TMI Blog2018 (12) TMI 1248X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, not available for giving evidence. In considered opinion of this Court, if the sanctioning authority was not available, then in that case, the Prosecution could have examined any other witness from the said Department, who was acquainted with the facts of the case or even with the signature of the sanctioning authority and get the sanction proved. The burden was entirely upon the Prosecution to prove the fact that the requisite sanction has been obtained. The Prosecution has however not made any attempt to prove the sanction by examining the subordinate officer or the staff, who has seen the sanctioning authority signing the sanction order or who is acquainted with the signature of the sanctioning authority. Merely, filing the order purported to be the sanction order alleged to have been signed by the competent authority, does not discharge the burden on the Prosecution of proving the sanction, according to law - no hesitation in holding that the Prosecution has failed to prove its case against all the Accused beyond reasonable doubt. Hence, the order. (i) Accused No.1 R. Sitaraman, Accused No.3 Ravi Kumar, Accused No.4 Ashok Agarwal, Accused No.5 Janardan Bandopad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce for six months. - SPECIAL CASE NO.4 of 1993 - - - Dated:- 1-11-2018 - Mr Shalini Phansalkar Joshi, J. For The Appearing Parties : Mr. R.S. Mhamane, Special P.P., for the Complainant - C.B.I., Mr.R. Sitaraman, Accused, Mr.P.G. Sabnis, Advocate, Mr.D.U. Mirajkar i/b. Mr.Sachin Joshi, Advocate, Mr.Vivek Sharma, Advocate, for Accused, Mr.S. Suresh Babu, Accused, Mr.R. Satyanarayanan, Advocate And Mr.Prashant Sawardekar, Advocate JUDGMENT 1. This Special Case is a fall out of the security scam, that rocked the nation in the year 1992 and shattered its economy for the years to come. Accused No.2 Harshad S. Mehta, who is no more and in whose name the scam came to be known, is one of the main Accused in this case, against whom the case however stands abated on account of his untimely death in the year 2001. The other Accused were at the relevant time the Officers in the State Bank of India, Main Branch, Mumbai (for short, SBI Main Branch ) and its subsidiary, State Bank of India Capital Markets Ltd. (for short, SBI Caps ), except Accused No. 8 Ashwin Mehta, who was Broker and the Constituted Attorney of Accused No. 2 Harshad Mehta and Accused No. 3 C. Ravi Kumar and A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in sale and purchase transactions of securities during the year 1991-92, as per the following transactions : (a) Transaction dated 29th July 1991 for purchase of 25 lakh units of ₹ 3,37,75,000/- from UCO Bank by SBI Caps. (b) Transaction dated 2nd September 1991 for purchase of 5 crore units of ₹ 67,83,00,000/- from National Housing Bank by SBI Caps. (c) Transaction dated 31st March 1992 for purchase of 1.25 crore units of ₹ 18,75,00,000/- from CANBANK Financial Services Ltd. by SBI Caps. (d) Transaction dated 6th April 1992 for purchase of 1 crore units of ₹ 15,15,00,000/- from CANFINA by SBI Caps. 12. The complaint for this offence was lodged by Accused No. 5 Janardan Bandopahyay himself on behalf of SBI Capital Markets, in consequence of which the Crime was registered. The case was initially registered against Accused No. 1-R. Sitaraman, Accused No. 2-Harshad S. Mehta (since deceased) and Accused No. 3-Coodli Ravi Kumar only, for the offences punishable under Section 120B of IPC, r/w. Sections 420, 467, 471 and 477A of IPC and Section 13(1) (c) and (d) r/w. Section 13(2) of the Prevention of Corruption Act, 1988. 13. The investigati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of SBI Caps, instead of recording the entries on transaction to transaction basis, as per the instructions from the SBI Caps. 16. The Police Report gives various details of the transactions, by which dishonest and fraudulent gains were allegedly made by the accused persons. It also elaborates the modus operandi adopted by them and the details of the criminal acts of the different accused persons. 17. After the Charge-sheet was filed, Accused No. 2 Harshad Mehta died on 31/12/2001 and therefore, the case against him was abated on 17/01/2002. 18. Accused No. 6 M. Subramaniam, Accused No. 13 K. Kailasam and Accused No. 14 Arun N. Bavdekar came to be discharged from the case as per the orders passed by this Court (Coram : Abhay M. Thipse, J.) on 13/02/2015, 11/06/2015 and 17/08/2015 respectively. 19. Accused No. 7 Hiten B. Mehta, Accused No. 9 Sudhir S. Mehta, Accused No. 10 Pankaj V. Shah and Accused No. 11 Atul M. Parekh came to be discharged by the separate orders passed by this Court on 23/02/2017 20. Thus, as on today, the case stands against Accused No. 1 R. Sitaraman, Accused No. 3 Coodli Ravi Kumar, Accused No. 4 Ashok Agarwal, Accused No. 5 Janardan Bando ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dattaram Padmakar Patil [Exhibit268] PW-20 Ramesh Shantaram Dabholkar [Exhibit-283] PW-37 Tukaram Dhondu Sitap [Exhibit-536] Officers from various other Banks (06 Witnesses) PW-8 Chandar Shivaldas Lalla, Deputy Chief Manager (Deposits), Bank of India. [Exhibit-230] PW-9 Smt. Sindhu Bhatt, Funds Management Cell, State Bank of Saurashtra. [Exhibit-237] PW-19 B. Murlidharan, Accounts Department, National Housing Bank. [Exhibit-273] PW-26 R.K. Bijlani, Bank of India. [Exhibit-430] PW-27 Dhundiraj G. Vernekar, Canara Bank Funds and Investment Sector. [Exhibit-433] PW-32 Premshankar Mukund Joshi, UCO Bank. [Exhibit-473] Broker (01 Witness) PW-35 Pravin Babulal Parekh [Exhibit-529] Investigating Officer(s) (02 Witnesses) PW-34 Dy. S.P. Deokumar Choudhary [Exhibit-520] PW-36 Dy.S.P. Partha Mukherjee [Exhibit-530] 23. After the Prosecution has closed its case, the statements of Accused-persons were recorded u/s. 313 of Cr.P.C. In their statements, Accused have denied all the incriminating evidence brought on record by the Prosecution against them and to substantiate their defence of fals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng or in the alternate, the offence of criminal breach of trust, by diverting the funds of SBI Caps to the account of Accused No. 2 Harshad Mehta, being entrusted or having dominion over those funds and thereby committed the offence punishable under Section 420 or in the alternate under Section 409 read with 120B of IPC ? Negative. 3 Whether the Prosecution proves that Accused persons, except Accused No. 8 Ashwin Mehta, being the public servants have committed the offence of criminal misconduct by dishonestly or fraudulently misappropriating or otherwise converting for their own use the funds of the SBI Caps, entrusted to them or under their control as public servants, and thereby committed the offence under Section 13(1)(c) r/w. Section 13(2) of the Prevention of Corruption Act? Negative. 4 Whether the Prosecution proves that the Accused persons, except Accused No. 8 Ashwin Mehta, being the public servants, by abusing their position as public servants, obtained for them or for accused No. 2 Harshad Mehta or Accused No. 8 Ashwin Mehta, the pecuniary gains and advantages and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to issue Credit Vouchers and the Bankers Cheques for payment to the counter parties from the current account of SBI Caps, which was maintained in the Institutional Banking Division of SBI. 30. Thus, the deals were finalized at SBI Caps but they were executed at the end of SBI. SBI has to act as per SBI Caps s instructions, by making payments to the counter parties on acceptance of Banker s Receipts or Physical Securities. SBI Main Branch was also required to send computerized statement of Bank accounts, showing debits and credits to SBI Caps and the same were to be reconciled by SBI Caps in consultation with SBI Securities Division, Main Branch, regularly. 31. Thus, according to the Prosecution, for execution of the securities transactions, the equal responsibility lied with the Officers of SBI Caps and the Officers of SBI Main Branch. The deal was to be struck by the dealers in SBI Caps, processing of the deals, like its entry in the Blue Diary and preparation and issuance of the debit instruction authorization letter was to be done by the Back Office of SBI Caps, where Accused No. 17 P. Murlidharan was working. On the basis of this work done by the Officers of SBI Caps, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps. It was a ready-forward transaction. Accused No. 4 Ashok Agarwal has finalized this deal but has not issued the Deal Ticket for this transaction. He has also not made any entry thereof in the Blue Diary but issued Debit Authorization Letter (Art. N) and sent it to Accused No. 1 R. Sitaraman and accordingly Accused No. 1 R. Sitaraman has debited the account of SBI Caps for the amount of ₹ 3,37,75,000=00 vide Debit Voucher Exhibit-487 and made entries in Purchase Slip Book vide Exhibit-478. In this entry initially, Vijaya was written. It is cancelled and in place thereof Canara is written. However, instead of making the payment of the said amount to UCO Bank, as per Debit Authorization Letter, it was credited to the account of Accused No. 2 Harshad Mehta, by Accused No. 1 R. Sitaraman, mixing it up with other amounts and totaling the amount to ₹ 5,46,16,577=33, so that it should not be traced. The Contract Note Exhibit-284 in this case is signed by Accused No. 8 Ashwin Mehta, as Constituted Attorney of Accused No. 2 Harshad Mehta. As per the case of the Prosecution, in respect of this transaction, Accused No. 1 R. Sitaraman did not obtain any BR nor received any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be discussed in detail while considering the case of the Prosecution against Accused No. 8 Ashwin Mehta. 2) Transaction No. 2 dated 02/09/1991 The second transaction pertains to the purchase of 5 crore Units of UTI for ₹ 67,83,00,000=00 on outright basis from National Housing Bank. It is Accused No. 4 Ashok Agarwal, who has prepared the Deal Slip No. 559 vide Exhibit-13 for this transaction, mentioning the name of the counter party as NHB. According to the Prosecution, there was no such transaction with NHB on that day, even then he has made the entry thereof in the Blue Diary vide Exhibit-539, which is initialed by Accused No. 5 Janardan Bandopadhyay Though, it was a transaction of purchase on outright basis, no Contract Note, physical security or BR thereof was received from NHB. Despite that, Accused No. 4 Ashok Agarwal has issued the Debit Instruction Letter vide Exhibit-15 to SBI for making payment of the amount of ₹ 67,83,00,000=00 to NHB. Accused No. 1 R. Sitaraman has, instead of making payment to NHB, diverted the said amount, by mixing it up with other amount, totaling to ₹ 93,64,68,150=68, by issuing Banker s Cheque Exhibit-115, favouring Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opadhyay has finalized this deal through the broker Accused No.2 Harshad Mehta and issued the Deal Ticket Exhibit-17 He had also issued Debit Authorization Letter vide Exhibit-580 addressed to Securities Division SBI Main Branch for making this payment. However, he did not obtain any BR or physical securities from the counter party As per the Prosecution case, two Contract Notes, one for delivery of the securities on 31/03/1992 and another for delivery of the securities on 30/04/1992 Exhibit-269 (Colly) were prepared by the Accused No.11 Atul Paresh, since discharged. On the basis of the Debit Authorization Letter (Exhibit-580), Accused No.1 R. Sitaraman debited the account of SBI Caps by preparing a single Debit Voucher Exhibit-488 for ₹ 54,47,57,260=27 including the amount of ₹ 18,75,00,000=00. However, instead of crediting the said amount to CANFINA, it was credited in to the account of Accused No.2 Harshad Mehta, lying in ANZ Grindlays Bank by Accused No.1 R. Sitaraman by issuing the Credit Voucher/Banker s Cheque for the amount of ₹ 18,75,00,000=00 vide Exhibit-518. According to the Prosecution, therefore, in this case, Accused Nos.1 R. Sitaraman and Accus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved or marked as exhibit. 5) Transaction No.5 dated 15/02/1992 This transaction is in respect of purchase of 30 lakh Units of UTI by SBI Caps, at the rate of 14% interest. It was a ready-forward transaction and it was to be reversed on 17/02/1992 at the interest rate of 21%. The counter party was shown as CANFINA and the name of Accused No.2 Harshad Mehta was written in the Deal Ticket Exhibit-601 as a Broker. The transaction was for the amount of ₹ 4,20,00,000=00. Accused No. 17 P. Murlidharan has issued Debit Authorization Letter Exhibit-596. The Debit Voucher was however issued by Accused No.1 R. Sitaraman for the amount of ₹ 61,70,55,658=50, including this amount of ₹ 4,20,00,000=00. Instead of making payment to CANFINA, the amount was credited to the account of Accused No.2 Harshad Mehta, as per Debit Voucher Exhibit-468. Accused No. 17 P. Murlidhar falsely mentioned in the BR Issued and Receipt Register Exhibit-421 maintained in SBI Caps that BR of CANFINA was received and on due date the same was discharged. But infact no such BR was received, as there was no such transaction with CANFINA. All the documents created are only to divert the funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 S.R. Gupta. 7) Transaction No.7 dated 28/06/1991 This transaction is in respect of purchase of 9% IRFC Bonds of the face value of ₹ 25 crore. This transaction was on the ready-forward basis to be reversed on 29/07/1991. It was for the amount of ₹ 25,29,24,657=54. Accused No. 15 S.R. Gupta, the Dealer, has finalized this deal by showing UCO Bank as a counter party. However, he has not obtained the Contract Note from Accused No.2 Harshad Mehta, who has acted as Broker in this transaction. He even did not obtain any physical securities, nor the BR from UCO Bank, as he was fully aware that there was no such transaction. On the basis of the Deal Ticket Exhibit-23 prepared by him, he issued the Debit Authorization Letter vide Exhibit-324 for the amount of ₹ 2023,39,736=03 and another Debit Authorization Letter Exhibit-325 for the amount of ₹ 5,05,84,931=51. Accused No.1 R. Sitaraman has, on the basis of these two Debit Authorization Letters debited the account of SBI Caps in SBI to the tune of ₹ 25,29,24,657=53. The Credit Vouchers prepared by him for issuance of Cheque favouring UCO Bank are produced on record at Exhibit-123 and 124 respectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 16 B.D. Raut and Accused No. 17 Murlidharan for their respective roles as described above. 9) Transaction No.9 dated 13/12/1991 This transaction is in respect of purchase of 50 lakh Units of UTI by SBI Caps from CANFINA at the rate of 13.40 per Unit on ready-forward basis. The transaction was to be reversed on 30/12/1991 for the sum of ₹ 6,70,00,000=00. The name of Accused No.2 Harshad Mehta was written as a Broker in this transaction. This transaction was finalized by Accused No.5 Bandopadhyay. He has prepared the Deal Ticket Exhibit-27 and the Debit Authorization Letter Exhibit-583 and it was done without obtaining BR or physical securities. The Contract Note in this transaction was issued by Accused No.2 Harshad Mehta and signed by Accused No.9 Sudhir Mehta and Accused No.11 Atul Parekh vide Exhibit-285. Deal Operation Report Exhibit-28 is signed by Accused No.5 Bandopadhyay and PW-23 Nalini Prabhu. The Bank Statement thereof is at Exhibit-364. No entry of this transaction is found in the register of CANFINA Exhibit-434. Accused No.1 R. Sitaraman has however on the basis of the Debit Authorization Letter prepared Debit Voucher for the amount of ₹ 6, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This transaction is in respect of purchase of Units for total value of ₹ 16,87,50,000=00. Accused No.4 Ashok Agarwal has finalized this deal and issued the Deal Ticket Exhibit-32. The UCO Bank is shown as counter party and Accused No.2 Harshad Mehta as a Broker. Accused No.4 has also issued the Debit Authorization Letter vide Exhibit-584. However, no such transaction was actually entered into as Accused No.4 Ashok Agarwal had not obtained securities or the BR from the UCO Bank. Accused No.1 R. Sitaraman has debited the amount of ₹ 16,87,50,000=00 vide Exhibit-143 by issuing a Voucher for ₹ 18,48,38,356=16 including this amount. Another Voucher (Exhibit-144) for the amount of ₹ 6,57,53,800=28 was also issued by him. One of the Banker s Cheque Exhibit-147 crediting amount of ₹ 20 lakhs favouring Grindlays Bank in this transaction was counter signed by Accused No. 16 B.D. Raut. Accused No. 17 Murlidharan has made the entry in the BR register about the receipt of the BR, though no such transaction was infact effected with UCO Bank and UCO Bank had clarified that they had stopped transaction with SBI Caps with effect from 06/05/1990. The Credit Voucher E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.1 R. Sitaraman and counter signed by Accused No. 16 B.D. Raut vide Exhibit-164 and 166 favouring Canara Bank and ANZ Grindlays Bank respectively. The Credit Vouchers for the same were prepared vide Exhibit-165 and Exhibit-163 respectively. Accused No. 17 Murlidharan has, in the BR Register fraudulently mentioned that the BR for the same was received. However, there is no entry in transaction register confirming this transaction. Thus, Accused No.1 R. Sitaraman, Accused No.4 Ashok Agarwal, Accused No. 16 B.D. Raut and Accused No. 17 Murlidharan are implicated in this transaction by the Prosecution. 14) Transaction No. 14 dated 02/01/1992 This transaction is in respect of purchase of Units. Accused No.4 Ashok Agarwal has issued the Deal Ticket Exhibit-48 and Debit Authorization Letter (which is not proved). The counter party is shown as CANFINA. Accused No.1 R. Sitaraman has prepared the Credit Voucher Exhibit-170 and the amount was diverted to the account of Accused No.2 Harshad Mehta by Credit Voucher. The Cheque are signed by Accused No. 16 Bhushan Raut (Exhibit-170 and 110) to the tune of ₹ 1,80,00,000=00 and in the name of CANARA Bank to the tune of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns comes to ₹ 59,25,05,000=00. Accused No.4 Ashok Agarwal has finalized the transaction No.(iii) and transaction Nos.(i) and (ii) are finalized by Accused No.5 Bandopadhyay. The Deal Tickets thereof are produced at Exhibit-55, 54 and 53 respectively. Accordingly, Debit Authorization Letters (Not Exhibited) were also issued. The name of CANFINA was shown as counter party and the name of Accused No.2 Harshad Mehta as a Broker. However, neither the securities nor the BR s were issued on the basis of these Deal Tickets or Debit Authorization Letters. However, Accused No.1 R. Sitaraman has debited the account of SBI Caps with total sum of ₹ 59,25,05,000=00 and ₹ 1,72,36,31,095=87 The Cheques therefore were counter signed by Accused No. 16 B.D. Raut. In these transactions also, instead of making payment to SBI and CANFINA, the amount was credited to the account of Accused No.2 Harshad Mehta. Accused No. 17 Murlidharan has fraudulently mentioned the receipt of BRs from CANFINA and SBI and its discharge. 19) Transaction No. 19 dated 21/01/1992 This transaction is in respect of purchase of the Units of the total value of ₹ 13,55,00,000=00. The deal w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount of ₹ 16,54,73,972=60, without receipt of the BR or securities. Accused No.1 R. Sitaraman debited the said amount from the SBI Caps account, but instead of making payment to the counter party CANFINA, credited the said amount in the account of Accused No.2 Harshad Mehta in SBI. Accused No. 16 B.D. Raut has counter signed the said Cheque. (23) Transaction No.23 dated 19/02/1992 It is a purchase transaction for which the Deal Ticket Exhibit-68 was prepared by Accused No.4 Ashok Agarwal. It pertains to purchase of Units from CANFINA for the amount of ₹ 18,20,00,000=00. Accused No.1 R. Sitaraman has issued the Banker s Cheque for the said amount. It was counter signed by Accused No. 16 B.D. Raut, but instead of the payment being made to the counter party, it was diverted to the account of Accused No.2 Harshad Mehta. Accused No. 17 P. Murlidharan has made false entry of the receipt of the BR in respect of this transaction also, which was infact not executed at all. (24) Transaction No.24 dated 04/03/1992 This transaction pertains to the purchase of the Units for the amount of ₹ 25,43,36,986=30 and ₹ 14,50,00,000=00, totaling for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to SBI Caps, either to collect the debit authorization letters or some times to handover the Contract Notes. 38. According to their evidence, at the end of the day, the Deal Operation Report used to be prepared by the Dealer containing all the details of the deals of that day with the names of the Brokers. Dealer used to sign on that Report and then it was put up before PW-1 Ashish Sable on the same day. After he has signed on it, it was sent to PW-23 Smt.Nalini Prabhu; thereafter to the General Manager, Mr. S.V. Naik. According to their evidence, if the deal was good, he used to make a remark. At the end of the day, Mr. S.V. Naik was also discussing with the Dealers about the deals executed on that day and the deals which were to be undertaken on the next day. After the General Manager, Mr. S.V. Naik, has signed the Deal Operation Report, it used to go to the Executive Director and from there to the Managing Director. 39. According to the evidence of PW-23 Nalini Prabhu, in case of purchase transactions, it was the responsibility of SBI Main Branch, mainly, Accused No.1 R. Sitaraman to receive the Bank Receipts; even the entry of Bank Receipts used to be made in SBI Securi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otes and they were sent to the SBI Securities Division, namely, to Accused No.1 R. Sitaraman with whom they used to deal. Either he himself used to go there to deliver these instruction letters, or Accused No. 17 P. Murlidharan was doing the said job. 42. Thus one fact which clearly emerges from the evidence of these witnesses is that the job of Accused No. 17 P. Murlidharan and PW-38 Deepak Sogani was more or less the same. Both of them were making entries in the Blue Book and also issuing the instruction letters by going personally, and they used to handover these instruction letters to Accused No.1 R. Sitaraman. 43. Their evidence on record is also categorical that Accused No.1 R. Sitaraman from SBI Main Branch has to act on the basis of those instruction letters alone and no one from SBI Main Branch had authority to make any changes in the transaction, either by changing the name of the counter party or even the name and rate of the securities mentioned therein. Once such instructions was received, the responsibility of the Officers in SBI, Main Branch used to commence for completing the further part of the execution of the deal. 44. As regards the procedure adopted in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng some instructions on phone call, noting them on the note pad and then giving instructions to his staff for preparing Vouchers. According to him, on the instructions of Accused No.1 R. Sitaraman, he had also prepared some Vouchers. After Accused No.1 R. Sitaraman left, this witness has taken over the job of Accused No.1 R. Sitaraman from 09/04/1992 onwards. 48. According to his evidence, if the Banker s Cheque was for the amount above ₹ 50,000/-, it was required to be signed by two Officers of the Bank. The first signature has to be of the Officer authorizing the transaction and preparing the Voucher and the second signature was of the Officer outside the Treasury Department, who was to sign thereon, after verifying that the first Officer has signed on it. According to him, Accused No.1 R. Sitaraman used to do everything in his own handwriting, like, preparing the Vouchers, Cheques etc and Accused No.1 R. Sitaraman was the first signatory of the Cheques. Accused No. 16 Bhushan Raut was another Officer working in the said Department in the absence of Accused No.1 R. Sitaraman and he has signed on some of the cheques as first signatory. In evidence before the Court he has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Ledger Folio was maintained date-wise and each customer has a separate ledger folio. Through his evidence, the Prosecution has brought on record, the photocopies of various Vouchers received from the Securities Division for posting. 53. To prove its case against Accused that, though the name of the counter party in most of these transactions was mentioned as CANFINA, actually no such transactions were effected with CANFINA, the Prosecution has examined PW-27 Dhundiraj Vernekar. According to his evidence, on behalf of the CANFINA, Mr. Ashok Kumar Agarwal and Mr. S. Mohan were finalizing the deals in the CANFINA s registered Office at Bangalore. After the deal was finalized, they were giving the instructions to Mumbai Office. On receipt of the instructions from the Dealers in Bangalore along with the purchase Memos, Banker s Receipts or Physical Securities, in Mumbai Office they were verifying the correctness of the details of the securities and then issuing Banker s Cheque favouring the counter party. They were also making note of the transactions in the Transaction Register and in the BR Purchase and Sale Register on the receipt of the BR. 54. According to his evidence, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hwin Mehta, their brother Sudhir Mehta as per the instructions received from the concerned Bank. Through his evidence, the Prosecution has proved the account opening forms of these Accused and also the various Banker s Cheques credited or debited in their account as per the instructions of Accused No.1 R. Sitaraman from SBI Main Branch. 58. Thus through the evidence of all these witnesses, the Prosecution has tried to prove the procedure which was adopted at the end SBI Caps, then SBI Main Branch and the various Banks so far as the securities transactions are concerned and as to how in the present case though apparently the procedure appears to be followed and the Deal Tickets were issued in the name of CANFINA, actually CANFINA was not the counter party therein and the amounts were credited or diverted to the account of Accused No.2 Harshad Mehta, by netting the debit and credit entries. 59. To prove the effect of all these transactions on the financial status of SBI Caps, the Prosecution has examined PW-29 Panchcapakeshan, the Deputy General Manager of SBI Caps, who has personally verified these transactions after the scam had broken out. According to him, at that time, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame to Mr. S.S.Zha, Deputy Superintendent of Police, CBI vide letter Exhibit-463. Submissions of Special P.P. and Defence Counsels 63. According to learned Special P.P. Mr. Mhamane, this oral and documentary evidence on record is more than sufficient to bring home the guilt of the Accused for the offences alleged against them. It is submitted by him that the evidence on record categorically proves the diversion of the funds belonging to SBI Caps to the account of Accused No.2 Harshad Mehta. In the Civil Suit filed by SBI Caps, SBI has admitted the claim of ₹ 105 crores. According to him, this diversion of funds would not have taken place, unless these Accused persons acted in connivance with each other and aided and abetted each other in performance of these transactions. Therefore, in his opinion, the offence of criminal conspiracy is required to be held as proved in the present case. It is submitted by him that, there cannot be any direct evidence to prove the offence of criminal conspiracy and it has to be inferred from the circumstances proved on record. To substantiate this submission, he has relied upon the judgment of Hon ble Supreme Court in the case of Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more persons to do an illegal act. The express agreement also need not be proved. Nor the actual meeting of two persons is necessary to be proved. It is also not necessary to prove the actual words of communication. The crux of the offence of agreement is to break the law. Hence, the parties to such an agreement will be guilty of criminal conspiracy, though the illegal act agreed to be done, has not been done. 65. By placing reliance on the judgment of the Hon ble Supreme Court in the case of Yash Pal Mittal v. State of Punjab [1977] 4 SCC 540, it is submitted by learned Special P.P. that, The very agreement, concert or league is the ingredient of the offence. It is not necessary that all the conspirators must know each and every detail of the conspiracy as long as they are co-participators in the main object of the conspiracy. There may be so many devices and techniques adopted to achieve the common goal of the conspiracy and there may be division of performances in the chain of actions with one object to achieve the real end, of which every collaborator must be aware and in which each one of them must be interested. There must be unity of object or purpose but there may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d finalized the deals at SBI Caps cannot be held liable for the same. Especially when there is no accounting system as such. As admitted by all the witnesses, the Dealers at SBI Caps were not supposed to know or at-least there was no such mechanism available that they should know that their instructions were carried out or not, by the SBI Main Branch. They proceeded on the assumption that their instructions were carried out, as the amount was debited from the account of SBI Caps. It was ultimately the responsibility of Accused No.1 R. Sitaraman in SBI Main Branch to receive the BRs or physical securities. If Accused No.1 R. Sitaraman has not done so and instead, by mixing by netting the said amount with other amounts, diverted the same to the account of Accused No.2 Harshad Mehta, then the Accused No.4 Ashok Agarwal, Accused No.5 Bandopadhyay and Accused No.15 S.R. Gupta cannot be said to have acted in conspiracy in any way. The documentation at their end was perfectly legal and proper. Hence, according to learned counsel for these Accused, the charge of criminal conspiracy, in the present case cannot be held as proved at all. 68. Even as regards the charge for offence under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equire that all the incriminating circumstances alleged against the Accused must be fully established and all the acts so established must be consistent with the hypothesis of the guilt of the Accused alone. By placing reliance on the judgment of the Hon ble Supreme Court in the case of Munish Mubar v. State of Haryana 2013 Cri.LJ. 56, it is submitted that the circumstances alleged against the Accused must be conclusive in nature and they should exclude every other possible hypothesis except the one sought to be proved. As held in this judgment, Circumstantial evidence is a close companion of factual matrix, creating a fine network through which there can be no escape for the accused, primarily because the said facts, when taken as a whole, do not permit to arrive at any other inference but one, indicating the guilt of the accused . It is urged that here in the case such chain of circumstances is not at all established by the Prosecution. Taking a tit-bit from here and there, the Prosecution wants to prove the case, which can never be permitted. It is urged that, some of the documents are not even proved by the Prosecution. Only proving of signature on the said documents cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o them are clearly demarcated. Prosecution case against Accused No.4 Ashok Agarwal, Accused No.5 Bandopadhyay and Accused No.15 S.R. Gupta 76. Taking up first the case against the Accused No.4 Ashok Agarwal, Accused No.5 Janardan Bandopadhyay and Accused No. 15 S.R. Gupta, who were working as the Dealers in SBI Caps and who have initiated the transactions and set the ball rolling. Even a cursory glance to the Prosecution case, as alleged against these Accused persons goes to show that the Prosecution case against them proceeds on the assumption that it was the responsibility of the Dealers to obtain the Contract Note from the Brokers and the BRs and physicals from the counter party Hence, the Dealers are prosecuted for finalizing the deals without obtaining Contract Note and issuing instructions for Debit Authorization Letters, without getting or following up, for recovery of BRs or physicals. 77. However, the evidence of Prosecution witnesses adduced on record as stated above is exactly contrary to this basic premise of the Prosecution case. All the Prosecution witnesses are unanimous and unequivocal to the effect that the job of the Dealers was over the momen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted that it was the responsibility of SBI to make and receive payments and to deliver and accept securities, since SBI was the custodian of SBI Caps. PW-33 Anil Joshi has also admitted that the Bank Receipts or physical securities from the counter parties were delivered to the Officers in-charge of the Securities Division and they were kept by those Officers in their custody. The evidence of PW-23 Nalini Prabhu also goes to prove that she used to visit SBI Main Branch to verify the existence of the BRs of SBI Caps. This evidence is thus more than sufficient to prove that it was not at all the responsibility of these Accused who are the Dealers from SBI Caps to receive either the BRs or the physical securities. In such situation, these Accused cannot be fastened with the liability that too criminal, for the acts which were not in their domain. 81. The evidence on record brought in this case by the Prosecution itself proves that, it was the responsibility on the part of the SBI Main Branch to obtain the Contract Notes from the Broker and further the BRs and physical securities from the counter party. Only after SBI had obtained these Contract Notes or BRs, they were collecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of SBI Main Branch and on that basis the Daily Dealing Operation Reports were prepared and were sent to the General Manager, Executive Director and Managing Director for their approval. This assumption was on the basis that SBI Caps was the subsidiary Company of SBI Main Branch. Moreover, when there were several such transactions, in which the instructions issued by SBI Caps were followed by SBI Main Branch, there was no reason for any of the Dealers or the Officers from SBI Caps to assume that SBI Main Branch will not follow their instructions in respect of these transactions also. 84. Here in the case, thus the evidence on record proves that none of this dealer, who are the Accused in the case, was having any concern with the actual execution of the deals and it is in the execution of the deals, where the things have gone amiss. As rightly submitted by learned counsel for Accused, the Prosecution has proceeded backwards to infer knowledge on the part of the Dealers that without there being any deals with CANFINA or UCO Bank, the Dealers have issued fraudulently or wrongly, these Deal Tickets. The Prosecution cannot proceed in this way, especially when there are several loopho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, he was also discussing with the Dealers about the deals executed on that day and to be executed on the next day The Daily Deal Operation Report, after signing of Mr. S.V. Naik was placed before the Executive Director and then before the Managing Director. Therefore, there were sufficient checks and control, at the end of SBI Caps on the work of the Dealers. Merely, on the basis of the deals, the funds were not diverted. Hence, if the Dealers had in real effect, no control over the funds of SBI Caps, there is no meaning to the charge under Section 409 or 420 of IPC. 86. As stated above, it is also not the case of the Prosecution, not even a allegation that, as a result of these acts, these Accused-the Dealers have been benefited or there was any wrongful gain for them or wrongful loss to the SBI Caps or SBI Main Branch. In view thereof, as regards the Dealers, it has to be held that there is no sufficient evidence to link them with the acts, on account of which the funds of SBI Caps, according to the Prosecution case, were diverted to the account of Accused No.2 Harshad Mehta. If at all those funds were diverted, they were diverted at the end of SBI Main Branch to the Banks wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals. PW-1 Ashish Sable has deposed that the Deal Ticket Exhibit-23 and Exhibit-256 is signed by Accused No.15 S.R. Gupta. However, he has admitted in his cross-examination that he had no occasion to be acquainted with the signature of Accused No.15 S.R. Gupta and he also does not recollect whether these two Deal Tickets Exhibit-23 and Exhibit-356 were shown to him when his statement was recorded by CBI. PW-1 Ashish Sable has categorically deposed that as the name of Accused No. 15 S.R. Gupta is appearing on these two Deal Tickets, he was saying that they are signed by him. 90. In this respect, learned counsel for Accused No. 15 S.R. Gupta has drawn attention of this Court to the documents at Exhibit-24 and 357 and rightly pointed out that the signatures of Accused No. 15 S.R. Gupta thereon are totally different from his signatures alleged to be appearing on Deal Tickets Exhibit-23 and 356. Thus, as rightly submitted by learned counsel for Accused No.15 S.R. Gupta, there is a serious question as to whether these Deal Tickets are properly proved to be signed by Accused No.15 S.R. Gupta, as except for PW-1 Ashish Sable, no one else has established the same or identified the signat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit of ₹ 4,57,417=81. Therefore, on the face of it, it becomes difficult to accept the case of the Prosecution as regards this transaction. 93. Moreover, even if one considers the role attributed to the Accused No. 15 S.R. Gupta, it is pertinent to note that PW-15 Virkar has correctly debited the SBI account for the amount of ₹ 15,24,78,082=19. This amount is included in Exhibit-216, which was prepared for consolidated amount of ₹ 32,62,00,000=00. This transaction has been processed at SBI Main Branch by PW-15 Virkar and not by Accused No.1 R. Sitaraman, as alleged by the Prosecution. Ultimately this amount is also credited back to the SBI Caps account with net profit of ₹ 4,57,417=81 vide Exhibit-266. 94. What is pertinent to note in this entire transaction is that UCO Bank has received the Cheque Exhibit-217 from SBI without any disposal instructions. Therefore, as per RBI guidelines, if the Cheque was not pertaining to UCO Bank, UCO Bank should have returned it to SBI. However, it is UCO Bank, which has collected the Cheque through clearing in the normal way, as it had granted Cheque Routing Facility to Accused No.2 Harshad Mehta. It is thus the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to that effect at Exhibit-328 in the Investment Register. It is also found reflected in the Blue Diary in the entry Exhibit-329. In this transaction also, the same process, which is described above, in respect of transaction dated 07/06/1991, was adopted and there is nothing on record to show that any irregularity was committed. The same allegations which are raised in respect of above said transaction by the Prosecution about non obtaining of the Contract Note or BR and Physical Securities are advanced in respect of this transaction also. Admittedly, the Dealers had no dominion over the funds of the SBI Caps. There is no evidence proving that UCO Bank had stopped the securities transactions with effect from 06/05/1991. None of the witness has stated so. There are several such transactions executed by the UCO Bank during the said period, as pointed out through the relevant documents Exhibit-411 to 418 and also the fact that there are in all 12 BRs issued by SBI Caps favouring UCO Bank during the said period and all these BRs were duly discharged by the UCO Bank. 101. As regards the charge for the offence under Section 411 read with Section 120B of IPC that Accused had received t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed , though there was no such BR received or discharged. He is implicated in this respect in 10 transactions only. Out of that, in 3 transactions viz. Nos.5, 9 and 10, it is alleged that he made the entry of both the BR received and discharged and in remaining 7 transactions, viz. 11 to 14 and 20, 21 and 23, he made the entry of BR received . However, the Prosecution has not brought on record any evidence to prove these entries. As admitted by the witnesses, no separate register was maintained in SBI Caps for the BR received . The system of maintaining the BR Received Register started only from 01/07/1991. The essential ingredients of the offence under Section 477A of IPC, namely, of engineering the fraud or of deceit and injury is conspicuously lacking in this case, as no loss is proved to have been caused. 104. The second allegation made against him is that he has made entries in the Blue Diary on the basis of the Deal Tickets; that is merely the processing of the transaction. He has neither the dominion over the funds of SBI nor his conduct of taking note of these transactions in the Blue Diary has any effect on diversion of the funds. If on the basis of the Deal Ticket, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.1R. Sitaraman was proceeding on leave from that day. The leave application of Accused No.1 is produced on record at Exhibit-450 and 451. The evidence on record also goes to prove that Accused No. 16 was totally a new Officer brought there, to work in the Securities Department, without any training imparted to him or without there being any Manual of Operating Instructions. Therefore, there is much substance in his contention that he has followed the prevailing practice and procedure and accordingly, signed the Cheque Exhibit-172 on the very first day of his posting and counter signed the other cheques in good faith, without having any guilty intention thereof. 111. This inference can be drawn from the fact that he was posted there only for 8 days from 02/01/1992 to 08/01/1992 and when he realized the danger of the Cheque Routing Facility given to Accused No.2 Harshad Mehta by the SBI, he has, during his period from 04/01/1992 to 08/01/1992 not afforded any such facility to Accused No.2 Harshd Mehta. There is entry in the Ledger of the transactions with Accused No.2 Harshad Mehta to that effect, which is admitted by the Prosecution witness PW-14 Arvind Rane. The document at Exh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to be counter signed by the two authorized signatories and Accused No. 16 B.D. Raut, being one of such authorized signatories, was required to counter sign the same. Admittedly these Cheques Exhibit-126, 129, 131, 147, 155, 156, 157, 159, 164, 166, 168, 192, 181, 198, 199, 201, 209, 210, 211 and 213 were merely counter signed by him, after they were signed by the Officer who prepared the Banker s Cheques and Credit Vouchers. It is brought on record through evidence of PW-28 Ulhas Wakade that it was the responsibility of the first signatory to verify the contents thereof and so far as the second signatory, who has counter signed the same, he has only to verify the signature of the first signatory. That was the normal practice followed during the period. 115. It is pertinent to note that for the similar act of counter signing the Banker s Cheque Exhibit-84, 85, 105, 106, 107, 108, 109 and 113, Accused No. 14 Arun Bavdekar was also implicated in this case. However, he has been discharged by this Court vide order dated 17/08/2015 by observing that, there is difference between signing a Cheque and counter signing the same. The Officer counter signing is entitled to feel m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the Voucher of even date at Exhibit-266 in favour of SBI Caps. This transaction which is entered into by PW-15 Virkar while working in place of Accused No.1 R. Sitaraman stands on the similar footing, as the transaction dated 02/01/1992 done by Accused No. 16 B.D. Raut. Again the Prosecution has not brought any evidence on record to differentiate this transaction from the transaction of Accused No. 16 B.D. Raut. Moreover, the Prosecution has also not produced on record, the RO Book, nor proved the entry dated 02/01/1992 made in the said RO Book. In such situation, the offence for which this Accused is charged, including the offence under Section 477A as elaborated in Charge No.50 to 54 cannot be said to be proved. 118. As regards the sanction order for his prosecution, less said is better. PW-4 Mr. B. Muthuswamy is examined by the Prosecution to prove the sanction Exhibit-77, but his evidence does not show any application of mind on his part. He has merely stated that on perusal of the papers placed before him by the Department giving the reasons as to why the sanction was necessary, he has signed on the sanction order. However, in his cross-examination, he has categorically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h these documents is totally different. The Deal Slip Exhibit-13 mentions the amount of consideration as ₹ 67,83,00,000=00 for 5 crore Units at the rate of ₹ 13.56600 per Unit; whereas the BR Exhibit-274 shows that the amount of consideration is ₹ 67,95,00,000=00 and the rate is 13.5900 per Unit. It is pertinent to note that the name of NHB is also struck off in the Deal Slip Exhibit-13. 122. In this respect, the evidence of all the Prosecution witnesses is unequivocal to the effect that for the BR and Deal Slip to be part of the same transaction, the amount and the rate mentioned therein must match. PW-19 Murlidharan has categorically stated that, as the amount and the rate of security mentioned in the Deal Ticket Exhibit-13 and the Bank Receipt Exhibit-274, do not match, he cannot say whether they are pertaining to the same transaction. He has further stated that, generally whatever details are stated in the Bank Receipt should match with details in the Contract Note and the other documents with the counter party . Similarly, PW-23 Nalini Prabhu has also deposed that, this BR Exhibit-274 does not match with the Deal Slip Exhibit-13 in respect of amount and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he language of the BR itself shows that it is non transferable. Hence, the case of the Prosecution that BR was issued to cover up some transaction with CANFINA appears difficult to accept. 127. As a matter of fact, the evidence of PW-19 Murlidharan and rest of the witnesses read as a whole, clearly prove that the BR Exhibit-274 was never acted upon. It has died a natural death. It has become infructuous, as there was no sale and no payment by either party. It is also not the case of the Prosecution that any loss was suffered by NHB on account of the said BR. 128. It is pertinent to note that the amount debited from the SBI Caps account of ₹ 67,83,00,000=00 allegedly on the basis of this BR and the amount paid to Canara Bank for credit to CANFINA of ₹ 93,64,68,150=68 is also not matching. There is no evidence to show that this amount of ₹ 93,64,68,150=68 includes the amount of ₹ 67,83,00,000=00. 129. The evidence on record, on the contrary, shows that there was a transaction for 5 crore Units of UTI between CANFINA and SBI Caps on 02/09/1991 for the amount of ₹ 67,50,00,000=00. The evidence PW-27 Vernekar from Canara Bank to prove that Exhibit- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a large scale. The deals used to be often struck on telephone and as the BR is non-transferable negotiable instrument, in these transactions, there was no receipt of money and no sale of Units. Hence, NHB has not suffered any loss. The evidence of PW-29 Panchapakeshan also goes to prove that, no payment was made by SBI Caps to NHB in pursuance to this BR Exhibit-274. According to him, the right of purchasing party to receive physicals in lieu of BR arises only if the purchasing party makes payment to the counter party. According to him, until May 1992, SBI Caps did not write to NHB, demanding the Units under the said BR. SBI Caps has also not filed any suit against NHB for recovery of the Units under the BR Exhibit-274. The correspondence between the NHB and SBI Caps, namely, the Letters Exhibit-275, 276 and 277 also prove that no payment was made to NHB by SBI Caps. 133. Thus, the evidence on the whole and read together clearly proves that BR at Exhibit-274 was issued in anticipation of the transaction, which did not get completed. Neither any witness from NHB nor any letters addressed by NHB, which are on record allege that the BR Exhibit-274 was issued wrongfully by Accused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th CANFINA deal and did not proceed with NHB deal. Thus the BR Exhibit-274 issued by NHB became infructuous. At-least, from the evidence on record, it cannot be said that this BR Exhibit-274 facilitated any wrongful act by any person. Moreover, a purchasing party cannot hold two BRs in respect of a single transaction, for which the payment has been made from its account to only one party. In this case, the payment has been made from the account of SBI Caps to CANFINA and the latter had issued, the BR which was reversed within fifteen days. Therefore the BR Exhibit-274 issued by NHB had become infructuous and carried no value, which could give any right to SBI Caps for making any claim. 137. Learned counsel for Accused No.3, also points out that, the same transaction was the subject matter of Special Case No.1 of 1996, filed on the complaint of SBI Caps against CANFINA. The employees of CANFINA charged in the said transaction are already acquitted in the said case. 138. Otherwise also, the Charge under Section 409 of IPC, as alleged against Accused No.3 Ravi Kumar, cannot be tenable. To prove the offence under Section 409 of IPC, there must be entrustment of property and conve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mar had no authority to sign the BR on behalf of NHB. It is signed by Accused No.3 Ravi Kumar, under his own name and it does not give an impression that it is signed by someone else. Therefore, as long as this BR is executed under the name and authority of the authorized signatory, it cannot amount to forgery, even if it may contain a false statement. This point was considered and upheld by this Court in the case of CBI v. Raghunath Wadhwa [Special Case No. 4 of 1997, dated 30-11-2007] wherein it was held that, a document containing false recitals or particulars or representations does not amount to forgery. 143. Learned counsel for Accused No.3 Mr. Sabnis has also placed reliance on the judgment of the Hon ble Supreme Court in the case of Mir Nagvi Askari v. CBI [2009] 96 SCL 248 to submit that the document containing a false recital or statement is not a false document amounting to forgery. 144. It is submitted that, as held in para No. 164 of this judgment, 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 bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disputed that he has prepared it in the normal course of his duties and under the instructions from Accused No.3 Ravi Kumar, who was in charge of Funds Management Group at NHB. 149. It is a matter of record that Accused No.12 Suresh Babu was, though holding the post of Assistant Manager, it was in reality the glorified position of Clerk. He has just completed the Probation period of 6 months on 07/08/1991 and was working under the direct control and supervision of Accused No.3 Ravi Kumar. Above him, there were several other Officers. His position was in the entire hierarchy of NHB at the lowest level. Taking cognizance of his position in the hierarchy of the organizational set-up of NHB, the Hon ble Supreme Court has also, in the case of R. Venkatkrishnan v. CBI [2009] 96 SCL 143 acquitted this Accused for the similar role played by him. 150. It is admitted position that he was never authorized to undertake any decision and was to act only on the instructions of Accused No.3 Ravi Kumar. This fact is certified by PW-19 Murlidharan also. Mere preparation of BR in the handwriting of Accused No.12 Suresh Babu therefore cannot be called as issuance of the BR. Therefore, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show that only on the basis of the material placed before him and even without consulting the Legal Department, he has issued the sanction order for prosecution of Accused No.3 C. Ravi Kumar and Accused No. 12 Suresh Babu. He even was not aware whether CBI has recorded the statement of Accused No.3 C. Ravi Kumar in the matter or whether NHB had initiated any Departmental Enquiry against him. 155. PW-11 Mr. N.R. Sampath, who has issued sanction order in respect of Accused No. 16 B.D. Raut has categorically admitted that, he does not know how the securities transactions were conducted. He was also not aware whether the transactions on behalf of SBI Caps were put through on telephonic instructions. He has further admitted that, he does not remember whether he has personally seen any false entries made by Accused No. 16 B.D. Raut in R.O. Register. He does not remember the documents which were placed before him along with note given to him by the SBI Main Branch. However, the said note is not produced along with sanction order. 156. As regards the sanction and its validity, its importance need not be emphasized. Sanction is a solemn and a very serious act. It needs to be done wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... force be acting upon it to take decision one way or the other. Since the discretion to grant or not to grant sanction vests absolutely in the sanctioning authority, its discretion should be shown to have not been affected by any extraneous consideration. If is shown that the sanctioning authority was unable to apply its independent mind for any reason whatsoever or was under an obligation or compulsion or constraint to grant the sanction, the order will be bad for the reason that the discretion of the authority not to sanction was taken away and it was compelled to act mechanically to sanction the prosecution. 159. In the present case, as rightly submitted by learned counsel for the Accused, there is no evidence to prove that this act of giving sanction is performed properly by the Sanctioning Authorities. Hence, it constitutes a major lacuna in Prosecution case, the benefit of which goes to these Accused persons. Hence, neither on factual, nor on legal aspects, the Charge for the offences punishable under Section 13(1)(c)(d) read with Section 13(2) of the Prevention of Corruption Act can be held proved against them. Prosecution case against Accused No.8 Ashwin Mehta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here in the picture. He had neither initiated, nor negotiated, nor concluded the said transaction. As a matter of fact, the Prosecution has also not succeeded in proving the contents of this Contract Note, nor attributed any knowledge to Accused No.8 Ashwin Mehta in respect of underlying transaction. The only witness who has deposed about it is PW-20 Ramesh Dabholkar, the delivery boy in the office of Accused No.2 Harshad Mehta, who has only identified the signature of Accused No.8 Ashwin Mehta on this Contract Note. Thus, no Prosecution witness has attributed any knowledge or participation of Accused No.8 Ahswin Mehta in the said transaction. Moreover, his mere signing of the Contract Note cannot make him liable, as the Contract was to be performed after two months by delivery of Units. If there was any fraud in subsequent part of execution of the such Contract in payment and delivery of the Units, he cannot be held penally liable. 163. It is necessary to note that, for similar such role played by the other Accused, that of signing of the Contract Note, not only in this case, but in other cases also, those Accused were acquitted or discharged. Reliance can be placed on the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of outstanding Units and BRs from various counter parties, but he could not locate the exact counter party to the deal. It is submitted that admittedly on 29/07/1991 BOI Finance has delivered 50 lakh Units by drawing BR No.49 in the name of SBI Caps, which was delivered to SBI on behalf of SBI Caps on 29/07/1991. The payment of ₹ 6,78,25,000=00 to BOI Finance was effected on 29/07/1991 by Accused No.2 Harshad Mehta by debit to his account and therefore, against the purchase of 25 lakh Units, SBI Caps has received delivery of 50 lakh Units from Accused No.2 Harshad Mehta and therefore, the allegation of non delivery of 25 lakh Units under the said transaction is not correct. This BR No.49 dated 29/07/1991 was also seized from Mr. S.M. Vaidya, Senior Project Manager of BOI Finance. 166. It is pointed out that the Contract Note Exhibit-284, does not disclose the name of the counter party, much less that of the UCO Bank. It is the imagination of the Prosecution that the counter party was UCO Bank. As a matter of fact, as Contract Notes were entered into by Accused No.2 Harshad Mehta on principal to principal basis, it was his prerogative to decide how the delivery of Units ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion has also failed to prove the further diversion of funds from the Account of Accused No.2 to the account of this Accused. As the offence of criminal conspiracy and the offences under the Prevention of Corruption Act are not established, there is no question of holding this Accused liable for the offence of abatement under Section 109 or under Section 120B of IPC. Prosecution case against Accused No.1 R. Sitaraman 172. If the entire case and the evidence discussed above is carefully perused, then the inference is inevitable that the ball stops rolling at the end of SBI and that too, at the door step of Accused No.1 R. Sitaraman. As per the Prosecution case, it was Accused No.1 R. Sitaraman, who has, by netting and mixing the amount of the securities transactions, diverted the funds to the account of Accused No.2 Harshad Mehta. However, to prove this charge, the Prosecution has not led any evidence except for producing the statements of accounts of Accused No.2 and his Associates. Their contents are also not proved. Moreover, as per Accused No.1 R. Sitaraman, these transactions were entered into with Accused No.2 Harshad Mehta on principal to principal basis and therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s failed to prove the sanction for his prosecution. Admittedly, Accused No.1 R. Sitaraman was a public servant, being an employee of the public sector bank, like, SBI, at the time of commission of the alleged offence, as well as, at the time, when the Charge-sheet was filed and the cognizance of the offence was taken. As evident from Exhibit-605, Accused No.1 R. Sitaraman was in service till the year 1996 and hence, very much the public servant. He is prosecuted for the acts done by him in discharge of his duty as public servant. Hence, in order to implicate him for the offences under the Prevention of Corruption Act, which are alleged against him, the sanction for his prosecution is must, as laid down under Section 19(1) of the Act, which reads as under, 19. Previous sanction necessary for prosecution.- (1) No court shall take cognizance of an offence punishable under sections 7, 10, 11, 13 and 15 alleged to have been committed by a public servant, except with the previous sanction,- (a) in the case of a person who is employed in connection with the affairs of the Union and is not removable from his office save by or with the sanction of the Central Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per the law laid down by the Hon ble Supreme Court, in the absence of a valid sanction, even if any trial is conducted against the public servant for which the sanction is required, such trial becomes null, void and non est. 179. Here in the case, Investigating Officer has obtained the sanction for prosecution of accused No.1 R. Sitaraman. However, the Prosecution has failed to prove it and therefore, it is as good as not on record. The Prosecution has filed a report dated 30/08/2018 stating that the sanctioning authority Mr. Gordhan Bhojraj Kathuria has expired on 25/01/2018 and therefore, not available for giving evidence. 180. In considered opinion of this Court, if the sanctioning authority was not available, then in that case, the Prosecution could have examined any other witness from the said Department, who was acquainted with the facts of the case or even with the signature of the sanctioning authority and get the sanction proved. The burden was entirely upon the Prosecution to prove the fact that the requisite sanction has been obtained. As held by the Hon ble Supreme Court in the case of State of Rajasthan v. Tarachand Jain AIR 1973 SC 2131, such burden includes p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easonable doubt. Hence, the order. (i) Accused No.1 R. Sitaraman, Accused No.3 Ravi Kumar, Accused No.4 Ashok Agarwal, Accused No.5 Janardan Bandopadhyay, Accused No.8 Ashwin Mehta, Accused No.15 S.R. Gupta, Accused No. 16 B.D. Raut and Accused No. 17 P. Murlidhar stand acquitted for the offences punishable under Section 120B and 420, in the alternate Section 409 read with Section 120B of IPC. (ii) Accused No.1 R. Sitaraman, Accused No.3 Ravi Kumar, Accused No.4 Ashok Agarwal, Accused No.5 Janardan Bandopadhyay, Accused No.12 Suresh Babu, Accused No.15 S.R. Gupta, Accused No. 16 B.D. Raut and Accused No.17 P. Murlidhar, are further acquitted for the offences punishable under Section 13(1)(c) and (d) read with Section 13(2) of the Prevention of Corruption Act and Accused No.8 Ashwin Mehta stands acquitted for the offence punishable under Section 13(1)(c) and (d), read with Section 13(2) of the Prevention of Corruption Act, read with Section 109 of IPC. (iii) Accused No.1 R. Sitaraman and Accused No. 16 B.D. Raut are further acquitted for the offence punishable under Section 477A read with Section 120B of IPC. (iv) Accused No.3 Ravi Kumar and Accused No. 12 Suresh Babu ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
