the basis of clear enteries made in the BCR Register and the  

transfer scroll giving the details of the cheque. We do not find any reason to  

interfere with the said finding. We agree with the observations of the Special  

Judge that all the evidence on record would only go on to show that the  

cheques had in fact been received on the 6.11.1991.

The next question which arises for our consideration is as to whether  

the said cheque had been sent for the clearing department on the date of its  

receipt itself or on 08.11.1991.

The learned Special Judge in regard to the said question has clearly  

held that the two cheques were sent to the clearing department on the 8th  

only and not on the 6th.

The  learned  Special  Judge,  however,  in  our  opinion,  erroneously  

rejected  the  argument  advanced  on  behalf  of  the  appellant  that  the  said  

7 1

cheques were sent along with a single voucher but they were returned and  

therefore were again sent back to the clearing department on 08.11.1991. As  

long  as  there  is  the  slightest  opportunity  of  two  views  possible,  in  our  

opinion, the one in favour of the accused must be adopted.  

All  the  materials  on record were  required to  be  considered having  

regard to the fact that 7.11.1991 was a bank holiday and accordingly the  

credit voucher could only have been sent on the 8.11.1991

In our opinion, the learned Special Judge was, with respect, wrong in  

concluding that  even though the two cheques were probably received on  

06.11.1991, they were not sent for clearing on 06.11.1991.  

In our considered opinion, despite evidence leading to the effect that  

cheques were received on 06.11.1991, the finding to the contrary was clearly  

erroneous.  We are,  therefore,  of the opinion that  the prosecution has not  

been successful in establishing the involvement of the accused as regards  

these transactions.

SEVENTH TRANSACTION

So  far  as  the  seventh  transaction  is  concerned,  a  bankers  cheque  

bearing No.  22687 dated 13.11.1991 for  a sum of Rs.  2,37,29,750/-  was  

7 2

issued by the Standard Chartered Bank in favour of Andhra Bank.  Although  

a  credit  voucher  for  the  entire  sum should  have  been  prepared,  a  credit  

voucher only for a sum of Rs.  1.50 crores authorizing the amount to be  

credited in the account of Accused No. 3 was prepared.  It was signed by  

Accused  No.  4  Ramesh  Vardraya  Shenoy.   The  Current  Account  of  the  

Accused No. 3 was credited on the same day on the basis of the said credit  

voucher.  The said amount was duly credited in his account, as would appear  

from Exhibit 195.

It is not in dispute that the credit of Rs. 1.50 crores was given on an ad  

hoc basis.  Had such credit not been given, the account of Accused No.3  

would  have  stood  overdrawn  by  Rs.  1,39,86,304/-.   The  amount  of  

difference, viz., 87,29,750/, however, was credited on the next day, i.e., on  

14.11.1991.   The  credit  voucher  was  again  signed  by  Accused  No.  4.  

Indisputably, the said bankers cheque was received on 14.11.1991 and sent  

for clearance on the same day.  No interest was charged thereupon.  In the  

said transaction, bank suffered a loss of Rs. 9,760.27 by way of interest.

A finding of fact has been arrived at by the learned Special Judge that  

the bankers cheque was not  in physical  possession of the officers  of  the  

Andhra Bank on 13.11.1991 stating:

7 3

“58. From this  evidence,  it  clearly  appears  that  the  Cheque  /  Pay  Order  [Exhibit  –  40]  was  not  received in the  Andhra Bank on 13.11.1991 and  the  same  was  not  forwarded  to  the  Clearing  Department  for  clearance  i.e.  for  ensuring  the  credit of that cheque.  On 14.11.1991 there is entry  in the B.C.R. Register of the entire amount of the  cheque  i.e.  Rs.  23729750/-.   On  that  day  credit  voucher  [Exhibit  –  78]  was  prepared  for  the  amount of the difference between the amount of  the cheque and the amount of Rs. 1.5 crores which  was credited on 13.11.1991 to the account of Hiten  P. Dalal.  The credit voucher, therefore, is for Rs.  872975/-…”   

No adequate or sufficient explanation in regard thereto was furnished  

by the concerned appellants.  Admittedly, there was no entry in the BCR  

register with regard to the said cheque.  There are no details in the Current  

Account Credit Voucher.   

It has been submitted by the learned counsel appearing on behalf of  

the appellants that the cheque was received late on 13.11.1991 but was not  

sent for clearance.  It was furthermore submitted that the BCR Register was  

not exhibited in the evidence.

From the records as also the findings of the learned Special Judge, it is  

evident  that  the  cheque  was  not  received  in  the  Funds  Department  on  

13.11.1991.  The entry of this cheque finds place as per Exhibit 77 only on  

7 4

14.11.1991.  The details of the said transaction shows that the beneficiary  

thereof was the Accused No. 3 and other details have also been mentioned  

therein.  The credit voucher, according to Hemlata Nair (PW-11) was sent to  

the Current Account Department under the signature of the Accused No. 4.  

Ordinarily, it should have contained the details, but, as noticed hereinbefore,  

it was only for a sum of Rs. 1.50 crores.  A debit voucher (Exhibit 75) was  

issued wherein it was stated:

“To  receive  1.50  crores  cheque,  but  received  cheque  for  Rs.  23929750  –  erroneously  not  presented  in  the  clearing.   Presented  on  14.11.1991.”

Mention of both the credit and debit vouchers finds place in Scroll  

Register (Exhibits 76(1) and 76(2)).  The Transfer Scroll entries (Exhibits  

76(3) and 76(4)) also show that the credit as against the cheque at Exhibit  

40, that was given to the account of Accused No. 3, was only Rs. 1.50 crores  

although the cheque was for a sum of Rs. 2,37,29,750.  Although the cheque  

was not sent to the clearing department for clearance on 13.11.1991, a pay  

order/ cheque (Exhibit 82) was issued in favour of Standard Chartered Bank  

for and on behalf of  Accused No.3 upon debiting the amount mentioned  

therein.

7 5

In the aforementioned state of affair, the learned Special Judge rightly  

arrived at the conclusion that the cheque might not have been in the physical  

possession of Andhra Bank on 13.11.1991.  Even Sunil Pore (PW-13) in his  

evidence  categorically  stated  that  the  consolidated  credit  voucher  was  

received from the Funds Department on 13.11.1991 (Exhibit 128) in terms  

whereof 14 instruments had been received from the Funds Department.  The  

bank  schedule  which  was  marked  as  Exhibit  159  showed  that  the  total  

amount of the said transaction tallied with the consolidated credit voucher  

(Exhibit 128).  However, the bank schedule also did not include the amount  

of the cheque / pay order of the Standard Chartered Bank.

It is difficult to conceive that such a transaction could be cleared by  

the Accused bonafide.  It was evidently done with an object of giving an ad  

hoc credit of Rs. 1.50 crores to Accused No.3 which he must have badly  

needed on 13.11.1991.  Otherwise,  as it  would appear not only from the  

evidence of Ms. Hemlata Nair (PW-11) but also from that of Mr. Ramteke  

(PW-18), that his account would have been overdrawn on that day by Rs.  

1,39,86,304.44.  Mr. Bhalla (PW-23) in his evidence stated that no reference  

in relation to the transaction was made to him.  Mr. Sastry (PW-22) also in  

7 6

his  evidence  categorically  stated  that  the  amount  was  overdrawn,  and  

therefore, it attracted levy of interest.

The debit voucher dated 13-11-1991 is for 1.5 crores and is signed by  

both A-1 and A-4.  It  is  not  difficult  to infer  that  A1 has also played an  

equally active role in ensuring an ad-hoc credit of Rs. 1.5 Crore into the  

Account  of  Accused  No.  3.  In  her  evidence,  Ms.  Hemlatha  Nair  has  

identified the signature of A1 in the debit voucher (Ext. – 75). Therefore, it  

is not difficult to perceive that A-1 is  involved in this transaction.   

The learned counsel for the appellant would contend that the error was  

an inadvertent one and as the said error was detected,  it was re-submitted on  

the next day.  We do not think that the said explanation is sufficient. We,  

therefore,  are  of  the  opinion  that  the  involvement  of  the  concerned  

appellants  – Accused No. 3  and 4 is  established beyond any doubt with  

regard to the said transaction.

EIGHTH TRANSACTION

The Eighth transaction pertains to Cheque No. 193889 dated 04-12-

1991  for  Rs.  7  Crore  issued  by  Bank  of  Karad,  Fort  Branch,  Bombay.  

[Ext.32] PW2, Ms. Sampada Ambre, who was working in Bank of Karad  

7 7

during the  time of  the  transaction,  in  her  evidence,  affirms  that  she  had  

prepared the said Cheque and that was signed by PW-5, Mr. Sarmalkar.  

It is being claimed on behalf of the Petitioners that the said Cheque  

was received by Andhra Bank on 04-12-1991.

A perusal of the record reveals that the Cheque was dated 04-12-1991.  

The amount for the same was credited to the Account of Accused on 04-12-

1991  but  the  Cheque  was  presented  for  clearing  only  on  05-12-1991.  

However the irregularities in the records should have been subjected to close  

scrutiny to determine collusion, if any, between the Accused persons for the  

purpose of serving a common object.

In  her  deposition,  Mrs.  Hemalatha  Nair,  (PW-11)  Clerk,  Funds  

Department of Andhra Bank, Fort Branch, states that she had prepared the  

Credit Voucher [Ext. 85] dated 04-12-1991 for Rs. 7 Crore favoring C.D.  

No. 4819 and the Debit Voucher [Ext. 86] dated 04-12-1991 for the same  

amount on being instructed by her officer.  

Curiously, both the entries only mention of a Cheque received from  

Bank  of  Karad,  without  any  reference  to  its  number  or  date.   She  also  

deposed that the vouchers were scrolled at Scrl. No. 12 on Pg. No.90 of the  

7 8

Transfer  Scroll  Register  [Ext  88(1)  and  (2)]  and  authorized  by  Accused  

No.1.  

As per  Katta  Hari  Babu [PW-17],  on the  basis  of  the  same credit  

voucher,  he credited to the account of Accused No.3, an amount of Rs.7  

crores. The same is corroborated by his Statement of Account of the same  

date. [Ext. 195 (11)] However, according to Mr. Sunil Pore, PW-13, in the  

Bank  Statement  dated  04-12-1991,  no  entry  of  the  said  Cheque  may  be  

found.  Similarly,  a  perusal  of  the  Cheque  Clearance  Register  of  Andhra  

Bank Dt. 04-12-1991 also reveals that there is no mention of the Cheque  

issued by Bank of Karad in it.  

Further in her deposition, Ms. Hemalatha Nair, (PW-11) states that the  

said Cheque was received by Andhra Bank only on 05-12-1991 and that at  

Pg. 122 of the BCR Register, dated 05-12-1991, an entry with all the details  

of the said Cheque was made.  

As per her evidence, on 05-12-1991, the consolidated Credit Voucher  

which included the Cheque amount of 7 Crores was prepared by Shailendra  

Rane and was sent to the Clearing Dept. for clearing. The BCR Register, dt.  

05-12-1991, which tallied with the Consolidated Credit Voucher prepared by  

Sri. Shailendra Rane on the same day, was initialled by Accused No. 2.  

7 9

She deposed further  that  on 05-12-1991,  as  per  the  instructions  of  

accused No. 2 and 5, she prepared the BCR Debit Voucher which does not  

include the Cheque amount of Rs. 7 Crore. She identified the handwriting,  

signatures and initials of herself, Accused No.1, 2 and 5.  

Had the said credit been not given, the account of the Accused No. 3  

would have been overdrawn by Rs.3,01,92,461.90.  No interest was charged  

as a result whereof the bank suffered a loss of Rs. 45,547.90.

Thus, it is evident that the amount of the cheque was credited to the  

account of Accused No.3 on 04-12-1991, even without having the same in  

the possession of the bank.  It is also clear from the perusal of the records  

that certain irregularities are present in the records pertaining to the cheque  

which,  undoubtedly involved Accused No. 1 and 2.  We are,  thus,  of the  

opinion that Accused No.1 and 2 have undoubtedly assisted in ensuring the  

credit of Rs. 7 Crore in the account of Accused 3.

The allegation against Accused No.5 is only regarding signing by him  

the Consolidated Debit Voucher for a lesser amount even when it was not  

tallying with the total amount of the cheques recorded in the BCR Register  

on 05-12-1991.  

8 0

Accused No. 5, contended that he had done so because the amounts  

were not tallying with and was less by seven Crores. His further contention  

was that the Consolidated Credit Voucher was prepared by Ms. Hemalatha  

Nair and put up to him for his signature, and he signed it keeping with the  

requirements of double entry system and to avoid double debit as the same  

had already been debited on 04-12-1991.  

We may  also  notice  that  accused  No.5 was acquitted  by  the  Trial  

Court  in  respect  of  transaction  dt.  16-12-1991  despite  the  Consolidated  

Debit Voucher not tallying with the total as reflected in the BCR Register.  

Thus, being only involved in these two transactions having similar facts, and  

being acquitted in one, he is, in our view, entitled to the same benefit in the  

other transaction too. Benefit of doubt given in respect of one transaction  

would apply on all fours to the other, as both of them are of similar nature.  

Further, it also needs to be considered that the prosecution has not been able  

to  produce  any  evidence  to  prove  Accused  no.5’s  involvement  in  the  

conspiracy. Therefore we are of the opinion that the learned Special Judge  

erred in holding that accused no.5 was a party to the conspiracy with regard  

to the instant transaction.  

NINTH TRANSACTION

8 1

It related to a bankers cheque bearing No. 231381 dated 16.12.1991  

for a sum of Rs. 8,80,95,890.41 drawn on the Standard Chartered Bank in  

favour of Andhra Bank. The entry in BCR Register of 16-12-1991 (Ext. 91)  

has an entry with full details of the said cheque including the cheque number  

and  the  date.  However,  the  beneficiary  is  shown  as  “Current  Account  

ABFS” instead of  Accused No.3.  A credit  voucher  was prepared for  the  

aforementioned sum which was signed by Accused Nos. 1 and 2.  Accused  

No. 3’s account was credited on 16.12.1991.  The banker’s cheque, however,  

was received in the Clearing Department on 17.12.1991 and sent for clearing  

on  that  day.   Had  the  credit  of  Rs.  8,80,95,890.41  not  been  given,  the  

Accused  Nos.  3’s  account  would  have  been  overdrawn  by  Rs.  

3,88,54,765.49.   

The evidence brought on record clearly indicate that the cheque was  

received on 16.12.1991.  It is possible that the cheque was received late and  

the same was sent with a single credit voucher.  As the Clearing Department  

refused  to  accept  the  same,  it  was  once  again  sent  to  the  Clearing  

Department  with  the  consolidated  voucher  (Exhibit  122)  on  17.12.1991.  

The  learned  Special  Judge  opined  that  if  the  cheque  was  received  on  

16.12.1991, the same should have been sent to the Clearing Department for  

8 2

clearance on the same day and as such the learned Judge has inferred that the  

cheque  must  have  not  been  received  before  3.00  p.m.   Had  the  credit  

voucher been returned, as has been contended, it was obligatory on the part  

of the concerned appellants to intimate the Current Account Department so  

as to enable them to, through posting of the credit voucher give credit to the  

account  of  the  Accused  No.  3.   It  was  evidently  not  done.   In  the  said  

transaction, loss of interest to the bank was for Rs. 57,324.

The learned trial judge has rejected the contention of the accused that  

the cheque was received late and it was sent to the clearing department with  

a single credit voucher and since the clearing department refused to accept  

the  same,  it  was  once  again  sent  to  the  clearing  department  with  a  

consolidated credit voucher (Ext. - 122) on 17-12-1991 on the grounds that  

even if it was true, it was the duty of the accused No. 1 and Accused No. 2 to  

immediately intimate the Current Accounts department to withhold posting  

of the credit voucher for giving credit in the Accused 3’s account.  

In relation to this transaction also, it  appears to us that the learned  

Special Judge failed to consider the practice of “Clear” and “Unclear Credit”  

to which we have already made reference hereinbefore and for the sake of  

brevity, we restrain ourselves from elaborating thereon once again.  

8 3

However, we are constrained to mention that is difficult to accept that  

a  mere  failure  to  intimate  the  current  accounts  department  to  withhold  

posting when there existed a mechanism of clear and unclear credits, would  

be sufficient to establish conspiracy. We do not, therefore, agree with the  

learned  special  judge’s  finding  with  respect  to  this  transaction  also  and,  

therefore,  of  the opinion that  benefit  of doubt should be given to all  the  

accused herein.

TENTH TRANSACTION

The tenth transaction related to a banker’s cheque bearing No. 102956  

dated 7.04.1992 for a sum of Rs. 4.00 crore drawn on Bank of Karad Ltd. in  

favour  of  Andhra  Bank.   The  credit  voucher  was  prepared  for  the  

aforementioned sum which was signed by the Accused No. 2.  Accused No.  

3’s account was credited on 7.04.1992.  The bankers cheque was received on  

8.04.1992 in the Clearing Department and was sent for clearing on the same  

day.  Had credit of Rs. 4.00 crore not been given, Accused No. 3’s account  

would have been overdrawn by Rs. 2,77,95,280.95.  Loss to the bank on  

account of interest was Rs. 26,027.

8 4

The finding arrived at by the learned Special Judge is that the cheque  

was issued on 8.4.1992.  It appears that on the day on which the cheque was  

issued, there was no sufficient balance in the account of Shri A.D. Narottam.  

His account was debited only on 8.4.1992.

The evidence of Mr. Raje (PW-3) is that he had signed the cheque on  

7.4.1992.   He  also  signed  the  forwarding  letter  (which  was  marked  as  

Exhibit  17) on the same day.  Credit voucher was, however, prepared by  

Sudhakar Ali (PW-4) on 8.4.1992.   

It  is  not  in  dispute  that  this  transaction  pertained  to  purchase  of  

securities  from Andhra  Bank  for  Mr.  A.D.  Narottam,  who  was  a  share  

broker.  As would appear from the evidence of Sudhakar Ali (PW-4), an  

inter-bank  credit  voucher  was  prepared  on  the  same  day  on  which  the  

cheque was issued.

In  his  evidence,  Mr.  Sarmalkar  (PW-5)  also  stated  that  as  Mr.  

Narottam did not have sufficient amount in his credit, the cheque as also the  

forwarding  letter  was  actually  issued  on  8.4.1992  although  they  were  

bearing the date 7.4.1992.

8 5

The BCR Register (Exhibit 105) also did not show that there was any  

entry in regard to the said cheque on 7.4.1992.  No such entry is found even  

on 8.04.1992.  The rubber stamp of Clearing Department, however, showed  

the date to be 8.04.1992.  The corresponding debit voucher (Exhibit 98) also  

provides the details of the said cheque.  The credit voucher (Exhibit 100) on  

the basis whereof the said sum of Rs. 4.00 crores was credited to the account  

of Accused No. 3 on 7.04.1992, however, did not mention the other details  

of the cheque of  Bank of Karad.   It  mentioned the name of the bank as  

Standard Chartered Bank which is evidently not correct.   The said credit  

voucher was signed by Accused No. 2.  Therefore, the basis on which the  

credit voucher was prepared on 7.04.1992 has not been explained.   

Contention of the appellant that in the credit voucher, the name of the  

bank was wrongly mentioned as the Standard Chartered Bank in stead and  

place of Bank of Karad cannot be accepted.  Even the BCR Register does  

not show that a cheque for the aforementioned amount has been received.  

The bank schedule dated 7.04.1992 also does not indicate receipt of such a  

cheque from either of the said banks on 7.04.1992.  The consolidated credit  

voucher also does not bear any entry.  It,  therefore, appears that the said  

credit  voucher  was  wrongly  prepared  for  a  sum  of  Rs.  4.00  crores  

8 6

mentioning the name of the drawer bank as Standard Chartered Bank.  False  

entry was also made in the Transfer Scroll (Exhibit 102) showing the name  

of the drawer bank as Reserve Bank of India.  Even in the BCR Register of  

8.04.1992, no entry is found as regards the said cheque (Exhibit 12).  The  

amount  of  the  said  cheque  was,  however,  included  in  the  consolidated  

voucher  dated  8.04.1992  (exhibit  106)  which  was  sent  to  the  Clearing  

Department.  The bank schedule dated 8.04.1992 also shows the receipt of  

the cheque which was forwarded for clearance on the same day.

It  is,  therefore,  evident  that  the concerned accused were not  aware  

about exactly where the money came from.  It is wholly unlikely that the  

experienced bank officers would make such a glaring mistake with regard to  

the name of the bank as credit vouchers and debit  vouchers are prepared  

only on the basis of the cheque as also the forwarding letter.

Katta Hari Babu (PW-17) in his deposition stated that had the said  

amount  not  been  credited,  Accused  No.  3’s  account  would  have  been  

overdrawn by the amount of Rs. 2,77,95,280.95.

Thus, it is evident that Accused 2 prepared the credit voucher dated  

07-04-1992 [Ext. – 100] for the purpose of giving credit to the account of  

8 7

Accused 3 for the  furtherance of the objectives of the conspiracy between  

them.

APPLICATION  OF  THE  PRINCIPLES  OF  CRIMINAL  CONSPIRACY

Applying  the  said  principles  to  the  facts  and circumstances  of  the  

present case it must be held that with respect to the transactions involved in  

the  present  case,  the  ultimate  beneficiary  was  Hiten  P.  Dalal  (Accused  

No.3).   Amount received from different banks by the Andhra Bank were  

credited to his account as a result  whereof the cheques issued by him in  

favour of third parties could be honoured.  But for the said credits made in  

his account, it would have been overdrawn on a few occasions.

The nature of transactions, the manner in which the same had been  

dealt  with,  and  the  fact  that  some  of  the  officers  of  the  Andhra  Bank,  

employed in the Funds Department and authorized to get the amounts in  

question credited to the account of Hiten P. Dalal, had facilitated the same  

although the bankers’ cheques in question had in some cases not even been  

received by the Bank clearly establish the factum of conspiracy.

An officer of a bank holds a position of trust.   Each one of them,  

keeping in view the nature and extent of duties required to be performed, is  

8 8

expected to do so not only in terms of statutory directions, but as also the  

directions  issued  by  the  Reserve  Bank  of  India  and  his  own  employer.  

Documents for the purpose of giving credit in the account of a customer  

would indisputably be required to be prepared on the basis of the cheque  

receipts.  It cannot be prepared in anticipation of receipt of a cheque; firstly,  

because  the  amount  of  the  cheque,  the  name  of  the  drawee  and  other  

particulars would not be known to them; secondly, the bank is required to  

maintain a large number of registers to put in place a sound banking system.  

All precautions must be taken to prevent a fraud or deceit on the part of a  

customer.   

Therefore, the fact that, credit and debit vouchers were prepared and  

other  registers  were filled up,  although the cheques were not  in physical  

possession of the bank, in our opinion, clearly establishes the existence of a  

criminal conspiracy between the ultimate beneficiary, on the one hand, and  

some of the officers of the bank, on the other.    

A debit or credit voucher furthermore is not prepared in piecemeal or  

in  instalments.   Bank  officers  are  not  supposed  to  know the  immediate  

requirement of an account holder.   

8 9

An  analysis  of  the  facts  of  the  case  clearly  demonstrates  that  a  

conspiracy had been hatched between the accused 1,2, 3 and 4 its object  

being  that  accused  Nos.1,  2  and  4  who  were  the  manager  and  officers  

working  in  the  Funds  Department  and  had  dominion  over  the  funds  of  

Andhra  Bank  connived  with  A3  to  prepare  credit  and  debit  vouchers  

authorising the Current Account department to credit those cheques to the  

account  of  Accussed  No.3  and,  thus,  affording  him  to  take  pecuniary  

advantage of the public money of the Bank, without some of the cheques in  

question  having  even  been  received  by  the  bank  and  thus  dishonestly  

enabling A3 to make withdrawals from his account No.4819 against the said  

credit afforded to his account. Such things would not have been possible but  

for meeting of mind amongst the accused involved herein.  

It  is  not  in  dispute  that  A3  was  a  broker  in  securities  transaction  

through  the  Funds  and  Investment  Department  of  Fort  Branch,  Andhra  

Bank. From these circumstances it is clear that there existed a conspiracy  

between A1, A2 and A4 the object of which was to obtain undue pecuniary  

advantage for A3.  The said act of the accused had been in violation of the  

guidelines issued by Andhra Bank.

9 0

As we have noted hereinbefore on a thorough discussion, in relation to  

all the ten transactions in detail we have not been able to find any conclusive  

evidence as  regards the involvement of Accused No. 5 in the offence of  

criminal conspiracy.  

The  conduct  of  the  accused,  keeping  in  view  the  aforementioned  

finding of fact, being clear and explicit; in our opinion, the ingredients of  

conspiracy  as  enumerated  under  Section  120A of  the  Indian Penal  Code  

must be held to have been clearly established only against A 1, A2, A3 and  

A4.

PREVENTION OF CORRUPTION ACT

Further A1, A2, A4 and A5 have also been charged and convicted for  

the  offence  under  s.  13(1)(c)  and  s.  13  (1)  (d)  of  the  Prevention  of  

Corruption Act by the special court below. It is undisputed that accused No.  

1  was  working  as  Manager  and  others  accused  as  officer  in  the  Funds  

Department of the Fort Branch. Andhra Bank is a Nationalised Bank and,  

therefore, they are ‘Public servants’ within the meaning of section 21 of the  

IPC.  

9 1

The Accused, particularly A1 and A2 had dominion over the funds of  

the Bank, and they misappropriated the funds of Andhra Bank by issuing  

credit vouchers to the current account department for getting the amounts  

credited to the account of A3, in some cases when the cheques were not  

received or sent for clearance.

Prevention  of  Corruption  Act,  1988  replaced  the  prevention  of  

Corruption Act, 1947. The new Act was enacted ‘to consolidate and amend  

the law relating to the prevention of corruption and for matters connected  

there  with.  Relevant  portions  of  S.  13  which  provide  for  Criminal  

Misconduct by a public servant read as under:

“13. Criminal misconduct by a public servant.

(1) A public servant is said to commit the offence  of criminal misconduct, -

[…]

(c)  If  he  dishonestly  or  fraudulently  misappropriates or otherwise converts for his own  use  any  property  entrusted  to  him  or  under  his  control  as  a  public  servant  or  allows  any  other  person so to do; or

(d) If he, -[…]

(ii)  By  abusing his  position  as  a  public  servant,  obtains  for  himself  or  for  any  other  person  any  valuable thing or pecuniary advantage; or  

9 2

[…](2) Any public servant who commits criminal  misconduct shall be punishable with imprisonment  for a term which shall be not less than one year but  which may extend to seven years and shall also be  liable to fine.”

Section 13 in general lays down that if  a  public servant obtain for  

himself or for any other person, any valuable thing or pecuniary advantage  

he  would  be  guilty  of  criminal  misconduct  and  sub-section  (2)  thereof  

prescribes of the punishment for such misconduct.

The ingredients of clause (c) of the said section are that the public  

servant must dishonestly or fraudulently misappropriate or otherwise convert  

to his own use or allow any other person to misappropriate  or  otherwise  

convert  for  his  own  use  any  property.  Such  property  must  have  been  

entrusted  to  such  public  servant  or  must  be  in  the  alternative  under  his  

control  as  a  public  servant.  Further  such  conversion  or  misappropriation  

must  be  done  with  a  dishonest  or  fraudulent  intention.  If  the  said  three  

conditions have been satisfied then the public servant would be guilty of an  

offence under clause (c) of the section 13(1). That is to say that if there is a  

dishonest or fraudulent intention on the part of a public servant and he with  

that  intention  misappropriates  or  otherwise  converts  for  his  own  use  or  

allows any one else to misappropriate or otherwise convert for his own use,  

9 3

any property which has been entrusted to him or is under his control as a  

public servant.

Further clause (d) of the said section of which the accused herein have  

also been charged deals with a similar kind of a situation. The public servant  

must  in  this  case  by  abusing his  position as  a  public  servant,  obtain  for  

himself or for any other person any valuable thing or pecuniary advantage to  

be  liable for criminal misconduct under the section.

The accused in the present case indisputably had dominion over the  

funds of the bank. They through their acts facilitated misappropriation of the  

funds to the account of A3. Without the assistance provided by the other  

accused, the main accused herein A3 would not have been able to withdraw  

from his account amounts of money to which he was not entitled to under  

law.  The  accused  herein  being  public  servants  had  an  additional  

responsibility  of  ensuring  that  the  funds  of  the  public  were  not  

misappropriated in any manner or form, what so ever.  

A3 did not have over draft facility or any overdraft limit sanctioned to  

him. A3 could not have overdrawn his account . he was facilitated to do so  

by A1, A2 and A4.

9 4

Since  we  have  not  been  able  to  find  adequate  evidence  of  the  

involvement of A 5 in the transactions we hereby acquit him of all charges  

under the Prevention of Corruption Act.

It is, therefore, beyond the purview of any doubt that A1, A2 and A4  

being public servants were guilty of offences under s. 13(1)(c) r/w 13(2) as  

also s. 13(1) (d) r/w 13(2) of the said Act.

OFFENCES RELATING TO MAKING OF FALSE DOCUMENTS  

The learned special judge has also charged all the accused  A1, A2 ,  

A4 and A5 for offences under s. 467, 471 and 477 A of the IPC. S. 467 deals  

with  the  forgery  of  valuable  securities  and  wills  etc.  and  is  reproduced  

below:

“467. Forgery of valuable security,  will,  etc.— Whoever forges a document which purports to be a  valuable security or a will, or an authority to adopt  a son, or which purports to give authority to any  person to make or transfer any valuable security,  or  to  receive  the  principal,  interest  or  dividends  thereon,  or  to  receive  or  deliver  any  money,  moveable  property,  or  valuable  security,  or  any  document  purporting  to  be  an  acquittance  or  receipt acknowledging the payment of money, or  an acquittance  or  receipt  for the  delivery of  any  moveable  property  or  valuable  security,  shall  be  punished  with  imprisonment  for  life,  or  with  imprisonment  of  either  description  for  a  term  

9 5

which may extend to ten years, and shall also be  liable to fine.”

Section 471 which deals with using as genuine a forged document has  

been reproduced below:

“471.  Using  as  genuine  a  forged  document  or  electronic  record—Whoever  fraudulently  or  dishonestly  uses  as  genuine  any  document  or  electronic record which he knows or has reason to  believe  to  be  a  forged  document  or  electronic  record, shall be punished in the same manner as if  he had forged such document or electronic record.”

Section 477 A reads as under:

“477A.  Falsification  of  accounts.—Whoever,  being a clerk, officer or servant,  or employed or  acting in the capacity of a clerk, officer or servant,  willfully,  and  with  intent  to  defraud,  destroys,  alters,  mutilates  or  falsifies  any  book,  electronic  record,  paper,  writing],  valuable  security  or  account which belongs to or is in the possession of  his employer, or has been received by him for or  on behalf of his employer, or willfully,  and with  intent to defraud, makes or abets the making of any  false  entry  in,  or  omits  or  alters  or  abets  the  omission or alteration of any material particular of  any material particular form or in, any such book,  electronic record, paper, writing], valuable security  or account, shall be punished with imprisonment of  either description for a term which may extend to  seven years, or with fine, or with both.

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Explanation-It  shall  be  sufficient  in  any  charge  under  this  section  to  allege  a  general  intent  to  defraud  without  naming  any  particular  person  intended  to  be  defraud  without  naming  any  particular  person  intended  to  be  defrauded  or  specifying any particular sum of money intended  to be the subject of the fraud, or any particular day  on which the offence was committed.”

These three offences deal with substantially what is known as forgery,  

defined in Section 463 or making of a false document which is provided  

under Section 464. It is reproduced heretobelow:

“Section  464.  Making  a  false  document—A  person is said to make a false document or false  electronic  record- First-Who dishonestly or fraudulently-

(a) Makes, signs, seals or executes a document or  part of a document;

(b)  Makes  or  transmits  any  electronic  record  or  part of any electronic record;

(c) Affixes any digital signature on any electronic  record;

(d) Makes any mark denoting the execution of a  document  or  the  authenticity  of  the  digital  signature,

With the intention of causing it to be believed that  such  document  or  part  of  document,  electronic  record  or  digital  signature  was  made,  signed,  sealed,  executed,  transmitted or affixed by or  by  the authority of a person by whom or by whose  

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authority he knows that it  was not made, signed,  sealed, executed or affixed; or

Secondly-  Who,  without  lawful  authority,  dishonestly  or  fraudulently,  by  cancellation  or  otherwise,  alters  a  document  or  an  electronic  record in any material part thereof, after it has been  made,  executed  or  affixed  with  digital  signature  either by himself or by any other person, whether  such person be living or dead at the time of such  alteration;  or

Thirdly-  Who dishonestly  or  fraudulently  causes  any  person  to  sign,  seal,  execute  or  alter  a  document  or  an  electronic  record  or  to  affix  his  digital signature on any electronic record knowing  that such person by reason of unsoundness of mind  or  intoxication  cannot,  or  that  by  reason  of  deception practised upon him, he does not know  the contents of the document or electronic record  or the nature of the alterations.[…]”

A person is said to make a false document or record if he satisfies one  

of the three conditions as noticed hereinbefore and provided for under the  

said section. The first condition being that the document has been falsified  

with the intention of causing it to be believed that such document has been  

made by a person, by whom the person falsifying the document knows that it  

was not made. Clearly the documents in question in the present case, even if  

it be assumed to have been made dishonestly or fraudulently, had not been  

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made with the intention of causing it to be believed that they were made by  

or under the authority of some one else.

The second criteria of the section deals with a case where a person  

without lawful authority alters a document after it has been made. There has  

been no allegation of alteration of the voucher in question after they have  

been made. Therefore in our opinion the second criteria of the said section is  

also not applicable to the present case.

The third and final condition of Section 464 deals with a document,  

signed  by  a  person  who  due  to  his  mental  capacity  does  not  know the  

contents of the documents which were made i.e because of intoxication or  

unsoundness of mind etc. Such is also not the case before us. Indisputably  

therefore  the  accused  before  us  could  not  have  been  convicted  with  the  

making of a false document.  

The learned Special Judge, therefore, in our opinion, erred in holding  

that the accused had prepared a false document, which clearly, having regard  

to the provisions of the law, could not have been done.  

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Further the offence of forgery deals with making of a false document  

with the specific intentions enumerated therein. The said section has been  

reproduced below.  

“463.  Forgery.—Whoever  makes  any  false  documents or electronic record part of a document  or electronic record with, intent to cause damage  or  injury],  to  the  public  or  to  any  person,  or  to  support any claim or title, or to cause any person to  part with property, or to enter into any express or  implied contract, or with intent to commit fraud or  that fraud may be committed, commits forgery.”

However, since we have already held that the commission of the said  

offence has not been convincingly established, the accused could not have  

been  convicted  for  the  offence  of  forgery.  The  definition  of  "false  

document"  is  a  part  of  the  definition  of  "forgery".  Both  must  be  read  

together. [Dr. Vimla v. Delhi Administration, [1963] Supp 2 SCR 585]

Accordingly, the accused could not have been tried for offence under  

Section  467 which  deals  with  forgery  of  valuable  securities,  will  etc.  or  

Section 471, i.e., using as genuine a forged document or Section 477-A, i.e,  

falsification of accounts. The conviction of the accused for the said offences  

is accordingly set aside.

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CRIMINAL BREACH OF TRUST

The next charge we shall deal with is one arising under Section 409 of  

the IPC with which the accused herein have also been convicted of by the  

special  judge.  The  punishment  for  criminal  breach  of  trust  by  a  public  

servant  is  provided  under  Section  409.  However  we  must  herein  make  

reference of definition of criminal breach of trust simplicitor which reads as  

under Section 405:

“405.Criminal breach of trust.—Whoever, being  in any manner entrusted with property, or with any  dominion  over  property,  dishonestly  misappropriates  or  converts  to  his  own  use  that  property,  or  dishonestly  uses  or  disposes  of  that  property  in  violation  of  any  direction  of  law  prescribing the mode in which such trust is to be  discharged,  or  of  any  legal  contract,  express  or  implied, which he has made touching the discharge  of such trust, or willfully suffers any other person  so to do, commits ‘criminal breach of trust’.”

The punishment  for criminal breach of trust  is  provided in Section  

406. Punishment for aggravated forms of criminal breach of trust is provided  

in Section 407 to Section 409.

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The terms of the section are very wide. It applies to one who is in any  

manner entrusted with property or dominion over property. The section does  

not require that the trust should be in furtherance of any lawful object. The  

section provides inter alia, that if such a person dishonestly misappropriates  

or converts to his own use property entrusted to him he commits criminal  

breach of trust. There are separate offences by which criminal breach of trust  

may be committed. This section requires :

1) Entrusting any person with property or with dominion over property.

2) That person entrusted (a) dishonestly misappropriates or converting to  

his own use that property; or (b) dishonestly using or disposing of that  

property or willfully suffering any other person so to do in violation –

(i) of any direction of law prescribing the mode in which such  

trust is to be discharged, or

(ii) of any legal contract made touching the discharge of such  

trust.

In  Onkar Nath Mishra and Ors. vs.  State (NCT of Delhi) and Anr.,  

[(2008) 2 SCC 561] this court noted that in the commission of the offence of  

criminal breach of trust, two distinct parts are involved. The first consists of  

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the creation of an obligation in relation to the property over which dominion  

or control  is  acquired by the accused.  The second is  misappropriation or  

dealing  with  the  property  dishonestly  and  contrary  to  the  terms  of  the  

obligation created.  

Criminal breach of trust by a public servant has been dealt with under  

Section 409 which reads as under:

“409.  Criminal  breach  of  trust  by  public  servant,  or  by  banker,  merchant  or  agent.— Whoever,  being  in  any  manner  entrusted  with  property,  or  with  any dominion over property in  his capacity of a public servant or in the way of his  business  as  a  banker,  merchant,  factor,  broker,  attorney  or  agent,  commits  breach  of  trust  in  respect  of  that  property,  shall  be  punished  with  1[imprisonment for life], or with imprisonment of  either description for a term which may extend to  ten years, and shall also be liable to fine.”

Since we have dealt with the said issue in detail in K Venkatkrishnan  

v.  Central  Bureau  of  Investigation  (Criminal  Appeal  76 of  2004 decided  

today), we need not deal with it here again.

However, it is important to mention here that more recently this court  

in State of Punjab v. Pritam Chand and Ors., 2009 (2) SCALE 457 opined:

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“The ingredients of offence under Section 405 are  (i)  entrusting  any  person  with  property  or  with  dominion  over  the  property,  (ii)  the  person  entrusted  (a)  dishonestly  misappropriated  or  converted  to  his  own  use  the  property  or  (b)  dishonestly  used  or  disposed  of  the  property  or  willfully  suffered  any  other  person  so  to  do  in  violation  (i)  of  any  direction  of  law  prescribing  mode in which such mode is to be discharged or  (ii)  of  any  legal  contract  made  touching  the  discharge of trust.”

Further, more the court in Sharon Michael and Ors. v.   State of Tamil    

Nadu and Anr., 2009 (1) SCALE 627 noted thus:

“Ingredients of Section 409 of IPC read as under:

(i) The accused must be a public servant;

(ii) He must have been entrusted, in such capacity, with property.

(iii) He must have committed breach of trust in respect of such  property.”

Therefore,  in  view of the principles  of  law extracted above in  our  

opinion there is no doubt that the offences relating to criminal breach of trust  

stands established against the accused. They were the officers in the Funds  

Department of Andhra Bank. In the said capacity they had been entrusted  

with the funds of the Bank. In that sense they had dominion over a thing.  

The  money  which  was  transferred  to  the  account  of  A3 was  the  money  

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belonging to the Bank. Only the said accused had the power to transfer it to  

the account of A3.

In  the  present  case,  the  same  has  been  done  dishonestly  to  cause  

wrongful gain to A3 and in the process wrongful loss has been caused to the  

Bank.  The  instruments  based  on  which  the  funds  of  Andhra  Bank  were  

transferred to the account of A3 were not physically available with Andhra  

Bank at the time the accused persons authorized the transfer of the funds of  

Andhra Bank to the account of A3.

A3 also utilized the said credit given and accordingly even cheques  

issued by him were honoured. Had it not been for the credits given on the  

relevant  dates  his  account  would  have  been overdrawn.  Interest  was  not  

charged  from  A3  and  was  not  debited  from  his  account  and  loss  was  

therefore caused to the bank.  

Moreover, it  must be noted in this respect that Banking norms and  

established  practices  and  procedures  would  contain  directions  of  law  

prescribing the mode in which the trust is to be discharged. The expression  

direction of law in the context of sections 405 and 409 would include not  

only  legislations  pure  and  simple  but  also  directions,  instruments  and  

circulars issued by an authority entitled therefor.

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The trust in this regard would therefore have to be discharged in terms  

of such directions. Acting in violation thereof causing wrongful gain to A3  

and loss to the Bank would bring the action within Section 409 IPC.  

Established banking norms are binding on an officer of the Bank in  

the matter of discharge of the trust i.e. in dealing with the money entrusted  

to him. He is required to follow the same and that would be an implied term  

of his contract of service as an officer of the bank. The accused before us  

here acted in breach of the same.  

We are therefore of the opinion that the prosecution has sufficiently  

been able to prove the involvement of A1, A2 and A4 as regards the offence  

of criminal breach of trust.

OFFENCE RELATING TO RECEIVING STOLEN PROPERTY

The main accused herein,  Hiten P Dalal,  has in addition also been  

convicted u/s 411 which deals with dishonestly receiving stolen property.  

The said section has been reproduced below:

“411. Dishonestly receiving stolen property.— Whoever dishonestly receives or retains any stolen  property, knowing or having reason to believe the  same to be stolen property, shall be punished with  imprisonment  of  either  description  for  a  term  

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which may extend to three years, or with fine, or  with both.

Stolen property as  used in this  section has been defined in section  

Section 410 :

“410. Stolen Property.—Property, the possession  whereof  has  been  transferred  by  theft,  or  by  extortion, or by robbery, and property which has  been  criminally  misappropriated  or  in  respect  of  which criminal breach of trust has been committed,  is  designed  as  "stolen  property",  whether  the  transfer has been made, or the misappropriation or  breach  of  trust  has  been  committed,  within  or  without India. But, if such property subsequently  comes  into  the  possession  of  a  person  legally  entitled to the possession thereof, it then ceases to  be stolen property.”

Section 410 accordingly defines stolen property. A property is stolen  

for the purpose of this section when its possession is transferred by theft,  

extortion, robbery, dacoity or criminal breach of trust or which was obtained  

under misappropriation committed whether in India or outside.

An extended meaning is given to the words ‘stolen property’ which  

are used in the four subsequent sections. Not only things which have been  

stolen,  extorted  or  robbed  but  also  things  which  have  been  obtained  by  

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criminal misappropriation or criminal breach of trust are within the meaning  

assigned to these words.

We will not delve into this matter in detail because, as has already  

been noted, Accused A1, A2 and A4 here, were involved in the offence of  

criminal breach of trust and accordingly the funds which were transferred to  

the account of A3 falls within the definition of stolen property.

Section  411  provides  punishment  to  the  person  who  dishonestly  

receives stolen property. The person must have the knowledge that it is a  

stolen property.

We must bear in mind that A3 had entered into a criminal conspiracy  

with A1, A2 and A4. He would in that respect be deemed to have known that  

the property in question was stolen property.

This section as also the succeeding sections are directed not against  

the principal offender e.g. a thief, robber or misappropriator but against the  

class  of  persons  who  trade  in  stolen  articles  and  are  receivers  of  stolen  

property. Principal offenders are therefore outside the scope of this section.  

Accordingly  the  conviction  of  the  principal  offender  is  also  not  a  

prerequisite to the conviction of the receiver of stolen property under this  

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section. However in the present case the principal offender i.e. A1, A2 and  

A4  have  been  held  guilty  of  a  ‘criminal  breach  of  trust’  therefore  the  

conviction of A3 would be even more clearly established from the facts and  

circumstances of the present case.

It  must  be  noted  in  this  respect  that  this  section  requires  two  

essentials:

a) Dishonest receipt or retention of stolen property.

b) Knowledge or reason to believe at the time of receipt that the property  

was obtained in the ways specified in the section

The  offence  of  dishonest  retention  of  property  is  almost  

contemporaneous with the offence of dishonestly receiving stolen property.  

A person who dishonestly receives property and retains it, must obviously  

continue to retain it.

It is the duty of the prosecution in order to bring home the guilt of a  

person under Section 411 to prove:

(1) that the stolen property was in the possession of the accused.

(2) That  some  person  other  than  the  accused  had  possession  of  the  

property before the accused got possession of it and  

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(3) That the accused had knowledge that the property was stolen.

It has therefore in our opinion been conclusively established by the  

prosecution that the A3 was guilty of an offence under Section 411, since he  

had dishonestly received stolen property.   

SENTENCING AND CONCLUSION

We may also place on record that as the CBI has not preferred any  

appeal against the quantum of sentence, this Court cannot impose a higher  

sentence.

Since we have acquitted accused No. 5 Mir Nagvi Askari of all the  

charges  against  him the  order  of  sentence  passed  against  him is  hereby  

quashed.  

Since we have acquitted all the accused of offences under Section 467  

read with Sections 120, 471 read with Section 120B as well as section 477A  

read  with  120-B  of  the  Indian  Penal  Code,  the  sentence  passed  by  the  

learned Special Judge against all the accused as regards the said offences is  

hereby quashed.

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The Main accused herein A 3, Hiten P Dalal has been found guilty of  

offences punishable under Section 120B and 411 read with Section 120B.  

He is hereby sentenced to suffer rigorous imprisonment for 6 months and to  

pay a fine of Rs. 50,000 and in default to suffer Rigorous imprisonment for  

one month.

So far as the sentence for the offences punishable under s. 409 r/w  

section 109 of the Indian Penal Code and Section 13 (1) (c) and Section  

13(1)(d)  read  with  13(2)  of  the  Prevention  of  Corruption  Act  read  with  

Section  109  of  the  Indian  Penal  code  is  concerned,  we  agree  with  the  

conclusion arrived at by the learned Judge that no special sentence needs be  

passed against him in this respect.  

We affirm the sentence imposed by the learned Special Judge with  

regard to the offence under the Prevention of Corruption Act.

Accused 1, Rachakonda Dhankumar, Accused 2, Suratkal Kamat, and  

Accused  4  Ramesh  Vardaya  Shenoy  are  sentenced  to  suffer  RI  for  one  

month each and to pay Rs. 1000/- in fine and in default to suffer RI for seven  

days  each  for  the  offences  punishable  under  Section  13(1)(c)  read  with  

Section 13(2) of the Prevention of Corruption Act read with Section 120-B  

of the IPC.

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Similarly, the accused are also sentenced to suffer RI for one month  

and to pay a fine of Rs. 1000/- each in default to suffer RI for seven days  

each for offences punishable under Section 13(1)(d) read with Section 13(2)  

of the Prevention of Corruption Act read with Section 120B of the IPC.

Further  Accused  1,  Rachakonda  Dhankumar,  Accused  2,  Suratkal  

Kamat, and Accused 4 Ramesh Vardaya Shenoy are sentenced to suffer RI  

for 6 months each and to pay fine of Rs. 5000/- each , and in default to suffer  

RI  for  one  month  each for  offences  punishable  under  Section  120B and  

Section 409 read with Section 120B of the IPC.

All  substantive  sentences  are  directed  to  run  concurrently.  Each  

accused should be given the benefit of set off for the period for which he has  

already undergone imprisonment in this case. So far as the payment of fine  

is concerned, a period of 2 months time is given to all accused persons, to  

deposit the same.  

..…………………………..…J.  [S.B. Sinha]

..…………………………..…J.  [Cyriac Joseph]

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New Delhi; August 7, 2009

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