Smt. B. Satya Venkata Hima Bindu

IN THE COURT OF THE I ADDL. SPECIAL JUDGE FOR C.B.I.

CASES, VISAKHAPATNAM.

Present:Smt.B.Satya Venkata Hima Bindu

Principal Spl. Judge for C.B.I. Cases,

FAC I Addl. Spl. Judge for C.B.I Cases, Visakhapatnam.

Tuesday this the 9 th day of March, 2021

C.C.No.03/2005

Between:

State represented by the Inspector of Police, C.B.I, Visakhapatnam.

…Complainant And:

Mr.Mutya Subramanyam, S/o Mutya Sita Rama Murthy,Aged 58 years, Formerly ITO, Vizinagaram and Now Tax Recovery Officer, O/o Joint CommissionerofIncomeTax,Range-III, Dabagardens, Visakhapatnam. R/o P-2, Maruthi towers,K.R.M.Colony,Seethammadhara, Visakhapatnam. R/o P-2, Maruthi Towers, K.R.M.Colony, Seethammadhara, Visakhapatnam.

….. Accused

This case came on 03.02.2021 for final hearing before me in the presence of Mr.K.Suryanarayana, Ld. Sr.Public Prosecutor for the

Complainant and of Mr.K.V.Rama Murthy and Mr.B.V.Ravi Kumar,

Advocates for Accused and the matter having stood over for consideration till this day, this Court doth the following:

J U D G M E N T

1.The accused officer Sri Mutya Subramanyam formerly the

Income Tax Officer is arraigned and prosecuted for alleged criminal misconduct under Section 13(1)(e) r/w 13(2) of Prevention of

Corruption Act in RC 35(A)/2002 registered against him by CBI,

Visakhapatnam.

2 C.C.03/2005/I CBI Court/VSP

2.For brevity the Statues under discussion i.e., The Prevention of

Corruption Act is herein after referred as P.C Act/Act, 1988, The Indian

Penal Code is referred as IPC, Indian Evidence Act is referred as

I.E.Act, The Code of Criminal Procedure is referred as Cr.P.C. and the accused officer is referred as AO or accused in short wherever cited.

I. The over view of the prosecution case:

3.The case of the prosecution in brief is that, the AO who is formerly the Income Tax Officer, as on the date of 09.04.2001 was found in possession of disproportionate assets worth

Rs.24,86,792.80ps(Rupees) standing in his name and in the name of his wife, children and father-in-law. It is the further case of the prosecution that the AO amassed and floated the above worth assets during the check period 01.01.1998 to 09.04.2001 disproportionate to his known sources of income, for which he could not satisfactorily account for or render any plausible explanation and thereby alleged to have committed the offence punishable under

Section 13(2) r/w 13(1)(e) of PC Act.

II. Registration of F.I.R.

4.In this case on hand the criminal law was set into motion against the accused under peculiar circumstances. The roots of the accusation against the accused discovers its origin in preceding

Crime No.RC 8(A)/2001 against the accused under Section 7 of PC Act.

The FIR in the present case i.e., Rc.35(A)/2002 was registered on 01.11.2002 enumerating, the AO while functioning as Income Tax 3 C.C.03/2005/I CBI Court/VSP

Officer, Ward II, Vizianagaram during January, 1998 to December, 2001 had amassed assets worth Rs.8,93,000/- approximately, disproportionate to the known source of income. The above information has been striped during course of investigation in RC 8(A)/2001, when search has been conducted at the office and the residential premises of the accused. It is pertinent that the FIR in RC 35(A)/2002 was registered on 02.11.2002 almost after 20 months after registration of RC 8(A)/2001.

III. The brief material of investigation by CBI:

5.The accused joined in Income Tax Department in the year 1970 as a steno and was promoted as an Inspector of Income Tax in 1992 and as an Income Tax Officer in 1995 and in that capacity he worked at

Salary Circle in Visakhapatnam for two years and later he was transferred to Vizianagaram. Thereafter he was placed under suspension with effect from 01.04.2001. His marriage was performed with Mrs.M.Lakshmi on 10.03.1971, he and his wife did not inherit any ancestral property. For investigation purpose the complainant took the check period as 01.01.1998 to 09.04.2001. The accused had assets both movable and immovable worth Rs.6,35,936/- at the beginning of the check period shown in Statement–A and the assets worth

Rs.14,53,098.80ps at the end of the check period shown in Statement-

B. His total income was reflected in Statement-C as Rs.6,98,750.07ps and total expenditure was shown as Rs.23,68,380/- in Statement-D during the check period.

6.The charge sheet further discloses that the AO entered into a false agreement of sale dated 03.03.2001 with one K.Anji babu 4 C.C.03/2005/I CBI Court/VSP resident of Visakhapatnam and falsely shown the sale of his house bearing No.8-5/3-3(ground floor + 1 floor), Pratap Nagar, Kakinada including the Plot for Rs.6.5lakhs and receipt of an amount of

Rs.3.5lakhs. It is further averred that the said K.Anji Babu confessed

before this Court that he never purchased the said house under any

agreement from the AO and never paid any amount to him and that the cheque for Rs.25,400/- drawn by Sri Venkayya and Rs.23,000/- in cash for purchase of Plot No.33 in Juttada village, Pendurthi Mandal,

Visakhapatnam along with development charges were handed over to him by the AO informing him that he being in Government service has to account for, if the Plot was registered in his name and requested to register the same in the name of his father- in-law.

However he further stated that the Plot was not registered and later it was sold for Rs.1,00,000/- and the cheque for the said amount was drawn in favour of G.Venkayya on the instructions of the AO. The said

K.Anji Babu also disclosed that two promissory notes dated 04.10.2002 for Rs.50,000/- and for Rs.4,00,000/- dated 04.01.2001 were written in the name of Sri M.Venkayya by him on the instructions of AO, but asserted that the money was not taken from him and repudiated giving loan of Rs.1,00,000/- to Sri G.Venkayya. The said

K.Anji Babu was tendered pardon by this Court vide Orders in

Crl.M.P.No.285/2004.

7.The investigating officer after recording the statements of all the relevant witnesses and on completion of investigation obtained sanction Order dated 14.04.2004 issued by Sri D.D.Goel,

Commissioner of Income Tax, CIB, Hyderabad under Section 19(1) (c) of PC Act, competent authority to remove Sri M.Subramanyam i.e., 5 C.C.03/2005/I CBI Court/VSP the AO from service, filed charge sheet before this Court enclosing the list of LWs.1 to 65 vide memo of evidence and list of LD.Nos. 1 to 112 including the certified copies of inventories, locker proceedings and search lists in RC 8(A)/2001-CBI/Visakhapatnam.

IV. Taking cognizance by the Court and charges against the

accused :

8. This Court took cognizance against the accused for the offence under Section 13(1)(e) r/w Sec.13(2) of PC Act on 5.04.2005 and on appearance of the accused before this Court, he was furnished with the case documents as provided under Section 207 of Cr.P.C. and was examined under Section 239 Cr.P.C. Thereafter on 09.06.2005 after hearing learned Sr.Public Prosecutor for CBI and learned counsel for accused, this Court framed a charge for the offence under Section 13(1)(e) r/w Sec.13(2) of the PC Act, read over and explained to the accused in Telugu for which he pleaded not guilty and claimed to be tried.

V. Evidence on record:

9.To prove the allegations against the accused, the prosecution preliminarily examined as many as 29 witnesses and admitted in evidence Exs.P1 to P.26, Ex.P31 to Ex.P.66 and closed its side evidence.

VI. Examination of accused under Section 313 Cr.P.C

10.After the initial closure of the prosecution side evidence, the accused was examined under Sec.313 Cr.P.C on 24.01.2013 explaining him the incriminating material in the prosecution side 6 C.C.03/2005/I CBI Court/VSP evidence, for which the accused admitted part of the evidence as true and denied the rest. The accused filed his detailed written statement under Section 243(1) Cr.P.C in reply and sought for adducing defence evidence. However the prosecution sought for examination of

additional witnesses A.Sudhakara Rao and K.L.Narayana vide

applications under Crl.M.P.Nos.980/2019, 2159/2019 dt.18.06.2019 and 27.11.2019. The same were allowed by this Court, consequently

PWs.30 and 31 were additionally examined by the prosecution, marking Exs.P.82 and 83. In pursuance of the same the accused was further examined under Section 313 Cr.P.C. with regard to the incriminating material in the evidence of PWs.30 and 31 on 10.12.2019 wherein which the accused denied the evidence and filed supplementary written statement on 12.12.2019.

VII. Defence Evidence:

11.The accused got examined 16 witnesses as DWs.1 to DW.16 including himself as DW.16 and got marked Exs.D24 to D.49 and

Exs.X1 to Ex.X8 documents on his behalf. During the course of cross examination of prosecution witnesses the defence side got marked

Exs.D1 to D.23 and D.44. The Ex.P73 to Ex.P81 are the prosecution documents marked through the defence witnesses.

VIII. Documents marked with the consent of both sides:

12.Ex.P1(A) to Ex.P26(A) and Ex.27 to Ex.P30, Ex.P67 to Ex.P72 and

Ex.D45 are marked with the consent of both sides as per the written arguments.

7 C.C.03/2005/I CBI Court/VSP

IX. The argument of the prosecution side:

13.At very onset the learned Sr.Public Prosecutor for CBI submitted the personal details of the accused officer stating that the AO hailed from the very humble family at Poduru village, West Godavari District.

His father was a purohit and his mother, a house wife. He has four elder brothers and one elder sister and was married to Smt.M.Lakshmi on 10.03.1971 and was blessed with two children named Bharathi and

Ravi Kumar. The daughter of AO pursued B.Tech from Andhra

University during the year 1991-1995 and M.Tech in Electrics from IIT

Kharaghpur during the year 1995-1997. She got married on 16.11.1997 and presently working as Engineer BEL, Bangalore from

January, 1998, her husband is a Charted Accountant and working as

Manager Finance, Manipal hospital , Bangalore from 2000, earlier he worked in Taj Residency hotels Visakhapatnam, Bangalore and

Cochin.

14.The son of the AO i.e., M.Ravi Kumar studied B.E in EEE from

GRM Institute of Technology, Rajam , Srikakulam District from 1998- 2002 under NRI Quota. The father-in-law of the AO, Sri G.Venkayya retired as Panchayat Executive Officer, Kondamanchili, West Godavari

District about 25 years back. Smt.Mahalakshmi is the mother-in-law of the AO. The A.O. initiated his carrier as Steno in Andhra Paper Mills in 1967 and subsequently worked in several Government departments and finally joined as Steno in the Income Tax Department in the year 1970 and he was promoted as Inspector of Income Tax in the year 1992 and as on Income Tax Officer in 1994. He worked in the capacity of Income Tax Officer at Visakhapatnam and Vizianagaram during the 8 C.C.03/2005/I CBI Court/VSP period 1995 to 2001. In the year 2001 crime in RC 8(A)/2001 was registered against the AO for allegedly demanding illegal gratification from one Venu. In pursuance of investigation in the said crime the AO was found in possession of disproportionate assets worth

Rs.24,86,792/- in his name and the in the name of his family members and the present crime RC 35(A)/2002 was incepted against the accused as offshoot. There is a specific allegations against the AO that he entered into a false agreement with one K.Anji Babu on 03.03.2001 and others misrepresenting transactions in the name of his father-in-law Sri G.Venkayya.

15. The learned Public Prosecutor reiterated the authenticity of the sanction order which was marked as Ex.P54 and the evidence of

PW.4 Sri D.D.Goel competent authority with regard to the disproportionate assets, the learned Public Prosecutor insisted upon the value of assets prior to the check period at Rs.6,35,936/- as mentioned in Statement-A of charge sheet and the assets at the end of the check period as Rs.14,53,098.80ps as mentioned in Statement-

B and accordingly presented the calculation of assets acquired, of value Rs.8,17,162.80ps during the check period(Rs.14,53,098.80ps– 6,35,936/-=8,17,162.80ps). The income of the AO was presented as

Rs.6,98,750.07ps as in Statement –C and expenditure as

Rs.23,68,318/- as in Statement–D. The prosecution side highlighted that neither the AO nor his wife inherited any ancestral property and that there is excess of expenditure amounting to Rs.16,69,630/- during the check period, which in total ended in disproportionate assets of Rs.24,86,792.80ps(Statement A– Statement B=Assets during check period + Expenditure during the check period – Income).

9 C.C.03/2005/I CBI Court/VSP

16.The prime argument of the learned public prosecutor is that the assets at the beginning of the check period includes immovable property acquired by the accused in his name and the in the name of

Smt.B.Subbalakshmi(benami), Sri N.V.V.S Ravi Kumar, fixed deposits(FDs in short) in his name and the name of his wife and deposits in various banks gold items, household items, two wheelers, shares etc.,. The assets at the end of the check period includes unaccounted balance of amounts in the name of the AO in various banks, term deposits in the name of his wife, Indira Vikas Patras, Cash recovered from residential premises of Vizianagaram, gold items and household items, immovable properties, KTDS and household items, shares in his name and in the name of his wife.

17.As far as the income of the AO is concerned it is calculated in total of his net salary, considering the deductions, DA arrears, GPF part final, 5th pay commission arrear of relevant period, interests delivered on various accounts, dividends, hand loans, withdrawals from the finance companies, returns from the deposits, sale of shares, income tax refunds and loan repayments. It is further submitted that the domestic expenditure during the check period is calculated, basing on Data of Bureau, Economics and Statistics and that the repayment of loan by the accused along with purchase of shares and other items was determined as expenditure.

18.As far as the assets of the AO are considered the learned public prosecutor insisted that there are two main items as follows which are clearly proved to be benami transactions of the accused from the 10 C.C.03/2005/I CBI Court/VSP circumstantial evidence and documentary evidence led by the prosecution. Firstly Plot No.47 of 350sq,yards in Resavanipalem,

Visakhapatnam in the name of Smt.M.Bharathi i.e., daughter of accused. Secondly shops measuring 2700sq.yards in G.K.Mansoions,

Pedawaltair in the name of G.Venkayya, father-in-law of the accused.

19.It is further submitted that either the daughter of AO or his father-in-law never had any sustainable source of income to purchase the above said properties. It is also submitted that Sri K.Anji Babu, the proprietor of A.B.K.S. Real Estate was involved in this case as A2 for accompanying the accused in preparing the false and fabricated documents for the purpose of the case for keeping pecuniary sources in benami names. It is argued the AO being Income Tax Officer is well versed with knowledge to make assets and to maintain them without any proper evidence and that he got filed the Income Tax returns through his benamies every year to avoid further complication.

Accordingly recapped the entire prosecution side evidence of PWs.1 to 31 and submitted that, it sufficiently prove the guilt of the accused for having been in possession of disproportionate assets specifically standing in his name and in the name of benamies. The prosecution side relied upon the following list of citations in support of its arguments.

1.State of Madhya Pradesh Vs. Awadh Kishore Gupta and Ors. reported in AIR 2004 SC 517

2.M.Kishan Vs. State reported in 2005 CriLJ 2103

3.State of Karnataka Vs. Jayalalitha reported in 2018 (13)SCC 455

4.State of Bihar V. Lalu Prasad reported in 2008 KHC 5733.

5.Rameshwar Prasad Upadhyaya Vs. The state of Bihar reported in 1971 CriLJ 1708.

6.Sajjan Singh Vs. The state of Punjab reported in 1964 AIR 464 .

11 C.C.03/2005/I CBI Court/VSP

7.Krishnanand Vs. The State of Madhya Pradesh reported in AIR 1977 SC 796

8.State Vs.Bharat Chandra Roul reported in 1995 CriLJ 2417

9.P.Nallammal Vs. State Rep. by Inspector of Police dated 09.08.1999 of the Hon’ble Supreme Court of India

10.K.Ponnuswamy Vs. State of Tamilnadu by Inspector of Police in Crl. Appeal No.759 of 2001 dated 31.07.2001.

11.State of Tamilnadu Tr Inspector of Police Vs. N.Suresh Rajan and others 2014 AIR SCW 942

X. Defence side arguments:

20.The learned counsel for accused contradicting to the version of the prosecution pleaded that initially a false case was registered against the accused officer vide RC 8(A)/2001, in furtherance of which a false trap was laid against the accused on 15.03.2001 and that the

CBI officials on the same day proceeded to the residence of AO and prepared inventory for all the household articles, seized fixed deposits, share certificates and promissory notes vide Ex.P7 and also cash of Rs.2,43,200/- at office and Rs.1,20,700/- at his residence. It is averred that the FIR in the present case i.e, RC 35(A)/2001 was registered after long gap of more than 1 ½ year from the date of search wherein the disproportionate assets are only shown as

Rs.3,97,218/-, however the charge sheet was filed on 26.07.2004 raising the disproportionate assets to the tune of Rs.24,86,792/- on baseless allegations by showing excess expenditure and ignoring actual income of the AO. The contents of the charges sheet were disputed for clubbing the investment made by the wife of accused and ignoring her income. It is stressed upon the fact that Ex.P50 FIR discloses the savings of the accused officer to the tune of

Rs.2,00,450/- and saving during the check period as Rs.2,95,216/- which are in total Rs.4,95,719/- at the end of the check period, but unfortunately nothing was considered as savings in the charge sheet 12 C.C.03/2005/I CBI Court/VSP filed on 26.07.2004, which was filed, four years after the date of search.

21.The learned counsel for the AO submitted that it was mentioned in the charge sheet that except the ancestral property at

Rajahmundry the AO family did not possess any property. In fact the family of the AO consisted of his father four elder brothers and himself. They sold their agricultural properties at Utchili, Atreyapuram

Mandal, East Godavari District under sale deed No.984, 985 and 986 on 16.08.1975 for Rs.13,000/-, 8,000/-, 23,000/- and 500, out of which

Rs.10,000/- was received by the AO and was intimated to the

Department, depositing the same in Andhra Bank, Kakinada which was renewed from time to time, disclosed as Item No.7 of Statement–A for

Rs.30,459/- and as Item No.6 in Statement-B for Rs.40,617/-, which was not encashed till date. It is also submitted that the father of the

AO being karta of Hindu undivided family sold Ac.1.00cents of agricultural land at Utchili on 26.09.1980 for Rs.18,000/- and the same was also intimated to the Department. The family of the AO was also said to have sold one house at Door No.9-4-26 near Chand Choultry,

Rajahmundry on 07.04.1992 vide document No.2736/92 to one

Y.Lakshmi Ammanna. In pursuance of said sale, the karta of the family consolidated the other amounts and gave Rs.50,000/- to his daughter- in-laws including the wife of the AO as per joint family agreement

dated 07.05.1993, which was also intimated to the Department on

19.05.1993.

22.It is further submitted that the accused performed his sons thread marriage(upanayanam) on 06.05.1995 at Rajahmundry after 13 C.C.03/2005/I CBI Court/VSP obtaining GPF advance, and his son received a formal family gifts totaling Rs.50,000/- which were kept with his wife and intimated to the department. The wife of the accused also used to impart music tuitions and earned Rs.1000/- to Rs.1500/- every month and used to used to give loans to known persons and thereby earned some money.

The stirdhana amounts of the wife of the accused her professional income, amount given by her father-in-law and interest thereon together accrued to an amount of Rs.2,00,000/- as on date of 01.01.1992.

23. In the similar manner it is submitted that the father-in-law of late G.Venkayya was also a retired Panchayat Executive Officer having independent source of income and was a long standing income tax assessee till date of his death on 25.01.2007. It is averred that the father-in-law of the AO after his retirement used to stay at

Visakhapatnam and worked in Sri Venkateswara Swamy temple,

Seethammadhara, Visakhapantam during the period from 1993 to 1999 and also he used to give advise in accounts and documentation to known persons and used to save money and purchased some property at Visakhapatnam. Admitting the discovery of some promissory notes in the name of G.Venkayya and one share certificate in the name of his wife and copy of SB account maintained by him in

Andhra Bank, Visakhapatnam to be found at the residence of the AO.

The accused counsel pleaded that the entire transactions were conducted only by the father-in-law of the accused and by no stretch of imagination tag to the AO.

14 C.C.03/2005/I CBI Court/VSP

24.The learned counsel for the accused reiterated that the charge sheet was filed without any basis and showing excessive expenditure specifically tagging the transactions of the father-in-aw, wife and daughter of the AO. In this context, it is specifically highlighted that the marriage of the daughter of AO was performed on 16.11.1997 at

Visakhapatnam and the same was mentioned in the first page of the charge sheet, however the investigating officer reflected it as if performed during check period by incurring expenses of Rs.95,900/- quite contradictingly. In fact the AO performed the marriage of his daughter by withdrawing GPF amount. It is further submitted that certain balances available with the banks/debtors/investors as on 01.01.1998 i.e, beginning of the check period were not taken as assets in Statement–A and quoted the non inclusion of Item No.5 of

Statement–B in Statement-A vide account No.20810, Andhra Bank,

Seethammadhara, wherein the amount as on 01.01.1998 is

Rs.10,502/-. In the similar the amount of Rs.1,185/- vide account

No.7598, State Bank of India, Seethammadhara, Visakhapatnam was not include. It is submitted that some amounts available in the finance companies like Durga Finance Company, Lakshmi Finance

Company were reflected lesser than the actual and that some balances available with the banks/debtors/investors as on 09.4.2001 at the end of the check period were inflated and shown at higher value without any material.

25. It is further submitted the interest accrued on fixed deposits and other items were not taken in the income during the check period, particularly item Nos.7, 9 and 12 in the Statement-A. The learned counsel for the counsel re-insisted the non inclusion of income of the 15 C.C.03/2005/I CBI Court/VSP wife of the AO while simultaneous inclusion of loans extended by her to others on pronotes as expenditure during the check period. In a similar manner the receipts withdrawn from Unit Trust of India by the wife of the AO were not shown as income during the check period, even though the investment made by her were taken as assets at the beginning of the check period, in brief the withdrawals from UTI i.e., 5 cheques received and credited to SB No.6510 of Vysya Bank as per

Ex.P60, but however only three cheques were received shown as receipts and other two cheques of Rs.25,000/- each were ignored. It is submitted that the fixed deposits made during the check period in the name of wife of the AO were taken as expenditure but the cancellation value of the same was not taken i.e., the Item No.16 and 17 of expenditure for Rs.36,000/- and Rs.50,000/-, but their cancellation and income received as shown in SB A/No.6510 vide Ex.P59 and Ex.P62 were not shown in income to the tune of Rs.36,643/- and Rs.50,894/-.

The version of the accused further discloses that some of the shares purchased during the check period by his wife were shown in expenditure but sale proceeds of the same during the check period were not included in the income particularly Reliance shares,

Cybermate share vide Ex.P32 and also that balances drawn from the bank as on 27.03.2000 were also not included as income.

26.The accused also disputed with the amount of domestic expenditure and contended that the same is shown at excessive rate without any basis, as such after the marriage of his daughter it is only himself and his wife were living and at the maximum their domestic expenditure can be considered as only 25% of net salary which comes

Rs.67,280/-. The learned counsel for accused further submitted that 16 C.C.03/2005/I CBI Court/VSP the accused explained about the availability of cash with him and that the investigating officer simply brushed away the explanation accorded by the accused and seized cash of Rs.3,50,000/- It is the version of the accused that Pw.23 i.e., Mr.K.Anji Babu was conveniently converted as approver by CBI without showing him as an accused only with a malafide intention to secure negative evidence against the accused and that Pw.23 factually, with an intention to purchase the house at Kakinada paid Rs.3,75,000/- to him as advance sale consideration on various dates as mentioned in Ex.P55, and that under the pressure of the CBI willfully spoken falsehood as if Ex.P55 is created.

27.It is also submitted that on 03.03.2001 the accused and his wife entered into an agreement of sale with one Mr.M.S.N.Raju to purchase the house site at Vizianagaram and the wife of the accused since have been sufficient balance in her account maintained with M/s

Durga Finance instructed PW.6 to issue a demand draft in favour of the said M.S.N.Raju for Rs.1,00,000/- as evident under Ex.P20 and handed over the same to him. It is averred that the accused with an intention to pay some more amount to M.S.N.Raju towards part sale consideration, have taken the cash which was given to him by PW.23 under Ex.P55 at his office, that in the mean time the CBI commenced unforeseen ride and seized the cash above mentioned.

28.It is further submitted that some of the movable properties and shares belonging to the third parties were shown as assets at the beginning and the end of check period particularly the Item No.4 and 63 of assets at the beginning of the check period, in fact the same 17 C.C.03/2005/I CBI Court/VSP were standing in the name of one Smt.B.Subbalakshmi and father of the accused and the accused is only the custodian of the documents.

The counsel for the accused also submitted that the prosecution examined PW.31 and falsely marked Ex.P83 without any supporting document to falsify the amount of fee particulars of the son of the accused for perusing his engineering graduation. The defence arguments were concluded with a precise statement that the accused was dragged into this case without any basis, only with an intention to prejudice the mind of the Court to secure conviction in trap case filed by CBI in C.C.20/2001, however the same was ended in acquittal.

Accordingly pleads that there is no rationality between the alleged assets, expenditure and income incorporated by the CBI against him and that the entire case against him lacks merits to yield any conviction under Section 13(2) r/w 13(1)(e) of P.C.Act and prays to acquit him of charges leveled against him by the prosecution.

29.The counsel for the accused relied upon the following set of case laws in support of the defence arguments.

1.P.Satyanarayana Murthy Vs State of Andhra Pradesh, reported in 1992 (4) SCC 39

2.B.T.Nagappa Vs State by Lokayuktha Police in

Crl.A.814/2010 dt.8-8-2013 of the Honourable High Court of

Karnataka

3.K.Goverdhan Vs State of A.P., reported in 2001 (1) ALD (Crl.) 886 (A.P.)

4.D.S.P., Chennai Vs K.Inbasagaran reported in 2006 (1) SCC 420

5.Kedarilal Vs State of MP reported in 2015 (14) SCC 505

6.G.Malliga Versus State, rep.by the Dy.Superintendent of Police reported in 2007(1) MLJ (Cri.) 86

7.Ashok Tshering Bhutia Versus State of Sikkim reported in 2011 (4) SCC 402.

8.Akunuri Haranadha Babu Rao Versus The State Rep. by Inspector of Police, Anti Corruption Bureau, Guntur, Vijayawada Range, Krishna District Through Public Prosecutor High Court of Judicature at Hyderabad reported in 2016 ALT (Cri) 350.

18 C.C.03/2005/I CBI Court/VSP

9.S.Lingam Versus State of A.P reported in CDJ 1998 APHC 020.

10.State Inspector of Police Visakhapatnam Vs. Surya Sankaram Karri reported in 2007 (7) SCC 172

11.State of Tamil Nadu Vs. M.M.Rajendran reported in 1998 (9) SCC 268

12.CBI Vs Ashok Kumar Aggarwal, reported in 2014 (14) SCC 295

13.Mansukhlal Vithaldas Chauhan Vs State of Gujarat, reported in (1997) 7 SCC 622

30.Having considered the detailed arguments on either side this

Court proceeds framing the following points for determination:

XI. The Points for determination are :

1) Whether the prosecution proves beyond all reasonable doubt that the accused being a public servant acquired and possessed in his name and in the name of his wife, children and father-in-law assets to the tune of Rs.24,86,792.80ps as on date 09.04.2001 disproportionate to his known source of income during the check period from 01.01.1998 to 09.04.2001 without any plausible explanation?

2) Whether the sanction order issued by PW.25 is legally valid?

3) Whether the authorization under Section 17 of P.C. Act under Ex.P82 is valid?

4) Whether the prosecution proved the guilt of the accused beyond all reasonable doubt for the offences under Section 13(2) r/w 13(1)(e) of P.C Act ?

XII. POINT No.1:

31.To substantiate the charges under Section 13(2) r/w 13(1)(e) of

Prevention of Corruption Act the following ingredients are to be established by the prosecution.

(1)the accused is a public servant, (2)the nature and extent of the pecuniary resources or property which were found in his possession (3)it must prove the known sources of income of the accused 19 C.C.03/2005/I CBI Court/VSP (4)that such resources or property found in possession of the accused were disproportionate to his known sources of income.

Once the above ingredients are satisfactorily established, the offence of criminal misconduct under Section 13(1)(e) is inferred, unless the accused is able to account for such resources or property.

The law is settled that in case of allegation of disproportionate assets the prosecution has to prove that all the assets of the accused along with the expenditure during the check period exceeds his known sources of income. In this case hand, the specific allegations against the accused are that the accused, Sri M.Subramanyam formerly

Income Tax Officer at Vizianagaram/ Visakhapatnam being public servant found in disproportionate assets to the tune of

Rs.24,86,792.80ps standing in his name and in the names of his wife, children and father-in-law as on 09.04.2001 for which he could not account for. In view of the rival contentions averred by the prosecution and the counsel for the accused in detailed arguments before this

Court and as well as the written arguments submitted, the issues raised contradictingly by both sides were answered by appreciating the evidence adduced on behalf, along with the documentary evidence as follows.

32.Generally disproportionate assets is calculated as [(B-A)+D]-C wherein as already discussed Statement-A reflects the assets in the possession of the accused before the check period, Statement -B is assets in the possession of the accused after the check period,

Statement -C reflects income of the accused during the check period,

Statement -D the expenditure of the accused during the check period.

20 C.C.03/2005/I CBI Court/VSP

Essential difference of A and B reflects the assets required by the accused in the check period which is further added to his expenditure as it also reflect his assets and the result is subtracted from his income and the difference if any is ascertained as disproportionate assets, which the accused has to account for. In application of the above formula initially it is to ascertain exact assets of the accused

before and at the end of the check period as per Statements A and B

so as to calculate the assets acquired during the check period.

Thereafter the exact income and expenditure of the accused is required to be determined. Therefore for brevity the Point No.1 is divided into following sub points.

XIII. Sub points (i to iv) i.Whether the accused possessed assets worth Rs.6,35,936/- as shown in Statement-A at the beginning of the check period i.e., as on 01.01.1998?

ii.Whether the accused possessed assets worth

Rs.14,53,098.80/- as shown in Statement-B at the end of the check period i.e., as on 09.04.2001?

iii. Whether the income of the accused is Rs.6,98,750.07 as shown in Statement-C during the check period i.e., from 01.01.1998 to 09.04.2001?

iv.Whether the expenditure of the accused is Rs.20,33,025.05 as shown in Statement-D during the check period i.e., from 01.01.1998 to 09.04.2001?

21 C.C.03/2005/I CBI Court/VSP

XIV. Sub Point-(i)

Assets at the beginning of the check period Statement -A

i)Assets at the beginning of the check period as per the prosecution were reflected in Statement-A of the charge sheet and the same is extracted below for better appreciation.

STATEMENT - A

Sl.Name of the DocumentRs.Ps No. 1Plot bearing No.160, Pratap Nagar, Kakinada in the6,150-00 name of Sri M.Subramanyam(including stamp duty and Registration charges) purchased on 26.03.77 2House bearing No.8-5-3-3, Pratapnagar (ground26,600-00 floor) on Plot No.160, Pratapnagar, Kakinada, Constructed by Sri M.Subramanyam in 1978 3House bearing No.8-5-3-3, Pratapnagar, Kakinada37,000-00 on Plot No.160, Pratap Nagar, Constructed in 1984 in the name of Sri M.Subramanyam (first floor) 4Plot of 350 sq.yards in S.No.190/5-B and 191/1,8,594-00 Narendrapuram village, Rajanagenam (M), E.G.Dist in the name of Smt.Deekshithulu Subba Laxmi, W/o Deekshithulu Sreerama Murthy Registered sale deed dt.20.10.90 5A plot of 200 sq.yards bearing No.232 in9,009-00 S.No.199/10, 13, 14 and 15 of Dakamarri village, Bheemunipatnam Madnal, Visakhapatnam in the name of Sri M.V.S.S.R.Ravi Kumar, S/o M.Subramanyam–saledeeddated 06.07.1994(including Registration charges and cost plantations) 6KTD No.96/39/159 dt.12.02.96 of Andhra Bank3,815-00 Dabagardens, Visakhapatnam ( in the name of Sri M.Subramanyam) 7KTD No.96/39/90 dt.27.1.96 of M.Subramanyam30,459-20 with Andhra Bank Dabagardens Branch, Visakhapatnam.

8Deposit with Sri GVM Raju on 01-05-1996 by the10,000-00 wife of the accused 22 C.C.03/2005/I CBI Court/VSP 9FD No.061-041133-0515 with HSBC Bank in the25,000-00 name of the wife of Sri M.Subramanyam taken on 04.12.1997 10Deposits in Durga Finance by the W/o Sri91,000-00 M.Subramanyam 01.10.94 of Rs.15,000/- (cash) 12.12.95 of Rs.20,000(cash) 29.02.96 of Rs.35,000/- by cheque No.074811 of Andhra Bank, Seethammadhara and 18.04.1997 of Rs.21,000/- by cheque No.671512 of SBI, Seethammadhara.

11Deposits in Lakshmi Finance by the W/o Sri20,000-00 M.Subramanyam on 4.1.94 12Deposit with Visakha Grammena Bank,16,033-00 Dabagardens, (later transferred to Vizianagaram) in the name of Sri M.Subramanyam taken on 26.4.1994 transferred to Vizianagaram branch on 29-8-98.

13Deposit dt.22.04.1995 of A-1 with Radha Finance,5,000-00 VSKP 14Balance in SB A/c No.2042 of Sri M.Subramanyam20,271-32 with Sri Visakha Grammena Bank, Dabagrdens, Visakhapatnam as on 31.12.97 15Balance in A/c No.8058 with SBI, Sri Venkateswara17,606-00 Metta Branch, Visakhapantam in the name of Sri M.Subramanyam as on 31.12.97 16Balance on SB A/c No.8409 of Indian bank,5,257-00 Maharanipeta in the name of wife of Sri M.Subramanyam 172 Nos. of gold bangles purchased in 1971 weighing1400-00 GMS.24 18 1 Gold Necklace studded with white stones and10,062-00 pendent weighing about 25 Gms purchased in 1996.

191 Gold 3 row chain with Lakshmi coin weighing650-00 about 49 Gms purchased in 1971 201 Gold necklace with pendent weighing about 236,219-00 Gms. Purchased in 1991 211 Gold name plate in the style of Mutya purchased417-00 in 1990 221 gold necklace wg. About 3 ½ tolas purchased in15000-00 1997 231 Gold chain wg. About 2 ½ tolas purchased in10,000-00 1997 241 Gold chain pendent wg. About 1 tola purchased4,000-00 23 C.C.03/2005/I CBI Court/VSP in 1997 251 Gold step chain wg. About 2 ½ tola purchased10,000-00 in 1994 262 Ear studs and two ear tops, purchased in 19965,000-00 wg. About 1 tolam 273 Gold flowers with hair pins purchased in 19962,400-00 28 Various silver articles wg. About 200 Gms2,000-00 purchased in 1996 293 silver small statues of idols wg. About 8 tolas400-00 purchased in 1985 302 small steel almarahs purchased in 19751500-00 311 wooden dressing table purchased in 1985500-00 32 1 cane sofa set with cushion(2+1) purchased in2,000-00 1996.

331 polar ceiling fan purchased in 1990400-00 34One 25’’ Colour T.V. with stand purchased in 1996.22,000-00 351 Wooden dining table with 4 chairs purchased in700-00 1981 36One 3 seater sofa purchased in 1985500-00 37One handing chair purchased in 1996600-00 382 ceiling fans purchased in 19961,000-00 391 wooden T-poy purchased in 197180-00 403 H.P. Gas cylinders purchased in 19851500-00 411 master wall clock purchased in 1986100-00 42 1 wooden double cot with mattress purchased in500-00 1971 431 Godrej almariah purchased in 19958,000-00 441 Aristocrat red colour brief case purchased in1,000-00 1995 45One 24 inches VIP suit case purchased in 19961,000-00 461 Orient ceiling fan purchased in 1971200-00 471 Wooden deewan cot with mattresses purchased 500-00 in 1985 481 triple door big size Videocon refrigerator 9,000-00 purchased in 1994 491 inverter purchased in 19953,000-00 24 C.C.03/2005/I CBI Court/VSP 501 Grinder purchased in 19932,500-00 512 Gas stoves purchased in 1971600-00 52Steel utensils psurhcase from 1971 to 20016,000-00 531 Preethi mixee purchased in 19971,000-00 541 Tata Cordless phone purchased in 19972,000-00 551 Bajaj Chetak scooter A.V.V.5241 purchased in4,000-00 1985 5650 shares in Brook Bond (Hindustan Liver LTd.,)19,900-00 purchased on 09.01.95 by the wife of Sri M.Subramanyam.

57200 shares in Global trust Bank purchased on15,200-00 25.01.95 by the wife of Sri M.Subramanyam 58 100 shares in Andhra Sugars purchased on12,600-00 23.12.95 by the wife of Sri M.Subramanyam and 100 shares in KCP purchased on 09.1.96 59100 shares in Finolex Industries Ltd., purchased on5,800-00 16.02.95 by the wife of Sri M.Subramanyam 60UTI mutual funds in the name of Sri296-00 M.Subramanyam 61200 shares in Nagarjuna Fertilisers and chemicals2,600-00 purchased on 13.12.85 and 12.11.92 by Sri M.Subramanyam 62100 shares in APPLE Finance Ltd., (Apple7,400-00 Industries-Aptech) purchased on 27.01.95 by the wife of Sri M.Subramanyam 63300 shares in LK Pharmaceuticals Pvt., LTd.,30,000-00 purchased on 29.06.93 and 09.07.94 in the name of Sri M.Sitarama Murthy, father of Sri M.Subramanyam 64100 shares in Asia Television NetworK Ltd., in the1,000-00 name of wife of Sri M.Subramanyam 65100 shares in PAN clothing and consolidated co.,2,850-00 Ltd., in the name of the wife of Sri M.Subramanyam 66100 shares in Stilbene Chemicals Ltd., in the name3,820-00 of the wife of Sri M.Subramanyam purchased on 01.01.94 67One Bond in the Industrial Credit & Investment24,399-00 Corporation of India Ltd., in the name of the wife of Sri M.Subramanyam purchased on 28th May, 25 C.C.03/2005/I CBI Court/VSP 1997.

68100 shares in the Industrial Finance Corporation of3,500-00 India Ltd., in the name of Sri M.Subramanyam purchased on 04.07.94 69Investment in UTI by the wife of the Sri19,059-00 M.Subramanyam dated 13.3.94(in cash) 70Investment in UTI by the wife of Sri16,900-00 M.Subramanyam dated 08.01.96(in cash)

Total: 6,35,936.00

33.As per the charge sheet there are 70 items worth Rs.6,35,936/- mentioned under Statement-A as assets at the beginning of the check period by the accused. Except for arithmetic error in calculation, the assets under Statement-A remained undisputed by the accused.

Therefore qua prosecution evidence on record the assets of the accused at the beginning of the check period is concluded as

Rs.6,34,846.52 with correction to the arithmetic error in the charge sheet. However the accused contended the prosecution left over certain items without including the Statement-A.

XV.Additional Items as per the accused not considered by the prosecution in the Statement-A:

34.The accused seriously contended that the investigating officer intentionally omitted six number of assets worth Rs.2,27,637/- to

Statement–A which was gross misleading account of statement and prays to include the following items to the assets of the beginning of the check period.

35.Item No.1: The version of the accused is that as on 01.01.1998 there is balance amount of Rs.10,502/- in SB A/c No.20810 of Andhra 26 C.C.03/2005/I CBI Court/VSP

Bank, Seethammadhara Vizag relating to Smt.M.Lakshmi wife of the accused. It is submitted that the account was transferred to Andhra

Bank, Vizianagaram as A/c No.22271 and the amount as on 09.04.2001 at the end of the check period was shown at Item No.5 of assets at the end of the check period of Rs.5,282/-. It is contended that the opening balance as on 01.01.1998 has to be shown in the assets at the beginning of the check period. It is submitted that the interest of Rs.894/- was also to be shown as income during the check period at Sl.No.16 of Statement-C and submitted that the investigating officer intentionally omitted this value in Statement-A.

The counsel for the accused relied upon the evidence of PW.29 and contents of document under Ex.P63.

36.Accordingly when look into the evidence of the then Assistant

Manager, Andra Bank, Seethammadhara who was examined as Pw.29 it goes to show that on the instructions of the Manager he handed over the statement of joint account standing in the name of

M.Lakhmi and Kurm.Bharathi vide A/c No.20810 opened on 28.12.1994. He further stated that by the end of 31.12.1997 there is a balance of Rs.10,502.20ps in the account with accrued interest of

Rs.894/- and that the account was transferred to Vizianagarm on 10.11.1998. The entire file was marked as Ex.P63. Neither the evidence of Pw.29 nor the contents of Ex.P63 were in dispute by the prosecution. It is the evident from the contents of Ex.P63 and the evidence of PW.29 that there is a balance of Rs.10,502.20ps in the joint account of the wife of the accused and his daughter at Andhra

Bank, of which the interest accrued was reflected at Item No.16 of

Statement-C. The investigation officer did not mention any reason for 27 C.C.03/2005/I CBI Court/VSP excluding the balance amount in Statement–A and only including the interest therein in Statement-C. In absence of any reasonable explanation from the prosecution the above said balance amount of

Rs.10,502.20ps is warranted to be part of Statement-A as asset at the beginning of the check period and accordingly included.

37.Item No.2 : the version of the accused is that as on 01.01.1998 there is balance amount of Rs.1185/- in SB A/c No.7598 of State

Bank of India, Seethammadhara, Vizag relating to Smt.M.Lakshmi wife of the accused and that the accused intentionally omitted the same in Statement-A. The counsel for the accused relied upon the evidence of PW.13 and contents of document under Ex.P34.

Accordingly when look into the evidence of PW.13 the then

Dy.Manager, S.B.I branch, Seethammadhara, it is evident that a balance of Rs.1185/- was lying in the S.B account 7598 in the name of M.Lakshmi wife of the accused as on 31.03.1997 and the said account was transferred to Fort Branch on 13.07.1998 with accumulated interest of Rs.42/- credited to the account. The entire statement of account was marked as Ex.P34. It is evident from the contents of Ex.P34 that as on date of 07.06.1997 there is an opening balance of Rs.1185/- and an amount of Rs.910/- as on February, 1998. In the cross examination of Pw.13 ascertained that the balance stood as Rs.1185/- as on 31.12.1997. Accordingly the said amount can be rightly considered as the asset at the beginning of the check period standing in the name of the wife of the accused.

38.Item No.3: The accused contended that the Item No.B- 23(Statement-B) i.e., One BPL VCD player purchased in 1998 was 28 C.C.03/2005/I CBI Court/VSP actually purchased in the year 1997 for Rs.7,500/- and was falsely shown by the investigating officer as purchased in the year 1998 .

However no evidence was adduced by the accused in this regard besides showing the Item under undisputed list in the written arguments. Hence this Item cannot be added to the Statement-A.

39.Item No.4: The accused contended that the Item No.B- 28(Statement-B) i.e., One Khitan AIR Cooler purchased in 1998 was actually purchased in the year 1996 for Rs.4000/- and was falsely shown by the investigating officer as purchased in the year 1998. In absence of any evidence was adduced by the accused in this regard this Item cannot be added to the Statement-A.

40.Item No.5 : The accused contended that the Item No.B- 41(Statement-B) i.e.,One Vijaya geyser purchased in 1998 was actually purchased in the year 1995 for Rs.4000/- and was falsely shown by the investigating officer as purchased in the year 1998.

The absence of any evidence on part of the accused, the contention raised to add this item in Statement-A is rejected.

41.Item No.6 : The version of the accused is that as per the contents of page 2 of FIR and the evidence of PW.24 and DW.16 an amount of Rs.2,00,450/- was shown as savings of the accused at the beginning of the check period but for the reasons better known the

CBI without any explanation filed charge sheet intentionally omitting to show the savings. Accordingly relying upon the evidence of PW.24 and

DW.16 along with the contents of FIR under Ex.P50 the accused pleads to add an amount of Rs.2,00,450/- to the Statement-A. It is 29 C.C.03/2005/I CBI Court/VSP the evident from the deposition of PW.24 the then Inspector of Police

CBI that he registered FIR, it is Ex.P50 against the accused under

Section 13(2) r/w 13(1)(e) of PC Act. As raised by the counsel for the accused the contents of Ex.P50 FIR categorically shows that the accused officer had an amount of Rs.2,00,450/- towards savings at the starting of the check period and the total savings at the end of the check period is averred as Rs.4,95,719/- and is likely savings during the check period is shown as Rs.2,95,269/-. However the charge sheet reflects the savings of the accused as Nil. It is settled proposition and the FIR is not substantial piece of evidence and can be used only for contradiction or corroboration under specific circumstances. The FIR is the primary information relating to the commission of alleged offence against which the criminal law was set into motion. Based upon the contents of the FIR the investigating officer takes up the investigation and the detailed facts of the alleged offence along with the evidence oral and documentary was filed

before the Court in the form of charge under Section 173 Cr.P.C. There

is no hard and fast rule that the contents of the FIR shall be reflected in the same manner in the charge sheet. In case the accused want to rely upon the contents of the FIR he can, at the least contradict with the informant and any reliance on the contents of the FIR contradicting with the charge sheet shall be proved by leading an independent evidence. In this case on hand, no specific evidence led by the accused to bring on record as his likely savings prior to the check period. Accordingly the amount mentioned in FIR as savings prior to the check period cannot be included under Statement-A.

30 C.C.03/2005/I CBI Court/VSP

42.Conclusion for Statement-A:

In view of the above discussion, an amount of Rs.10,502/- balance as on 01.01.1998 as per Ex.P63 in the bank account standing in the name of wife of accused at Andhra Bank, Seethammadhara and an amount of Rs.1,185/- lying in the account of wife of the accused at

State Bank of India, Seethammadhara branch which were ignored by the investigating agency are added to the Statement-A. Accordingly the total value of Statement-A assets is concluded as

Rs.6,34,846+10,502+1185=6,46,533/- at this point of

discussion.

XVI. Restriction of discussion pertaining to the monitory

value at this stage:

43.It is pertinent to note in a case for disproportionate assets the accused disputes with the disproportionate assets alleged against him under two heads. Firstly the value of the assets and secondly the ownership of the assets as in this case. For the sake of convenience the point as to the value of assets is determined initially preserving the determination of ownership of assets as contradicted by the accused to the later stage. In pursuance of the same this

Court proceeds for determination of the assets acquired during the check period by the accused under Statement-B.

XVII. Sub point (ii) ii).Whether the accused possessed assets worth

Rs.14,53,098.80/- as shown in Statement-B at the end of the check period i.e., as on 09.04.2001?

31 C.C.03/2005/I CBI Court/VSP

44.In this regard when the assets under Statement-B in specific are looked into, there are 101 items in total worth Rs.14,53,098.80ps as per charge sheet. However there is a clerical error in calculation wherein the exact value is Rs.14,70,011/- Out of the said 101 items 60 items were reflected in both statement A and B as follows.

Assets both at the beginning and at the end of the check

period.

SlSl.No.Sl.No. inNature of Asset Amount asAmount as per Noin C.S C.S.per C.SC.S. StatemStatementStatement-B State ent-B–A Rs.Rs. ment -A 1142PlotbearingNo.160,6,1506,150 Pratap Nagar, Kakinada in thenameofSri M.Subramanyam (including stamp duty and Registrationcharges) purchased on 26.03.77 2243House bearing No.8-5-3/3,26,60026,600 Pratapnagar (ground floor) onPlotNo.160, Pratapnagar,Kakinada, ConstructedbySri M.Subramanyam in 1978 3344House bearing No.8-5-3/3,37,00037,000 Pratapnagar, Kakinada on Plot No.160, Pratap Nagar, Constructed in 1984 in the nameofSri M.Subramanyam (first floor) 4445Plot of 350 sq.yards in8,5948,594 S.No.190/5-B and 191/1, Narendrapuramvillage, Rajanagenam (M), E.G.Dist inthenameof Smt.Deekshithulu Subba Laxmi, W/o Deekshithulu SreeramaMurthy Registeredsaledeed dt.20.10.90 5546A plot of 200 sq.yards9,0099,009 32 C.C.03/2005/I CBI Court/VSP bearingNo.232in S.No.199/10, 13, 14 and 15 ofDakamarrivillage, Bheemunipatnam Madnal, Visakhapatnam in the name of Sri M.V.S.S.R.Ravi Kumar.

6647KTDNo.96/39/1593,8153,815 dt.12.02.96 of Andhra BankDabagardens, Visakhapatnam ( in the nameofSri M.Subramanyam) 776KTDNo.96/39/9030,45940,617 dt.27.1.96of M.Subramanyamwith Andhra Bank Dabagardens Branch, Visakhapatnam.

8948FD No.061-041133-051525,00034,619 with HSBC Bank in the name of the wife of Sri M.Subramanyam taken on 04.12.1997 9128DepositwithVisakha16,03320,699 GrammenaBank, Dabagardens,(later transferredto Vizianagaram) in the name of Sri M.Subramanyam takenon26.4.1994 transferredto Vizianagaram branch on 29-8-98.

101349Deposit dt.22.04.1995 of5,0005,000 A-1 with Radha Finance, VSKP 1117502 Nos. of gold bangles14,00014,000 purchasedin1971 weighing Gms 24.5 (wife) 121851 1 Gold Necklace studded10,06210,062 with white stones and pendent weighing about 25 Gms purchased in 1996.

1319521 Gold 3 row chain with650650 Lakshmi coin weighing about 49 Gms purchased in 1971(wife) 33 C.C.03/2005/I CBI Court/VSP 1420531 Gold necklace with6,2196,219 pendent weighing about 23 Gms purchased in 1991(daughter) 1521541 Gold name plate in the417417 style of Mutya purchased in 1990 (accused) 1622551 gold necklace wg. About15,00015,000 3 ½ tolas purchased in 1997 about 38grs(wife) 1723561 Gold chain wg. About 210,00010,000 ½ tolas purchased in 1997 1824571 Gold chain pendent wg.4,0004,000 About 1 tola purchased in 1997. accused 1925581 Gold step chain wg.10,00010,000 About 2 ½ tola purchased in199429grms (daughter) 2026592 Ear studs and two ear5,0005,000 tops, purchased in 1996 wg. About 1 tola about 11 grms (wife) 2127603 Gold flowers with hair2,4002,400 pins purchased in 1996 (wife) 222861 Various silver articles wg.2,0002,000 About 200 Gms purchased in 1996 2329623 silver small statues of400400 idols wg. About 8 tolas purchased in 1985 2430632 small steel almarahs15001500 purchased in 1975 2531641 wooden dressing table500500-00 purchased in 1985 263265 1 cane sofa set with2,0002,000-00 cushion(2+1) purchased in 1996.

2733661 polar ceiling fan400400-00 purchased in 1990 283467One 25’’ Colour T.V. with2200022,000-00 stand purchased in 1996.

2935681 Wooden dining table with700700-00 34 C.C.03/2005/I CBI Court/VSP 4 chairs purchased in 1981 303669One3seatersofa500500-00 purchased in 1985 313770Onehandingchair600600-00 purchased in 1996 3238712 ceiling fans purchased in10001,000-00 1996 3339721 wooden T-poy purchased8080-00 in 1971 3440733 H.P. Gas cylinders15001500-00 purchased in 1985 3541741 master wall clock100100-00 purchased in 1986 364275 1 wooden double cot with500500-00 mattress purchased in 1971 3743761Godrejalmariah80008,000-00 purchased in 1995 3844771 Aristocrat red colour10001,000-00 brief case purchased in 1995 394578One 24 inches VIP suit10001,000-00 case purchased in 1996 4046791 Orient ceiling fan200200-00 purchased in 1971 4147801 Wooden deewan cot with500500-00 mattresses purchased in 1985 4248811 triple door big size 9,0009,000-00 Videocon refrigerator purchased in 1994 4349821 inverter purchased in 3,0003,000-00 1995 4450831 Grinder purchased in 2,5002,500-00 1993 4551842 Gas stoves purchased in600600-00 1971 465285Steel utensils psurhcase6,0006,000-00 from 1971 to 2001 4753861 Preethi mixee purchased1,0001,000-00 in 1997 35 C.C.03/2005/I CBI Court/VSP 4854871 Tata Cordless phone2,0002,000-00 purchased in 1997 4955881 Bajaj Chetak scooter4,0004,000-00 A.V.V.5241 purchased in 1985 50568950 shares in Brook Bond19,90019,900-00 (Hindustan Liver LTd.,) purchased on 09.01.95 by thewifeofSri M.Subramanyam.

515790200 shares in Global trust15,20015,200-00 Bankpurchasedon 25.01.95 by the wife of Sri M.Subramanyam 525891 100 shares in Andhra12,60012,600-00 Sugars purchased on 23.12.95 by the wife of Sri M.Subramanyam and 100 shares in KCP purchased on 09.1.96 536092UTI mutual funds in the296296-00 nameofSri M.Subramanyam 546294100 shares in APPLE7,4007,400-00 FinanceLtd.,(Apple Industries-Aptech) purchased on 27.01.95 by thewifeofSri M.Subramanyam 556395300sharesinLK30,00030,000-00 Pharmaceuticals Pvt., LTd., purchased on 29.06.93 and 09.07.94 in the name of Sri M.Sitarama Murthy, fatherofSri M.Subramanyam 566496100 shares in Asia1,0001,000-00 Television NetworK Ltd., in the name of wife of Sri M.Subramanyam 576597100 shares in PAN clothing2,8502,850-00 and consolidated co., Ltd., in the name of the wife of Sri M.Subramanyam 36 C.C.03/2005/I CBI Court/VSP 586698100 shares in Stilbene3,8203,820-00 Chemicals Ltd., in the name of the wife of Sri M.Subramanyam purchased on 01.01.94 596799OneBondinthe24,39924,399-00 IndustrialCredit& Investment Corporation of India Ltd., in the name of thewifeofSri M.Subramanyam purchased on 28th May, 1997.

6068100100 shares in the3,5003,500-00 IndustrialFinance Corporation of India Ltd., in thenameofSri M.Subramanyam purchased on 04.07.94

Total: 4,26,353 4,50,796.00

45.As per the written arguments 60 items were reflected in both statements s A and B, wherein the value of 60 items in Statement A is

Rs.4,26,353 and Statement B is Rs.4,50,796/-. The difference is

Rs.24,443/-. There is an acceleration is with regard to the Item No.7, 9 and 12 of Statement-A corresponding to Item Nos.6,48 and 8 of

Statement-B. Precisely Item No.7 of Statement-A is KTD No.96/39/90

dated 27.01.1996 in the name of M.Subramanyam with the Andhra

Bank, Dabagardens Branch, Visakhapatnam. As per the accused this item was not encashed either at the beginning of the check period or during the check period and no income is received during the check period for this fixed deposit. Hence the value as on beginning of the check period is sought to be taken at the end of the check period in similar time. In this regard the prosecution vide its additional written statement also assents, that the value does not increase or decrease.

Hence the value of Item No.7 of Statement -A for Rs.30,459/- 37 C.C.03/2005/I CBI Court/VSP remains same in the Statement -B at Item No.6. In the same manner

Item No.9 is fixed deposit No.061-041133-0515 with HSBC Bank in the name of wife of accused taken on 04.12.1997 and Item No.12 of

Statement -A is deposit with Visakha Grameena Bank, Dabagardens in the name of accused taken on 26.04.1994 transferred to Vizinagaram branch on 09.08.1998 for value of Rs.25,000 and 16,033. Value of these FDs was also accelerated in Statement-B to the extent of

Rs.34,619 and 20,699/- in Statement B as Item No.48 and 8. Though these items were undisputed the argument of the accused is that no income is received from these fixed deposit during the check period and their value should be considered as same at the end of the check period also. In this regard the prosecution vide its additional written statement also assents, that the value does not increase or decrease. Therefore the accused is entitled for reduction of difference of value of Rs.24,443/- in Statement A and B, for all the three from Statement-B.

46.There are 23 items which are not disputed by the accused either in terms of value or ownership. The 23 items worth Rs.7,51,917/- are as follows:

Sl.Item No. asDescription of the item Rs.Ps No.per charge sheet in Statement- B 11Balance in S.B A/c No.5015 of Sri2,705-00 M.Subramanyam as on 09.04.2001 with Visakha Grammena Bank, Vizianagaram.

22Balance in S.B A/c No.20232 of Sri16,750-00 M.Subramanyam with Andhra Bank,GandhiNagarBranch, Kakinada as on 09.04.2001.

38 C.C.03/2005/I CBI Court/VSP 33Balance in S.B A/c No.11718 of10,712-56 Sri M.Subramanyam with SBI Main Branch, Vizianagaram as on 09.04.2001 49Term deposit No.739871 dt.6-1-10,000-00 2001 of Sri Visakha Gramena Bank in the name of Sri M.Subramanyam 512112 Nos of Indira Vikas Patras of2,80,000-00 face value of Rs.2,500/- each taken on 09.04.99, 12.04.99, 23.04.99, 24.04.99, and 29.05.99 613Cash from residential premises of1,20,700-00 Sri M.Subramanyam at Vizianagarm 714Cash from the office of Sri2,43,000-00 M.Subramanyam 822 3 plastic chairs purchased in 1998300-00 9231 BPL VCD player purchased in7,500-00 1998 102420 ACD cassettes and 40 cassettes2,000-00 purchased in 1998-2001 11251 Rakshak Stabiliser purchased600-00 in2000 12266 video cassettes purchased in600-00 1998-2001 132760 Audio cassettes purchased1,800-00 1998-2001 14281 Kaitan air cooler purchased in4,000-00 1998 15291 samsung A/c Machine 1 tonne20,000-00 with Unit stab stabilizer purchased in 2000(as declared in 1 to 6 statements) 163020 sarees purchased in 1990 to15,000-00 2001 173110 pairs of shirts and Trousers5,000-00 purchased in 1995 to 2001 18373 plastic chairs purchased in 1998300-00 193815 Nos. of sarees purchased from1,500-00 1990 to 2001 20391 iron folding cot purchased in600-00 1998 39 C.C.03/2005/I CBI Court/VSP 21401 acqua flow water filter purchased3,500-00 in 1999 22411 Vijay Geyser purchased in 19984,000-00 2393200 shares in Nagarjuna Fertilisers1,350-00 and Chemicals purchased on 13.12.85 and 12.11.92 by Sri M.Subramanyam

Total: 7,51,917.00

47.Further there are 5 items worth Rs.89,180/- contended to be standing in the name of his wife Smt.M.Lakshmi and one item worth

Rs.1,00,000/- contended to be standing in the name of his father-in- law G.Venkayya by the accused. Irrespective of the ownership claim the values of these 6 assets were also not disputed by the accused.

The table of the above mentioned items were extracted below.

Sl.No.Item No. asDescription of the item Rs.Ps per charge sheet in Statement- B 244Balance in SBV A/c of the wife of2,836-00 Sri M.Subramanyam as on 9.4.2001 255Balance in A/c No.22271 of Smt.5,282-00 M.Lakshmi and M.Bharathi wife Vizianagaram, Andhra Bank 267KTD No.2000/532 dt.14.10.2000 in35,000-00 the name of wife of Sri M.Subramanyam with Andhra Bank, Vizianagaram 2710Deposits with Durga Finance by41,000-00 the W/o Sri M.Subramanyam 2811Deposits with Lakshmi Finance on5,000-00 04.01.94 by the wife of Sri M.Subramanyam

Total: 89,118.00 40 C.C.03/2005/I CBI Court/VSP

48.Excluding the above mentioned 60+29(89) items there are 12 items disputed by the accused with regard to their value in Statement-B. These items includes Item Nos.15 to 21, Item Nos.32 to 36 of Statement-B extracted below

Sl.No.Item No. asDescriptionValue per Statement-B 1156 gold bangles wg.about 22,555-00 68grms purchased in 1999

2.16(wife)2 Nos. of gold bangles11,609-00 1999studded with green stones wg.About35Gms purchased in 1999.

3171 gold necklace studded9,816-00 with green stones and pendent wg. About 30 gms. Purchased in 2000 4181 Gold bracelet wg. about 82,524-00 Gms purchased in 1998 5191 diamond gold ring1,577-00 purchased in 1998 wg about 5 Gms 6201 gold ring studded with818-00 green stones purchased in 2000 wg. About 2.50 gms 7212 Nos. of gold ear studs with2,780-00 stones purchased in 2000 wg. About 8.50gms 8321 small bracelet wg. About1,500-00 4 Gms purchased in 1998 9331 gold chain and beads5,000-00 chain with locket wg. About 1 tula purchased in 2000 1034(daughter)2 small gold anklets10,000-00 weighing about 2 tolas 2001 purchased in 2001 1135(daughter)2 small gold bangles wg.5,000-00 About 1 tola purchased in 2001 2001 1236(wife)2 small ear rings. 2 small5,000-00 finger rings wg. About 1 ½ 1999 tolas purchased in 1999 41 C.C.03/2005/I CBI Court/VSP

49.The AO contends that the Item Nos.34 and 35 of Statement –B worth Rs.15,000/- belongs to his daughter and Item No.36 and 16 of

Statement-B worth Rs.16,609/- belongs to his wife. However there is no dispute with regard to the value of the assets. The accused completely disputes with gold items of value Rs.46,570/- mentioned at

Item Nos.32,18,19,15,33,17,20 and 21 in the statement-B contending that the said Items are purchased prior to the check period.

Admittedly the prosecution did not adduce any evidence to show that the above said gold items were purchased by the accused during the check period neither the accused adduced any evidence on that point. However the learned counsel for the accused relied upon the

Judgment of Hon’ble High Court of Andhra Pradesh between

G.V.S.Lingam Vs. State reported in 1999 (1) ALD 413. The learned counsel submitted that in view of the principle laid down in the above case law whenever there is a dispute with regard to the year of acquisition to gold, the gold items have to be spread over the entire service of the accused and it has to be divided by the average value of the gold by following gold rates in respect to years. However the close perusal of the citation referred by the learned counsel for accused, the rule provision slightly defers wherein in case of ambiguity with regard to the date of acquisition of the gold, it is presumed that the gold is acquired by the accused now and then during the span of check period and was valued accordingly as per the gold rate in the market in the corresponding years. The relevant paragraph was extracted below :

“ In this case, working out the value of the assets (gold) on the basis of the market value as on the date of search would imply that it is presumed that the said 42 C.C.03/2005/I CBI Court/VSP assets were acquired on the date of search or in the vicinity of that date. In the absence of any evidence as to the date or the period of acquisition of such assets, the question is what would be the date or period which could be ascribed for the acquisition of those assets. It is a complex question which is not easy to answer. But any rate the assumption that they were acquired on the date of check does not appear justified. Considering the circumstance that in rural Indians in general and people belonging to Vysya Community in particular are known to be fond of gold and assuming that the accused has had resources throughout the check period, it appears more reasonable to presume that the said gold might have been acquired periodically every now and then if not in every year proportionately. Thus, in the absence of any evidence as to the period during which the gold was acquired and considering the above circumstances, it appears more reasonable to presume that the gold under item No.18 of the Annexure-C might have been acquired periodically every now and then. If it is assumed that gold might have been acquired proportionately in every year throughout the period of check, the value of the gold based on the market value prevailing in the relevant years would come to

Rs.3,40,454-72 ps. (this work out is shown in the calculation sheet furnished on behalf of the accused wilh notice to the learned Addl. Standing Counsel and the same has not been disputed). Thus, the value of the gold articles under Item No.18 of Annexure would be

Rs.3,40,454-72 ps. Thus the value of the gold assets 43 C.C.03/2005/I CBI Court/VSP would stand reduced by Rs.5,09,170-08 ps (Rs.8,39,625-00 - 3,30,454-00 - 5,09,170-08)”.

50.In the view of the principles laid by the above case law the total gold under dispute by the accused including the gold alleged to be belongs to his wife and daughter comes to 224grams. The check period is between 01.01.1998 to 09.04.2001 i.e., 4 years. The total weight of the gold when divided by four, the possible amount of gold purchased during the each year between 1998 to 2001 is 56grams.

As per the particulars of the market rates of the gold and silver for wealth tax purposes based upon the Bombay Bullion Association

Limited statistics, the ornamental value of 24character gold for the year 1998 to 2001 is 370, 388, 401.50, 384 rupees per gram.

According to the said market value the value of gold purchased in the year 1998 to 2001 is Rs.20,720+21,728+22,484+21,504 totaling

Rs.86,436/-. However the market value data produced by the accused does not show any reliable source or issuing authority and is only a

Photostat copy as to the quotation reported in Financial Express ,

Mumbai Edition during the corresponding years. More specifically the value as per the said data exceeds the value fixed by the investigating officer. Accordingly, this Court is of the opinion that it is reasonable to calculate the value of the gold ornaments mentioned in the statement A and B as mentioned in the inventory in absence of any evidence in contrary.

51.Conclusion :

As already discussed above, the prime contention of the accused officer is that the financial transactions of his family members i.e., his 44 C.C.03/2005/I CBI Court/VSP wife, father-in-law and daughter were attributed to him by the investigating officer conveniently to incriminate against him. The discussion with regard to the ownership of the assets whether they belong to the accused or by his family members is reserved for discussion at the later stage consolidately for statements A,B,C and

D and at present the discussion is limited with regard only with the disputed value of the assets. Accordingly the value of the assets under

Statement-B on monitory terms remains same with deduction of

Rs.24,444/- in view of revised values of Item Nos.6,8,48 of

Statement-B i.e., Rs.14,70,011-24,444=14,45,567/- at this point.

XVIII. Sub point (iii) iii).Whether the income of the accused is Rs.6,98,750.07 as

shown in Statement-C during the check period i.e., from

01.01.1998 to 09.04.2001?

52. Conventionally Statement-C in disproportionate assets case reflects the total income of the accused during the check period. As per the charge sheet the total income of the accused during the check period is Rs.6,98,750.07ps under 40 items. Admittedly there is a calculation error where the actual total value is Rs.6,98,752.07ps.

The undisputed items of the accused as per the written arguments includes 16items amounting to Rs.2,21,956 extracted below :

INCOME DURING THE CHECK PERIOD(STATEMENT –C)

Undisputed items of Accused

Sl.Item No.asDescription of the item Name of theRs.Ps NperDocument o.statement- C 11Receipt of hand loan from late20,000-00 K.Satyanarayana, Retd., ITO and Smt.K.RajaRatnam,W/olate 45 C.C.03/2005/I CBI Court/VSP

K.Satyanarayana taken on 20.11.98 to SriM.SubramanyambyDD Nos.973910dt.18-11-98,for Rs.5,000/- of SBI, Seethammadhara Branch, 971490 dt.18-11-98 for Rs.2,000/- of SBI, Port Branch, 638650 dt.18-11-98 for Rs.13,000/- paid by Stm.K.RajaRatnamW/oSri K.Satyanarayana 22Receiptofhandloanfrom10,000-00 M.V.Narasimha Murthy, Retd., AO Central Excise Department (Brother of accused ) taken on 20.11.98 to Sri M.Subramanyam in cash 34D.A arrears paid in May, 98, Sept, 98,8,035-00 April, 99, September, 99, April, 2000, September, 2000, April 2001 and from January,1998 to March, 1998 to Sri M.Subramanyam.

45GPF part final (taken on 15.11.98) by50,000-00 Sri M.Subramanyam.

56Fifty Pay Commission arrears 2nd10,256-00 installment paid on in May, 1998 to Sri M.Subramanyam.

67Interest on Bank A/c No.SB 5015 of Sri1,228-00 M.Subramanyam with Sri Visakha Grammena Bank, Vizianagaram 78Interest on SB A/c No.20232 of Sri1,123-00 M.Subramanyam with Andhra Bank, Gandhi Nagar Branch, Kakinada, 89Interest on SB A/c No.11718 of A-12,180-00 with S.B.I, Main Branch, Vizianagaram ason09.04.2001ofSri M.Subramanyam 910Interest on SB A/c No.2042 of Sri660-00 M.Subramanyam with Sri Visakha GrameenaBank,Dabagardens, Visakhapatnam 1017Interest on SB A/c No.8058 of SBI,116-00 VenkateswaraMettabranch, Visakhapatnam in the name of Sri M.Subramanyam 1123Dividend on the shares of Nagarjuna960-00 Fertilizers and Chemicals of Sri M.Subramanyam (Rs.360,400 and Rs.200 credited on 12.11.98, 3.11.99 and 17.11.2000(Rs.360+400+200) 46 C.C.03/2005/I CBI Court/VSP 1227Return of hand loan by Sri P.K.Satya4,000-00 Raju, Retd., ITO, credited on 17-12-98 to A/c No.5015 of Sri M.Subramanyam maintainedwiththeVisakha Grammena Bank, Vizianagaram (DD No.11/TT -0216738 dt.8-12-98) 1328 Rental income from House No.8-5-3-3,1,01,000-00 Pratap Nagar, Kakinada of Sri M.Subramanyam (from 1-1-98 to June, 99, credited to A/c No.5015 of Visakha Grammena Bank, Vizianagaram and from July, 99 to April, 2001 to A/c No.20232ofAndhraBank, Gandhinagar branch Kakinada) 1429Refund from Jodiac Resorts Private9,630-00 Ltd., Visakhapatnam on 12-12-2000 in cash to Sri M.Subramanyam (invested by cheques for Rs.4,000/-, Rs.4,000/- and Rs.1635/-) 1537Dividend on 100 shares on Industrial400-00 Finance Corporation of India of Sri M.Subramanyam (Rs.150+Rs.150+Rs,100 credited on 17.7.98, 12.9.98 and 3.11.99 to SB A/c No.2042 of Sri M.Subramanyam maintainedwithSriVisakha GrammenaBank,Dabagardens, Visakhapatnam) 1638Income Tax refunds (Rs.582/- 286/-2,368-00 and 1500/- credited on 1.6.99, 23.12.99 and 5.1.2000 to SB account No.11718 of SB, Vizianagaram of Sri M.Subramanyam

Total: 2,21,956.00

53.The undisputed income alleged to be relating to the wife of the accused as per the written arguments discloses 16 items amounting to Rs.94,961/- extracted below :

Undisputed items in the name of wife of accused as claimed by the accused

Sl.Item No.Description of the item Rs.Ps No.as per charge sheet 47 C.C.03/2005/I CBI Court/VSP 1711 Interest on SB A/c No.8409 of Indian118-00 Bank,MaharanipetaBranch Visakhapatnam of the wife of Sri M.Subramanyam 1812Interest on SB A/c No.7806 of the wife461-00 of Sri M.Subramanyam maintained with Indian Bank, Vizianagaram 1913Interest on SB A/c No.6510 of the wife236-00 of Sri M.Subramanyam with Vysya Bank Ltd., Vizianagaram 2014Interest on SB A/c No.22271 of328-83 Smt.M.Lakshmi and M.Bharathi wife and daughter of Sri M.Subramanyam respectively from the date of transfer from Seethammadhara branch on 4- 11-98 to the date of closure i.e., 21-4- 2001.

2115Interest on SB A/c No.7598 of42-00 Smt.M.LakshmiW/oSri M.SubramanyamwithSBI, Seethammadharabranch, Visakhapatnam from 1-1-98 to its transfer to Vizianagaram branch 13-7- 98.

2216Interest on SB A/ No.20810 in the894-00 name M.Lakshmi and M.Bharathi wife and daughter of Sri M.Subramanyam with Andhra Bank Seethammadhara Branch, Visakhapatnam 2319 Dividend on 100 shares of Finolex275-00 Industries Ltd., of the wife of Sri M.Subramanyam 2521Dividend on the shares of M/s The1,661-00 Andhra Sugars Ltd., of the wife of Sri M.Subramanyam 2622Dividend on Global Trust Bank Ltd.,1,200-00 shares of the wife of Sri M.Subramanyam 2723Dividend on shares of Nagarjuna960-00 Fertilizers 2824Dividend on the shares of Apple120-00 FinanceLtd.,oftheApple Industries/AptechwifeofSri M.Subramanyam 2925Dividend on KCP shares of the wife of125-00 Sri M.Subramanyam 48 C.C.03/2005/I CBI Court/VSP 3026Withdrawals from Lakshmi Finance45,000-00 Co., on 15.04.98, 10.08.99 and 16.5.2000 by the wife of Sri M.Subramanyam(Rs.15,000 each) 3130Return of loan by Smt.Madhavi Latha,10,000-00 W/o Sri C.Raja on 16.2.98 to Sri M.Subramanyamthecheque No.A/573-589301 dt.13-2-98 of SBI, Dondaparthi credited to A/c No.20810 of Andhra Bank, Seethammadhara Branch of the W/o Sri M.Subramanyam 3231Return of Deposit from M/s10,000-00 Chakravathi and Co., on 18.3.98 credited on 20.3.98 to the A/c No.20810oftheW/oSri M.Subramanyam 3332Return of Deposit from DSS Narayan10,471-00 Raju of Vizianagaram on 14.8.2000 to the W/o Sri M.Subramanyam 3433Sale of 100 shares of Copran by DSS13,650-00 Narayana Raju of the w/o Sri M.Subramanyam

Total: 94,961-00

54.Accordingly it is pertinent that the value of the item No.1 to 10,11,12,13,14,15,16,17,19,21,22,23,24,25,26,27,28,30,31, 32 and 33 is undisputed and remains same.

55. Disputed items by the accused in Statement –C

The following are the items disputed by the accused.

Sl.No.Item No.Name of the DocumentRs.Ps as per charge sheet 353Net Salary from 01.01.98 to2,70,374-00 09.04.2001 of Sri M.Subramanyam 3618Interest on Durga Finance Scheme3,600-00 credited on 2.11.98 to SB A/c No.5015 of A-1 maintained with the VisakhaGrammenaBank, Vizianagaram 49 C.C.03/2005/I CBI Court/VSP

Total: 2,73,974.00

56.The accused deferred with the value of Item No.3 and Item

No.18 of Statement–C wherein the Item No.3 is the Net salary of the accused and Item No.18 is interest on Durga Finance Scheme credited on 02.11.1998 to SBI A/c No.5015 of accused maintained with Visakha

Grameena Bank, Vizianagaram. The particulars of the these items in detailed.

57.Item No.18 : As per the prosecution the net salary of the accused from 01.01.1998 to 09.04.2001 is Rs.2,70,374/-. The accused claims his net salary during the check period as Rs.2,76,897/-. The prosecution in order to prove the salary of the accused examined

PW.27 who worked as Income Tax Officer, Vizianagaram from 2001 to 2004. PW.27 deposed that he furnished the pay particulars of the accused to the Additional Commissioner, Visakhapatnam for the period from 01-01-1998 to 09-09-2001 in two spells, according to which the gross pay was Rs.4,33,141/- and the net salary was Rs.2,71,760/-. The file consisting of those pay particulars has been marked as Ex.P57. In the cross examination it was elicited that the total gross salary paid to the accused from January, 1998 to March, 2001 was Rs.4,50,739/- and net salary paid was Rs.2,89,358/-. PW.27 also disclosed that an amount of Rs.28,810/- was paid to the accused as travelling allowances during the period from 12.3.1999 to 16.6.2000 which is not the part of gross salary. He admitted that he stated before investigating officer, that the accused was paid net amount of Rs.2,70,374/- as salary along with Rs.8,035/- as DA arrears, Rs.50,000/- GPF part final withdrawal 50 C.C.03/2005/I CBI Court/VSP and Rs.10,256/- as 5th pay commission 2nd installments for the above period.

58.The contention of the accused is that the salary of the accused for the month of March, 1998 was not reflected in Ex.P57 and net salary for the month of March, 1998 which comes to Rs.6,523/- is to be added to the salary of the accused. In the cross examination of

PW.27 it was clearly admitted that the salary particulars of March, 1998 were not mentioned in Ex.P57. The prosecution in the additional written arguments reported no objection for adding the March salary of Rs.6,523/- which was drawn on the first working day of April.

Further even considering the average of the annual net income for 12 months as per Ex.P76 marked by the prosecution and remained undisputed, there is a deprecation of value of net income when compare to the pay particulars under Ex.P57.Therefore, the accused is rightly entitled for addition of net salary for the month of March, 1998 i.e., Rs.6,523/- for item No.3 of Statement-C. It is also pertinent that as per charge sheet the net salary of the accused at Item No.3 of Statement –C is shown Rs.2,70,374/- however the evidence of

PW.27 goes to show that the net salary of the accused from 01.01.1998 to March, 2012 was Rs.2,71,760/- . The sum of net salary as per Ex.P57 is also Rs.2,71,760/-. Accordingly by adding the net salary for the month of March, 1998 i.e., Rs.6,523/- to Rs.2,71,760/- the total net income of the accused from 01.01.1998 to 09.4.2001 goes to Rs.2,78,283/-.

59.Item No.18: As per the investigating agency, an amount of

Rs.3,600/- received by the accused as interest on Durga Finance 51 C.C.03/2005/I CBI Court/VSP

Scheme is shown as Item No.18 of Statement –C. The contention of the accused is that it is actually Rs.14,000/- received by him along with interest from Durga Finance Scheme which is about Rs.13,600/- after deduction of TDS amount of Rs.400/-. In this regard the prosecution got examined PW.6 M.Venkateswarlu the Managing Partner of Durga Finance as well as Sri Lakshmi Finance Co., Visakhapatnam, which subsequently stopped functioning in the year 2002. As far as

Item No.18 of Statement–C is considered his evidence in chief does not disclose any substantial statement.

60.However in the cross examination PW.6 stated admitted that the accused paid him Rs.10,000/- by way of cheque dated 02.09.1995 drawn on Visakha Grameena Bank, Dabagardens, Visakhapatnam and this amount was repaid by him to the accused with interest of

Rs.4,000/-. He also stated that out of the interest amount of

Rs.4,000/- he repaid in cash a sum of Rs.3,600/- retaining Rs.400/- towards TDS and issued Form-16A the Photostat copy of which was marked as Ex.D1.

61.The witness was recalled subsequently for further cross examined by the accused on 21.11.2012, wherein he stated that he paid Rs.13,600/- after deduction TDS amount of Rs.400/- to the accused on 31.08.1998 as covered under Ex.D1. The close perusal of

Ex.D1 which is the Photostat copy of Form-16A goes to show that an amount of Rs.400/- was deducted from the amount of Rs.4,000/- credited to the accused on 31.08.1998 after deducting TDS amount of Rs.400/- vide challan No.0021 at Syndicate Bank, Dabagardens,

Visakhapatnam. There is no whisper about the transaction of 52 C.C.03/2005/I CBI Court/VSP crediting total amount of Rs.13,600/- including original deposit to the accused on 31.08.1998 in Ex.D1. Even the contents of Ex.P76 the income tax returns of the accused for the assessment year 1999-2000 i.e., for financial year 1998-1999, also discloses about Rs.400/- as tax collected at source. Though the interest from M/s Durga Finance

Scheme is reflected as Rs.4,000/- including TDS as other source of income, it does not help the accused to bring on record receiving the

additional amount of Rs.10,000/- deposited with Durga Finance

Scheme.

62.It is pertinent from the evidence of PW.6 that the deposit of

Rs.10,000/- was made by the accused in Durga Finance Scheme prior to the check period i.e., 02.09.1995 by way of cheque. Admittedly this amount was not shown in Statement-A as asset at the beginning of the check period. The accused did not raise any objection initially to add the deposit amount of Rs.10,000/- under Statement–A. In the written arguments the learned counsel for the accused appraised that the interest from Durga Finance Scheme was credited on 02.11.1998 to SBI A/c no.5015 of accused maintained with Visakha Grameena

Bank, Vizianagaram. In this regard it is important to look into the documents marked by PW.1 G.Gopalakrishna Murthy, the then

Manager, Visakha Grammena Bank, Vizianagaram, particularly Ex.P1 which is statement of A/c SB 5015 of the accused at Visakha

Grammena Bank, Vizianagaram. It discloses about the deposit of cheque for Rs.3,600/- however does not reflect any transaction of crediting deposit of Rs.10,000/- from M/s Durga Finance. PW.6 did not disclose in his evidence whether he repaid the amount in cash or by way of cheque. Accordingly the mere oral evidence of PW.6 merely 53 C.C.03/2005/I CBI Court/VSP an admission in cross examination does not itself constitute sufficient evidence of proof as to receiving of deposit of Rs.10,000/- by the accused along with the interest of Rs.3,600/- on 02.11.1998. Hence the accused is not entitled any inclination in the value of income at

Item No. 18 of Statement-C .

63.Disputed Items in the monetory terms, alleged to be the income on the wife of the accused are as follows:

Sl.No.Item No.Description of the item Rs.Ps as per charge sheet 3634Realisation of Unit 64 by the wife of14,166-00 Sri M.Subramanyam and credited to A/c No.6510 of the Vysya Bank Ltd., on 7.3.2000 3735Realisation of Unit 64 by the wife of2,754-00 Sri M.Subramanyam and credited to A/c No.6510 of the Vysya Bank Ltd., on 7.3.2000 3836Realisation of Unit 64 by the wife of6,439-00 Sri M.Subramanyam and credited to A/c No.6510 of the Vysya Bank Ltd., on 06.04.2000 3939Loan repayment by Sri G.V.N.Raju4,500-00 S/o late G.S.Raju, Proprietor, Visakha Securities, Visakhapatnam on 16-7-2000 4040Withdrawals from Durga Finance of80,000-00 Rs.10,000/- on 8-6-99, Rs.15,000/- each on4-11-99, 5-11-99, 6-11-99, 8-11-99, Rs.10,000/- on 31-7- 2000(the amount of Rs.10,000/- on 8-6-99 was paid by DD No.09-27240 of Bank of Baroda, Asilmetta branch, The remaining were in cash

Total: 1,07,859.07 54 C.C.03/2005/I CBI Court/VSP

64.Item Nos.34,35 and 36:

The realization of Unit 64 by the wife of accused and credited to her A/c No.6510 maintained with Vysya Bank Limited on different dates was shown as Rs.2,574/-, Rs.14,166, Rs.2,754/- and Rs.6,439/- at item Nos.34,35 and 36 of Statement-C by the investigating agency.

The contention of the accused is that all these UTI items were credited to the account of the wife of the accused vide five cheques in her account i.e., four cheques on 25.02.2000 and one cheque on 23.03.2000 for total amount of Rs.73,360/-. It is argued that the investigating agency conveniently omitted two cheques for

Rs.25,000/- each and decreased the total value of Item Nos.34,35 and 36 by Rs.50,000/- and accordingly prays for addition of Rs.50,000/- to the total amount of Rs.23,359/-.

65.In this regard the prosecution did not choose to examine any witness, however the accused got examined DW.5 P.Santha Ram the

Regional Manager, UTIITSL, Dwarakanagar, Visakhapatnam who was authorized to give evidence under Ex.X1 authorization letter. The evidence of DW.5 goes to show that the wife of the accused

Smt.Lakshmi was possessing US 64 scheme units and towards the said units the Unit Trust of India paid on different dates by way of cheques that was on 25.02.2000 a sum of Rs.52,754.58ps(three cheques), on 25.02.2000 Rs.14,166.60ps and on 23.03.2000

Rs.6,439.46ps and all the payments in total for sum of

Rs.73,360.64ps. The letter dated 22.02.2013 containing the particulars of the above payment was marked as Ex.X2. DW.5 also stated that the computer generated letter dated 22.12.2012 55 C.C.03/2005/I CBI Court/VSP mentioned on Ex.X2 was sent to Smt.M.Lakshmi and the same is marked as Ex.D25. He further asserted that the cheques covered under Ex.X2 were honored and encashed by Smt.Lakshmi. The prosecution did not choose to cross examine the witness and accordingly the evidence of DW.5 and contents of Ex.X2 and issuance of Ex.D25 to Smt.M.Lakshmi by UTIITSL remains undisputed.

Accordingly the close perusal of Ex.X2 and Ex.D25 clearly discloses the details of repurchase payment made under US 64 unit certificate for total amount of Rs.73,360.64ps. There is no much dispute with regard to the Item No.34 and 35 for Rs.14,166/- and Rs.6,439/- of

Statement–C . However as far as Item No.35 is considered the total value is Rs.52,764.58 under cheques dated 25.02.2000.

66.Similarly the contents of Ex.P62 the SB A/c No.6510 maintained with Vysya Bank, Vizianagaram relating to Smt.M.Lakshmi also corroborates the above transactions. Ex.P62 was got marked by the prosecution through PW.29 to prove its case. The statement of account of Sm.M.Lakshmi on 29.11.1999 to 30.6.2000 clearly shows the credit of Rs.52,754.58ps by clearance under three different transactions for Rs.2,754/-, 25,000/- and 25,000/- along with transactions under Item No.34 and 36 for Rs.14,166.60ps and

Rs.6,436.46ps . Accordingly in view of evidence of DW.5 and contents of Ex.X2, Ex.D25 and Ex.P62 statement, this Court is of the opinion that an amount of Rs.50,000/- was to be added on merits to Item

No.35 of Statement-C. Accordingly the total value of income under

Item Nos.34,35 and 36 of Statement-C is calculated as Rs.73,360.64ps rounding off to Rs.73,361.

56 C.C.03/2005/I CBI Court/VSP

67.Item No.39:

As per the charge sheet an amount of Rs.4,500/- is shown as income at Item No.39 of Statement-C as loan repayment by Sri

G.V.M.Raju, S/o G.S.Raju, Proprietor, Visakha Securities, Visakhapatnam on 16.07.2000. In this regard, the prosecution got examined PW.3

G.V.M.Raju who is the proprietor of Visakha Securities, Visakhapatnam.

He deposed that the Visakha Securities was originally started in the name and style of Chakravarthi & Co., and that he borrowed an amount of Rs.50,000/- in the year 1996 from Smt.Lakshmi who is the wife of the accused and that again he borrowed an amount of

Rs.25,000/- in the year 1997 from her and that for both the said advances he paid an amount of Rs.25,000/- in lump sum towards interest and that in total he paid an amount of Rs.1,00,000/- to her.

During the course of his cross examination he stated that he paid an amount of Rs.25,000/- to her in April, 1997 and the balance amount of

Rs.75,000/- from 1998 to May, 2000. He was recalled and further cross examined on 02.01.2013 during which he admitted that Ex.P64 is the promissory note executed by him for the amount of Rs.50,000/-

dated 01.09.1996 and that Ex.P65 is another promissory note executed

by him for Rs.25,000/- on19.03.1997 and that he furnished the details of shares purchased and sold by Smt.M.Lakshmi which are covered under Ex.P66.

68.In fact Ex.P64 and Ex.P65 were the documents seized by the investigating agency. However the prosecution did not tend to mark the documents in the chief examination of PW.3. It is during the further cross examination of PW.3 having been recalled by the accused,

Ex.P64 and Ex.65 were marked. The Ex.P64 and Ex.P65 on the face of 57 C.C.03/2005/I CBI Court/VSP the record clearly shows that they were executed by PW.3 on 01.09.1996 and 19.3.1997 in favour of Smt.M.Lakshmi. Both the documents were much prior to the check period. The same was reflected in 161 Cr.P.C statement of PW.3. However the investigating officer did not prefer to mention the said promissory notes and repayment of Rs.1,00,000/- during the period 1998 to 2000 in the any of the statements. The very purpose of examining Pw.3 is contradicting from the case against the accused.

69.In this regard the defence counsel relies upon the contents of documents under Ex.D43 which includes income tax return of

Smt.M.Lakshmi for assessment period 1997-1998, 1998-1999, 1999- 2000, 2000-2001 to ascertain repayment of loan along with the interest. The cash flow statement of Smt.M.Lakshmi for the financial year 1997-1998 clearly shows a part payment of Rs.25,000/- and interest Rs.11,929/- by Sri G.V.M.Raju(PW.3). In the like manner the cash flow statement of Smt.M.Lakshmi financial year 1998-1999 reflects the repayment of loan amount of Rs.25,000/- and interest of

Rs.6,965/- by Sri G.V.M.Raju(PW.3). The cash flow statement of

Smt.M.Lakshmi financial year 1999-2000 discloses the repayment of loan amount of Rs.25,000/- with interest of Rs.5,296/- and Rs.4,500/- full repayment with interest of Rs.410/- during the financial year 2000- 2001.

70. Accordingly the entire repayment of loan amount to Sri

G.V.M.Raju to Smt.M.Lakshmi wife of accused Rs.74,500/- (Rs.4,500+25,000+25,000 +20,000) principal with interest of

Rs.24,595/- (Rs.11,929/-+6,960+ 5,296+410). It is pertinent that the 58 C.C.03/2005/I CBI Court/VSP prosecution neither sought for re-examination of PW.3 nor contradicted with his version of taking loan from Smt.M.Lakshmi and repayment of the same with interest as deposed by him. Even during cross examination of DW.16 through whom Ex.D43 was marked, there is no specific denial with regard to the loan extended to Sri G.V.M.Raju and subsequent repayment by him with interest.

71.Accordingly taking into the consideration and the evidence of

PW.3 and contents of Ex.P64 and Ex.65 and Ex.D43, this Court is of the opinion that PW.3 G.V.M.Raju obtained loan of Rs.75,000/- from

Smt.M.Lakshmi wife of accused under Ex.P64 and Ex.P65 promissory notes and repaid the same with interest of Rs.24,595/- along with

principal amount of Rs.74,500/- though there is a slight balance in

the repayment of principal amount as per the income tax returns for the financial year 2000-2001 of Smt.M.Lakshmi the same recorded and consider as full repayment. Since the principal was repaid during the check period the same is to be considered as income during the check period. Hence this Court is of the opinion that it is the reasonable to substitute the amount of income at Item No.39 with

Rs.99,095/-.

72.Item No.40:

The withdrawal from Durga Finance by the wife of the accused is reflected as Item No.40 of Statement-C for Rs.80,000/- in the charge sheet. The contention of the accused is that his wife withdrawn a total amount of Rs.2,00,200/- from M/s Durga Finance towards deposits made by her and that I.O intentionally omitted to add

Rs.1,20,200/- to the existing amount of Rs.80,000/- under Item No.40.

59 C.C.03/2005/I CBI Court/VSP

In this regard the prosecution examined PW.6 and got marked Ex.P19 and Ex.P20.

73.When the evidence of PW.6 was appraised on this aspect it goes to show that on 18.4.1997 FD receipt for Rs.21,000/- by Sri Durga

Finance was issued in favour of wife of the accused and that she issued a cheque bearing No.67521 of SBI, Seethammadhara,

Visakhapatnam in respect of the amount deposited. The corresponding

FD is marked as Ex.P9. PW.6 also deposed that the FD receipt for

Rs.30,000/- dated 16.10.2000 was issued by the Sri Durga Finance in favour of Smt.Lakshmi and the said amount was paid by her through cheque bearing No.428221 of Andhra Bank. The corresponding FD receipt is marked as Ex.P10.

74.It is further stated that FD for Rs.15,000/- dated 01.10.1994,

FD for Rs.20,000/- dated 12.12.1995, FD for Rs.35,000/- dated 29.02.1996 were issued by Durga Finance in favour of M.Lakshmi and in respect of all these FDRs she paid the deposit money in cash. The said three FDs were marked as ExsP11, 12 and 13 respectively. It is further stated that two FDRs each for Rs.10,000/- dated 04.01.1992 were issued by Sri Lakshmi Finance Company in favour of Smt.Lakshmi and that in respect of these two FDs she deposited in cash and the same were marked as Ex.P14 and Ex.P15.

75.Pw.6 further stated that maturity amount under the said FDR receipts was repaid back to her and that the attested copy of ledger account extract of Sri Durga Finance which was marked as Ex.P19 shows that Smt.Lakshmi withdrawn cash of Rs.15,000/- on 60 C.C.03/2005/I CBI Court/VSP 04.11.1999, Rs.15,000/- on 05.11.1999, Rs.15,000/- on 06.11.1999,

Rs.15,000/- on 08.11.1999, Rs.20,000/- on 09.11.1999. In the cross examination he admitted that on behalf of Durga Finance he obtained demand draft for Rs.10,000/- in favour of Smt.Lakshmi and delivered to her and that he paid the cash of Rs.10,000/- on 31.07.2000 to Smt.Lakshmi on behalf of Sri Durga Finance. He further stated that at the request of Smt.Lakshmi the Finance clerk of

Durga Finance i.e., A.N.Kumar obtained demand draft for Rs.1,00,000/- in favour of M.S.N.Raju, the Xerox copy of DD is marked as Ex.P20 which correspondence to Item No.7 of Statement-D. He further stated that the total amount paid to Smt.Lakshmi is Rs.2,00,200/- towards deposits made by her.

76.PW.6 further asserted that under Ex.P19 there is an entry

dated 02.03.2001 in favour of Smt.Lakshmi for Rs.1,00,200/- and that

in respect of Ex.P14 and Ex.P15 FDs. The corresponding account statements of Sri Durga Finance bearing the signature of PW.6 from the period 01.10.1994 to 01.04.1995, 01.04.1995 to 01.04.1996, 01.04.1996 to 31.03.1997, 01.04.1997 to 31.03.1998, 01.04.1998 to 31.03.1999, 01.04.1999 to 31.03.2000 and 01.04.2000 to 31.03.2001 and the corresponding Form-16A copies were marked as Exs.D8 to

D15.

77.The close perusal of the evidence of PW.6 it is evident that the opening balance of Smt.Lakhsmi as per her account statement as on 09.04.2001 is Rs.1,23,851/- and the outstanding balance payable

Smt.Lakshmi as on 09.04.2001 is Rs.38,603/-. It is also pertinent that PW.6 deposed that the total amount paid to Smt.Lakshmi 61 C.C.03/2005/I CBI Court/VSP towards the deposit made by her is Rs.2,00,200/-. Pertinently there is no much dispute by the either side with regard to Rs.80,000/- in total withdrawn by Smt.Lakshmi from Durga Finance on 04.11.1999, 5.11.199, 6.11.1999, 8.11.1999 and 9.11.1999 as per Ex.P19 ledger extract. However in the cross examination PW.6 clearly elicits about payment of Rs.10,000/- to Smt.Lakshmi on 31.07.2000 and obtaining demand draft for Rs.1,00,000/- in favour of Sri M.S.N.Raju under

Ex.P20. Both the transactions are clearly evident from the entry

dated 31.7.2000 and 02.03.2001 of Ex.P19. Similarly as per the

contents of Ex.D14 the payment of Rs.10,000/- by way of DD on Bank of Baroda was paid to Smt.Lakshmi on 08.06.1999. In fact Ex.P19 is the document marked by the prosecution itself and it cannot be presumed to be disputed by the prosecution.

78. It is pertinent that the prosecution did not dispute with the any fact elicited in the cross examination and never choose to re-examine the witness when he was subsequently recalled for further cross examination and marking defence Ex.D18 to Ex.D23. Inspite of the same the payment dated 08.06.1999 is also evident from Ex.P19 ledger extract. Accordingly the total payment made by Sri Durga

Finance to Smt.Lakshmi during the check period is

Rs.80,000+Rs.10,000+Rs.10,000+Rs.1,00,200 including the amount amount given to Sri M.S.N.Raju through DD, which amounts to

Rs.2,00,200 in total. Accordingly the version of the defence is completely corroborated with the evidence of PW.6 and the documents of contents of Ex.P19 and Ex.D14. The prior deposits with Durga

Finance by smt.Lakshmi and corresponding fixed deposits were let in evidence by the prosecution under Ex.P9 to Ex.P15 and were not in 62 C.C.03/2005/I CBI Court/VSP dispute accordingly the veracity of Ex.P9 to Ex.P15 does not warrant any discussion. In view of the above discussion, this Court is of the opinion that the total income derived in the name of Smt.Lakshmi under Item No.40 of Statement-C is Rs.2,00,200/-.

79. Additional Income not considered by the prosecution as per accused:

The accused claims that there are 18 Items worth

Rs.14,69,612/- which are not included by the investigating officer as income in Statement-C and pleads to include the same to the income of the accused during the check period. The description of the said 18 items as per the written arguments is as follows: Sl.No.Description of the item Amount as per AO 1Loan repayment by M.Venkateswara5,44,266 Rao to M.Lakshmi during the check period 2Premature closure of Fixed Deposit 36,643 3Premature closure of Fixed Deposit 50,894 4Sale value of Reliance shares 17,775 5Sale value of Cybermate shares 20,350 6Withdrawal from Jagannath Vidya Peeth25,450 7Withdrawal from Jagannath Vidy Peeth25,514 8Amount drawn from HSBC Bank out of22,000 FD amount 9Dividend from KCP sugar & Industries 250 Coprn.,(LD.104) 10Refund of telephone deposit 870 11Payment by DSS Narayanaraju(PW.11) 6000 12Premature withdrawal from Gayatri16,000 Vidya Parishat on 4-8-98 13Professional income of M.Lakshmi, wife15,000 of accused as shown in her I.T returns(Ex.D43) for the financial year 2000-01 14Professional income of M.Lakshmi, wife15,000 of accused as shown in her I.T returns(Ex.D43) for the financial year 1999-2000 15Professional income of M.Lakhsmi, wife15,000 of accused as shown in her I.T returns (Ex.D43) for the financial year 1998-99 16Professional income of M.Lakshmi, wife3,600 of accused as shown in her I.T returns (Ex.D43) for the period 1-1-98 to 31-3- 98. 17Amount retained by AO with regard to3,75,000 the sale agreement transaction with K.Anji Babu(PW.23) 18Sale consideration received by selling 2,80,000 National Savings Certificate Total 14,69,612 63 C.C.03/2005/I CBI Court/VSP

80.The discussion with regard to the above said items in view of evidence on record is as follows:

Item No.1: Loan repayment to Smt.Lakshmi by

M.Venkateswara Rao during the check period:

The accused contended that PW.6 during his cross examination deposed that he returned a sum of Rs.50,000/- on 10.10.2000,

Rs.2,00,000/- on 12.10.2000, Rs.2,00,000/- on 10.01.2001 and

Rs.94,266/- on 05.02.2001 under pronotes marked as Ex.P16 to

Ex.P18. It is the version of the accused that the amount returned by

PW.6 under Ex.P16 and Ex.P18 which would contribute considerable income was wantonly suppressed by the prosecution.

81.In this regard the evidence of PW.6 in the chief examination discloses that he borrowed Rs.2,00,000/-, Rs.2,00,000/- and

Rs.1,00,000/- on 14.08.2000, 15.08.2000 and 16.08.2000 respectively from Smt.M.Lakshmi wife of the accused and executed three ponotes in her favour agreeing to pay interest at the rate of 2%p.a. The said promissory notes were marked by the prosecution as Exs.P16,P17 and

P18. The prosecution did not consider this statement made by PW.6 as incriminating its case against the accused. Pertinently in furtherance of this statement PW.6 in his cross examination deposed that he repaid the entire amount under Ex.P16 to Ex.P18 as stated above. The corresponding income tax returns of Smt.Lakshmi for the financial year 2000-2001 under Ex.D43 also discloses about the extension of loan to PW.6 and subsequent repayment by him along with interest which comes to Rs.5,44,266/-.

64 C.C.03/2005/I CBI Court/VSP

82.The argument raised by the prosecution is that the repayment of loan by PW.6 to the accused is not intimated to his department and except the income tax returns of the accused there are no other documents to prove the amount received from PW.6. and no source of amounts was submitted by the accused to include it as additional income and pleads to set aside the contention of the accused.

suffering repetition at this point, this Court is only discussing on the quantitative determination of assets of the accused and accordingly the merits at this stage is whether there is any monetory transactions by way extending loan to PW.6 and whether there is any corresponding repayment. As already discussed the evidence of PW.6 and the contents of Ex.P16 to Ex.P18 promissory note categorically shows that the wife of the accused extended loan of Rs.5,00,000/- on different occasion in the month of August, 2000 to PW.6 and the contents of Ex.D43 expeditiously shows the repayment by PW.6 with interest. This Court hence accedes to the version of the accused in part reserving the discussion as to the source of the loan extended to the PW.6 and whether it is the accused who extended the loan to

PW.6 to later stage. However the entire transaction of extending loan and repayment of the same is within the check period. Accordingly the loan amount of Rs.5,00,000/-, indispensably constitute expenditure under Statement-D and only the interest thereon is considered as income. Therefore the plea of accused to include the entire principal amount with interest is negated. The accused is only entitled for inclusion of interest amount of Rs.44,266/- in Statement-C.

65 C.C.03/2005/I CBI Court/VSP

83.Item No.2 and 3:Premature closure of fixed deposits:

The accused disputes with the Item Nos.16 and 17 of statement-D under this head which includes the fixed deposit of

Rs.36,000/- and Rs.50,000/- prematurely closed and credited to the

SB account of the wife of the accused under Ex.P78, Ex.P59. The argument of the accused is that the I.O wantonly did not consider the premature closure of FDs and omitted to show the income of

Rs.36,643/- and Rs.50,894/-.

84.In this regard, it is pertinent to look into the evidence of PW.28 the then Assistant manager, ING Vysya Bank, Vizianagaram.

Accordingly to his evidence, vide letter dated 23.2.2003 he furnished the locker advance receipt and rent receipt standing in the name of Sri

Kameswara Rao which is marked as Ex.P58. He also furnished to the

CBI, Visakhapatnam pay-in-slip for Rs.15,000/- to issue Akshya deposit certificate in the name of Smt.M.Lakshmi dated 27.11.1999 which maturity date is 27.11.2000. PW.28 also stated that the said deposit was encashed on 25.02.2000 for Rs.50,894/- and connected file was marked as Ex.P59. Further Pw.28 deposed that he furnished Ex.P62 file to the CBI, Visakhapantam which is the statement of account in respect of SB A/c No.6510 standing in the name of Smt.M.Lakshmi commenced on 29.11.1999 and closed on 15.05.2000. Accordingly to PW.28 as per Ex.P62 the interest accrued from 06.03.2000 to 15.05.2000 is Rs.236/-. The premature closure of Akshya fixed deposit for Rs.50,000/- which is corresponding to Item No.17 of Statement-D is undisputed. There is another Akshya fixed deposit for Rs.36,000/- which was encashed on 25.02.2000 was omitted in the chief examination of PW.28. However in the cross examination by the 66 C.C.03/2005/I CBI Court/VSP learned counsel for the accused, Pw.28 stated that on 25.02.2000 a sum of Rs.36,643/- and on the same day Rs.50,894/- after closing the

FDs were credited to the account under Ex.P62. The close perusal of entries dated 25.02.2000 of Ex.P62 file relating to statement of account in respect of SB A/c No.6510 standing in the name of

Smt.M.Lakshmi at Vysya Bank, Vizianagaram commenced on 29.11.1999 and closed by 15.5.2000 clearly discloses the corresponding closure of fixed deposits. In fact the corresponding entries and the Item No.16 and 17 of Statement-D were not in dispute.

The only point for determination here is that whether the premature closure of fixed deposits mentioned at Item No.16 and 17 of

Statement–D can be shown as income in Statement-C. It is pertinent that these Akshya fixed deposit were issued in the name of

Smt.M.Lakshmi on 27.11.1999 and were closed prematurely on 25.2.2000 . Both these fixed deposits were issued only during the check period. Accordingly there is no illegality in reflecting the same

Statement-D as expenditure. However the accrued interest as per

Ex.D62 over these fixed deposits is Rs.643/- and Rs.894/-. Accordingly the accused is only entitled to inclusion of the interest over the FDs under Statement-C. Hence the accused is entitled to addition of

Rs.1492/-(Rs.643+894) under the income statement.

85. Item No.4 Sale value of Reliance shares:

This item correspondence to Item No.18 of Statement-D i.e.,

Rs.13,000/- purchase value of 100 reliance shares from

D.S.S.Narayana Raju on 30.06.1999. The contention of the accused is that these shares were purchased by his wife on 30.06.1999 and the same were sold during the check period for Rs.17,775/- and that 67 C.C.03/2005/I CBI Court/VSP the sale value along with profit is to be added to the income column. In this regard the prosecution examined PW.11 D.S.S.Narayana

Raju. He deposed that he did shares business in the name of style of

Siri Shares at Vizianagaram and that he was acquainted with the accused and that Mrs.Lakshmi who is the wife of accused had purchased shares from him. The statement of account of his shares business relating to the shares in the name of M.Lakhsmi was marked as Ex.P32. According to him he purchased 100 shares of

Reliance in his name and the money financed by Smt.Lakshmi and subsequently sold the same for Rs.17,775/-. The contents of Ex.P32 clearly shows the purchase date of the said Reliance shares 23.06.1999 for Rs.13,000/- and subsequent sale is on 07.09.1999 for

Rs.17,775/- since the purchase and sale of shares was made during the check period the accused is not entitled to claim the sale value as income. However he is entitled for addition of profit of Rs.4,775/- (17,775-13000) in the income statement.

86. Item No.5: Sale value of Cybermate Shares:

The purchase of the value of Cybermate shares was shown as expenditure under item 20 of Statement–D. The contention of the accused is that the sale value of this share which were sold during the check period was not included in the income. In this regard the prosecution examined PW.11 D.S.S.Narayana Raju. He deposed that he did shares business in the name of style of Siri Shares at

Vizianagaram and that he was acquainted with the accused and that

Mrs.Lakshmi who is the wife of accused had purchased shares from him. The statement of account of his shares business relating to the shares in the name of M.Lakhsmi was marked as Ex.P32. According to 68 C.C.03/2005/I CBI Court/VSP him in the month of September, 1999 he purchased 100 shares of

Cyber mate Info in her name which he sold away in December, 1999 for Rs.20,350/- and he issued a cheque for Rs.10,000/- in March, 2000/- to her. During the cross examination he stated that he paid

Rs.6,000/- on 05.09.1999 and Rs.10,000/- on 21.03.2000 in total

Rs.16,000/- to smt.Lakhsmi during the financial year 1999-2000 and the said entries were covered under Ex.P32. He also further stated that those two amounts were issued by him vide cheques drawn on

Karnataka Branch, Vizianagaram.

87.It is pertinent that the Item No.20 of Statement-D reflects the purchase of 100 share of Cybermate Info on 10.09.1999 for Rs.10,690/- by the wife of the accused from PW.11. It is evident from the evidence of PW.11 that the said shares were sold by him in the month of December, 1999 for Rs.20,350/- for commission of Rs.150/-.

The purchase and sale of the above said shares was made during the same year within the check period. Accordingly the value of investment is undoubtedly falls under the column of expenditure.

However the profit of Rs.9,660/- is to be calculated under the head of income which the investigating officer has incorrectly not included.

Accordingly the accused is entitled for inclusion of Rs.9,660/- as

additional income in Statement-C for corresponding entry of Item

No.20 in Statement-D.

88. Item No.6 & 7 : Withdrawal from Jagannath Vidya Peeth:

The deposits made by the wife of the accused for Rs.18,000/- each with Jagannath Vidya Peeth on 05.02.1998 and 28.01.1998 were reflected as Expenditure at Item No.21, 22 of Statement-D. The 69 C.C.03/2005/I CBI Court/VSP contention raised by the accused is that these deposits were withdrawn subsequently by her on different dates within the check period and the interest along with principal was to be added as part of income.

89.In this regard the cross examination of prosecution witness PW.9

Sri V.Jagannadham discloses that he used to run Jagannadh Vidya

Peeth, Visakhapatnam during the check period at Prakashrao peta,

Visakhapatnam giving ITI training to the students and that the said

Vidya Peeth stopped functioning in the year 2002. He admitted the letter issued on the letter head of Sri Jagannadh Vidya Peeth dated 28.2.2000 acknowledging the two fixed deposits in the name of

Smt.M.Lakshmi and the same is marked as Ex.D2. The contents of

Ex.D2 discloses that smt.M.Lakshmi deposited two fixed deposits for

Rs.18,000/- on 05.02.1998 and 28.01.1998. According to PW.11 he repaid Rs.28,450/- by 28.2.2000 for FD dated 05.02.1998 through check No.108845 and he discharged the FD dated 28.1.1998 by 28.2.2000 by issuing cheque for Rs.25,514/-. The contents of Ex.D2 shows that for both the fixed deposits an amount of Rs.25,450/- and

Rs.25,514/- was issued along with interest . Accordingly it can be inferred that for two fixed deposits worth Rs.18,000/- each made in the year 1998, the wife of the accused received Rs.50,964/- along with the interest. Accordingly excluding the principal amount, which was deposited and received during the check period, the interest of

Rs.14,964/- is liable to be added to the income of the accused.

70 C.C.03/2005/I CBI Court/VSP

90. Item No.8 Amount drawn from HSBC Bank :

It is contended that the wife of the accused Smt.M.Lakshmi has taken over draft loan from HSBC bank on 27.03.2000 for Rs.22,000/- by way of DD and the same is to be credited to the income of the accused. On this aspect the accused relied upon the evidence of

PW.15 and contents of Ex.P38 and Ex.P1(A). In this regard PW.15

M.M.Rao the Dy. Branch Manager, HSBC Bank, Visakhapatnam for confrontation of letter furnished by him as to the information regarding the fixed deposits standing in the name of Smt.M.Lakshmi along with statement of account. The Ex.P38 i.e., Statement of account of Smt.M.Lakshmi marked in the chief examination was confronted to the witness in the cross examination with regard to the availing loan of Rs.22,100/- at Page No.14. However PW.15 deposed that he cannot say whether Smt.M.Lakshmi availed any loan as per entry dated 27.03.2000. Subsequently Ex.P1(A) document i.e., certified statement of account No.7806 of

Smt.M.Lakshmi with Indian Bank, Visakhapatnam was marked with consent of both sides, which categorically shows the deposit of cheque for Rs.22,000/- drawn on HSBC Bank. In the additional written arguments filed by the prosecution it is contended that as per the evidence of PW.15 the wife of the accused had deposit of Rs.34,619/- on 04.12.2000 and the date of maturity is 4.12.2003 and that originally Smt.M.Lakshmi made fixed deposit of Rs.25,000/- on 04.12.1997 and it was matured for Rs.34,696.60ps as on 04.12.2000 and she again renewed it on the said date which is to be matured on 04.12.2003 and that on the same day she availed loan of Rs.22,000/- and on 23.7.2000 purchased demand draft of Rs.22,100/. The evidence of PW.11 and the contents of Ex.P36, Ex.P37 and Ex.P38 71 C.C.03/2005/I CBI Court/VSP corroborates the part of prosecution version as to the original fixed deposit of Rs.25,000/- on 04.12.1997 and subsequent renewal on 04.12.2000 which is to be matured on 04.12.2003.

91.The investigating officer ought to have to shown the fixed deposit dated 04.12.1997 as assets prior to the check period. The subsequent renewal does not preclude the accused from the benefit of already existing asset prior to the check period. The argument of the prosecution that as the renewal of the FD was not considered as expenditure, the loan availed on the FD cannot be considered as income is completely unsustainable. As the prosecution itself admits availing loan of Rs.22,000/- by Smt.M.Lakshmi from HSBC bank from her secured deposits the said amount is liable to be added to the income column. Similarly the fixed deposit dated 04.12.1997 which was subsequently renewed on 04.12.2000 is also liable to be added to the assets prior to the check period.

92. Item No.9: Dividend from KCP sugar & Industries Corp.,

The accused disputes that the dividend of Rs.125/- on 23.09.1998 and Rs.125/- on 27.08.1999 from KCP Sugar & Industries

Corporation Ltd., received by Smt.M.Lakshmi was intentionally excluded by the investigating officer under Statement-C. The prosecution did not raise any objection for inclusion of this amount to the Statement-C. Further the contents of Ex.P30 Letter dt.21.2.2003 of S.Chidambaram, Manager M/s KCP Sugar and Industries Corporation

Ltd., and Ex.P33 copy of statement of account no.22271 of

Smt.M.Lakshmi and Bharathi maintained at Andhra Bank, which was marked the consent of both sides clearly elicits the receipt of the 72 C.C.03/2005/I CBI Court/VSP above dividend. Accordingly the amount of Rs.250/- is added to the

Statement-C.

93. Item No.10 : Refund of telephone deposit :

The accused claims the addition of refund of Telephone deposit received by him by way of cheque No.693952 from Telephone

Department credited to the SB A/c No.5015 of the accused to his income. This was undisputedly reflected in page-2 of Ex.P1

Statement of account maintained by the accused at Sri Visakha

Grameena Branch, Vizianagaram. The addition this amount is undisputed by the prosecution. Accordingly the eligible for inclusion of

Rs.870/- which was refunded to him by the Telecom department during the check period.

94. Item No.11 : Payment by DSS Narayanaraju(PW.11)

The accused raised that the amount of Rs.6,000/- issued by way of cheque drawn Karnataka Bank, Vizianagaram in the name of

Smt.Lakshmi on 06.09.1999 is to be added as additional income. The prosecution contends that according to the evidence of PW.11 he sold Reliance shares for Rs.17,775/- and Koparan shares for

Rs.13,650/- on 06.09.1999 and he issued cheque of Rs.6,000/- drawn on Karnataka bank and that the said sale proceeds were already covered under Item No.18 and 19 in Statement-D. Accordingly pleads to ignore the claim of the accused on this aspect.

95.It is pertinent from the evidence of PW.11 and contents of

Ex.P32 that PW.11 purchased 100 copran shares in the name of

Smt.M.Lakshmi on 23.08.1999 for Rs.11,363/- and subsequently sold 73 C.C.03/2005/I CBI Court/VSP the same for Rs.13,650/- on 04.09.1999. The purchase value of these shares was reflected under Item No.19 of Statement–D and the sale value was reflected at Item No.33 of statement-C. Admittedly the said Rs.6,000/- was issued by PW.11 in pursuance of sale of copran shares. Factually the prosecution ought to show only the profit over the sale of copran shares in the Statement-C as such the purchase and sale of the said shares was made during the check period.

Inspite of the same the entire sale value was shown as income at

Item No.33 of Statement-C which is quite contradictory when compare with similar sale and purchase of Reliance and Cybermate shares. Accordingly the accused is not entitled to any additional amount under the cheque for Rs.6,000/- issued by PW.11

D.S.S.Narayana Raju without any substantial explanation for payment.

Further the value of item No.33 of Statement-C is reduced to

Rs.2,287/- confining only profits on sale of copran shares excluding the

principal amount by this Court.

96. Item No.12. Premature withdrawal from Gayatri Vidya

Parishat on 04.08.98

The accused claims for addition of the amount regarding premature withdrawal of fixed deposit from Gayatri Vidya Parishat on 04.08.1998 which amounts to Rs.16,000/-. This item was not mentioned in any of the statement in the charge sheet. However the evidence of PW.9 V.Jagannadham in his further cross examination elicit that he is the President of Sri Gayatri Vidya Parished Society,

Visakhapatnam, which used to accept fixed deposit from the public.

PW.9 further disclosed that the wife of the accused made fixed deposit for Rs.10,000/-on 01.06.1996 and had withdrawn the fixed deposit 74 C.C.03/2005/I CBI Court/VSP prematurely on 04.08.1998 for Rs.16,000/- . The Xerox copy of FDR with original endorsement by PW.11 is marked as Ex.D7. The prosecution did not sought for re-examination of the witness or disputed the contents of Ex.D7. It is also pertinent that the IT returns of Smt.Lakshmi under Ex.D43 for financial year 1998-1999 also reflects the same. Accordingly the principal amount of fixed deposit i.e., Rs.10,000/- which is prior to the check period is entitled to be added to the assets before check period under Statement-A and the interest therein Rs.6,000/- is added to the income under Statement-C.

97. Item Nos.13 to 16: Professional income of Smt.M.Lakshmi from 1998-2001.

It is the contention of the accused is that his wife Smt.M.Lakshmi used to teach music lessons to the children and thereby earned

Rs.48,600/- during the check period and thereby the same is to be added to the Statement-C. On this aspect when we look into the evidence of Smt.M.Lakshmi who was examined as DW.15, she specifically stated that “ I used to teach music lessons since 1972 to 2001 and was earning money every month”. In the entire cross examination the prosecution did not deny anywhere that

Smt.M.Lakshmi never earned any money by teaching music lessons during the check period. The only stray statement elicited in the cross examination is that she did not take any certificate from the music teacher from whom she learnt music. This statement does not help the prosecution in any manner to deny the personal income of

Smt.M.Lakshmi by way of instructing music lessons. Further there are some prosecution witnesses who also corroborate the version of 75 C.C.03/2005/I CBI Court/VSP the accused that Smt.Lakshmi is earning some amounts on her own by teaching music classes.

98.In this regard, PW.6 in his cross examination stated that “I am acquainted with smt.M.Lakshmi since 1992 and she was residing at

Seethammadhara, Visakhapatnam and she is a Teacher of Classical

Music and vocal. I observed that she was teaching music lessons to about 15 students. She was earning Rs.15,000/-per month from the students for teaching music and this fact was informed to me by her”.

99.In the similar manner PW.9 stated that “ I was frequent visitor to the house of the accused and observed that the wife of the accused used to teach music to the students numbering 15”. It is evident that PW.11 stated in his cross examination “ I know

Smt.Lakshmi for the last 20 years. I know that Smt.Lakshmi is a musical teacher. My daughter Siri attended music classes conducted by Smt.Lakshmi for two or three months in the year 1999. I paid

Rs.150/- per month to my daughter to Smt.Lakshmi. She was teaching about 10 students”.Further the income tax returns of Smt.Lakshmi under Ex.D43 clearly elicit that her income from music tuition is

Rs.15,000/- for the financial year 1997-1998, Rs.15,000/- for the financial year 1998-1999, Rs.15,000/- for the financial year 1999-2000 and Rs.15,000/- for financial year 2000-2001. Since the check period is from 01.01.1998 to 09.04.2001 the accused claims the professional income of Smt.Lakshmi from 01.01.1998 to 31.3.1998 as Rs.3,600/-.

The contention of the prosecution is that as per the evidence of DW.13

Dr.Bhagyarao, the wife of the accused suffered from depression and anxiety and migraine and was under his treatment for the last 17 76 C.C.03/2005/I CBI Court/VSP years. Hence in view of her health condition it cannot be presumed that she earned the income mentioned in the IT returns by teaching music lessons. Inspite of the argument of the prosecution, the prosecution did not raise any question to DW.13 in the cross examination whether the ill-health of Smt.Lakshmi possibly hinders her capacity to teach music. The impression of depression, anxiety and migraine in the normal course of living does not preclude any person for carrying out their daily or professional activities. Unless and until there is some substantial denial by the prosecution as to the statements made by the witnesses about PW.15 teaching music lessons to the children and evidence in contrary, its argument cannot be considered on merits. Accordingly the professional income of the

Smt.Lakshmi during the check period which amounts to Rs.48,600/- (15,000+15,000+15,000+3,600) is added to Statement-C.

100. Item No.17 : Amount retained by AO with regard to the sale agreement transaction with K.Anji Babu(PW.23)

The accused claims that he entered into agreement of sale under

Ex.P55 with PW.23 on 03.03.2001 with regard to disposal of his house at Kakinada. He states that he received advance sale consideration of

Rs.3,75,000/- i.e., Rs.25,000/- on 03.03.2000 i.e., date of agreement,

Rs.1,00,000/- on 08.03.2001, Rs.2,50,000/- on 13.2.2001 from PW.23.

He further claims that Rs.2,43,000/- which was seized at his office and cash of Rs.1,20,700/- seized at his residence is the part of the amount received by him towards advance sale consideration of Rs.3,75,000/- and pleads to add the advance sale consideration received by him under Ex.P55 to his income under Statement-C.

77 C.C.03/2005/I CBI Court/VSP

101. The prosecution alleges that the accused has created the agreement of sale dated 03.03.2001 for Rs.6,50,000/- under Ex.P55 with the support of K.Anji Babu(PW.23) to falsely prove that the cash of

Rs.2,43,000/- which was seized at his office and cash of Rs.1,20,700/- seized at his residence was received by him towards advance sale consideration for disposal of his house at Kakinada. It alleges that the entire transaction under Ex.P55 is a fake transaction. In fact these amounts were shown as Item No.13 & 14 of Statement-B under assets at the end of the check period.

102. As per the evidence of PW.22 the then Inspector of Police,

Visakhapatnam on 15.03.2001 in pursuance of investigation in RC 8/2001 he conducted searches in the office of the accused at ITO,

Ward-II, Vizianagaram in the presence of mediators and an amount of

Rs.2,43,200/- was seized in cash along with an assessment file related to Mr.Althi Venu an LIC Agent and the visitors book of ITO, Ward-II.

PW.22 also disclosed that, the said search was conducted from 7.30pm to 9.30p.m and that some other documents along with above mentioned cash were seized under search list, the certified copy of which is marked as Ex.P.46.

103. PW.22 further stated that subsequently they conducted searches at the residential house of the accused at Plot No.126, TSR Colony,

Vizianagaram and an amount of Rs.1,20,700/- in cash along with some documents including five fixed deposit receipts of different values in the names of the accused and his family members were seized. The certified copy of the search list was marked as Ex.P47.

The inventory list prepared pertaining to the movable property at the 78 C.C.03/2005/I CBI Court/VSP house of the accused was also prepared by Pw.22 in the presence of the mediators and the same was marked as Ex.P41.

104. The evidence of PW.22 with regard to the above mentioned searches under Ex.P.46 and Ex.P47 was corroborated by the evidence of one of the mediator who was examined as PW.17. PW.17 who was working as LDC at Central Excise, Visakhapatnam during the year 2001 stated that on 15.03.2001 on the instructions of their Additional

Commissioner he contacted S.T.Mishra, Inspector in CBI,

Visakhapatnam and consented to act as mediator along with one ASR

Murthy who was already present there, with regard to complaint received by the CBI. Pw.17 further stated that thereafter they proceeded to Income Tax Office at Vizianagaram, in the 1st floor of the office a trap was laid against the accused and at the end of the trap proceedings, they again proceeded to the house of the accused at 11.00PM in the night and that the CBI officers conducted search in the house of the accused and seized a cash of Rs.1,20,000/- and prepared

Ex.P41 inventory for the movable items recording their valuation, as per information given by the accused and his wife. According to him the proceedings closed at 2.00AM. Though Pw.17 did not made any whisper about the amount of Rs.2,43,000/- seized from the accused at his office, the said seizure was not in dispute.

105. Precisely the accused claims the amount under item Nos.13 and 14 of Statement-B as part of advance sale consideration of

Rs.3,75,000/- received by him on different dates from PW.23 for disposal of his house at Kakinada. These items were seized by the investigating agency in the searches conducted in RC 8/2001. The 79 C.C.03/2005/I CBI Court/VSP corresponding certified copies of search memos were marked as

Ex.P46 and Ex.P47. As per the contents of the charge sheet these amounts were deposited vide FD No.232696 dated 23.04.2004 in Bank of Baroda, M.V.P.Colony, Visakhapatnam in the name of the accused as per the Orders of Crl.M.P.78/2004. Though these amounts were mentioned by the prosecution in the charge sheet as seized by the investigating officer, the prosecution did not choose to mark the corresponding FD as exhibit. The same was marked as Ex.P79 through the accused who was examined as DW.16.

106. Under these circumstances, the crucial point of determination is that whether the accused genuinely entered into agreement of sale with K.Anji Babu(PW.23) for disposal of his house which was shown as

Item No.3 in Statement-A and received Rs.3,75,000/- towards advance sale consideration and that whether the amount of Rs.2,43,000/- seized at the office of the accused and Rs.1,20,700/- seized at his residence forms the part of advance sale consideration alleged to have received by him from K.Anji Babu(PW.23). There is no dispute with regard to existence of house bearing No.8-5-3-3, Pratap Nagar,

Kakinada in Plot No.160 standing in the name of accused which is shown by the prosecution as asset prior to the check period at Item

No.3 of statement-A. It is pertinent that the subject matter of the alleged agreement of sale dated 03.03.2001 is item No.3 of statement-A. Therefore it is reasonable to appraise this issue by framing a separate point.

1) Whether the accused entered into agreement of sale

dated 03.03.2001 with Anji Babu

80 C.C.03/2005/I CBI Court/VSP

In this regard the accused in his evidence as DW.16 reiterated that the amount seized under Item No.13 and 14 of Statement –B received by him as an advance for sale of immovable property under

Ex.P55 from PW.23. Accordingly it is pertinent to look into the evidence of PW.23 who is the Managing Partner of ABK Real Estate,

Visakhapatnam on this aspect. His evidence goes to show he did Real

Estate business from 1994 to 2004 and was acquainted with the accused since 2001. According to him the accused informed him that

CBI, Visakhapatnam conducted ride on him and seized Rs.3,63,700/- from him and requested to help him. He further stated that on the instructions of the accused he agreed to purchase his plot and the house building in Pratap Nagar, Kakinada for Rs.6,50,000/- and payment of advance of Rs.25,000/- was reduced into writing on stamp papers.

107. The argument of the prosecution is that the accused failed to accord proper explanation during the seizure of above said amount of Rs.3,63,700/- and created a false story with the help of PW.23. On this aspect PW.23 further stated that the said agreement was scribed on two stamp papers each worth Rs.100/- and the stamp papers were purchased by him subsequent to the date of agreement.

According to him one Ravi Varma scribed the agreement as to the instructions of the accused and that Ch.Mangapathi Rao, resident of

FCI colony, Marripalem and K.Jagannadha Rao, resident of Port

Quarters attested the agreement. Though PW.23 stated that he do not remember the date of agreement on which it was scribed he testified the date of agreement as 02.03.2001.

81 C.C.03/2005/I CBI Court/VSP

108. The prosecution reiterates from the evidence of PW.23 that the entire agreement was concocted and is antedated on the stamp papers purchased subsequently. In this regard the prosecution also examined the stamp vendor as PW.7. Smt.I.Vijayalakshmi who was examined as PW.7 deposed that she is resident of Visakhapatnam and worked as Stamp vendor from 1992 to 2003 and used to sell judicial and non-judicial stamps. She stated that she was maintaining Register for sale of stamp and admitted the register shown to her by the prosecution as the register maintained by her during the period 01.01.2001 to 31.12.2001, the same was marked as

Ex.P21.

109. With regard to the questioned stamp papers on which the alleged agreement of sale between the accused and K.Anji Babu was scribed, Pw.7 stated that the entry dated 02.03.2001 for sale of two non-judicial stamp each worth Rs.100/- in total of Rs.300/- with serial

No.403929 and 403930 is not under her handwriting and is appearing in the register in the name of Konduri Anji Babu and that she do not remember whether she sold the stamps to Konduri Anji Babu, s/o

Subba Rao.

110. The prosecution did not tend to mark the said agreement of sale inspite of the fact that the very existence of agreement is not in dispute. The only argument of the prosecution is that the said agreement is fabricated subsequently to the date of seizure of amounts from the accused in RC 8/2001. The prosecution did not mention about the original agreement of sale anywhere. However the

Photostat copy of the same was marked in the cross examination of 82 C.C.03/2005/I CBI Court/VSP

PW.23. Wherein he admitted that the said Xerox copy of the agreement dated 02.03.2001 shown to him contains the numbers of the stamp papers under Ex.P21. The contents of Ex.P21 registered maintained by the stamp vendor Pw.7 categorically shows that on 02.03.2001 stamp papers with Sl.Nos.3131 and 3036 were sold to

Konduri Anji Babu.

111. As per the evidence of PW.23 in his cross examination the said stamp papers were subsequently purchased to the date of purchase recorded under Ex.P21 and that the stamp papers might have been purchased two or three months later from the date of trap of the accused. The date of agreement as per Ex.P55 is 03.03.2001. Now the question is whether the stamp paper on which the original agreement was scribed were purchased subsequently as contended by the prosecution and stated by PW.23. In this connection when we look into cross examination of PW.7 I.Vijayalakshmi, stamp vendor, she categorically stated that the entire writing in Ex.P21 belongs to her and no transaction under Ex.P21 would take place in her absence.

PW.7 specifically admitted that the entry dated 02.03.2001 in Ex.P21 was scribed by her and further admitted that she affixed her signatures on the NJ stamps sold to PW.23. Her cross examination is contradicting with her statements made in the chief examination.

Wherein she denied the entries pertaining to Sl.Nos.403929 and 403930 does not belongs to her.

112. Admittedly PW.7 is the custodian of Ex.P21 Register and she categorically denies any transaction under Ex.P1 in her absence or by any of her family members. So in view of this evidence, it is to be decided whether there are any circumstances to presume that the 83 C.C.03/2005/I CBI Court/VSP stamp papers on which the original agreement of sale under Ex.P55 was scribed were purchased subsequent to date i.e., 02.03.2001 contradicting to the entries in Ex.P21. It is not the evidence of PW.7 that the above said stamp papers were sold to K.Anji Babu on subsequent date and that the entries in Ex.P21 register are false. It is not the case of the prosecution that the said stamp papers were not sold by PW.7 to K.Anji Babu. According to the evidence of PW.23 he purchased the stamp papers about two to three months later from the date of trap of the accused. At the initial point of cross examination he admitted that that he was aware on 16.03.2001, about the trap of the accused on 15.03.2001. Accordingly he might have purchased the stamp papers in the month of May or June for execution of the agreement of sale dated 03.03.2001. At this point it is important to look into the provisions of section 103 of Indian Evidence Act which reads that the burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence, unless it provided by any law the proof of that fact shall lie on any particular person. Before fixing the burden of proof as to proof of date of purchase of stamp papers it is important to take into consideration the presumption under Section 114(f) and the definition of “may presumption” under Section 3 of Indian Evidence Act which reads as follows:

Section 114 :Court may presume existence of certain facts. —

The Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case. Illustrations The Court may presume— 84 C.C.03/2005/I CBI Court/VSP …..

(f) That the common course of business has been followed in particular cases;

Section 4 “May presume”.—Whenever it is provided by this Act that the Court may presume a fact, it may either regard such fact as proved, unless and until it is disproved, or may call for proof of it.

113. In this case on hand, Pw.7 is a certified registered stamp vendor during the specified period from 1992 to 2003. The registered maintained by her under Ex.P21 forms record of relevancy under

Section 34 of Indian Evidence Act and attracts presumption under

Section 114(f) of the Evidence Act that the common course of business was followed by PW.7. The presumption under Section 114(f) which is “may presumption” as defined under Section 3 wherein the Court may presumes the fact as proved unless and until it is disproved or call for proved. The contents of the Ex.P21 were well corroborated with the evidence of PW.7 and the only clog in her chief examination that the entries were not in her handwriting was clarified in the cross examination. PW.7 did not testify at any point that she sold the stamp papers to PW.23 two to three months after the date of entries mentioned in Ex.P21 or two to three months from date of trap against accused on 15.03.2001. In view of this evidence the burden as per the provisions of Section 103 of Indian Evidence Act lies on the prosecution side that is particularly on Pw.23 to prove without any contradiction by adducing a reasonable evidence that the stamp papers dated 02.03.2001 were purchased from Pw.7 subsequently thereafter the entry made in the Ex.P21. However except stray denial,

Pw.23 did not corroborate his statement on this aspect with any 85 C.C.03/2005/I CBI Court/VSP reasonable evidence. The prosecution did not choose either to examine the scribe of the document or the attestors inspite of the fact that the PW.23 himself purchased the stamp papers and admitted his acquaintance with the attestors Ch.Managapathi Rao and

Jaganmohana Rao.

114. The another important fact that was elicited in the cross examination of PW.23 is that the CBI officials took the original agreement dated 02.03.2001 from his office and did not issue any receipt. Though repeatedly Pw.23 stated the agreement as dated 02.03.2001 even during the confrontation of Photostat copy under

Ex.P55, the factual date on Ex.P55 is 03.03.2001. Accordingly though there is slight misconception of date regarding the date of agreement of sale in the evidence of PW.23, in absence of any other proof regarding a parallel similar transaction between Pw.23 and accused, it is presumed that the disputed transaction is under Ex.P55 and the original agreement of the same was seized by the investigating agency from PW.23. It is quite surprisingly that why the prosecution did not brought on record the original agreement of sale dated 03.03.2001. If in case the investigating officer never seized the original agreement of sale from PW.23 if is quite suspicious how he concluded the falsification of the said agreement of sale. It is pertinent that the I.O did not even tend to file the Photostat copy of agreement along with the charge sheet and the prosecution proceeded on the entire aspect without even marking the said agreement of sale, atleast its Photostat copy. In view of the same it is not extraneous to take a negative presumption against the investigating agency under 86 C.C.03/2005/I CBI Court/VSP

Section 114(g) that the same was suppressed being unfavourable to the case instituted by the CBI against the accused on this aspect.

115. It is pertinent from the contents of Ex.P55 that there is a payment made to accused as a part of advance sale consideration in three installments ie..,Rs.25,000/- on 03.03.2001, the date of agreement, secondly Rs.1,00,000/- on 08.03.2001 under first endorsement made on the back side of the page number 1 of the agreement and finally Rs.2,25,000/- on 13.03.2001 under second endorsement made on the back side of the page number 1 of the agreement. It is also evident that K.S.Chandran and Jaganmohan Rao were the attestors for the endorsement dated 03.03.2001 and

Ch.Mangapathi Rao and G.Narasingha Rao are the attestors for the second endorsement dated 13.03.2001. It is speculative that Pw.23 did not mentioned anywhere in his chief examination about the endorsement on the agreement of the sale and denied about payment of advance consideration, because it is not the case that PW.23 did not execute Ex.P55 but it was antedated. The prosecution did not take any steps to examine any of the attestors to prove that the endorsements on the back of the agreement are false. Particularly when the contents of the documents stands substantial against the oral evidence under Section 91 and 92 of the Indian Evidence Act.

116. Besides the accused himself got examined two of the attestors as defence witness. Initially DW.3 K.S.N.Chandran testified that he was acquainted with the both the accused and PW.23 who is the vendee under Ex.P55 and that he witnessed further advance consideration of Rs.1,00,000/- to the accused on 08.03.2001 as per 87 C.C.03/2005/I CBI Court/VSP the endorsement. He asserted that, he attested the endorsement as first attestor and admits his signature on Ex.P55. He also supported the version of the accused by stating that the Mr.K.Jaganmohan rao working in MES attested as second witness and he is known to him.

He further stated that at the time of scribing the endorsement and also passing of further consideration PW.23 was present and the said transaction took place in the office of PW.23 located behind Sagam

Sarat Theater.

117. In the similar lines DW.4 G.Narasimha Rao testified that the signature appearing on the endorsement dated 13.03.2001 on Ex.P55 belongs to him and corroborated about the other attestor

Mangapathi. He also further stated that the said endorsement was scribed in the office of PW.23 located behind Sangam Sarat Theater and at the time of endorsement PW.23 paid further consideration of

Rs.2,50,000/-.

118. The prosecution did not elicit anything contradictory to their statements in chief examination by cross examining DW.3 and DW.4, further contradicting to his version in chief examination Pw.23 at the end of his cross examination admitted that “in my presence and in the presence of attestors the accused affixed his signature on the original of Ex.P55 and also on the endorsements”. It is specifically noted that both DW.3 and Dw.4 categorically stated that in the year 2003 they were examined by the CBI officials with regard to their signature on Ex.P55 and they stated above mentioned facts. The point remains ambiguous why the CBI suppressed the statements of these attestors besides examining them during the course of 88 C.C.03/2005/I CBI Court/VSP investigation under Section 161 Cr.P.C. This fact again inclines this

Court to draw adverse inference under Section 114(g) of I.E.Act against the acts of the investigating agency.

119. Before making a conclusion on this point it is also relevant to discuss the another contention made by the accused disputing the item No.13 and 14 of Statement-D(Expenditure Statement). According to the charge sheet these items relates to payment of Rs.50,000/- on 04.10.2000 and Rs.1,00,000/- on 04.01.2000 to K.Anji Babu/PW.23.

The argument of the accused is that the payment under both these items belongs to his father-in-law i.e., Sri G.Venkayya and he has no connection with these transaction. The evidence of Pw.23 is also on the relevant point. Pw.23 stated that “At the request of the accused I executed one pronote for

Rs.1,00,00/- in favour of Venkayya father-in-law of the accused and another pronote for Rs.50,000/- executed by me in favour of Venkayya.

I have not received any cash consideration under both the demand pronotes marked Ex.P48. Subsequently I came to know that the name of father-in-law of the accused is G.Venkayya and not Mutyala

Venkayya. I delivered both the pronotes to the accused”.

120. The prosecution asserts these transactions were made by the accused in the name of Sri G.Venkayya and in order to discharge this burden relied upon the evidence of PW.23 and promissory notes under Ex.P48. Initially when we look into the contents of two promissory notes under Ex.P48 they were dated 04.01.2001 and 04.10.2000 for Rs.1,00,000/- and 50,000/- executed by K.Anji Babu.

However both the documents were executed in favour of one Sri 89 C.C.03/2005/I CBI Court/VSP

Mutya Venkayya. As per the evidence of PW.23 referred above he did not receive any consideration under the above two promissory notes and were executed at the request of the accused.

121. The prosecution attempted to bring on record that total amount of Rs.1,50,000/- under the above mentioned promissory notes includes the part of unaccounted expenditure of the accused carried in the name of G.Venkayya under Item Nos.13 and 14 of Statement-D. In the lines of prosecution these pronotes were got executed by the accused in his favour in the name of G.Venkayya. If it is the case the accused extended the amount of Rs.1,00,000/- and Rs.50,000/- to

Pw.23, the statement of Pw.23 that he did not receive any consideration under these pronotes in his evidence totally destructs the version of the prosecution on this aspect. If at all when no consideration is passed prosecution did not come up with any explanation what is the purpose gained by the accused in obtaining the above promissory notes.

122. The another point that attracts the attention of this Court is that if the accused himself requested K.Anji Babu to execute the above two promissory he would get them drafted very meticulously so that they would assist him in screening his disproportionate assets if any. The accused is not presumed to be sheer negligent in obtaining the pronotes in the name of Mutya Venkayya the person whose existence is not mentioned on record. It cannot be excepted that the accused with all his prudence would obtain the pronotes in the name of Mutya Venkayya instead of G.Venkayya i.e., Gopavajula

Venkayya who is his own father-in-law. Pw.23 in the position of the 90 C.C.03/2005/I CBI Court/VSP executor of the document is obliged with a burden to explain the ambiguity which he did not attempt to do either in his examination in chief or cross examination. Moreover in his cross examination he admitted that he was acquainted with the relation between the accused and G.Venkayya by the year 1993 and they were instances of borrowing money by means of handloan from G.Venkayya between 1993 to 2002 in form of cheques or cash and he used to execute promissory notes in his favour. Accordingly it is clearly evident that

PW.23 had monetary transactions of taking loans from G.Venkayya since 1993. There is no specific reason why he executed Ex.P48 promissory notes as Mutya Venkayya when he intends to execute in the name of G.Venkayya father-in-law of the accused. Further adding much more to the ambiguity existing the address of promisor and promissee under pronote dated 04.01.2001 is one and the same. It remained unexplained whether Sri Mutya Venkayya and Sri Koduri Anji

Babu were the residence of the self same address. Accordingly it is obvious that the knowledge of the accused about the execution of these pronotes is suspicious and far from proof of facts.

123. There is also an additional aspect with also attracts relevancy with the evidence of Pw.23 i.e., Item No.26 of Statement-D. According to the prosecution it is the alleged house loan of Rs.1,00,000/- taken the father-in-law of Sri M.Subramanyam from K.Anji Babu for purchase of eight shops. In this regard the prosecution did not elicit anything from the chief examination of Pw.23.

124. The version of the accused is that Pw.23 carried Real estate business in the name and style ABK Real Estate from 1994 onwards 91 C.C.03/2005/I CBI Court/VSP and that Plot No.33 was proposed to Sri G.Venkayya in his venture and that inspite of receiving the amount from G.Venkayya he did not allot the plot and on repeated demands of G.Venkayya he issued a cheque bearing no.153036 for Rs.1,00,000/- in favour of G.Venkayya drawn on SBH, main road, Visakhapatnam during March, 2000 and asked him to treat it as advance anticipating that the plot would be sold at higher price and he would get more profits. It is also submitted that under these circumstances G.Venkayya showed this transaction as loan received from ABK Real Estates as Rs.1,00,000/- in his IT returns in Ex.P75 for assessment year 2000-2001.

125. It is further submitted Pw.23 sold the plot No.33 to Smt.Vedula

Nagaratnam under Ex.D6 for Rs.58,750/- and on the request of

Pw.23/Anji Babu that he incurred loss in the transaction under Ex.D6 certified copy of sale deed dt.15.11.2003 in favor of Vedula

Nagaratnam and he could not sell the plot for higher price,

G.Venkayya therefore returned Rs.50,000/- on 27.03.2004 to Pw.23 by way of cheque. The accused submits that he has no connection with the entire transaction and this amount was utilized by G.Venkayya for purchasing seven shops in his favour which was also reflects in his IT returns and accordingly prays to delete Item No.26 of

Statement-D.

126. As already referred though the prosecution did not bring on record any evidence with regard to Item No.26 of Statement-D, Pw.23 however stated in his chief examination that from the layout of plots of his real estate business at Pendurthi the accused purchased one

Plot No.33 in the name of G.Venkayya for Rs.24,500/- paid by the 92 C.C.03/2005/I CBI Court/VSP accused by way of cheque and he maintained the accounts. He further stated that subsequently when the layout got approved he collected Rs.23,000/- in cash. The account statement along with the plan and receipt was marked as Ex.P49.

127. The close perusal of Ex.P49 discloses that the account statement was reflecting the payment transaction by way of cash and cheques from 17.04.1993 to 04.03.1997 for total amount of Rs.25,400/- in the name of G.Venkayya. Wherein the entire transaction is prior to check period. Now the question is whether the accused really obtained loan of Rs.1,00,000/- from Pw.23 or whether it is independent transaction between Pw.23 and G.Venkayya. Admittedly G.Venkayya passed away by the time of trial and the entire record does not disclose anywhere that the investigating officer examined and recorded the statements of G.Venkayya at the time of investigation. However the accused got marked the income tax returns of the G.Venkayya as

Ex.P75 by examining the then Dy.Commissioner, Income Tax

Department as DW.10.

128. Inspite of the fact that the Ex.P49 is a transaction prior to the check period and if Pw.23 intends to testify that the entire transaction is made by the accused and not G.Venkayya contrary to the contents of the documents under Ex.P49. His statement needs some corroborative evidence either oral or documentary, particularly when the version of the accused is brought on record from the contents of

Ex.P75 and evidence of Dw.10. It is relevant to refer the evidence of

Dw.10 who clearly stated that the IT returns of G.Venkayya 1998-1999 shows that loans and advances as Rs.7,00,000/- and vacant site owned 93 C.C.03/2005/I CBI Court/VSP by him at Pendurthi valued at Rs.25,400/- which is akin to the transaction under Ex.P49. The mere statement of Pw.23 referring with the documentary contents under Ex.P49 cannot be perse believed as the proof of fact alleged against the accused. Pw.23 would have furnished his account statements and IT returns or that of the business carried by him, throughout to disprove the transactions under Ex.P48 and Ex.P49 in the name of G.Venkayya. Particularly when it is the version of the Pw.23 the transaction under Ex.P49 were made by means of cheques he could easily bring on record that the said cheques were issued by the accused and not G.Venkayya.

129. It is pertinent that in connection with this transaction under

Ex.P49 and subsequent sale to Vedula Nagaratnam and monetory adjustment with G.Venkayya. Pw.23 in his cross examination stated that “It is true that the cheque for Rs.50,000/- dt.27.3.2004 was issued in favour of A.B.K. It is true that in connection with Ex.D6 we have paid

Rs.1,00,000/- by way of cheque bearing No.153036 drawn on S.B.H, main branch, Visakhapatnam in March, 2000 in favour of late Sri

G.Venkayya. I do not know whether G.Venkayya is alive or not. It is true that though the plot under Ex.D6 not sold but we have paid the cash of Rs.1,00,000/- to G.Venkayya in 2000. I do not remember whether the payment of Rs.1,00,000/- in March, 2000 to G.Venkayya in what form it was showed. It might be true that in our accounts showed the said payment of Rs.1,00,000/- as loan and Venkayya also showed in accounts. It is true that in our accounts it was recorded a sum of

Rs.25,400/- received from G.Venkayya. At times G.Venkayya was not available the accused used to bring the cheques of G.Venkayya and 94 C.C.03/2005/I CBI Court/VSP delivered to me. Therefore, I have said the examination in chief that the accused paid sum of Rs.25,400/-. I cannot say whether in which year the payment of Rs.1,00,000/- to G.Venkayya was closed as settled. Might have given a receipt for Rs.1,00,000/- in the year 2001 to G.Venkayya that the said amount between us as settled. In the I.T returns of me and G.Venkayya it might have been showed as

Rs.1,00,000/- was settled”.

130. The version of Pw.23 in the cross examination completely interferes with the allegation made by the prosecution against the accused on this aspect. It is pertinent to note that all the above three transactions i.e., sale deed dated 03.03.2001, promissory notes dated 04.10.2000 and 04.01.2001 and Rs.1,00,000/- advanced by A.B.K.Real estate to G.Venkayya in view of allotment of plot No.33 at Pendurthi are documented. As per Section 61 of I.E Act the contents of a document may be proved either by way of primary evidence under

Section 62 or secondary evidence under Section 63 of the Act. In sequence the provisions of Section 91 and 92 of the Act discusses about the exclusion of oral evidence by documentary evidence. It is pertinent that except under specific exemptions and provisos provided under Section 91 and 92 the witness cannot contradict with the contents of the documents. In this case on hand the endeavor of the prosecution is that to bring on record the entire above mentioned transaction were entered by Pw.23 other than the purpose and terms disclosed in the documents. It is that the transaction record in the document was never intended to be acted upon between the parties and were sham. In such case the relaxation under the proviso (1) of

Section 91 I.E. Act where something is required to brought on record 95 C.C.03/2005/I CBI Court/VSP to invalidate the document and extent of oral evidence is permissible.

The prosecution is always entitled to prove the reality of the transaction and that Pw.23 never intended to act upon and that the intention prefixing is totally different.

131. However the proof of fact and burden of proving the same on prosecution is heavier and it never shifts. The burden on the prosecution shall never end on mere creation of suspicious. The fact alleged against the accused needs to be proved beyond all reasonable doubt. Particularly when the prosecution intends to prove a fact based on the the evidence of Accomplice.

132. Evidence of accomplice :It is evident on the record that PW.23

K.Anji Babu filed Crl.M.P.285/2004 under Section 306Cr.P.C and

Section 5(2) of P.C Act seeking tender of pardon even before filing of charge sheet. The preliminary examination of the petitioner K.Anji

Babu was made on 24.06.2004 and his statement was recorded on 16.07.2004 in the open Court. Subsequently the petition was allowed as per Orders dated 21.07.2004.Beforediscussing the merits of the evidence of Pw.23 it is necessary to overview the law relating to test evidentiary value of an Accomplice under illustration(b) of Section 114 and Section 133 of I.E Act. They read as follows :

Section 133: Accomplice.—An accomplice shall be a competent witness against an accused person; and a conviction is not illegal merely because it proceeds upon the uncorroborated testimony of an accomplice.

Section 114(b) :

96 C.C.03/2005/I CBI Court/VSP

(b) That an accomplice is unworthy of credit, unless he is corroborated in material particulars;

133. Precisely to define an accomplice is a guilty of associate or partner crime, a person who is connected with the offence, who make admission of facts showing that he had a conscious hand. The combined effect of Section 133 and 114(b) illustration is that it is not illegal to convict a person on the uncorroborated testimony of an accomplice. However the illustration under Section 114(b) of I.E.Act lays down a rule of prudence that an accomplice is unworthy of credit unless his evidence is corroborated in material particulars. The rule of law accepted as per the precedents is that the evidence accomplice must satisfy two steps firstly the evidence must show he is a reliable witness and secondly his evidence must receive sufficient corroboration.

134. In this case on hand the contention raised is that by the accused that Pw.23 was not shown as accused at any point of time by the investigating agency and was never arrested in connection with the crime. There is nothing on record to show Pw.23 was co-accused along with the accused officer. It was reiterated that Pw.23 was forced to be an accomplice and that his statement were made under the compulsion of the CBI officials. Accordingly pleads that he is not a trustworthy witness and in view of number of contradictions cited in his evidence prays that the evidence of Pw.23 cannot be relied upon in favour of the prosecution.

97 C.C.03/2005/I CBI Court/VSP

135. The English law defines the approver as “ one who confesses himself guilty of felony and accuses others of the same crime to safe himself from punishment. Similarly The Black Law Dictionary defines accomplice as “ a person who knowingly, voluntarily and it common intent with the principle offender units in the commission of a crime, one who is in somewhere concerned or associated in commission of crime; partaker of guilt; one who aids or assist or is an accessory. These two definitions make it clear that every approver is an accomplice but need not be vice-versa.

136. The provisions of Section 306 Cr.P.C dealing with tender of pardon to accomplice held as follows:

306. Tender of pardon to accomplice.

(1) With a view to obtaining the evidence of any person supposed to have been directly or indirectly concerned in or privy to an offence to which this section applies, the Chief Judicial Magistrate or a

Metropolitan Magistrate at any stage of the investigation or inquiry into, or the trial of, the offence, and the Magistrate of the first class inquiring into or trying the offence, at any stage of the inquiry or trial, may tender a pardon to such person on condition of his making a full and true disclosure of the whole of the circumstances within his knowledge relative to the offence and to every other person concerned, whether as principal or abettor, in the commission thereof.

137. Initially the provisions of the above referred Section expresses a flexibility including any person supposed to have been directly or indirectly concerned or privy to an offence, entitled to seek tender of pardon as accomplice . This includes any person who was in privity to 98 C.C.03/2005/I CBI Court/VSP the offence. There is no specific averment that the accused or co- accused is alone entitled to seek tender of pardon. However the subsequent sub sections when read along Section 308 Cr.P.C dealing with trial of the persons not complying the conditions of the pardon under Section 306 and 307 Cr.P.C it makes it evident that an accomplice is undoubtedly Participes criminis i.e., participant in crime, whether principle or accessories before or after the fact or person committing, procuring or aiding or abetting. In this case on hand

Pw.23 was never cited as accused in the initial FIR or in the charge sheet and this fact is determining on merits.

138. As already stated supra the evidence of accomplice requires both reliability and corroboration as such he himself contributed to the accused for the commission of alleged offence. The reliability of the evidence of the accomplice is always put to question unless and until it was found credible and cogent under the circumstances of the case and the other existing evidence on record . In this regard when the cross examination of Pw.23 looked into, he stated that his statement was recorded by CBI officials for two to three times on 16.03.2001, one month thereafter when they seized the original of

Ex.P55 and at the time of tendering pardon. He further stated that he was made to stay at CBI office during the day time for about three days continuously after the seizure of agreement from him. He admitted that on the advice of CBI he got the affidavit prepare through his advocate and presented before the Court and the affidavit was presented before the Court after it was seen by the CBI officer and he furnished a copy of the affidavit to them. He categorically admitted that at the instance of CBI and at their 99 C.C.03/2005/I CBI Court/VSP instructions the contents of petition in Crl.M.P.285/2004 was incorporated and further admitted that the petition in Crl.M.P.285/2004 was prepared by the CBI and made him present before the Court.

The tender of pardon can be extended to accomplice at any stage of the investigation or enquiry into or trial of the offence and it is not extraneous to presume the investigating agency or the prosecution bargaining with the accomplice to disclose the facts to the Court.

These circumstances, gathers the basis for the established principles that the testimony of accomplice is to be corroborated in all the material aspects.

139. In Ravinder Singh v. State of Haryana (1997) 11 SCC 720 the Hon’ble Apex Court observed that:

“An approver is a most unworthy friend, if at all, and he having bargained for his immunity, must prove his worthiness for credibility in Court. This test is fulfilled, firstly if the story he relates involves him in the crime and appears intrinsically to be a natural and probable catalogue of events that had taken place. Secondly, once that hurdle is crossed, the story given by the approver so far as the accused on trial is concerned, must implicate him in such a manner as to give rise to a conclusion of guilt beyond reasonable doubt”.

140. In view of the above case law it is evident that the evidence of accomplice warrants a corroboration which renders his evidence probable, true and reasonable safe to act upon. The similar proposition was held by Hon’ble Apex Court in Sarwan Singh Rattan 100 C.C.03/2005/I CBI Court/VSP

Singh v. State of Punjab (AIR 1957(SC 637)); Haricharan Kurmi

and another v. State of Bihar (AIR 1964 SC 1184); Pira Singh v.

State Punjab(AIR 1969 SC 961); Rampal Pithwa Rahidas and

others v. State of Maharastra (1994 SCC(Cri)851) and Bangaru

Laxman v. State(through CBI) and another ((2012) 1 SCC 500).

In this case the persuasion of the CBI officials on the PW.23 is clearly evident from the statement made in his cross examination and the involvement of the investigating agency in filing Crl.M.P.284/2005 is also apparent. It is not hazardous if the said persuasion by the investigating agency is to being out the true facts of the case. But in case if the evidence of accomplice before the court comes out in different colour with a blemish and taint of being concocted the role of investigating agency remains suspicious interfering with the trustworthiness of the accomplice.

141. Coming to the evidence of Pw.23 it was completely concentrated to bring on record that Pw.23 K.Anji Babu executed Ex.P55 agreement of sale dated 03.03.2001 on stamp papers antedated, purchased by him on later date other than 02.03.2001 from Pw.7 Smt.I.Vijaya

Lakshmi. It is also stated by him that he never paid any consideration as such Rs.25,000/- on 03.03.2001, Rs.1,00,000/- on 08.03.2001 and Rs.2,50,000/- on 13.03.2001 as averred by the accused and the agreement under Ex.P55 was executed to help the accused to accord an explanation to the amount seizure from him during the trap laid in RC.8(A)/2001 and never intended to act upon.

However the evidence of Pw.7 certified stamp vendor proves to be self-contradictory to the prosecution version and there is no record to 101 C.C.03/2005/I CBI Court/VSP show that the Pw23 purchased the stamp papers bearing Sl.Nos.3031 and 3032 from Pw.7 other than the date i.e., 02.03.2001 mentioned in

Ex.P21 register maintained by Pw.7. It is not the contention of the prosecution that Pw.7 was involved in falsification of record and hand- in-glove with accused. The prosecution cannot lead adverse evidence which is self-destructive. Even the evidence of Pw.23 only discloses that these stamp papers were purchased on subsequent date to the date of agreement and he do not remember on which date the agreement was scribed. Whenever the witness is an accomplice his evidence is required to be disclosing the complete facts in his knowledge. It is Pw.23 who executed the agreement under Ex.P55.

When he claims that it was scribed on stamp papers purchased subsequently other than the date mentioned on it, there is an obligation rests on him under Section 106 Indian Evidence Act to specify the actual date on which the stamps were purchased and on which date the agreement was executed irrespective of the intention to act upon as it is a different fact.

142. Mere mentioning that the stamps were purchased on later date and agreement was written on later date does not inspires his truthfulness. Pw.23 being the person who wishes the Court to believe in existence of fact , the burden lies on him under Section 103 of I.E.

Act to prove the same at least to the extent of preponderance of possibility. Particularly when the law presumes affirmative, negative has to be proved. Particularly of a document corroborated by the other evidence as such by the evidence of attestors Dw.3 and Dw.4 as well as stamp vendor Pw.7 as in this case. The proof of fact led by the prosecution should be backed by some intelligent reasoning and 102 C.C.03/2005/I CBI Court/VSP principle of prudence. It is not only the case on hand Pw.23 is unable to prove the agreement under Ex.P55 as fabricated, antedated, unintended and not acted upon but the merits lies in the fact proved by the accused by establishing reasonable evidence through

Dw.3 and Dw.4 who clearly deposed about the passing of consideration from Pw.23 to accused. It is further damages the evidence of Pw.23 who in cross examination made admissions in contrary. Irrespective of his evidence, Pw.23 was never forbidden from filing his account statements, income tax returns to prove that no monetary transactions akin to the consideration passed under Ex.P55 took place on particular dates. The denial of the prosecution that the accused did not given reasonable explanation for the amount of Rs.3,63,700/- seized from his office and residence stands alone and the stray statement of Pw.23 without any corroboration and further negated by defence evidence and evidence of Pw.7. The burden on prosecution still suffers incompleteness for non-examination of the scribe of the document nor any other persons acquainted with the transactions.

143. Even considering the aspects of amount lent on Ex.P48 promissory note, they worth no merits for inherent contradiction of contents as already discussed above. Though the promissory notes under Ex.P45 are considered to be true for argument sake, they fail for want of consideration as admitted by Pw.23. Further the evidence of

Pw.17 in his cross examination categorically says that the promissory notes under Ex.P48 are not seized under Ex.P47 search list. In view of the evidence of Pw.17 it is for the prosecution to bring on record from where the promissory notes under Ex.P48 were brought into existence.

It is similar case with the loan amount of Rs.1,00,000/- lent to 103 C.C.03/2005/I CBI Court/VSP

G.Venkayya mentioning at Item No.26 of Statement-D. Even considering the same to be true receiving loan falls under the head of income and not under the expenditure list. Irrespective of the same

Pw.23 failed to bring on record either oral or documentary to affirm that the said amount was lent to the accused and not G.Venkayya.

144. It is also evident from the record that the accused intimated about his agreement with Anji Babu for sale of his house at

Kakinada which was marked under Ex.P53(B) with consent of both sides. In fact the entire file containing intimations under Rule 18 of

CCS(Conduct) Rules relating to the accused along with order sheets was handed over to the investigating officer by the then

Commissioner of Income Tax vide letter dated 17.4.2001. This gives valid presumption that the accused intimated the transaction with

K.Anji Babu to his department much prior to 17.04.2001. It is also evident that the accused filed Crl.M.P.78/2004 under Section 451 r/w 457 Cr.P.C on 23.02.2004 contending that the amount of Rs.2,43,200/- and Rs.11,20,700/- were seized from his office and residence by the investigating agency in course of conducting searches at his office and residential premises in RC 8(A)/2001 and claims that the said amount was no way related to his crime and sought for return of the same or to direct the respondent to deposit the same in any nationalized bank.

145. The accused filed similar petition Crl.M.P.141/2001 in RC 8(A)/2001 on 09.04.2001 disclosing the entire facts about the agreement with K.Anji Babu and receiving the seized amount as consideration under the said agreement of sale dated 03.03.2001 for 104 C.C.03/2005/I CBI Court/VSP sale of his house at Kakinada. The same was subsequently closed as not pressed by the petitioner preserving his right to claim the same at later date. However during the disposal of C.C.20/2001 in its judgment dated 02.06.2006 this court made an averment that the said fact is not taken into consideration in the Judgment as the same is open for discussion in the present C.C.3/2005 pending as on date on the file of this Court against the accused.

146. It is pertinent that evenprior to the date of filing

Crl.M.P.141/2001 in R.C.8(A)/2001 on 09.04.2001 by the accused,

the investigating agency is continuing its investigation and registered

FIR in RC 35(A)/2002 on 01.11.2002, the charge sheet was filed on 26.07.2004 almost two years after registering the FIR. It is most surprising that the investigating agency did not take any initiation to produce Pw.23 as an approver before this Court and it is Pw.23 himself approached this Court seeking tender of pardon vide Crl.M.P.285/2004 on 08.06.2004, and notice were issued to the prosecution on 09.06.2004, and preliminary enquiry conducted on 26.04.2004 thereafter the matter was posted for recording the statement of accomplice/Pw.23 on 16.08.2004. However Pw.23 made a written request before this Court to record his statement on 06.08.2004 as he was chronic patient of BP and sugar, accordingly his statement was recorded on 16.07.2004. The matter still remains ambiguous as to why the investigating officer remains silent since 09.04.2001 without any action on the aspect of producing Pw.23 before this Court. Further filing of petition under Section 306 Cr.P.C by Pw.23 after pressing the

Crl.M.P.78/2004 on 08.04.2004 by the accused adds to the

suspiciousness of the investigating agency. The elaborate delay of the 105 C.C.03/2005/I CBI Court/VSP investigating agency, the uncorroborated evidence of Pw.23 without any specification or certainty totally shackles the case of the prosecution on the aspects of disproving the agreement of sale dated 03.03.2001 and promissory note under Ex.P48 and as to the loan extended to G.Venkayya by Pw.23 under Item No.26 of Statement of-

D. All these circumstances when summed up they categorically shows that the entire evidence of Pw.23 who was referred as accomplice is concocted, sham and is prejudiced by the influence of investigating agency. In Haricharan Kurmi and another v State of Bihar(supra) it has been held that in dealing with a case against the accused person the Court cannot start with a confession of co-accused; it must begin on other evidence adduced by the prosecution after it has formed its opinion with regard to the quality and effect of said evidence, then it is permissible to turn to the confession in order to receive assurance to the conclusion of the guilt which the judicial mind is about to reach on the said other evidence and that the confession of co-accused person cannot be treated as substantive evidence and can be pressed into service only when the Court is inclined to accept the other evidence and feels necessity of seeking an assurance in support of his conclusion deducible from the said evidence. In this case on hand the prosecution case entirely incepted from the statement of PW.23 with remained foiled on merits and remained uncorroborated.

Accordingly the entire evidence of PW.23 is ruled out and concluded to be unreliable. The Prosecution completely failed to disprove the agreement of sale dated 03.03.2001 in letter and spirit and equally failed to prove the transactions under Item Nos.13,14 and 26 of

Statement-D Expenditure against the accused.

106 C.C.03/2005/I CBI Court/VSP

147. In view of the above discussion, the accused is entitled for inclusion of amount of Rs.3,75,000/- received by him towards advance sale consideration received from Pw.23 to disposal of his house at

Kakinada as additional income under Statement-C. Consequently the amounts under Item Nos.13 and 14 are deleted from Statement-B.

Similarly the accused is also entitled for deletion of Item No.13,14 and 26 from Statement-D expenditure.

148. Item No.18: Sale consideration received by selling

National Savings Certificate

The plea of the accused is that he purchased National Savings

Certificate(NSC) prior to the date of the check period and subsequently during the check period he disposed off the same for Rs.2,80,000/- and purchased 112 Indira Vikas Patras(IVS for short) covered under 12 of Statement-B. It is further submitted that the accused intimated the transaction to his department and reflected the income in the income returns for the financial year 1999-2000 covered under Ex.P76. The counsel for the accused refers to the note on the rare side of the page in Ex.P76 “ computation of total income indicates that I purchased NSCs from time to time ever since I joined in service in

Income Tax department for Rs.1,50,000/- and intimated to the department at the respective stations, were sold away during April and May, 1999. The maturity value of Rs.2,80,000/- were invested by purchasing IVP certificates. Since it is an investment of both savings no tax is payable. Hence no tax is payable”. The arguments of the defence is that this amount is to be considered as additional income of the accused.

107 C.C.03/2005/I CBI Court/VSP

149. It is not in dispute that 112 number of Indira Vikas Patras of face value of Rs.2,500/- each were purchased on 09.04.1999, 12.4.1999, 23.04.1999, 24.09.1999, 29.05.1999 by the accused for total worth of Rs.2,80,000/- and the same were mentioned in Item

No.12 of Statement-B as asset at the end of the check period. In fact these 112 Indira Vikas Patras were seized during the locker operation on 09.04.2001 under Exs.P43 as per the evidence of mediator Pw.18,

Pw.19 the then Dy.Manager, Vysa Bank, Vizianagaram and Pw.24 the

Investigating Officer. Though these documents were seized from the locker in the name of one Kameswara Rao maintained at Vysa Bank at

Vizianagaram the same was not disputed by the accused. The argument of the accused is twofold, firstly the purchased National

Savings Certificate(NSC) prior to the check period and disposed off for Rs.2,80,000/- during the check period i.e., in the month of April and

May, 1999. There is obligation on the accused to show that he purchased NSC certificates worth value Rs.1,50,000/- prior to check period i.e., 01.01.1998. However this item was not shown as asset at the beginning of the check period and the accused never raised any point on it except reiterating the statement in his chief examination as DW.16. Secondly the argument of the accused is that he disposed off the said NSCs during the period April and May, 1999 for Rs.2,80,000/- and re-invested the amount by purchasing 112

Indira Vikas Patras worth Rs.2,80,000/-. The accused did not file any document in support of his contention as to the sale of the above said NSCs in the month of April and May, 1999. Though it was contended that the said disposal and purchase was intimated to the 108 C.C.03/2005/I CBI Court/VSP department no specific document was produced in the Court. The only supporting document is the endorsement made by the accused on the rare side of page containing computation of total income annexed to the income tax returns for assessment year 1999-2000 under Ex.P76. Unless and until the accused produced authenticated document disclosing the above said purchase and sale of NSCs, the subsequent purchase of Indira Vikas Patras mentioned at Item No.12 of Statement-B cannot be deleted. In fact the purchase of these 112

Indira Vikas Patras contributes to the expenditure of the accused which reciprocates under Statement-B as asset at the end of the check period. Accordingly the argument of the accused on this point to add the amount of Rs.2,80,000/- as additional income is negated.

Further there are two miscellaneous items with regard to which the accused examined DW.1, DW.7, DW.9, DW.11. Initially the evidence of

Dw.1 refers about the payment of Rs.10,000/- by way of cheque to

Smt.Lakshmi on behalf of Capital Growth Consultancy. Secondly the evidence of Dw.9 reflects the repayment of Rs.4,000/- was hand loan in the year 1998. However except the oral evidence of DW.1 and DW.9 there is no corroboration and the amounts mentioned by DW.1 and

Dw.9 does not attracts any merits for inclusion under Statement-C.

Similarly the evidence of DW.11 the then income tax officer,

Visakhapatnam elicit about the intimation of the accused dated 27.03.2001 with regard to the agreement dated 03.03.2001 in the name of Smt.Lakshmi and himself from M.S.N.Raju for sale consideration of Rs.6,00,000/- to purchase 1920sq.yards at Block No.5,

Railwaystation Road, Vizianagaram and the said intimation form was marked as Ex.P53(A) with consent. This agreement marked as Ex.D26 was supported by the evidence of DW.7 M.S.S.R.Varma the son of 109 C.C.03/2005/I CBI Court/VSP

M.S.S.R.S.N.Raju who died on 19.05.2005 as per Ex.X5. According to

DW.7 the transaction under Ex.D26 marked not fructified and on serving notice under Ex.D27 his father sold the property to the third parties. Pertinently this transaction under Ex.D26 was not disputed by the prosecution. However the return of advance consideration by

M.S.N.Raju was not corroborated with any documentary evidence except that of the oral evidence of DW.7. Hence this amount is also not entitled to be included in Statement-C.

150. Conclusion as to Statement-C:

In view of the above discussion, the total income under

Staement-C arrived by the Court is concluded as 14,96,970/- as follows:

Sl.NParticulars Amount as Amount asAmount o.per theper the AOarrived by prosecutionthe court according to charge sheet

1.Value of undisputed2,21,9562,21,9562,21,956 income of accused (16 items)

2.Undisputed income94,96194,96194,961 standing in the name of wife of accused (17 items)

3.Disputed income of2,73,9742,90,4972,78,283 the accused (2 items) Item No.3 net salary 2,70,3742,76,8972,78,283 Item No.18 interest3,60014,000- on Durga finance

4. Income disputed in1,07,8593,48,3593,72,656 the name of wife of accused ( 5 items) Item Nos.34,35,3623,35973,35973,361 Item No.394,50075,00099,095 Item No.4080,0002,00,2002,00,200

Additional items14,69,6125,40,477

claimed by the accused (18 items )

1. Loan -5,44,26644,266 110 C.C.03/2005/I CBI Court/VSP repayment by M.Venkeswara rao M.Lakhsmi (wife)

2. Premature -87,53714,092 closure of FD Akshya Deposit certificate (Item No.16 and 17 of Statement D) (wife)

3. Sale of -17,7754,775 reliance shares (Item No.18 of Statement-D) (wife)

4. Cybermate -20,3509,660 shares (item No.20 of Statement D) (wife)

5. Withdrawal -5096414,964 from Jaganadh Vidyapeet (Item No.21 and 22 of Statement-D) (wife)

6. Amount taken -22,00022,000 as overdraft loan (wife)

7. Divided from -250250 KCP sugars (wife)

8. Refund of -870870 telephone deposit (accused)

9. Payment by -6,000- DSS Narayana Raju (wife)

10.-16,0006000 Premature withdrawals from Gayatri Vidyaparished (wife)

11.-48,60048,600 Professional income of Smt.Lakhsmi (wife)

12. Amount -3,75,0003,75,000 received from 111 C.C.03/2005/I CBI Court/VSP

Anji Babu including item No.13 & 14 statement B(accused)

13. Sale of 2,80,000- National Saving Certificate relates to Item No.12 of Statement- D(accused) Total 6,98,752/-24,25,385/-15,08,333 The value of item (-)11,363 No.33 is reduced as per discussion at Para No.95 14,96,970

XIX. Sub point (iv )

The total value of expenditure under Statement-D of charge sheet is Rs.20,33,025.05. However there is a clerical error in totaling and the corrected value as per the items mentioned in the charge sheet is Rs.23,65,380/-. Considering the arithmetical correction the total expenditure of the accused was herein determined under the following sub point:

iv) Whether the expenditure of the accused is

Rs.20,33,025.05 as shown in Statement-D during the

check period i.e., from 01.01.1998 to 09.04.2001?

Expenditure during the check period as per the

prosecution under Statement –D Sl.Name of the DocumentRs.Ps No. 1Payment to Sri K.Raja Ratnam W/o Sri13,000-00 K.Satyanarana by DD dt.16.12.98 of SBI, VizianagaramMainBranchbySri M.Subramanyam(cheque No.5/573-369589 dt.12- 12-98 of the SBI Vizianagaram for Rs.13,000+5,000+2000) 2DD commission for the above DD 39-00 3Payment to Sri K.Satyanarayana by DD5,000-00 dt.16.12.98 of SBI, Vizianagaram Main Branch, by 112 C.C.03/2005/I CBI Court/VSP

Sri M.Subramanyam 4 DD commission for the above DD25-00 5Payment to Sri K.Satyanarayana by DD2,000-00 dt.16.12.98 of SBI, Vizianagaram Branch 6DD Commission for the above DD 25-00 7Payment of Sri M.S.N.Raju by DD No.3969511,00,200-00 dt.02.03.2001 from Bank of Baroda, Asilmetta Branch, Visakhapatnam including DD charges for purchase of site at Vizianagaram not yet Regd., 8Commission to the Vysya Bank, Vizianagaram for144-00 taking 3 DDs all dt.21.11.98 for Rs.30,000/- 9Loans to one Sri Muvva Venkateswara Rao by the5,00,000-00 wife of the accused on 14.08.2000, 15.08.2000 and 16.08.2000 in cash 10Payment of acquiring locker No.28 with Vysya2,26,372-00 Bank Ltd., Vizianagaram paid on 27-3-99 11Domestic expenditure at 30% of gross salary1,35,222-70 12Payment for acquiring Locker no.28 with Vysya1,050-00 Bank Ltd., Vizianagaram paid on 27-3-99.350-00 13Payment to Sri K.Anji babu on 04.10.200050,000-00 14Payment to Sri K.Anji babu on 04.01.20011,00,000-00 15Payment to Sri DSS Narayana Raju of Siri Shares,10,000-00 Vizianagaram on 11.6.99 by DD (through Durga Finance) DD No.27240 dt.31-7-2000 of Bank of Baroda, Asilametta branch taken by M/s Durga Finance 16Akshya FD No.0059879 with Vysya Bank,36,000-00 Vizianagaram taken on 27.11.99 the wife of Sri M.Subramanyam 17Akshya FD No.0059879 with Vysya Bank,50,000-00 Vizianagaram taken on 27.11.99 the wife of Sri M.Subramanyam 18Purchase of 100 shares of Reliance Industries13,000-00 LTd., by the wife of Sri M.Subramanyam on 30.06.99 from M/s DSS Nayana Raju, Vijayanagaram 19Purchase of 100 shares of Copron by the wife of11,363-35 Sri M.Subramanyam on 23.08.99 M/s DSS Narayana Raju, Vizianagaram 20Purchase of 100 shares of Cybermate Info on10,690-00 10.09.99 by the wife of Sri M.Subramanyam from 113 C.C.03/2005/I CBI Court/VSP

M/s DSS Narayana Raju, Vizianagaram 21DepositwithJaganadhVidyaPeeth,18,000-00 Visakhapatnam by the wife Sri M.Subramanyam on 5.2.98 in cash 22DepositwithJagannadhVidyaPeeth,18,000-00 VisakhapatnambythewifeofSri M.Subramanyam on 28.01.98 in cash 23PaymenttoV.JagannadhamChartered1,00,000-00 Accountant, Visakhapatnam on 8.3.2001 by the father of law of Sri M.Subramanyam 24Alleged payment of Rs.70,000/- to the daughter70,000-00 of A-1 by his father in law for purchase of a Plot No.47, Resapuvanipalem, Visakhapatnam and a house in the said Plot in 1998, by the daughter of A1(shown by her in her IT returns as one of the sources for purchase of the house) 25Alleged receipt of Rs.6.30lacs, by the father in6,30,000-00 law of A1 (from the persons to whom the alleged to have given as loans and advances) for purchase of 8 shops of 2700 sft., in G.K.Mansion, Peda Walter, Visakhapatnam in 1998 (shown as one of the sources for purchase of the shops in his IT returns) 26 Alleged house loan of Rs.1,00,000/- taken by1,00,000-00 the father in law Sri M.Subramanyam from Sri K.Anjibabu by purchase 8 shops 27Expenses incurred of Sri M.Subramanyam95,900-00 towards the marriage in his daughter Smt.T.Bahrathi 28Amount paid to Sri V.Jagannadham in72,000-00 installments in 1998 and 99 of Sri M.Subramanyam against a loan of Rs.65,000/- gives to Smt.T.Bharathi, his daughter

Total: 20,33,025.05

a) Admitted expenditure during the check period as per the accused. The following 8 items of value Rs.21,633/- under

Statement-D 114 C.C.03/2005/I CBI Court/VSP

Undisputed Items-Accused

Sl.Item No.Description of the itemRs.Ps No.as per charge sheet 11Payment to Sri K.Raja Ratnam W/o Sri13,000-00 K.Satyanarana by DD dt.16.12.98 of SBI, Vizianagaram Main Branch by Sri M.Subramanyam(chequeNo.5/573- 369589 dt.12-12-98 of the SBI Vizianagaram for Rs.13,000+5,000+ 2000) 22DD commission for the above DD 39-00 33. Payment to Sri K.Satyanarayana by DD5,000-00 dt.16.12.98 of SBI, Vizianagaram Main Branch, by Sri M.Subramanyam 44 DD commission for the above DD25-00 55Payment to Sri K.Satyanarana by DD2,000-00 dt.16.12.98 of SBI, Vizianagaram Branch 66DD Commission for the above DD 25-00 78Commission to the Vysya Bank,144-00 Vizianagaram for taking 3 DDs all dt.21.11.98 for Rs.30,000/- 812Payment for acquiring Locker no.28 with1400-00 Vysya Bank LTd., Vizianagaram paid on 27-3-99.(1050+350)

Total: 21,633-00

b) The accused also admitted the expenditure under the following 10 items of value Rs.7,67,253/- under Statement-D. However claims them to be the expenditure of his wife.

Undisputed items – wife of accused

SlItemDescription of the item Rs.Ps No. as No per charge t sheet 97Payment of Sri M.S.N.Raju by DD1,00,200-00 No.396951 dt.02.03.2001 from Bank of Baroda,AsilmettaBranch, Visakhapatnam including DD charges for purchase of site at Vizianagaram not yet 115 C.C.03/2005/I CBI Court/VSP

Regd., 109Loans to one Sri Muvva Venkateswara5,00,000-00 Rao by the wife of the accused on 14.08.2000, 15.08.2000 and 16.08.2000 in cash 1115Payment to Sri DSS Narayana RAju of Siri10,000-00 Shares, Vizianagaram on 11.6.99 by DD (through Durga Finance) DD No.27240 dt.31-7-2000 of Bank of Baroda, Asilametta branch taken by M/s Durga Finance 1216Akshya FD No.0059879 with Vysya Bank,36,000-00 Vizianagaram taken on 27.11.99 the wife of Sri M.Subramanyam 1317Akshya FD No.0059879 with Vysya Bank,50,000-00 Vizianagaram taken on 27.11.99 the wife of Sri M.Subramanyam 1418Purchase of 100 shares of Reliance13,000-00 Industries LTd., by the wife of Sri M.Subramanyam on 30.06.99 from M/s DSS Nayana Raju, Vijayanagaram 1519Purchase of 100 shares of Copron by the11,363-00 wife of Sri M.Subramanyam on 23.08.99 M/s DSS Narayana Raju, Vizianagaram 1620Purchase of 100 shares of Cybermate10,690-00 Info on 10.09.99 by the wife of Sri M.SubramanyamfromM/sDSS Narayana Raju, Vizianagaram 1721Deposit with Jaganadh Vidya Peeth,18,000-00 Visakhapatnam by the wife Sri M.Subramanyam on 5.2.98 in cash 1822Deposit with Jagannadh Vidya Peeth,18,000-00 Visakhapatnam by the wife of Sri M.Subramanyam on 28.01.98 in cash

Total: 7,67,253-00

c) The following items were disputed by the accused in respect of their monetary value:

Sl.Item as perDescriptionAmount No.statement-D

1.10Payment to GMR institute 2,26,372-00 of Technology, Rajam for the education of the son of 116 C.C.03/2005/I CBI Court/VSP the accused

2.11Domestic expenditure at1,35,222-70 30% of gross salary

151. Item No.10:

The contention of the accused is that he incurred only a sum of

Rs.72,000/- and Rs.144/- for demand draft charges towards the educational expenditure of his son Ravi Kumar. However the contention of the prosecution is that the accused paid Rs.2,26,371/- towards educational expenditure. In this regard the prosecution examined

Pw.31 and relied upon the contents of the documents marked under

Ex.P83. Pw.31 K.L.Narayana the then Correspondent in GMR, Institute of Technology during the year 2002-2004 testified that “ on the requisition given by the CBI Department I have furnished the details of tuition fee and hostel fees and miscellaneous fee related to

Mr.M.V.S.S.R.A.Ravi Kumar son of Mr.M.Subramanyam for the period between 04-11-1998 and 06-08-2001. Ex.P83 is the letter dated 08- 02-2003 addressed by me to K.C.V.Reddy, DSP, CBI, Visakhapatnam.

152. The learned counsel for the accused raised objection at the time of marking Ex.P83 on the ground that it is hit by Section 161Cr.P.C and argued that during the course of investigation IO should not compel or instruct any witness to address signed letters containing case details, which is nothing but nailing down the witness to stick to the contents in the said letter and the same is against the spirit of Section 161Cr.P.C. It is further submitted that the Investigating Officer inspite of securing necessary fee payment register, receipts and other records 117 C.C.03/2005/I CBI Court/VSP obtained Ex.P83 letter from Pw.31 and attempted to exaggerate the fee paid by the accused.

153. The bare perusal of the contents of Ex.P83 categorically shows that the accused paid an amount of Rs.2,26,372/- to GMR Institute of

Technology, Rajam towards the education of his son during the check period. The contention of the accused is that the contents of Ex.P83 is incorrect and ex.P83 which does not contain any mode of payment or fee receipt number was pressed into service with malafide intention by Pw.31 due to pressure of CBI officials in connection with CC 20/2001, wherein the entire business Groups of GMR(Grandhi

Mallikarjuna Rao) are under scrutiny of CBI. However there is no evidence oral or documentary to show that Pw.31 was persuaded by the CBI officials. Irrespective of the same it is evident that Pw.31 did not produce any concerned registers or account books based on which the calculation in Ex.P81 were made. Accordingly the intimation letters made by the accused officer to the department with regard to fee paid towards education of his son under Ex.P53(A) becomes relevant.

154. In this regard the order sheet approved on 19.07.1999 under

Ex.P53 reads about the intimation of the accused regarding the expenditure incurred for the admission of his son in the Engineering college. It discloses that the accused intimated that he has to incur an expenditure of Rs.82,000/- for admission of his son in Engineering,

Rajam and proposed to meet his expenditure from his personal savings of Rs.32,000/- and part final withdrawal from GPF amount into

Rs.50,000/-. The accused also furnished the copies of bank account 118 C.C.03/2005/I CBI Court/VSP bearing SB A/c No.41/805 of SBI and SB A/c No.2042(5015) of Sri

Visakha Grameena Bank, Vizianagaram and proceedings of sanctioning part final withdrawal of GPF. The intimation as to the payment was given under Form-II dated 05.11.1998. This document remains undisputed and the fact is evident that the accused officer intimated about incurring expenditure of Rs.82,000/- for admission of his son.

The subsequent note dated 22.07.1999 placed on record goes to show that the accused officer intimated about the payment of

Rs.67,000/- towards the college fee of his son along with the sources.

This was supported by Form-II dated along with the covering letter

dated 10.12.1999 payment of fee for the year 1998-1999. The

subsequent intimation was with regard to the payment of

Rs.60,000/- intimated to the department on 22.10.2000 along with the sources and the same is evident from the Form-II dated 22.10.2000. So the total expenditure incurred towards the education of his son by the accused during the check period as per Form-II intimations under Ex.P53 is Rs.2,09,000/-. It is evident from the contents of Ex.P83 that the fee particulars of the final year are beyond the check period and thereby omitted from consideration.

The brief comparison of the pay particulars under Ex.P83 with that of the intimation made by the accused under Ex.P53 is Rs.2,26,372- 2,09,000/-=17,372/-. All the three intimations made by the accused are supported by the accurate financial sources and the prosecution is not in dispute with the documents under Ex.P53. The accused in his examination in chief as DW.16 stated that he spent only Rs.72,144/- paying to GMR Institute of Technology, Rajam as per Ex.P60 towards education of his son. Ex.P60 receipt dt.12.12.2003 along with three DD applications. All the DD applications are dated 21.11.1998 and receipt 119 C.C.03/2005/I CBI Court/VSP

dated 12.12.2003 was issued by Assistant Manager, Vysya Bank to

the Dy.Superintendnet of Police, CBI. The above said receipt deals with the collection of DDs from the bank by the investigating officer. It cannot be expected that the accused paid the entire fees for three academic years in the year 1998 itself. Accordingly coming back to the evidence of PW.31 and the contents of Ex.P83, they are not corroborated by any other documentary records such as fee registers or account books. The evidence of Pw.31 therefore is not taken into consideration. In view of the above discussion, the calculation accorded vide Form-II dated 05.11.1998, 10.12.1999 and 22.10.2000 under Ex.P53 which are undisputed are taken into consideration as the expenditure incurred by the accused towards education of his son during the check period is concluded as Rs.2,09,000/- (Rs.82,000+67,000+60,000).

155. Item No.11 :

The contention of the accused is that his domestic expenditure is not more than 25% of his net salary and that when he informed the same to the investigating officer to instructed him to address a letter.

It is also submitted when he addressed letter under Ex.P81 to the

Superintendent of Police, CBI wherein he agreed for 25% of net salary as domestic expenditure inspite of the same the investigating office without any basis calculated the domestic expenditure of the accused as 30% of gross salary against the settled principles. Hence prays to consider the domestic expenditure as 25% of net salary.

According to the charge sheet the domestic expenditure of the accused is shown Rs.1,35,222/- at Item No.11 of Statement-D. The prosecution did not accord any plausible explanation how this amount was 120 C.C.03/2005/I CBI Court/VSP arrived. As per the ratio laid down by Hon'ble Apex Court in Sajjan

Singh Vs. State of Punjab reported in AIR 1964 Supreme Court

464, 1/3rd income is to be taken as non-verifiable expenditure. As per the evidence of the prosecution according to Pw.27 the gross salary of the accused is Rs.4,33,141/- and net salary of the accused is

Rs.2,71,760+6,523(as per discussion for Item No.3 of Statement-C).

Accordingly 1/3rd of the same would be Rs.92,761/-. Therefore the value of the domestic expenditure under Item No.12 of Statement-

D is considered as Rs.92,761/-. Except the above mentioned Item

No.10 and 11 of Statement-D all other items were undisputed by the accused with regard to their monetary value and the dispute sustains only with regard to the point whether the transaction stands in the name of the family members of accused or not or irrelevant. The discussion thereto was as follows:

156. Items fully disputed by the accused under Statement-D.

Sl.No.Item Description of the Item Amount No.as per charge sheet 127Expenses incurred by the accused 95,900-00 towards marriage of his daughter Smt.Bharathi

2.28Amount paid to Sri 72,000-00 Jagannadham(PW.9) in installments in 1998-99 by accused against the loan of Rs.65,000/- given to his daughter Smt.Bharathi

157. Item No.27:

The argument of the accused is that the marriage of his daughter Smt.Bharathi was performed 16.11.1999 which is prior to 121 C.C.03/2005/I CBI Court/VSP check period and the prosecution wantonly introduced the expenditure under this item to incriminate against the accused. In this regard the prosecution did not adduce any evidence to support its contention.

However the accused himself examined as DW.16 testified that he performed the marriage of his daughter in the year 1997 by taking part final loan of Rs.80,000/- from GPF. The loan application dated 19.07.1997 and order dated 03.10.1997 are marked Ex.D39 and

Ex.D40. Similarly the evidence of DW.12 Smt.Bharathi daughter of accused also goes to show her marriage was performed in the year 1997 and corresponding wedding card is marked as Ex.D28 along with bunch of marriage greetings 89 in number as Ex.X8. The documentary contents Ex.D28 and Ex.X8 categorically discloses the marriage of the daughter of the accused was performed on 16.11.1997 which is much prior to the check period. The evidence of PW.6 and PW.9 also discloses that the marriage of Smt.Bharathi daughter of accused was held on 16.11.1997 at TTD Kalyanamandapam and they attended the same. There is no reasoning how the investigating officer included the expenditure much prior to the check period in the charge sheet.

In the fact the prosecution subsequently in its additional written arguments conceded the fact averred by the accused stating that the accused performed the marriage of his daughter on 16.11.1997 for that purpose he obtained GPF advance of Rs.50,000/- from his department on 15.11.1997 and took hand loan of Rs.20,000/- meet the total expenditure Rs.1,00,000/- as per statements 1 to V1 LD.83. The act of the investigating agency manipulating the fact apparent on record discovered in the investigation is nothing but dereliction of official duties and is not expected. Accordingly in view of the above 122 C.C.03/2005/I CBI Court/VSP discussion the expenditure under Item No.27 is completely deleted from the Statement-D.

158. Item No.28:

The version of the prosecution is that smt.M.Bharathi daughter of the accused obtained loan of Rs.65,000/- from Sri Jagannadham and the accused repaid total loan amount of Rs.72,000/- on her behalf in installments during the year 1998-1999. On this aspect it is relevant to look into the evidence of PW.9 Sri V.Jagannadham surprisingly

V.Jagannadham in his entire evidence did not state anywhere about lending money to Smt.Bharathi or about subsequent repayment either by her or the accused on her behalf. The prosecution did not produce any document to bring on record the alleged loan transaction between V.Jagannadham and Smt.Bharathi. The charge sheet does not even disclose the date on which the alleged loan was transacted between Smt.Bharathi and V.Jagannadham. The burden of prosecution was already referred above is to prove an allegation against the accused beyond reasonable doubt. The attempt of a prosecution to incriminate against the accused by mere raising an allegations in the charge sheet does not relieve its burden. Accordingly the uncorroborated version of the prosecution with regard to expenditure of the accused under Item No.28 of Statement-D is denied from consideration. The accused is entitled for deletion of Item No.28 of

Statement-D.

159. Now the next point for consideration is that:

Whether Smt.Lakshmi, Smt.T.Bharathi and G.Venkayya

are benamidars of the accused as alleged by the prosecution?

123 C.C.03/2005/I CBI Court/VSP

The prime contention of the prosecution is that the accused amassed huge assets disproportionate to his known source of income in the name of wife, daughter and father-in-law and that they acted as benamidars for the property acquired by him. The accused denies the allegations made by the prosecution as false and baseless and contended that his wife Smt.Lakshmi, his daughter Smt.M.Bharathi and his father-in-law G.Venkayya are having their own source of income and the IT returns filed by them proves the said fact. It is also submitted that all the financial transaction alleged against accused were intimated to the income tax department and investigation officer wantonly did not considered their independent source of income and suppressed their IT returns with an intention to falsely implicate the accused in the disproportionate assets case. The learned counsel for the accused argued that the accused has no connection with financial transaction of his family members and whatever assets purchased by them, expenditure ascribed to them were met by them from their own source of income. In this aspect the counsel for the accused referred to the deposition of Smt.Lakshmi(DW.15) and Smt.Bharathi (DW.12) and Ex.D46 to Ex.D49 and Ex.P75. It is also contended that the prosecution had shown Smt.M.Lakshmi, Smt.M.Bharathi and Sri

G.Venkayya as conspirators to the alleged accusation of assets and that never intended to examine them at any point of time to discharge its burden. The counsel for the accused referred to case law between P.Satyanarayana Murthy Vs State of Andhra Pradesh,

reported in 1992 (4) SCC 39, B.T.Nagappa Vs State by

Lokayuktha Police in Crl.A.814/2010 dt.8-8-2013 of the

Honourable High Court of Karnataka and K.Goverdhan Vs State

124 C.C.03/2005/I CBI Court/VSP of A.P., reported in 2001 (1) ALD (Crl.) 886 (A.P.) with regard to the burden of proof on prosecution to prove the benami transactions.

160. The counsel for the accused argued that the prosecution ignoring the established principle that “the burden of proving a particular transaction is Benami and the owner is not real owner rests on the person asserting it to be so”, did not place any iota of evidence and alleged the AO that he acquired disproportionate assets in the name of his benamidars. It is also submitted that despite the fact that the prosecution has failed to discharge its initial burden the accused examined Smt.M.Lakhsmi, Smt.Bharathi to prove their transactions and got marked the death certificate of G.Venkayya marked as Ex.D30. Accordingly the accused pleads that the evidence of PW.12,15 and 16 and other documentary evidence establish that all the three alleged benamidars have separate independent source of income and AO has nothing to do with their financial status.

161. In consideration to the rival arguments on the above issue the following sub points are framed for determination:

1. Whether Smt.Bharathi had independent source of income ?

2. Whether Smt.Lakshmi had independent source of income ?

3. Whether Sri G.Venkayya had independent source of income?

4. Whether the prosecution to discharged its initial burden of proving the alleged benami transaction?

5. Whether the income tax returns are rebuttable and question of Conclusiveness of the income tax returns?

Sub Point No.1:

1. Whether Smt.Bharathi had independent source of income ?

125 C.C.03/2005/I CBI Court/VSP

162. The version of the accused the learned counsel for the accused submitted that Smt.Bharathi daughter of accused is having separate source of income and her financial status is completely different.

According to the accused his daughter was born in 1973 after completion of X class, she had studied in Government Polytechnic,

Bheemili and thereafter studied B.Tech in Andhra University Night

College and subsequently she persuade M.Tech at IIT Kharaghpur and got married 16.11.1997 which was prior to check period and while pursuing her B.Tech during the period 1993-1996 she used to impart tuitions to X Class and Intermediate students and thereby earn some income. She joined in Bharat Electronics, Bangalore in 1998 and also accustomed to file her income tax returns regularly. Her husband

T.Rama Murthy is working as Chief Financial officer at Manipal hospital,

Bangalore earning good amount of income. There is no necessity for the daughter of the accused depend on her father financially any time during the check period.

163. It is further pleaded that the investigation officer intentionally suppressed all these facts and tagged multiple items under Statement –B and Statement-D which related to Smt.Bharathi to the accused so as to buildup false case against him. The total list of items alleged to be the assets of the accused standing in the name of Smt.Bharathi are as follows:

Statement-A

Sl.No.Sl.No. in C.S Description of document Amount

Statement -A 1211 Gold necklace with6,219-00 126 C.C.03/2005/I CBI Court/VSP pendent weighing about 23 Gms. Purchased in 1991 2251 Gold step chain wg. About10,000-00 2 ½ tola purchased in 1994 327-inpart One gold flower out of three800-00 with hairpin

Statement-B

Sl.No.Sl.No. in C.S Description of document Amount

Statement -B 134Two small gold anklets 25Gms10,000-00 235Two small bangles 11.5gms5,000-00 3531 Gold necklace with pendent6,219-00 weighing about 23 Gms. Purchased in 1991 4581 Gold step chain wg. About 210,000-00 ½ tola purchased in 1994

5.60One gold flower out of three800-00 with hairpin (2400/3)

Statement-D

Sl.No.Sl.No. in C.S Description of document Amount

Statement -D 124Alleged payment of Rs.70,000/-70,000-00 to the daughter of A-1 by his father in law for purchase of a Plot No.47, Resapuvanipalem, Visakhapatnam and a house in the said Plot in 1998, by the daughter of A1(shown by her in her IT returns as one of the sources for purchase of the house) 228AmountpaidtoSri72,000-00 V.Jagannadham in installments in (already 1998 and 99 of Sri discussed at M.Subramanyam against a loan 127 C.C.03/2005/I CBI Court/VSP ofRs.65,000/-givestoPara No.158) Smt.T.Bharathi, his daughter

164. In order to prove the version of the prosecution with regard to the gold items claimed by Smt.Bharathi, it entirely relied upon the contents of Ex.P41 certified copy of inventory list dated 15/16.03.2001 in RC 8(A) 2001, CBI, Visakhapatnam and Ex.P42 certified copy of the locker proceedings marked through PW.18. In this regard PW.18 stated that on 09.04.2001 he acted as mediator for the locker proceedings conducted by Inspector Praveen Kumar(PW.24) at Vysya Bank,

Vizianagaram. He testified that in their presence the accused took the locker key from the Manager after duly acknowledging the same in the register. The said locker was standing in the name of Kameswara Rao who was also present there and opened the locker along with the accused. He asserted the locker proceedings by the investigating officer with regard to the 15gold ornaments and 112 Indira Vikas

Patras found in the locker. The certified copy of seizure memo dated 09.04.2001 is marked as Ex.P43. The evidence of PW.18 is in consonance with the evidence of K.Praveen Kumar(Pw.24), the then

Inspector of Police, CBI to some extent. However it is noted that Pw.24 is silent about the preparation of inventory with regard to the gold ornaments found in the locker.

165. In contrary the daughter the accused officer was examined as

Dw.12. She deposed “I am working as Member in Senior Research Staff,

CRL, Bharathi Electronics, Bangalore since 01.05.1998. My husband

T.Ramoji working as Director, finance in Manipal hospital. I am an 128 C.C.03/2005/I CBI Court/VSP income tax assessee from the assessment year 1998-1999. I have furnished my income tax files to CBI officer. My marriage was performed in the year 1997. The gold jewellery i.e., bangles two in number(Item No.50 of Ex.P41 of my daughter, pair of anklets(Item

No.49 of Ex.P41) of my daughter, gold necklace, step chain (item No.7 and 47 of Ex.P41) of mine and hairpin(item No.54 of Ex.P41) were kept with my father for safe custody. The gold step chain was presented to me by my inlaws. The other gold jewellery items were acquired by me and my husband. My daughter name of T.Sarada

Mani born in the year 2000”.

166. The accused seriously argued that the income tax returns of

Smt.Bharathi was seized by the investigating officer i.e., VKC Reddy and he acknowledged the receipt of the same vide Ex.D45 which was marked through Dw.12, however the prosecution during the entire trial suppressed the income tax details of Dw.12 and did not file the same

before the Court. The efforts made by the accused to summon the

said documents from the CBI office, Visakhapatnam vide

Crl.M.P165/2019 remained futile and the prosecution further reported

that the IT file of Smt.Bharathi was not available in the office of CBI and gave consent to mark Ex.D45 and copies of income tax returns of Smt.Bharathi vide Crl.M.P.166/2019. In consequences of the orders in the above referred Crl.M.Ps, DW.12 was again recalled as per the orders in Crl.M.P.304/2019 dated 14.03.2019 and was further examined by the counsel for the accused. The copy of receipt given by the investigating office as token of receipt of copies of income tax returns for the financial years 1997-1998 to 2000-2001 to Dw.12 was marked as Ex.D45. Further the copies of income tax returns for the financial 129 C.C.03/2005/I CBI Court/VSP years 1997-1998 to 2000-2001 corresponding to assessment years 1998-1999 to 2001-2002 were marked as Ex.D46 to Ex.D49. Dw.12 further stated that “assessment orders were passed by the income tax officials for those four years. The said orders were enclosed to the IT returns respectively. Those income tax returns would reflect all my income sources. I am an income tax assessee. My income sources relating to the Five gold ornaments which are disputed in this case are also mentioned in the income tax returns. The presentation of gold chain to me by my father-in-law was taken place on 16.11.1997 on the eve of my marriage”.

167. As per the evidence of Dw.12 she claims that One gold anklets wg.23gms, two small gold bangles wg.11.5gms, one gold flow with hairpin worth Rs.800/-, one gold necklace with pendent wg.23gms and one gold step chain wg.2 ½ tolas, belongs to her. Her deposition clearly shows that the gold step chain was presented by her inlaws at the time of marriage. However this gold step chain, one gold necklace with pendent and one gold flower were shown in Statement-

A at item Nos.21,25, and 27 and were also reflected in Statement-B at item Nos.58, 51,and 60. Accordingly there is much dispute with these items and want of proof with regard to the ownership of Smt.Bharathi is only auxiliary. The dispute with regard to gold anklets and two gold bangles reflected at Item No.34 and 35 of Statement-B as purchased by the accused in the year 2001. Dw.12 claims that both the items belongs to her daughter T.Saradamani born in the year 2000.

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168. The prosecution claims to have been relieved of its burden by examining PW.18, PW.24 and marking Ex.P41. The onus obviously shifts on the accused to prove that the above said gold ornaments does not belongs to him but his daughter. The close perusal of balance sheet as on 31.03.1999 annexed to the IT returns for assessment year 1999-2000 under Ex.D47 shows that DW.12 is in possession of 85gms of gold in the relevant period. Her gross salary is disclosed as

Rs.90,659/- in addition to the income from house property and other sources.

169. The gross salary of DW.12 for assessment year 2001-2002 is

Rs.1,62,298/-, for assessment year 2000-2001 is Rs.1,61,189/- and for assessment year 1999-2000 is Rs,90,659/-. The total income for assessment year 1998-1999 is shown as Rs.59,010/-. The source of income specifically for assessment year 1998-1999 is shown as income from tuitions, interest received from deposits. The prosecution nowhere disputed that DW.12 is not working as Member Senior

Research Staff, CRL, Bharathi Electronic, Bangalore since May, 1998.

The prosecution also did not dispute about the earning capacity of

T.Ramoji husband of DW.12 who is working as Director, Finance at

Manipal Hospital. It is also evident on record that the investigating officer received the income tax returns of Smt.Barathi for the financial year 1997-1998 to 2000-2001 and issued Ex.D45 receipt. These documents were not filed along with the charge sheet and when the accused is tried to summon these documents the prosecution reported that the same were not available in the office of CBI and consent for making Ex.D45. The acts of the prosecution undoubtedly gives raise to adverse presumption under the provisions of Section 114(g) of I.E.

131 C.C.03/2005/I CBI Court/VSP

Act which holds that the evidence which could be and is not produced would, if produced the unfavourable to the person who withholds it. The prosecution even subsequently did not made any attempt to rebut this presumption that may be considered against it.

170. Further, admittedly the marriage of Dw.12 was performed prior to check period. Once a daughter is married she is presumed to be segregated from her maternal family and considered as a member of matrimonial family. Particularly when the husband is well earning, the entire maintenance and expenditure of her, shall be met by her husband. The maternal family of a married women shall be concerned only with expenditure on customary practices. Considering the income of DW.12 under Ex.D46 to Ex.D.49 and the undisputed financial capacity of her husband, it is not extraneous to presume that

Dw.12 is capable of purchasing the gold items mentioned at Item

No.34 and 35 of Statement-B. In this regard her statement that the said items were kept in the custody of her father along with item

Nos.21,25 and 27 of Statement-A attracts the attention of the Court.

The stray line in the cross examination that she is not in the custody of the receipts for the purchase of the said gold items does not destroy her evidence in total as such the prosecution also did not produce receipt or bill on record to show that the said gold items were purchased by the accused during the check period, except claiming so, based upon his admitted possession under Ex.P41 inventory list. The general practice of married daughters keeping some of their gold ornaments with custody of their parents cannot be ruled out absolutely. Dw.12 in her cross examination categorically 132 C.C.03/2005/I CBI Court/VSP stated that she have no relatives at Bangalore. Hence considering both Dw.12 and her husband working, it can be presumed that

Dw.12 might have kept some gold ornaments with her parents for safe custody.

171. The factum of possession is most fundamental relation between a man and thing, which is a difficult concept to determine in the field of law. Legally speaking the concept of possession is segregated into two elements i.e., Corpus of Possession and Animus of Possession. The

Corpus of Possession determines the physical contact, control or custody of a person over a thing or object. The physical control or custody of a person over a thing must be always accompanied with an intention to exercise such control or custody which is called as

Animus possidendi. The aspect of legal ownership can be determined only when even both the elements of Corpus and Animus possidendi are present. The mere possession without the intention of the possessor to exclude others from interfering with his right over the thing or object in his custody does not alone stands as proof of his ownership and Corpus without Animus is ineffective.

172. Accordingly the burden of prosecution at this point is to prove that the gold ornaments found in the possession of the accused were purchased by him out of his funds which were not satisfactorily explained. The mere proving the possession of gold ornaments with the accused does not terminate the burden of proof on the prosecution. The prosecution should bring on record from the evidence either by oral or documentary that the above said gold ornaments were not only in the physical custody of the accused but 133 C.C.03/2005/I CBI Court/VSP also in his exclusive enjoyment excluding the others having purchased by him. When it comes to the onus of the proof on the accused as to rebutting the evidence of prosecution it is only to the extent of preponderance of possibilities and never absolute.

173. Therefore, the accused by examining his daughter DW.12 and thereby marking Ex.D46 to Ex.D49 satisfactorily explained the possession of the gold ornaments under Item Nos.34 and 35 of

Statement-B. It is convincingly brought on record by the accused that the said items actually belongs to Dw.12 and were only in his possession for safe custody. Hence it is concluded that

Smt.Bharathi is having her own independent source of income and the item Nos.34 and 35 of Statement-B are held to be exclusive properties of Smt.Bharathi and deleted from the list of assets at the end of the check period in the name of the accused.

174. Sub Point No.3:

3. Whether Sri G.Venkayya had independent source of income ?

Sri G.Venkayya is the father-in-law of the accused. There are certain items in the charge sheet which are standing in the name of

G.Venkayya tagged to the accused as benami transactions.

175. It is the contention of the accused that Sri G.Venkayya studied upto Degree and worked in Pachayat Raj Department at various levels and retired during the year 30.04.1977 as Panchayat Raj Extension

Officer at the age of 55 years. Thereafter retirement he received 134 C.C.03/2005/I CBI Court/VSP pension and got sufficient sources to maintain himself and his family. He also received superannuation benefits. The same is evident from EX.P75 income tax returns of G.Venkayya which the prosecution did not choose to mark. It is submitted by the counsel for the accused that Sri G.Venkayya is an accountant and document writer and taken up different activities to earn income on his own even after the superannuation and page 57 of Ex.P75 explains the same.

Accordingly to the accused Sri G.Venkayya after his retirement worked at Sri Venkateswara Swamy Temple, BHEL, Hyderabad, later he shifted his family to Visakhapatnam and worked as Manager Sri Venkateswara

Swamy temple, Seethammadhara and used to reside by the temple which is evident from the chief examination of Pw.16. The learned counsel for the accused tried to bring to the consideration of this

Court about the family particulars of G.Venkayya and submitted that

G.Venkayya was blessed with three sons and five daughters, wherein the wife of accused Smt.Lakshmi is his 3rd daughter. All his sons were well settled in Government Department and one of them worked and retired as Income Tax Officer. It is also averred that G.Venkayya was habituated to lend money to friends and close relatives on interest and re-invest the money, in course of which he purchased shares in

Harsha Ratna Industries and shops in GK Mansions with his own funds.

It is the version of the accused that the CBI obtained income tax file of

G.Venkayya from the Chief Commissioner of Income Tax and filed the same along with the charge sheet, but however the prosecution for the reasons better known did not choose to mark the same as exhibit.

The income tax returns of the G.Venkayya categorically mentioned all his income, expenditure and assets and the prosecution being aware of the same which would be against his case suppressed the same. It 135 C.C.03/2005/I CBI Court/VSP is further submitted the accused in order to prove his bonafides got examined the Dy.Commissioner of Income Tax as DW.10 and got marked the income tax file of G.Venkayya as Ex.P17 and seeks its perusal by the Court. The argument of the prosecution is that all the transactions made by G.Venkayya are in fact made by the accused and the same are benami transaction which the accused could not account for. In view of the rival contentions the assets in dispute in the name of G.Venkayya are discussed as follows:

176. Item No.101 of Statement-B:

To prove this transaction the prosecution got examined Pw.9

V.Jagannadham. The evidence of Pw.9 goes to shows that he flouted

M/s Harsha Ratna Industries Limited, Visakhapatnam with others and the company sold 1000 shares of total value Rs.1,00,000/- to

G.Venkayya who is the father-in-law of the accused and the said amount was paid through a cheque bearing No.39411 dated 07.08.2000 drawn on Andhra Bank. The share certificate issued in the name of Mrs.G.Mahalakshmi who is the wife of G.Venkayya and same is marked Ex.P25. The contents of Ex.P25 are not in dispute. It is not the evidence of Pw.9 G.Venkayya purchased the shares under

Ex.P25 on behalf of the accused. Further during the course of his cross examination PW.9 deposed that he got acquaintance with the father-in-law of the accused as he was visiting Sri Venkateswara

Swamy temple and that he requested G.Venkayya to purchase shares in their company and accordingly G.Venkayya issued a cheque from his account and purchased shares under Ex.P25 in the name of his wife and specifically stated that accused has nothing with the transaction.

136 C.C.03/2005/I CBI Court/VSP

The prosecution did not dispute this statement of Pw.9 who was examined on its behalf.

177. It is pertinent on record that the investigating officer did not endeavor at any time to record the statement of G.Venkayya.

However it was brought on record by the accused G.Venkayya was died pending trial and his death certificate marked as Ex.D30 through

DW.15 Smt.M.Lakshmi. As per the contents of Ex.D30 G.Venkayya died on 25.01.2007 Further the evidence of Dw.10 the then

Dy.Commissioner of Income tax discloses that he processed the income tax returns of G.Venkayya for the assessment years from 1998-1999 to 2001-2002 certified by D.Pera Raju and the connected file was marked as Ex.P75 and according to DW.10 those income tax returns were accepted by the Income Tax Department and he also stated that during the post retirement period G.Venkayya shown in his income returns that he was working as Accountant and Document writer and he retired as Executive Officer, Panchayat. The prosecution did not elicit anything contrary to the evidence of Dw.10 and contents of Ex.P75 by cross examining the witness.

178. The purchase of shares by G.Venkayya in the name of his wife is evident from the particulars of Ex.P25 share certificate dated 09.10.2000. In this context when the balance sheet annexed to income tax returns of G.Venkayya pertaining to the assessment year 2000-2001 clearly discloses that a investment for Rs.1,00,000/- was made by G.Venkayya by purchasing shares from Sri Harsha Ratna

Industries in the name of his wife G.Mahalakshmi. The prosecution without brining on record at any time the statement of G.Venkayya or 137 C.C.03/2005/I CBI Court/VSP any documentary or oral evidence to show that G.Venkayya has no financial source of income, further suppressing his income tax returns collected by the IO during the investigation, tried to impress on this

Court that all transactions relating to Venkayya were made by the accused. Hence this item is excluded from the assets of the accused under Statement-B

179. Item No.25 of Statement-D: Similarly there is another transaction under Item No.25 of Statement D relating to G.Venkayya which is also to be looked into before concluding the merits of the above investment alleged by the prosecution. As per the charge sheet the item No.25 of Statement-D is referred as “alleged receipt of

Rs.6.30lacs, by the father in law of A1 (from the persons to whom the alleged to have given as loans and advances) for purchase of 8 shops of 2700 sft., in G.K.Mansion, Peda Walter, Visakhapatnam in 1998 (shown as one of the sources for purchase of the shops in his IT returns)”.

180. The prosecution did not let any evidence on this point. However the income tax returns of G.Venkayya under Ex.P75 for the assessment year 2001-2002 discloses that G.Venkayya purchased shops measuring 2700sft., on 08.06.2000 for sum of Rs.11,70,000/- and incurred a sum of Rs.1,30,007/- towards stamp duty and registration expenses. The total cost of the shop is shown as

Rs.13,00,077/- and the sources for the said cost were mentioned as sale proceeds of 200 shares of Dalmia Cements sold i.e., 56,200/, sale proceeds of 300 shares of Blue Star Ltd., sold ie.., Rs.59,850/-, sale proceeds of gold jewellery Rs.1,54,995/-, loans and advances given 138 C.C.03/2005/I CBI Court/VSP earlier and now realized Rs.6,30,000/-, rent deposits received from tenants for Rs.3,00,000/- and loan received from ABK Real Estate for

Rs.1,00,000/-.

181. The two sale deeds dated 08.06.2000 for Rs.5,70,000/- and

Rs.6,00,000/- corresponding to the above said purchase of shops were annexed to the income tax returns. This transaction was made by

G.Venkayya during the check period. However the same was not disputed by the prosecution. The contention of the prosecution as per the charge sheet is that the amount of Rs.6,30,000/- said to have been loans and advances given earlier and realized by G.Venkayya belongs to the accused. It is contended that G.Venkayya never extended any such loans and advances or made any subsequent realization out of them. It is stressed upon that the entire amount of

Rs.6,30,000/- mentioned in Ex.P75 is the amount extended to the

G.Venkayya by the accused. There is no evidence either oral or documentary produced by the prosecution to show that the accused parted the said amount of Rs.6,30,000/- to G.Venkayya. The prosecution did not dispute with the fact that the G.Venkayya retired as Executive Officer, Panachayat and was receiving pension thereafter his retirement. It does not even dispute the statement made by the prosecution witness that G.Venkayya even subsequent to the retirement was working in Venkteswara Swamy temple and also as

Accountant and document writer. The income tax returns of

G.Venkayya categorically shows that he is receiving pension of

Rs.16,553/- during the assessment year 2001-2002, Rs.16,380/- during the assessment year 2000-2001, 1999-2000, 1998-1999. There is a specific note annexed to the assessment year 1998-1999 that 139 C.C.03/2005/I CBI Court/VSP

G.Venkayya was utilizing his superannuation benefits by advancing the same. The balance sheet of G.Venkayya as on 31.03.1998 shows the assets under loans and advances as Rs.7,00,000/-. Similarly

Rs.7,50,000/- as on 31.03.1999, Rs.70,000/- as on 31.03.2000 and

Rs.3,20,000/- as on March, 2001. Though the prosecution showed that

G.Venkayya purchased the property (commercial shops) at GK

Mansions, Pedawaltair, Visakhapatnam as in the year 1998, the actual date of purchase is 08.06.2000. In fact Ex.P75 documents were seized by the investigating agency itself. However it could not be explained by prosecution why there is a mistake apparent in mentioning the said date in the charge sheet. From the balance sheet enclosed to the income tax returns it is clearly evident that by the end of 31.03.1999 itself, G.Venkayya was owning assets worth Rs.7,50,000/- under loans and advances. The balance sheet as on 31.03.2000 categorically discloses that he paid advance of Rs.8,00,000/- for the purchase of shops and the assets under the head loans and advances for

Rs.70,000/-. This calculation clearly support the version of the accused that G.Venkayya utilized an amount of Rs.6,50,000/- realized from the loans and advances extended by him and incurred the same for purchase of the property in the year 2000. In the cross examination of Dw.10 did not choose to raise a slice of objection with regard to the transactions under Ex.P75. It is quite unexplainable how the prosecution without any piece of evidence attributed this transaction to the accused and further without referring anything in the charge sheet contended in the written arguments at Page No.10 that the investment for the purchase of these shops was the money of the accused. This argument of the prosecution is completely nullified by the vendor of G.Venkayya who was examined as PW.16 140 C.C.03/2005/I CBI Court/VSP

182. Item No.23 and Item No.26 of Statement-D:The accused also disputed about item No.23 and item No.26 of statement-D as his expenditure. The contention of the accused is that both these transitions are exclusively belongs to Sri G.Venkayya. Initially item

No.23 is payment of Rs.1,00,000/- on 08.03.2001 by G.Venkayya to

V.Jagannadham. Item No.26 is the alleged house loan of Rs.1,00,000/- taken by G.Venkayya from K.Anji Babu to purchase eight shops. The version of the prosecution is that both these transactions were made by the accused in the name of his father in law G.Venkayya. With regard to the item No.23 the prosecution relied upon the evidence of

PW.9 and Ex.P26 and Ex.P75. The evidence of Pw.9 V.Jagannadham categorically elicit he borrowed some of Rs.1,00,000/- from G.Venkayya on 08.03.2001 and executed Ex.P26 promissory note. In the cross examination he reiterated that the transaction under Ex.P26 is between himself and G.Venkayya and accused has nothing to do with and he repaid the entire amount including the interest under Ex.P26 to a tune of Rs.1,15,000/- to G.Venkayya. Even in his chief examination he asserted that the amount under Ex.P26 is given to him by

G.Venkayya. The prosecution did not dispute with the statement of

Pw.9 on his aspect and never considered his statement for re- examination.

183. Coming to the Item No.26 the prosecution relied upon the evidence of Pw.23 and Ex.P49. This aspect was already discussed in the preceding paragraphs No.123 to 130 while discussing the evidence of PW.23 and was ruled out from consideration.

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184. Item Nos.24 and 28 of Statement-D:In the like manner there are two other transactions referred under Item Nos.24 and 28 of

Statement-D tagged to the expenditure of the accused which were in contra contended by the accused to be absolutely independent transaction of smt.Bharathi with G.Venkayya. Initially Item No.24 deals actual loan of Rs.70,000/- taken by DW.12 from G.Venkayya father-in-law of the accused for the purpose of purchasing a house along with site at Resapuvanipalem. In fact Dw.12 is the granddaughter of the G.Venkayya. The purchase of house property at

Resapuvanipalem by Dw.12 is not disputed. It is evident from the

Photostat copy of sale deed dated 30.06.1998 annexed to the income tax returns for the assessment year 1999-2000 of Dw.12 under Ex.D47.

As per Ex.D47 Dw.12 purchased old tiled house at Resapuvanipalem for total consideration Rs.9,19,658/- in stamp duty and registration charges. The total source of amount for purchasing the property is mentioned vide “Note on house property”. It clearly indicates Dw.12 borrowed an amount of Rs.70,000/- from G.Venkayya, Rs.3,00,000/- from M.Venkateswara Rao and Rs.65,000/- from VJM Finance along with other loan amounts. Hence taking of loan of Rs.70,000 by

Dw.12 from G.Venkayya is not in dispute. The contention of the prosecution is that this amount is not extended by G.Venkayya and same was given by the accused officer to his daughter. The prosecution did not let any evidence on this point and strangely contended that this property was purchased by the accused in the name of Smt.Bharathi as benami, which is completely devoid of merits. In contra the above referred income tax returns of

G.Venkayya categorically shows that his annual income including pension is approximately more than Rs.1,00,000/-, income from 142 C.C.03/2005/I CBI Court/VSP profession of accountancy and document writing Rs.40,000/-, interest from loans and advances more than Rs.60,000/- followed by income from house property from the year 2000. The evidence of PW.20 on this aspect P.Ravi Kumar who is the lessee of shop premises purchased by G.Venkayya at G.K.Mansions also discloses the payment of monthly rent to G.Venkayya and transfer of advance amount from previous owner Bhavanarayana to G.Venkayya. All these factors evidently shows the sustainable sources of income to G.Venkayya. It cannot be said that G.Venkayya is an improbable non earning person or financially dependable person. Therefore the transactions under

Item Nos.23,24,25 and 26 of Statement-D are concluded to be complete independent transactions of G.Venkayya.

185. In the same manner Item No.28 of Statement-D relates to alleged amount of Rs.72,000/- along with interest paid to Sri

V.Jagannadham in installments in 1998 and 99 by Sri M.Subramanyam against a loan of Rs.65,000/- given to Smt.T.Bharathi, his daughter.

Though V.Jagannadham was examined as Pw.9 nothing was elicited by the prosecution on his point in his chief examination . However the income tax returns of Smt.Bharathi for the assessment year 1999- 2000 under Ex.D47 referred above also discloses a confirmation letter dated 04.08.1998 issued by V.Jagannadham, Chairman of, VJM

Finance and Investment Pvt Ltd., Visakhapatnam. The said letter elicit that an amount of Rs.65,000/- was extended to Smt.Bharathi as loan for meeting the cost of purchasing an old tiled house and the same is given by him from the funds available in their bank account,

Andhra Bank, Akkayyapalem branch. In view of the discussion above made the income tax returns of Smt.Bharathi under Ex.D46 to Ex.D49 143 C.C.03/2005/I CBI Court/VSP and income tax returns of G.Venkayya under Ex.P75 remains undisputed and proves the financial capacity of G.Venkayya and

Bharathi. These facts envisages the capacity of G.Venkayya for extending loans and subsequent realization and also financial capacity of Bharathi for repayment of loans obtained by her. Hence the item No.28 of Statement is also concluded as exclusive transcation between PW.9 and Smt.T.Bharathi.

186. Sub Point No.2:

2. Whether Smt.Lakshmi had independent source of income ?

Smt.Lakshmi is the wife of the accused officer. As per the prosecution she is averred as one of the prominent benamidar for the disproportionate assets of the accused officer and considerable number of transactions on her name were tagged to the accused.

The part of Items in A,B,C and D statements in the charge sheet were admitted by the accused to be in the name of his wife. Now the point of consideration is whether all these items conclude the disproportionate assets of the accused as alleged or frames any merits to consider as assets from separate income of Smt.Lakshmi.

187. On this aspect the accused got examined his wife as DW.15.

The argument of the accused goes to show that his wife Smt.Lakshmi used to teach music classes to the children and the said fact was evident from the evidence of Pws.6, 9, 11 and 12. During the year 1995 the accused officer performed Upanayanam(Thread marriage) of his son for which he has taken GPF advance of Rs.6,000/- and 144 C.C.03/2005/I CBI Court/VSP incurred an expenditure of Rs.10,000/-. His son got Rs.50,000/- as customary gifts from family members, relatives and friends which was intimated by the accused to his department under Ex.D38 and the said amount was kept with the wife of accused officer. It is further averred that the father of the accused disposed of the family properties and out of the sale proceeds gave Rs.50,000/- to her and also her co-daughter-in-law for the purpose of marriage expenses of children. This was intimated by the AO to his department under

Ex.D42. Likewise at the time of marriage Smt.Lakshmi received 15tulas of gold and Rs.20,000/- of cash by her parent-in-laws likewise other daughter-in-laws and she also got some brass and copper item.

The amount received by Smt.Lakshmi were utilized by her to carry out independent financial transactions like purchasing shares, lending amounts, investing in fixed deposit etc., with an intention to save some profits by the time of marriages of her children. All the assets purchased by her including movable and immovable are made by her own source of income and accused is no way connected to this.

188. In contrary the prosecution argued that all the assets standing in the name of Smt.M.Lakshmi wife of accused were made by the accused and she never had any source of independent income and relied on the case law between M.Kishan Vs. State reported 2005 (1) ALD 462 and Rameshwara Prasad Upadhyaya vs. The State of Bihar AIR 1971 SC 2471. Initially in Judgment between M.Kishan

Vs. State the Hon’ble High Court of Andhra Pradesh denied the appeal of the accused to set aside the conviction for the offence under

Section 13(1)(e) and 13(2) of Act, 1988 with observation that “in the present case the prosecution cases sufficient evidence that the 145 C.C.03/2005/I CBI Court/VSP appellant purchased properties with his money in the name of wife and brother-in-law and the seizure of the documents from the house of appellant, the non examination of appellant wife and the contention raised by the prosecution that he had no source of income are clear circumstances to establish that the appellant purchased the properties in the name of wife and brother-in-law. Though the appellant tried to establish his case through the evidence of some witnesses, neither he nor his wife entered the witness box and explained as to why the documents i.e., sale deed of the form house which are in the name of one Mr.Kishore Kumar who is the son of his wife’s sister and the RC Book and Insurance certificate which are in the name of P.Babu Rao, brother-in-law of the appellant were kept in the house of the appellant”.

189. The core basis for the opinion rendered by the Hon’ble High

Court is that despite seizure of title deeds from the possession of the accused which prima facie released the prosecution burden, the accused did not let any convincing evidence either documentary or oral by examining himself or his wife so as to discharge his onus.

190. Similarly in the Judgment between Rameshwara Prasad

Upadhyaya vs. The State of Bihar, the Hon’ble Apex Court dismissed the appeal against conviction of the appellant in a disproportionate assets case confirming the concurrent findings of the trial court and High Court withan observation “There was no explanation forthcoming as to how the two houses in Balia happened to stand in the name of the step-brother, nor was there any evidence that they or the lands or the said business belonged to take family.

146 C.C.03/2005/I CBI Court/VSP

Equally was there no proof that the father had diverted the income from the lands and the business towards making deposits in the savings accounts, the more substantial of which were in the account in the name of the appellant's wife. The entire contention was on an assumption that all these properties and the business belonged to the family, and that the father had diverted the income there from in the savings accounts and towards the purchase of the trucks. The first assumption was based on the sole ground that there was no account in the name of the father. But there was no evidence as to the extent of the income or as to the manner in which the father had dealt with it. The houses also were assumed to be family properties although they stood in the name of the step brother. It was easy to prove them to be the family properties, if they were so, by producing the title deeds or any other similar evidence, If the money lending business was substantial enough to lay aside such a sum as Rs. 80,000/-, there would have to be a licence for a business of that extent and there would also be an income-tax laibility, through both of which it would have been possible to show that it belonged to the joint family, its extent and the diversion of its capital or gains in the savings bank accounts or towards the purchase of the trucks. None of these things was even attempted”.

191. It is pertinent that the Hon’ble Apex Court confirmed the conviction of the accused for falling short to prove his defence. In this case the accused did not adduce any evidence to prove that the properties alleged as disproportionate assets are family properties as claimed him and no evidence was let to prove the claim of money lending business either by producing the licence for the said business or the liability of income tax.

192. In the light of above case laws, it is evident on record that the prosecution examined PWs.6,9,11 and 12 to bring on record several transactions attributed to the Smt.M.Lakshmi. But however the 147 C.C.03/2005/I CBI Court/VSP prosecution did not elicit anything from the chief examination of its witnesses that the accused is behind these transactions and persuaded his wife in the frontline. The prosecution as contended by the accused never choose to examine Smt.Lakshmi as witness nor cited as accused for allegedly abetting the accused to amass disproportionate assets. Under these circumstances to elicit the merits of facts in issue hereunder it is important to look into the evidence of

Smt.M.Lakshmi who was examined as DW.15.

193. DW.15 deposed that her marriage with the accused was performed on 10.03.1971 and that her father-in-law had presented 20 tulas of gold and her father gave 5 tulas of gold at the time of her marriage and that one of her daughters namely Madhavi died in 1983 and so she suffered depression, during which time her parents used to live with her wherever her husband was working. Her father retired as an Executive Officer in the department of Panchayat Raj in 1977 and after retirement his father worked as an Accountant and

Document writer and that her father had acquired shops in

Pedawaltair and was living with the rental income and that her father was an income tax assessee but died in the year 2007, the correspondent death certificate was marked as Ex.D10. According to her, her father-in-law having disposed of some property had given

Rs.50,000/- to her towards marriage expenses of her children and that she used to teach music lessons from 1972 to 2001 and was earning money every month and she invested Rs.20,000/- in Lakshmi Finance and Rs.1,00,000/- and odd in Durga Finance belonging to PW.6 and that she lent an amount of Rs.5,00,000/- to PW.6 under Ex.P16 to

Ex.P18 promissory notes and that PW.6 has returned that amount with 148 C.C.03/2005/I CBI Court/VSP interest and that she lent Rs.50,000/- on one occasion and

Rs.25,000/- on another occasion to PW.3 under Ex.P64 and Ex.P65 promissory notes which debts were repaid by PW.3 and that she purchased shares from PW.11 and that she taught music lessons to the daughter of PW.11. According to her she invested Rs.18,000/- each on different occasions and also Rs.10,000/- on another occasion with PW.9 who relates to Jagannadh Vidya Peta and Gayatri Vidya

Praished and that he repaid those amounts.

194. DW.15 has further deposed that she has got bank accounts in

Vysya Bank, Indian bank, HSBC and Andhra Bank, Visakhapatnam and that she is not dependent on her husband and that she has got financial resources of her own and she was managing them on her own. According to her the marriage of DW.12 who is her daughter was held on 16.11.1997 and that during the upanayanam of her son held in the year 1995 money gifts of Rs.50,000/- was received which was invested with PW.6 and others and that she has been taking treatment for depression from DW.13.

195. The prosecution in the cross examination cited to DW.13 that she is not a qualified music teacher and due to her treatment DW.13 she was not in a position to take music classes and was not earning. It is further suggested to her that no gold was presented to her by her father or her inlaws and she did not invest money in Durga Finance or

Lakshmi finance and never advance any amount on pronotes to Pw.6 or Pw.3 and that she did not purchase shares from Pw.11 and did not invest any money to Pw.11. It is also suggested to her she did not receive cash gift of Rs.50,000/- during the Upanayanam of his son 149 C.C.03/2005/I CBI Court/VSP and only to help her husband she is deposing false. However all the suggestions made by the prosecution were denied by DW.13.

196. It is evident from the evidence of Dw.15 and arguments advanced by the counsel for the accused that an amount of

Rs.50,000/- received from her inlaws, Rs.50,000/- received as cash gift during the Upanayanam of his son along with amount earned by her by teaching music lessons to children and Stridhana amounts and gold constitute the major source of income of Dw.15.Whether the

Dw.15 was earning income by teaching music class was already decided under the discussion for item No.13 to 16 of Statement-C.

197. Hence falling back to the assets of Smt.M.Lakshmi when we look into the evidence of accused who was examined as DW.16, he deposed that “ our joint family owned two houses bearing No.9-7-11 and another house located Chanda Choultry Street, Rajahmundry .

The house bearing Door No.9-4-26 was sold in the year 1992 for

Rs.81,000/-. The true copy of sale deed is Ex.D7. The sale money was with my father. In the year 1993 we brothers and my father entered into joint family agreement Ex.X6. Under Ex.X6 allotted cash of Rs.50,000/- towards marriage expenses of my children and

Rs.50,000/- allotted to my wife. I intimated to the department under

Ex.D42 the letter dated 19.05.1993 under Ex.X6, my wife received

Rs.50,000/- . My wife is an income tax assessee and she was examined by the CBI officer. My wife worked as Music teacher and she was earning in beginning Rs.200/- per month and later on Rs.1,000/- to Rs.1200/- per month, my wife for her first Sreemantham function received gifts in cash of Rs.15,000/- . The IT returns of my wife are 150 C.C.03/2005/I CBI Court/VSP collected by CBI officer . My wife was doing money lending business with gift money given for her Sreemantham, the gift money of my son received at the time of Upanayanam, the earnings as Music teacher and money of Rs.50,000/- received under Ex.X6. The amount of

Rs.1,02,000/- at Sl.No.7 of Statement –B was purchased by my wife under Ex.P20 as advance to purchase house plot jointly in my name and in the name of wife under Ex.P53(A)”.

198. In order to support the version of the accused that the wife received Rs.50,000/- in view of the family settlement dated 07.05.1993, the accused got examined his brother’s son

M.Veerabadram as Dw.8. Dw.8 testified that the accused is his junior paternal uncle and that his paternal grandfather namely Mr.Seetha

Rama Murthy had five sons and a daughter among whom, his father is eldest and the accused is youngest and that all of them entered into an unregistered family settlement dated 07-05-1993 which is

Ex.X6 and that his father died on 25-01-2010 as per the death certificate under Ex.X7 and during his life time his father handed over

Ex.X6 to DW.8 and that under Ex.X6 the wife of the accused was given an amount of Rs.50,000/-.

199. The close perusal of contents of Ex.X6 categorically shows that an amount of Rs.50,000/- was extended to DW.15. Dw.10 testified that he was present at the time of transaction under Ex.X6. Though the prosecution suggested to DW.10 that no transaction took placed under

Ex.X6 the same was denied by him. There is nothing in contrary to disbelieve the evidence of DW.10. In pursuance of the evidence of

DW.10 and DW.16 on this aspect that the contents of Ex.D42 i.e., 151 C.C.03/2005/I CBI Court/VSP intimation letter by the accused to his department is to be looked into.

The documentary contents of Ex.D42 shows that the accused intimated to his department, the receipt of Rs.50,000/- by his wife from his father. Similarly the cash flow statement of Smt.M.Lakshmi for the financial years 1995-1996 annexed to Ex.D43 income tax returns for the assessment year 1997-1998 categorically shows that she received an amount of Rs.50,000/- as gifts at the time of thread marriage of her son Ravi Kumar.

200. The corresponding income tax returns of Smt.M.Lakshmi marked under Ex.D43 discloses the annual income of Smt.M.Lakshmi from short term gain and sale of shares, interest on loans, deposits in finance institution, income from music tuitions, bank interest and dividends is shown as Rs.71,201/- for assessment year 1997-1998,

Rs.78,088/- for assessment year 1998-1999, Rs.85,990/- for assessment year 1999-2000 and Rs.1,07,921/- for assessment year 2000-2001 and Rs.1,22,850/- for assessment year 2001-2002. The income tax returns of Smt.M.Lakshmi were never challenged by the prosecution except making a suggestion in the cross examination of

DW.15 and DW.16 that the same is fabricated. The prosecution did not tend to examine the Income tax officials to contradict with the income tax returns of Smt.M.Lakshmi under Ex.D43.

201. It is pertinent that under Section 13(1) (e) r/w 13(2) of P.C. Act when the prosecution establishes the essential ingredients of criminal misconduct by adducing standard of evidence, that the public servant is, or was at any time during the period of his office, in possession of pecuniary resources or property disproportionate to his known source 152 C.C.03/2005/I CBI Court/VSP of income, within the knowledge of prosecution, the prosecution discharges its burden of proof and burden of proof is lifted from the shoulders of prosecution and descends on the defence. It is the onus on the public servant to satisfactorily account for the possession of such properties and pecuniary resources. When it comes to the onus shifted on the accused it is always a point for consideration whether the accused has to prove his case with same of amount rigor and certainty as that of the prosecution. In this regard it is necessary to refer the proposition laid by the Hon’ble Apex Court dealing a similar case between Ravindra Kumra Dey vs. State of Orissa 1977 AIR 170 wherein it is held as follows:

“The Evidence Act does not contemplate that the accused should prove his case with the same strictness and rigour as the prosecution is required to prove a criminal charge. In fact, from the cardinal principles referred to above, it follows that, it is sufficient if the accused is able to prove his case by the standard of preponderance of probabilities as envisaged by s. 5 of the Evidence Act as a result of which he succeeds not because he proves his case to the hilt but because probability of the version given by him throws doubt on the prosecution case and, therefore, the prosecution cannot be said to have established .the charge beyond reasonable doubt. In other words, the mode of proof, by standard of benefit of doubt, is not applicable to the accused, where he is called upon to prove his case or to prove the exceptions of the Indian Penal Code on which he seeks to rely. It is sufficient for the defence to give a version which competes in probability with the prosecution version, for that would be sufficient to throw suspicion on the prosecution case entailing its rejection by the Court. This aspect of the matter is no longer res integra but is concluded by several authorities of this Court. In Harbha- jan Singh v. State of Punjab (1) this Court observed as follows:

153 C.C.03/2005/I CBI Court/VSP "But the question which often arises and has been frequently considered by judicial decisions is whether the nature and extent of the onus of proof placed on an accused person who claims the benefit of an Exception is exactly the same as the nature and extent of the onus placed on the prosecution in a criminal case; and there is consensus of judicial opinion in favour of the view that where the burden of an issue lies upon the accused, he is not re- quired to discharge that burden by leading evidence to prove his case beyond a reasonable doubt. That, no doubt, is the test prescribed while deciding whether the prosecution has discharged its onus to prove the guilt of the accused; but that is not a test which can be applied to an accused person who seeks to prove substantially his claim that his case falls under an Exception. Where an accused person is called upon to prove that his case fails under an Exception, law treats the onus as dis- charged if the accused person succeeds "in proving a preponderance of probability." As soon as the preponderance of probability is proved, the burden shifts to. the prosecution which has still to discharge its original onus. It must be remembered that basically, the original onus (1) [1965] 3 S.C.R. 235, 241 never shifts and the prosecution has, at all stages of the case, to prove the guilt of the accused beyond a reasonable doubt."

The same view was taken in a later case in State of U.P. v. Ram Swarup & Anr.(1) where this Court observed as follows:

"That is to say, an accused may fail to establish affirmatively the existence of circum- stances which would bring the case within a general exception and yet the facts and circumstances proved by him while discharging the burden under section 105 of the Evidence Act may be enough to cast a reasonable doubt on the case of the prosecution, in which event he would be entitled to an acquittal. The burden which rests on the accused to prove the exception is not of the same rigour as the burden of the prosecution to prove the charge beyond a reasonable doubt. It is enough for the accused to show, as in a civil 154 C.C.03/2005/I CBI Court/VSP case, that the preponderance of probabilities is in favour of his plea."

202. It is evident from the above principle laid by the Hon’ble Apex

Court and also from the provisions of 101 and 102 of Indian Evidence

Act that the obligation to prove a fact is always on the prosecution and is called burden of proof which remains constant. Whenever the prosecution discharges initial burden the onus essentially switches to the accused who was not necessarily to disprove the fact but to raise a uncertainty about it. There is no obligation on the accused to disprove the fact alleged by the prosecution and it is sufficient enough to raise a reasonable suspicion about the existence of the same or plausible explanation as the case may be. Accordingly coming back to the facts of the case on hand the accused the onus on the accused is only restricted to adduce evidence which is sufficient to raise to a suspicion or reasonable justification to infer that the alleged transactions tagged to him does not belong to him. In this regard the evidence of Smt.Bharathi and Smt.M.Lkahsmi and other prosecution witnesses who never spoke about the active involvement of the accused behind the transactions and also the income tax returns of the wife, daughter and father-in-law of the accused suffices the onus of rebutting the prosecution version. Accordingly no justification can be attributed to the argument of the prosecution that Smt.Lakshmi has no independent source of income and the case laws relied by the prosecution in M.Kishan Vs State and Rameshwara Prasad

Upadhyaya Vs. the State of Bihar cited supra, which fail for want of plausible evidence on part of the accused officer has no relevance to the facts on hand. The fact that Smt.Lakshmi is a married women 155 C.C.03/2005/I CBI Court/VSP cannot itself impress that she is depending on the accused and despicable of financial dimensions. All her income tax returns, cash flow statements and intimations made by the accused to his department categorically conclude that Smt.Lakshmi since the time of her marriage is in possession of money and gold advanced to her as

Stridhana and attained considerable source of income by teaching music classes and thereby reinvesting the amounts. Her efforts of savings throughout till the check period with the amounts received

additionally from her family members as gifts and share, cannot be

disregarded. Therefore it is sufficiently inferred that Smt.Lakshmi is having independent source of income and corresponding transactions of her own.

203. Sub Point No.4

4.Whether the prosecution to discharged its initial burden of proving the alleged benami transaction?

As per the prosecution the accused amassed huge disproportionate to his known source of income in the name of his wife, daughter and father-in-law who acted as his benamidars. The counsel for accused strenuously argued that the burden of proof to prove a benami transaction is on the prosecution and the prosecution has to discharge its burden beyond all reasonable doubt and relied upon the case law between K.Goverdhan Vs State of A.P., reported in 2001 (1) ALD (Crl.) 886 (A.P.) where in it is held as follows:

“ 22. There is another aspect of the matter which deserves to be mentioned. Mere fact that the ostensible owner had no source of income in itself would not lead to any inference that the property in question was purchased with 156 C.C.03/2005/I CBI Court/VSP the income of a particular person. The absence of any source of income to the ostensible owner would merely indicate that the property might have been acquired with the income flowing from someone else. As to who that someone else is a matter of evidence and proof. That circumstance cannot lead to an inference that the property in question was acquired with the income from the accused.”

204. A similar reference is made to the case law between

P.Satyanarayana Murthy Vs State of Andhra Pradesh, reported

in 1992 (4) SCC 39. In this case the Hon’ble High Court of Andhra

Pradesh discussing the settled proposition laid by Hon’ble Apex

Court in Krishanand Agnihotri Vs. State of M.P (AIR 1977 SC

796) regarding the burden of proof of proving benami transitions opined as follows:

“ 8.................. Needless to say that this Court in a series of decisions have laid down the guidelines in finding out the benami nature of a transaction. Though it is not necessary to cite all those decisions, it will suffice to refer to the rule laid down by Bhagwati, J. as he then was in Krishnanand Agnihotri Vs State of M.P. In that case, it was contended that the amounts lying in fixed deposit in the name of one Shanti Devi was an asset belonging to the appellant and that Shanti Devi was a benamidar of the appellant. The learned Judge speaking for the Bench has disposed of that contention holding thus: It is well settled that the burden of showing that a particular transaction is benami and the owner is not the real owner always rests on the person asserting it to be so and this burden has to be strictly discharged by adducing legal evidence of a definite character which would either directly prove the fact of benami or establish circumstances unerringly and reasonably raising an inference of that fact. The essence of benami is the intention of the parties and not unoften, such intention is shrouded in a thick veil which cannot be easily pierced 157 C.C.03/2005/I CBI Court/VSP through. But such difficulties do not relieve the person asserting the transaction to be benami of the serious onus that rests on him nor justify the acceptance of mere conjectures or surmises as a substitute for proof.”

205. The learned counsel for the accused further argued that the prosecution did not let any evidence to prove that the alleged assets were acquired by the accused in the name of the wife, daughter and father-in- law and submitted it is not the burden of the accused officer to adduce evidence to prove or disprove the allegation of benami transaction and relied upon the case law between B.T.Nagappa Vs

State by Lokayuktha Police in Crl.A.814/2010 dt.8-8-2013 of

the Honourable High Court of Karnataka wherein it was held as follows:

“ 47. The prosecution asserts that the transactions that covered by the sale deeds in the name of his wife and children are benami. The burden is on the prosecution to discharge the same by adducing legal and acceptable evidence. The burden should be strictly discharged to prove the fact of benami transactions. In order to prove the transaction is benami, the vendors of the properties are the attestors and document writing of the documents are proper persons to prove the benami nature of transactions. ......................... As already stated, the burden of proof lies on the prosecution to prove the alleged benami nature of transactions. In this case the prosecution utterly failed to prove that the accused has purchased properties in the name of his wife and children and the transactions are benami in nature.”

206. The counsel for the accused submitted that, though it is bounden duty of the prosecution to prove the nature of transaction as benami, it never made an attempt to examine the alleged benamidars or cared to show them as accused. Inspite of the same the accused 158 C.C.03/2005/I CBI Court/VSP examined his wife and daughter as DW.12 and DW.15 and made all the efforts to disprove the concocted benami allegations by the prosecution. The accused relied upon the evidence of DWs.10,12, 15 and that of himself as DW.16 and also the documentary contents of

Ex.D46 to Ex.D49, Ex.D43 and Ex.P75 to draw the attention of the

Court that the prosecution miserably failed to prove the allegations of the so called benami transactions.

207. A benami transaction in a broader sense is a transaction or an arrangement where the property is transferred or is held by a person and consideration for such property has been provided, or paid by, another person; and the property is held for immediate or future benefit, direct or indirect of the person who has provided the consideration. There is no straightjacket formulae which can be uniformly applicable to determine a transaction benami or law.

However the Hon’ble Apex Court in various Judgments cited the following factors which can be weighed by the Court in an enquiry as to benami transaction :

1. The source from which the purchase money came

2. Nature and possession of the property after the purchase

3. Motive if any, for giving the transaction a benami colour.

4. The position of parties and the relationship between them

5. Custody of title deed or documents if any.

6. The conduct of parties concerned in dealing with the property.

208. It is evident from the citations above referred by the counsel

for the accused that burden of proof stress on the party pleading the

transaction as benami. The basis for this established principle lies 159 C.C.03/2005/I CBI Court/VSP inherently in the provisions of Section 101 and 102 of Indian Evidence

Act extracted below.

101. Burden of proof.—Whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist. When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person.

102. On whom burden of proof lies.—The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.

209. The above two section of laws clearly depict that the burden of proof lies on the person who fails in the proceedings initiated by him if he could not discharge the said burden by adducing cogent evidence. The Hon’ble Apex Court in case between Vallimmal Vs.

Subramaniam and others (2004) 7 SC 233 held that “This Court in a number of judgments has held that it is well- established that burden of proving that a particular sale is benami lies on the person who alleges the transaction to be a benami. The essence of a benami transaction is the intention of the party or parties concerned and often, such intention is shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of any part of the serious onus that rests on him, nor justify the acceptance of mere conjectures or surmises, as a substitute for proof”.

210. It is pertinent from the above case law that the burden of proving that a particular transaction is benami and the person apparent executing the transaction is not the real owner, always thrusts on a person asserting it to be so. Accordingly the burden on the prosecution to bring on record sufficient evidence to prove that all 160 C.C.03/2005/I CBI Court/VSP the alleged transactions in the name of Smt.Bharathi, Smt.M.Lakshmi and Sri G.Venkayya were made by the accused. The prosecution should let in evidence to prove that the source of money involved in the transaction is rooted from the accused and that the possession or title of such transaction stood in the name of alleged benamies only in view of the fiduciary relationship between them or otherwise. The prosecution shall also prove that the motive of the accused is only to screen the alleged disproportionate assets made the transaction in the name of his family members.

211. In contra the evidence on record does not prove either the motive of the accused or circumstances ensuring the entire investment for the alleged transactions by the accused. The most surprisingly much of prosecution evidence leads only towards the proof of transaction and nothing against the accused. Particularly the evidence of PW.3 G.V.M.Raju, PW.6 M.Venkateswara Rao, PW.9

V.Jagannadham, PW.20 P.Ravi Kumar and also other witnesses.

Moreover suppressing the income tax returns of G.Venkayya under

Ex.P75 and the contents of income tax returns of Smt.Bharathi under

Ex.D46 to Ex.D49 and that of Smt.Lakshmi under Ex.D43 by the prosecution also constructs an adverse inference against the prosecution case. It is the duty of the investigation officer and prosecution to bring out real facts and unvarnished truth before the

Court and not merely to bolster up the prosecution case with such evidence as may enable the court to record a conviction, as held by the Hon’ble Apex Court in Jamuna Chaudhary & others Vs. State of Bihar 1974 AIR 1822. The prosecution or the investigating officer 161 C.C.03/2005/I CBI Court/VSP is not expected to suppress the material facts which are crucial to the case from the court which is against the process of fair trial.

212. The prosecution in fact has to discharge its burden to prove the alleged benami transactions by adducing a legal evidence of definite character that may either directly involved the accused or establishing circumstances unerringly and reasonably raising an inference of the fact of benami transaction. Inspite of the same it foiled its case on this aspect of benami transaction, attracting an adverse inference under Section 114(g) against it by suppressing the above referred material facts.

213. Before concluding it is apt to refer the proposition laid by the

Hon’ble Apex Court on this aspect in case law between Krishanand

vs.State of Madhya Pradesh AIR 1977 SC 796 as follows:

“The essence of benami Is the intention of the parties and not unoften, such intention is shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of the serious onus that rests on him, nor justify the acceptance of mere conjectures or surmises as a substitute for proof. (Vide Jayadayal Poddar v. Mst. Bibi Hazra . It is not enough merely to show circumstances which might create suspicion, because the court cannot decide on the basis of suspicion. It has to act on legal grounds established by evidence”.

214. Thus from the above discussion, it can be unresistingly concluded that the burden of proof shouldered on the prosecution alleging the benami transaction is absolute and any short fall on its part never shifts the onus of proof on the accused and that in this 162 C.C.03/2005/I CBI Court/VSP case the prosecution lucidly failed to prove that all the monetary transactions standing in the name of Smt.Lakshmi, Smt.Bharathi and

G.Venkayya who are the family members of the accused were provided by the accused. The prosecution equally failed to bring on record that Smt.Lakshmi, Smt.Bharathi and G.Venkayya are not having any independent source of income and sourced their money transactions from the accused and further failed to raise any point of suspicion against the evidence led by the accused eliciting the independent income and transactions of the above referred family members.

215. Sub Point No.5:

5.Whether the income tax returns are rebuttable and the

question of Conclusiveness of the income tax returns?

In continuation of the above discussion, wherein the burden of proof on prosecution and onus on the accrued are at conflict owing to the facts and circumstances of the case the income tax returns filed by Smt.M.Lakshmi, Smt.Bharathi and G.Venkayya and that of the accused place a very important. It is to be decided what is the evidentiary value of the income tax returns marked under Ex.P75,

Ex.P76, Ex.D43 and Ex.D46 to D49. The contention of the prosecution is that the income returns of an assessee does not itself become conclusive and the same cannot be a ground to conclude that the entire income actually belongs to the assessee. On this point the prosecution relied upon two citations firstly State of Tamilnadu Tr

Inspector of Police Vs. N.Suresh Rajan and others, reported in 2014 AIR SCW 942, wherein the Hon’ble Apex Court at Para No.43 held as follows:

163 C.C.03/2005/I CBI Court/VSP “The property in the name of an income tax assessee itself cannot be a ground to hold that it actually belongs to such an assessee. In case this proposition is accepted, in our opinion, it will lead to disastrous consequences. It will give opportunity to the corrupt public servants to amass property in the name of known persons, pay income tax on their behalf and then be out from the mischief of law.

216. A similar reliance was also laid in case law between State of

Karnataka Vs. Selvi.J.Jayalalitha and others reported in

2018(13) SCC 455 wherein the Hon’ble Apex Court held that “While observing that mere declaration of property in the income tax returns does not ipso facto connote that the same had been acquired from the known lawful sources of income, the Trial Court held the view that the prosecution could successfully establish that the respondents and their firms/companies, who posed to be income tax assessees, had no independent or real source of income and that it was the finance of A1 that was really in circulation and thus it could prove beyond reasonable doubt that the only source of money the acquisition of large assets was that of hers”.

217. In contra the accused relied upon the following decisions supporting the conclusiveness of income tax returns as sufficient enough to discharge his onus.

1. D.S.P., Chennai Vs K.Inbasagaran reported in 2006 (1)

SCC 420 in which it has been observed as follows:

“ The wife of the accused has not been prosecuted and it is only the husband who has been charged being the public servant. In view of the explanation given by the husband and when it was been substantiated by the evidence of the wife, the other witnesses who have been produced on behalf of the accused coupled with the fact that the entire money has been treated in the hands of the wife and she has owned it and she has been assessed by the Income tax Department, it will not be proper to 164 C.C.03/2005/I CBI Court/VSP hold the accused guilty under the prevention of Corruption Act as his explanation appears to be plausible and justifiable. The burden is on the accused to offer plausible explanation and in the present case, he has satisfactorily explained that the whole money which has been recovered from his house does not belong to him and it belonged to his wife. Therefore, he has satisfactorily accounted for the recovery of the unaccounted money. Since the crucial question in this case was of the possession and the premises in question was jointly shared by the wife and the husband and the wife having accepted the entire recovery at her hand, it will not be proper to hold husband guilty. Therefore, in these circumstances, we are of the opinion that the view taken by the High Court appears to be justified and there are no compelling circumstances to reverse the order of acquittal. Hence, we do not find any merit in this appeal and the same is dismissed.”

218. G.Malliga Versus State, rep.by the Dy.Superintendent of

Police reported in 2007(1) MLJ (Cri.) 86 in which it has been observed as follows:

“Para-20: In this respect the judgment in Ananda Bezbaruah v. Union of India (1994 Crl. L.J. 12) is pressed into service wherein, the Gauhati High Court has held as follows:

“It is not mere acquisition of property that constitutes an offence, under the provisions of the Act but its failure to satisfactorily account for makes the possession offending.

Thus where accused was charged with the offence of having resources and property disproportionate to his income and trial court failed to consider and evaluate the income-tax return which clearly established that the property included in the assets of accused and shown to be disproportionate is the wife's property bought from her own resources and should have been excluded from assets of the accused and the income which should have been taken as savings was taken as expenditure thereby overlooking the actual savings and expenditure, which if 165 C.C.03/2005/I CBI Court/VSP calculated, showed that income of accused was proportionate to his source of income, inclusion of property of wife, without evaluating the materials on record, which a satisfactorily accounted for the assets disproportionate to income, do not establish the ingredients of the offence and order of framing of charge in such circumstances is liable to be quashed.

219. Kedarilal Vs State of MP reported in 2015 (14) SCC 505 in which it has been observed as follows:

“12. In the instant case, every single amount received by the appellant has been proved on record through the testimony of the witnesses and is also supported by contemporaneous documents and intimations to the Government. It is not the case that the receipts so projected were bogus or was part of a calculated device. The fact that these amounts were actually received from the sources so named is not in dispute. Furthermore, these amounts are well reflected in the Income Tax Returns filed by the appellant. In similar circumstances, the acquisitions being reflected in Income Tax Returns weighed with this court in granting relief to the public servant. In M.Krishna Reddy Vs State [2]. It was observed in para 14:- “......... Therefore, on the face of these unassailable documents i.e., the wealth tax returns, we hold that the appellant is entitled to have a deduction of Rs.56,240/- from the disproportionate assets of Rs.2,37,842/-.” Similarly in DSP Chennai Vs.K.Inbasagaran [3], the fact that the money was treated in the hands of the wife of the public servant and that she was assessed by the Income Tax Department was taken note of while accepting the explanation given by the public servant.

13. If the amounts in question, which were duly intimated and are reflected in the Income Tax Return are thus deducted, the alleged disproportionate assets stands reduced to Rs.37,605/-, which is less than 10% of the income of the Appellant. In Krishnanand Vs. State of Madhya Pradesh [4] and in M.Krishna Reddy (Supra), this court had granted benefit to the public servants in similar circumstances. We respectfully follow said decisions.

166 C.C.03/2005/I CBI Court/VSP

14. In our view there is no violation of Section 13(1)(e) read with section 13(2) of the Act. We, therefore, set aside the judgment and order in appeal and acquit the appellant of the charges leveled against him. The appeal thus succeeds and is allowed. The appellant is already on bail. The bail bonds shall stand discharged.”

220. The contention of the counsel for the accused is that where an assessee had established the income and expenditure particulars

before the Income Tax Authority they shall have binding effect on

the case of the prosecution in view of the above judicial precedents and submitted that the prosecution cannot tag the accused to the income of others and the exhibits Ex.P75, Ex.P76, Ex.D43, Ex.D46 to

Ex.D49 cannot be concluded as implausible.

221.The detailed consideration of above case laws referred by the both sides, it is pertinent that long since the Hon’ble Apex Court in number of Judgment asserted the admissibility of the income tax returns in evidence. It is pertinent that in State of Tamilnadu Tr

Inspector of Police Vs. N.Suresh Rajan and others relied by the prosecution the Hon’ble Apex Court laid the said proposition while disposing the appeal against discharge petition under section 239

Cr.P.C dismissed by the Special Judge. The substance of the Paragraph cited by the prosecution was made by the Hon’ble Supreme Court referring to the case of R.S.Naik vs. A.R.Autulay (1986) 2 SCC 716 allowing an appeal setting aside the order of discharge against the respondent who was in the relevant time Chief Minister of the

State of Maharashtra.

167 C.C.03/2005/I CBI Court/VSP

222. The Hon’ble Apex Court held that “while passing impugned orders the Court has shifted the material for the purpose finding out whether or not there is a sufficient ground for proceeding against the accused but whether that would warrant a conviction. We are of the opinion that this was not the stage where the Court should have appraised the evidence and discharged the accused as if it was passing an order of acquittal. Further the defect of investigation itself cannot be a ground for discharge. In our opinion the order impugned suffers from where error and calls for rectification”. It is pertinent that the Hon’ble Apex Court made such note reserving the conclusiveness of income tax in full pledged trial.

223. However in the subsequent Judgment between Kedarilal Vs

State of MP cited by the accused , the Hon’ble Supreme Court referring to the case law between Krishna Reddy Vs. State,

D.S.P.Chennai Vs. K.Inbasagaran and Krishanand Vs. State of

MP held the income tax returns as unassailable documents favoured the explanation accorded by the public servant as to the income assessed by the income tax Department in his name or in the name of others connected to him. Accordingly it can be humbly held that much reliance can be placed on the Kedarilal Vs State of MP over

Suresh Rajan Case cited supra.

224. The another important case which the prosecution tried to evaluate before this Court is the case between State of Karnataka

Vs. Selvi.J.Jayalalitha and others. It is the one of the important

Judgment, having prevalence over the arena of cases relating to disproportionate cases. The Hon’ble Apex Court discussed the 168 C.C.03/2005/I CBI Court/VSP broader respective of law relating the allegations falling under the purview of Section 13(1)(e) of 1988 Act. It is evident that the Hon’ble

Supreme Court made a clear averment that income tax does not ipsofacto connote that the same had been acquired from the known lawful sources of assessee. The Hon’ble Court did not ruled out the earlier proposition laid in Krishna Reddy Vs. State, D.S.P.Chennai

Vs. K.Inbasagaran, Krishanand Vs. State of MP, State of A.P

vs J.Satyanarayana. However the Hon’ble Apex Court stressed that the income tax returns filed in evidence are rebuttable and the prosecution could successfully established that the persons who posed on record as income tax assessee actually had no independent or real source of income and entire financial circulated from the public servant who was alleged to be in possession of assets disproportionate to his income.

225. The facts of Selvi.J.Jayalalitha and others cited supra are that the accused A1 the former Chief Minister of Thamilnadu and co- accused A2, A3 and A4 are charged and prosecuted for the offences under Section 13(1)(e) r/w 13(2) of 1988 Act and further under Section 120-B and Sec.109 of IPC. The Appeal before the Hon’ble Apex Court lies from the Judgment rendered by the Hon’ble High Court of

Karnataka acquitting the accused A1 to A4 against the conviction rendered by the trial Court. In the said case on hand the accused

A2 to A4 concisely relied upon their income tax returns to accord huge amount of disproportionate assets standing in their name. In this case the burden on the prosecution and shifting of onus is twofold wherein when the accused discharged their onus by raising a preponderance of possibility and filing their income tax returns, the 169 C.C.03/2005/I CBI Court/VSP onus automatically shifted to the prosecution to bring on record the accused A2 to A4 never had any independent source of income and rooted the entire finance from A1. In the said case on hand the trial

Court and the Hon’ble Apex Court opined that the prosecution rebutted the income tax returns produced by the accused and brought on record that the accused A2 to A4 were devoid of independent sources of income. In view of opinion held by the Hon’ble Apex Court there is a simultaneous burden on the income tax assessee wherein they were averred as accused to prove their lawful sources. But in case on hand

Smt.Smt.M.Lakshmi, Smt.Bharathi and G.Venkayya were never referred as accused neither by the investigation agency nor the prosecution during the trial. There is no blemish of conspiracy or abetment attributed to them. As far as this case concerns they are only the witnesses in defence examined by the accused to discharge his onus sufficient to raise the preponderance of possibility creating a doubt in the case of prosecution. The witness cannot be placed in the position of accused to prove their bonafides in par with the prosecution case.

The witness cannot be compelled to prove the sources of income beyond the income tax returns already accepted by the income tax authorities nor the accused in absence of any material in contra provided by the prosecution.

226. Further as per the evidence led by the accused Ex.P75,

Ex.P76 Ex.D43, Ex.D46 to Ex.D49 are collected by the I.O during the investigation. The prosecution did not produce any evidence negating the evidence adduced by the accused and rather got impeached by the adverse inference under Section 114(g) for suppressing these documents from the knowledge of the Court. Accordingly this Court is 170 C.C.03/2005/I CBI Court/VSP of the opinion that with all due respects, the opinion rendered by

Hon’ble Apex Court in Selvi.J.Jayalalitha and others does not

intricate upon the facts and circumstances of the case under discussion.

227. Further the Hon’ble Apex Court dealing with a similar situation upholding credibility of income tax returns refuting the suppression of the same by the prosecution held sufficient, for vitiating the prima facie case against the accused for the offences under Section 5(1)(d) read with s.5(2) of the Prevention of Corruption Act, corresponding to

Section 13(1)(e) and 13(2) of Act, 1988. The relevant proposition was extracted below:

Mohd. Mumtaz vs Nandini Satpathy And Ors reported in 1987

SCC (1) 279 “The Income Tax Officer examined in detail each one of the items of assets said to have been unaccounted and suppressed and the order passed by the Income Tax Officer which has been placed on record clearly explains all the items as also entries pertaining to the house construction and other assets and shows that there is nothing to indicate the respondent No. 1 was possessed of assets disproportionate to his means. The application moved by the Special Public Prosecutor for withdrawal from the prosecution was therefore clearly bonafide and in furtherance of public justice and it was clearly a false and vexatious criminal prosecution which had been launched against respondent No.1 which was sought to be halted. The learned Special Judge also on these facts took the view that no useful purpose would be served by continuance of the prosecution and he accordingly permitted the withdrawal. The High Court too maintained the order of the learned Special Judge. We agree that in the light of the facts on record and the order passed by the Income Tax Officer which explains all the items of 171 C.C.03/2005/I CBI Court/VSP assets alleged to be unaccounted and sup- pressed, the charges against respondent No. 1 appear to be groundless”.

228. Hence in detailed reconciliation of series of case laws cited by the prosecution and the counsel for the accused, this Court is of the considerable opinion that the income tax returns pertaining to the accused, G.Venkayya, Smt.M.Lakshmi and Smt.Bharathi under Ex.P75,

Ex.P76, Ex.D43, Ex.D46 to Ex.D49 suffices sufficient standard of proof for relinquishing the onus on the accused. In absence of any reliable evidence dissuading the defence of the accused that Smt.M.Lakhsmi,

Smt.Bharathi and G.Venkayya has their own source of income as reflected in income tax returns, the contents of Ex.P75, Ex.P76,

Ex.D43, Ex.D46 to Ex.D49 held conclusive as to the merits of the facts under discussion against stray plea of prosecution that they were filed untimely. Hence from the detailed consideration of rival evidence, conclusions emerged thereto in the preceding discussion, this court concludes that the accused adduced sufficient evidence both oral and documentary which categorically affirm that Smt.Bharathi,

Smt.Lakshmi and G.Venkayya are having independent sources of income, sufficiently capable of carrying out their own transactions.

Further the prosecution with best of its efforts could not bring on record any incriminating substance forthcoming against the evidence of Smt.Bharathi and Smt.Lakshmi and the contents of documents marked under Ex.P75, Ex.P76, Ex.D43, Ex.D46 to Ex.D49.

The cash flow statements coupled with account details and relevant documents annexed to the income tax returns exclusively confirm the financial status of Smt.Lakshmi and G.Venkayya even prior to the check period. There is no material justified by the prosecution to 172 C.C.03/2005/I CBI Court/VSP prove the alleged benami transactions either on fact or law.

Accordingly the transactions of Smt.Lakshmi, Smt.Bharathi and

G.Venkayya tagged to the accused does not attracts any credentiality and deserve to be segregated from the transactions of the accused officer. Hence in view of merits determined above, the expenditure of theaccusedunderStatement-Disconcludedas

Rs.10,90,647/- asfollows:

Expenditure of the accused during the check period under Statement-D arrived by the Court.

Sl.No.Particulars Amount as AmountAmount per theas perarrived by prosecutionthe AOthe court according to charge sheet

1.Undisputed21,63321,63321,633 expenditure of the accused (8 items )

2.Undisputed7,67,2537,67,2537,67,253 expenditure of the wife of accused (10 items )

3.Disputes expenditure of3,61,5941,41,2243,01,761 the accused (2 items)

1. Payment to GMR 2,26,37272,0002,09,000 institute

2. Domestic 1,35,222.7069,22492,761 expenditure

4.Disputed expenditure10,50,000NILNil in the name of G.Venkayya (6 items)

1. payment to Anji50,000NilNil Babu (item No.13)

2. Payment to Anji 1,00,000NilNil Babu(item No.14)

3. Payment to 1,00,000NilNil V.Jagannadham(it em No.23)

4. Payment to 70,000NilNil daughter of accused (item No.24)

5. Receipt of 6,30,000NilNil 6.30lakhs loan amounts(item No.25) 173 C.C.03/2005/I CBI Court/VSP

6. House loan from 1,00,000NilNil Anji Babu (item No.26)

5.Fully disputed items 1,67,900NilNil ( 2 items)

1. Item No.27 95,900 (marriage expenses of Smt.Bharathi)

2. Item No.2872,000 (amount paid to Jagannadham) Total 23,68,3809,30,11010,90,647

XX. POINT No.2:

2) Whether the sanction order issued by PW.25 is legally valid?

229. The legal position enshrined relating to importance of sanction under Section 19 of Prevention of Corruption Act is without equivocation. The Statute forbids taking of cognizance by the Court against the public servant except with the previous sanction of an authority competent to grant such sanction in terms of clauses (a)(b)

(c) Section 19(1). The competency of the Court trying the accused much so depends upon the existence of valid sanction. The question regarding the validity of sanction when raised by the accused, draws an utmost importance to be decided on merits.

230. In this case on hand the prosecution obtained Ex.P54 sanction under Section 19(1)(C ) of Act 1988 from D.D.Goel the then

Commissioner of Income Tax, (CIB), Hyderabad who was examined as

Pw.25 to prosecute the accused before this Court. The learned public prosecutor reiterated the authenticity of the sanction order which was marked as Ex.P54 while submitted the detailed arguments for consideration.

174 C.C.03/2005/I CBI Court/VSP

231. The counsel for accused submitted that the sanctioning authority is bound to consider entire material collected by the investigating agency during the investigation and thereafter accord sanction by application of mind. In contra it is argued that in this case on hand the sanction obtained under Ex.P54 is completely devoid of merits and deviated from the legal procedure and accepting the same is complete prejudice to the accused. It is submitted while according the sanction, the sanction authority shall peruse the FIR, charge sheet along with the calculation of assets under statements

A,B,C and D and all the material documents procured by the investigating officer in course of investigation and had to come to a logical and legal conclusion that there is prima facie substance against the accused suffice enough to prosecute him. It is further submitted that in the case on hand the sanctioning authority, skipped the facts apparent on the face of the record from consideration, particularly the opening balance of Rs.2,00,650/- as on 01.01.1998 mentioned in the

FIR, similarly the sanctioning authority carried away with the allegations of the investigation agency as to the expenditure of the

Rs.95,900/- incurred by the accused in view of marriage of his daughter Smt.Bharathi, specifically when the date of marriage of

Smt.T.Bharathi is evidently much prior to the check period on record.

It is submitted that the sanctioning authority without considering and applying its own independent mind accord sanction which is unreliable and placed reliance on case law between Mansukhlal Vithaldas

Chauhan Vs State of Gujarat, reported in (1997) 7 SCC 622 in which it has been observed as follows:

175 C.C.03/2005/I CBI Court/VSP “ The sanctioning authority has to apply its own independent mind for the generation of genuine satisfaction whether prosecution has to be sanctioned or not and the mind of the sanctioning authority should not be under pressure from any quarter and its discretion should be shown to have not been affected by any extraneous consideration.”

232.It is further argued that the investigating authority is obliged to sent the entire relevant record to the sanctioning authority including the FIR, documents, statement of witness and relevant material and the scrutiny of whole record is to be made by the sanctioning authority while discharging his duty to accord or reject the sanction. The learned counsel for the accused drew the attention of this Court to the point that the Crl.M.P.285/2004 was filed by Pw.23 K.Anji Babu seeking tender of pardon on 08.06.2004 and the notice was issued to the prosecution on 09.06.2004. The preliminary examination of Pw.23 was conducted on 24.06.2004 and statement was recorded on 16.07.2004 advancing from 16.08.2004. The Orders in Crl.M.P 285/2004 was

pronounced on 21.7.2004. It is submitted that these proceedings

were conducted after Ex.P54 sanction order and that it is clearly apparent that the sanctioning authority Pw.25 never received these proceedings. According to the accused counsel the sanction order without scrutiny of relevant material crucial to the case is invalid and the following Judgments are referred on this aspect firstly State of

Tamil Nadu Vs. M.M.Rajendran reported in 1998 (9) SCC 268 in which it has been observed as follows:

“The High Court, has come to the finding that all the relevant materials including the statements recorded by the Investigating Officer had not been placed for 176 C.C.03/2005/I CBI Court/VSP consideration by the City Commissioner of Police, Madras because only a report of the Vigilance Department was placed before him. The High Court has also come to the finding that although the Personal Assistant to the City Commissioner of Police, Madras has deposed in the case to substantiate that proper sanction was accorded by the City Commissioner of Police, the witness has also stated that the report even though a detailed one was placed

before the Commissioner by him and on consideration of

which the Commissioner of holdings Police had accorded the sanction, it appears to us that from such deposition, it cannot be held conclusively that all the relevant materials including the statements recorded by the Investigating Officer had been placed before the Commissioner of Police. It appears that the Commissioner of Police had occasion to consider a report of the Vigilance Department. Even if such report is a detailed one, such report cannot be held to be the complete records required to be considered for sanction on application of mind to the relevant materials on records. Therefore, it cannot be held that the view taken by the High Court that there was no proper sanction in the instant case is without any basis”.

233.Secondly CBI Vs Ashok Kumar Aggarwal, reported in 2014 (14) SCC 295 in which it has been observed as follows:

8(a)“ The prosecution must send the entire relevant record to the sanctioning authority including FIR, disclosure statements, statements of witnesses, recovery memos, draft charge sheet and all other relevant material. The record so sent should also contain the material/document, if any which may tilt the balance in favour of the accused and on the basis of which, the competent authority may refuse sanction. 8(b)The authority itself has to do complete conscious scrutiny of the whole record so produced by the prosecution independently applying its mind by taking into consideration all the relevant facts before grant of 177 C.C.03/2005/I CBI Court/VSP sanction while discharging its duty to give or withhold the sanction. 8(c )The power to grant sanction is to be exercised strictly keeping in mind the public interest and the protection available to the accused against whom the sanction is sought. 8 (d)The order of sanction should make it evident that the authority had been aware of all relevant facts/materials and had applied its mind to all the relevant material. 8(e)In every individual case, the prosecution has to establish and satisfy the court by leading evidence that the entire relevant facts had been placed before the sanctioning authority and the authority had applied its mind on the same and that the sanction had been granted in accordance with law.”

234. The learned for the accused argued that prosecuting the accused on the basis irregular sanction is as prejudice as prosecuting him without sanction against the spirit of Section 19 of the Act and emphatically submitted that the entire proceedings of the prosecution in this case are vitiated due to lack of valid sanction under Section 19 of P.C Act.

235.In consideration of the rival arguments when we look into the evidence let by the prosecution, on this aspect, Pw.25 Sri D.D.Goel who is the then Commissioner of Income Tax testified that he is competent authority to remove the accused who was then working as

ITO, Visakhapatnam and that he received FIR, Statement of witnesses and computation of income and expenditure of the accused during the check period along with a request to sanction prosecution of the accused. He further deposed that he had gone through the documents and found the prima facie case against the accused and 178 C.C.03/2005/I CBI Court/VSP accorded sanction for prosecution of the accused and sent the Order

dated 14.05.2004 to the Vigilance Section of our Department and

who in turn forwarded to CBI, Visakhapatnam. The sanction order is marked as Ex.P54.

236. The counsel for the accused confronted Pw.25 in the cross examination wherein it was elicited that Pw.25 received the concerned documents from the Vigilance Department along with draft sanction order and he denied the suggestion that except the draft sanction order he did not receive any other documents from CBI,

Visakhapatnam. He denied the suggestion that he is not the sanctioning authority and he did not apply his mind to the facts of the case and mechanically accorded sanction.

237. It is evident from the case laws referred on record pertaining to the validity of sanction that the following are the important ingredients to constitute valid sanction under Section 19 of the Act, 1988.

1. The competency of sanctioning authority

2. Production of all vital documents pertaining to the involvement of the accused in the offence before the sanctioning authority by the investigating agency.

3. Application of mind and independent scrutiny by the sanctioning authority to conclude prima facie case against the accused to sanction prosecution.

238. In this case on hand, the competency of Pw.25 the then

Commissioner of income(CIB) to remove the accused officer from the service is not proved contrary and thereby held conclusive. With regard to submission of entire material before the sanctioning 179 C.C.03/2005/I CBI Court/VSP authority it is observed that the sanctioning order was issued on 14.05.2004. The tender of pardon to Pw.23 was granted vide Orders

dated 21.7.2004 in Crl.M.P.284/2005 filed on 09.06.2004. It is prima

facie evident on record that the proceedings in Crl.M.P.284/2005 were not filed before the sanctioning authority. Now the point for consideration is whether the failure of the I.O to produce these proceedings before the sanctioning authority vitiates the entire sanction proceedings. It is not in dispute that the statement of witness were not produced before the sanctioning authority. The contents of the 161 Cr.P.C statements filed before this Court categorically discloses that the alleged transaction between the accused and Pw.23 along with disputed cheques and pronotes connected with G.Venkayya father-in-law of the accused. Accordingly it cannot be precluded that the said transactions are omitted from the knowledge of sanctioning authority. When the provisions of Section 306 Cr.P.C are looked into it entitles the Court to tender pardon to accomplice at any stage of the investigation, enquiry or trial of an offence. This provision is inherently absorbed under Section 5 of the Prevention of Corruption

Act. Accordingly there is no bar for the proceedings under P.C Act that the tender of pardon should be only during the stage of investigation. There is a possibility of an accomplice or approver seeking tender of pardon subsequent to filing of charge sheet or amid the trial. In such cases there is no possibility for the investigating officer to act retrospectively communicating the same to the sanctioning authority, in cases dealing under P.C Act. Therefore it can be safely inferred the proceedings under Section 306 Cr.P.C akin to provisions under Section 5 of PC Act has nothing to do with the sanctioning authority. Accordingly the non filing of proceedings in 180 C.C.03/2005/I CBI Court/VSP

Crl.M.P.285/2004 before the sanctioning authority is not in prejudice to

the prosecution and entire sanction is not vitiated on the ground.

239. The next contention of the accused is that the clerical mistake in the calculation of the assets and the inclusion of marriage expenses of daughter of the accused and non-consideration of savings mentioned in the FIR by the sanctioning authority is illegal. It is established principle that the function of sanctioning authority is only to conclude a prima facie case against the accused so as to facilitate his prosecution before the court of law. The sanctioning authority is not expected to go into the merits of the charge sheet or weigh the evidence and settle the accused guilty or innocent. It is sufficient enough on record that all the vital documents involving the accused are produce before the sanctioning authority and the sanctioning authority acts with a reasonable prudence by application of mind.

The contents of Ex.P54 clear elicit that the sanctioning authority carefully considering the material placed before it considered that the accused shall be prosecuted for an offence under Section 13(1)(e) r/w 13(2) P.C. Act. A mere error or irregularity in sanction is not considered as fatal unless it has resulted in failure of justice or has occasioned thereby and the provisions of Section 19(1) deals with matter of procedure and does not go into root of jurisdiction.

Accordingly the above said imperfection does not interfere with the sanction order under Ex.P54 and the same is found within the guidelines evaluated under the case laws cited by the accused. The contention of the accused on this aspect is accordingly ruled out.

181 C.C.03/2005/I CBI Court/VSP

XXI. POINT No.3:

3) Whether the authorization under Section 17 of P.C.

Act under Ex.P82 is valid?

240. The learned counsel for the accused assailed the very competency of the investigating officer Sri K.Praveen Kumar and Sri

V.K.C.Reddy to conduct the investigation and contended that they were not duly authorized as per Section 17 of P.C.Act. The said

K.Praveen Kumar registered the case in RC 35(A)/2002 and later part of investigation is concluded by Sri V.K.C Reddy.

241. On this point Pw.24 in the chief examination testified that he worked as the Inspector of Police, CBI, Visakhapatnam from 1999 to 2007 and that on 01.11.2002 as per the orders of Superintendent of

CBI, Visakhapatnam, he registered a case in RC 35(A)/2002 under

Section 13(2) r/w 13(1)(e) of the PC Act, 1988 against the accused.

The corresponding FIR is marked as Ex.P50. He further stated that on 13.11.2002 the case was transferred to V.K.C.Reddy(late)

Dy.Superintendent of Police, CBI, Visakhapatnam for the purpose of further investigation. It is also pertinent that he conducted part of investigation in RC 8(A)/2001 against the accused. In the cross examination by the counsel for the accused he stated that he follow the CBI manual in the investigation of crime and that the SP, CBI,

Visakhapatnam instructed him in writing to register the crime and to investigate. He acceded that Ex.P50 does not bear the proceedings issued or endorsement made by Superintendent, CBI directing him to register and investigate the case. According to PW.24 the said endorsement was available in the office. Subsequently to authenticate 182 C.C.03/2005/I CBI Court/VSP proceedings of SP, CBI authorizing the Dy. Superintendent, CBI to investigate the crime, the prosecution got examined the then SP, CBI,

Visakhapatnam as Pw.30. PW.30 A.Sudhakara Rao deposed that he authorized V.K.C.Reddy the then DSP, CBI, SPE, Visakhapatnam to conduct investigation of this case and issued proceedings marked as

Ex.P82.

242. However with regard to initial investigation regarding to Pw.24 in the cross examination he admitted that he has given oral instructions to Mr.K.Praveen Kumar for registration of the case, but have not issued any written proceedings. It is the version of the accused that the proceedings under Ex.P82 does not bear any date and was issued subsequently to the Judgment of the Hon’ble Supreme

Court in State Inspector of Police Visakhapatnam Vs. Surya

Sankaram Karri reported in 2007 (7) SCC 172 wherein the necessity of authorization under Section 17 PC Act was discussed as mandatory by Statute. The relevant proposition relied by the counsel

for the accused is extracted below:

Para-9 :“Provisions of the 1988 Act, no doubt, like the 1947 Act seek to protect public servant from a vexatious prosecution. Section 17 provides for investigation by a person authorized in this behalf. The said provision contains a non-obstante clause. It makes investigation only by police officer of the ranks specified therein to be imperative in character. The second proviso appended to Section 17 of the Act provides that an offence referred to in clause (e) of sub-Section (1) of Section 13, shall not be investigated without the order of a police officer not below the rank of a Superintendent of Police. Authorization by a Superintendent of Police in favour of an officer so as to enable him to carry out investigation in terms of section 17 of the Act is a statutory one. The 183 C.C.03/2005/I CBI Court/VSP power to grant such sanction has been conferred upon the authorities not below the rank of Superintendent of Police. The proviso uses a negative expression. It also uses the expression "shall". Ex-facie it is mandatory in character. When the authority of a person to carry out investigation is questioned on the ground that he did not fulfill the statutory requirements laid down therefore in terms of the second proviso, the burden, undoubtedly, was on the prosecution to prove the same. It has not been disputed

before us that the Investigating Officer, P.W.41, did not

produce any record to show that he had been so authorized. Shri K. Biswal, the Investigating Officer, while examining himself as P.W.41, admitted that he had not filed any authorization letter”.

Para-11: The approach of the learned Special Judge, to say the least, was not correct. When a statutory functionary passes an order, that too authorizing a person to carry out a public function like investigation into an offence, an order in writing was required to be passed. A statutory functionary must act in a manner laid down in the statute. Issuance of an oral direction is not contemplated under the Act. Such a concept is unknown in Administrative Law. The statutory functionaries are enjoined with a duty to pass written orders”.

243. It is submitted that the CBI, Visakhapatnam subsequent to these

Judgment in order to cover up its latches in a systematic manner had filed petitions in all the disproportionate assets cases pending before this court by enclosing alleged orders issued under Section 17 of P.C.

Act. Such one petition was filed on 07.01.2008 vide Crl.M.P.26/2008 and the same was dismissed by this Court as the alleged proceedings does not contain any date. The prosecution again came up with

Crl.M.P.560/2013 to receive the said proceedings on record, after

facing the dismissal by this Court on 08.07.2013 approached the

Hon’ble High Court vide CRLP No.7904/2013. Having faced dismissal

184 C.C.03/2005/I CBI Court/VSP by the Hon’ble High Court, approached Hon’ble Supreme Court and filed CRLA 853/2019, the same was allowed on 07.05.2019 permitting the prosecution to bring the order of authorization on record. After receiving the orders of the Supreme Court, Pw.30 was examined and

Ex.P82 was brought on record. The contention of the accused is that the document of Ex.P82 is totally concocted and brought into existence only in the year 2008. The absence of reference of proceedings, date of issuance and signature of VKC Reddy as token of receiving the order from PW.30 was appraised before this Court to convince that the authorization order was false. The counsel for the accused drew the attention of the Court to the cross examination of

PW.30, where he admitted that “ It is true that I used to put the dates under my signature but is only whenever required in all case. I have put the date below my signatures in Ex.P50. In all cases of FIR I used to put the date below my signature. Ex.P82 does not contain the date below my signature and it also does not bear any date. It is true that even on my deposition recorded by this Court in C.C.9/2005 I put dates below my signatures. Soon after registration of this case , I issued

Ex.P82 either at the end of 2002 or at the beginning of 2003, but I cannot say the exact date on which Ex.P82 is issued.

244. The close perusal of the Ex.P50 FIR discloses that there is no corresponding endorsement by the Superintendent of police authorizing PW.24 to register and investigate the case. According to him the SP, CBI, Visakhapatnam instructed him to register and investigate the crime and the said endorsement is available in the office and same is not filed into the Court. On this aspect PW.30 in his cross examination stated that he had given oral instructions to 185 C.C.03/2005/I CBI Court/VSP

Mr.Praveen Kumar for registration of the case but have not issued any written proceedings. The evidence of Pw.24 and Pw.30 is quite contradicting to each other and the prosecution did not accord any explanation to ruleout the ambiguity. Accordingly the availability of authorization in writing to Pw.24, IO who conducted the initial investigation is disbelieved.

245. Mr.VKC Reddy is the investigating officer who carried out the crucial part of the investigation. According to the prosecution Mr.VKC

Reddy died pending trial. However no authenticated evidence either oral or document was adduced by the prosecution. This latch on part of the prosecution is impacting, as such the non examination of the

IO cannot be ignored equally in all cases. Coming back to the point in issue the Ex.P82 proceedings are undated. The evidence of Pw.30 in his cross examination draws an inference that he was habituated put date below his signature, which was in contra, inEx.P82. Even considering the non-mentioning of date by Pw.30 as latent, the most important proceedings which interfere with the legality of the investigation, cannot be expected to be undated. For argument sake even if it is considered a mistake in over sight, Pw.30 shall atleast expected to be in position to mention a exact date on which the said proceedings might have issued. It is reluctant that PW.30 in his cross examination responded evasively stating that “I issued Ex.P82 either at the end of 2002 or at the beginning of 2003, but I cannot say the exact date on which Ex.P82 is issued”.

246. The another important fact that which interfere with the argument of the prosecution is that the existence of Ex.P82 was first 186 C.C.03/2005/I CBI Court/VSP time brought on the record as raised by the counsel for the accused for the first time on 07.01.2008 vide Crl.M.P.26/2008. In fact the case was registered against the accused on 01.11.2002. There is no explanation from the prosecution either in the petition in

Crl.M.P.26/2008 or subsequently with regard to the delay of almost six

years from the date of registration of FIR and four years from the date of filing the charge sheet on 05.04.2004. It is conspicuous on record that the attempt of prosecution to bring Ex.P82 on record had been rejected twice on the file of this Court and also by the Hon’ble High

Court. That the dissatisfied prosecution approached the Hon’ble

Supreme Court vide CRLA.No.853/2019 and been successful to bring the order of authorization on record. It is pertinent that the accused had been repeatedly disputing the truth and veracity of the Ex.P82 from the time of its inception on record before this Court and the

Hon’ble Appellate Courts. Unfortunately for some reasons this

substantial controversy had been remained shrouded in the arguments before Hon’ble Apex Court. The Hon’ble Supreme Court was pleased to allow the petition upholding that substantive justice is beyond procedural or technical justice and besides directed an enquiry with report on CBI, Visakhapatnam calling for explanation for delay.

247. Admissibility of document on record is completely different from the proof of the document. The mere bringing on record the Ex.P82 does not relieve the prosecution from its burden to prove the same when the issuance of the same itself is contended to be false and after thought by the accused. Inspite of the fact that the prosecution fell short with corroborating evidence, the statement of Pw.24 and 187 C.C.03/2005/I CBI Court/VSP

Pw.30 before this Court totally evacuate the merits of Ex.P82.

Accordingly the issuance of Ex.P82 by Pw.30 authorizing Mr.VKC Reddy well intime, does not merits any acceptance and the argument of the prosecution on this aspect is rejected. The genuineness and transparency of investigation is very basis of fair trial which concomitant to preservation of fundamental right of accused under

Article 21 of the Constitution of India. It is from the righteousness of the investigation the defence of the accused emergences and any injudicious, suppression of facts tampers the entire concept of fair trial.

248. Hence, now the next point for consideration as this Court disbelieved Ex.P82 whether the entire investigation can be vitiated as laid down in State Inspector of Police Visakhapatnam Vs.Surya

Sankaram Karri referred supra. It is undoubted that the Division

Bench of Hon’ble Apex Court in this case held the provisions of Section 17 PC Act as mandatory and any violation on that point as infraction of justice. However the Hon’ble Apex Court in Ashok Tshering Bhutia

Versus State of Sikkim reported in 2011 (4) SCC 402 referring to

Rishbud & Anr. v. State of Delhi, Munnalal v. State of U.P.,

Khandu Sonu Dhobi & Anr. v. The State of Maharashtra, State

of M.P. v. Bhooraji & Ors., ; State of M.P. v. Ramesh Chand

Sharma, and State of M.P. v. Virender Kumar Tripathi,opined that the issue regarding an investigation by officer not authorized by law as res integra. It reiterated that the defect or irregularity in investigation has no bearing on competency of the Court or procedure relating to cognizance or trial. Further referring to Division Bench

Judgment Kalpnath Rai v. State where the oral approval from the 188 C.C.03/2005/I CBI Court/VSP competent officer is considered sufficient to legalize the further action, the opinion in Surya Sankaram Karri supra has been held per incuriam. The relevant paragraphs are extracted below for better understanding:

7.Much has been argued on the issue that investigation has been conducted without a proper order in writing, by an officer not authorised otherwise and sanction has been granted under Section 19 of the PC Act 1988 vide order

dated 5.4.1997, without taking into account the assets

and income shown in Ext. D-4, though the said assets represented known sources of income within the meaning of Section 13(1)(e) and the Explanation attached thereto. It has further been submitted that an invalid sanction cannot be the foundation for the prosecution and thus, the entire investigation and trial stood vitiated as the investigation without proper authorisation and invalid sanction goes to the root of the jurisdiction of the court and so the conviction cannot stand.

8. The issues raised hereinabove are no more res integra. The matter of investigation by an officer not authorised by law has been considered by this Court time and again and it has consistently been held that a defect or irregularity in investigation however serious, has no direct bearing on the competence or procedure relating to cognizance or trial and, therefore, where the cognizance of the case has in fact been taken and the case has proceeded to termination, the invalidity of the precedent investigation does not vitiate the result, unless a miscarriage of justice has been caused thereby. The defect or irregularity in investigation has no bearing on the competence of the Court or procedure relating to cognizance or trial. (Vide H.N.

Rishbud & Anr. v. State of Delhi, AIR 1955 SC 196; Munnalal v.

State of U.P., AIR 1964 SC 28, Khandu Sonu Dhobi & Anr. v. The State of Maharashtra, AIR 1972 SC 958; State of M.P. v. Bhooraji & Ors., AIR 2001 SC 3372; State of M.P. v.

189 C.C.03/2005/I CBI Court/VSP

Ramesh Chand Sharma, (2005) 12 SCC 628; and State of M.P. v. Virender Kumar Tripathi, (2009) 15 SCC 533).

9. In Kalpnath Rai v. State (Through CBI), AIR 1998 SC 201, a case under the provisions of Section 20 of Terrorist and Disruptive Activities (Prevention) Act, 1987, this Court considered the issue as to whether an oral direction to an officer to conduct investigation could meet the requirement of law. After considering the statutory provisions, the Court came to the conclusion that as oral approval was obtained from the competent officer concerned, it was sufficient to legalise the further action.

10. In State Inspector of Police, Vishakhapatnam v. Surya Sankaram Karri, (2006) 7 SCC 172, a two-Judge Bench of this Court had taken a contrary view without taking note of the earlier two-Judge Bench judgment in Kalpnath Rai (supra) and held as under:

"When a statutory functionary passes an order, that too authorizing a person to carry out a public function like investigation into an offence, an order in writing was required to be passed. A statutory functionary must act in a manner laid down in the statute. Issuance of an oral direction is not contemplated under the Act. Such a concept is unknown in administrative law. The statutory functionaries are enjoyed with a duty to pass written orders. However, the Court taking note of subsequent proceedings recorded its conclusions as under:

`It is true that only on the basis of illegal investigation a proceeding may not be quashed unless miscarriage of justice is shown, but in this case as we have noticed hereinbefore, the respondent had suffered miscarriage of justice as the investigation made by PW 41 was not fair'."

11. In the instant case, the officer has mentioned in the FIR itself that he had orally been directed by the Superintendent of Police to investigate the case. It is evident from the above that the judgments in Kalpnath Rai (supra) and Surya Sankaram Karri (supra) have been decided by two Judge Benches of this Court and in the 190 C.C.03/2005/I CBI Court/VSP latter judgment, the earlier judgment of this Court in Kalpnath Rai (supra) has not been taken note of. Technically speaking it can be held to be per incuriam. There is nothing on record to show that the officer's statement is not factually correct. We have no occasion to decide as which of the earlier judgments is binding. It is evident that there was a direction by the Superintendent of Police to the officer concerned to investigate the case. Thus, in the facts and circumstances of the case, the issue as to whether the oral order could meet the requirement of law remains merely a technical issue. Further, as there is nothing on record to show that the investigation had been conducted unfairly, we are not inclined to examine the issue further.

12. Same remained the position regarding sanction. In the absence of anything to show that any defect or irregularity therein caused a failure of justice, the plea is without substance. A failure of justice is relatable to error, omission or irregularity in the sanction. Therefore, a mere error, omission or irregularity in sanction is not considered to be fatal unless it has resulted in a failure of justice or has been occasioned thereby.

249. Subsequently the decision in Ashok Tshering Bhutia(supra) was upheld by the another Division Bench of Hon’ble Supreme Court in Vinod Kumar Garg v. State (Govt., of National Capital

Territory of Delhi) reported in (2020) 2 SCC 88.

19. The last contention of the appellant is predicated on Section 17 of the Act and the fact that the investigation in the present case was not conducted by the police officer by the rank and status of the Deputy Superintendent of Police or equal, but by Inspector Rohtash Singh (PW-5) and Inspector Shobhan Singh (PW- 7). The contention has to be rejected for the reason that while this lapse would be an irregularity and unless the irregularity has resulted in causing prejudice, the conviction will not be vitiated and bad in law. The appellant has not alleged or even argued that any 191 C.C.03/2005/I CBI Court/VSP prejudice was caused and suffered because the investigation was conducted by the police officer of the rank of Inspector, namely Rohtash Singh (PW-5) and Shobhan Singh (PW-7).

250. Similarly the precedent established in Prabhu v.Emperor reported in AIR 1944 Mad 369, Lumbhardar Zutshi vs The King reported in (1950) 52 BOMLR 480 envisages that if cognizance is in fact taken on a police report initiated by the breach of a mandatory provision relating to investigation there can be no doubt that the result of trial, which follows it cannot be set aside. Unless the illegality in the investigation can be shown to have brought about a miscarriage of justice and that an illegality committed in the course of investigation does not effect the competence and the jurisdiction of the court for trial.

251. Accordingly the legal position as on date considering the catena of decisions of the Hon’ble Apex Court even presuming the error committed by CBI in submitting the charge sheet without the proceedings under Section 17, the cognizance taken by this Court and subsequent trial based on the charge sheet cannot be set aside unless and until a grave miscarriage of justice to the accused is proved on record. In this case on hand, the accused did not elicit anything as to how the technical irregularity under Section 17 of PC Act infringed his right to fair trial. Therefore duly conceding with the opinion of the

Hon’ble Apex Court this Court reiterates the substantial justice shall

always prevails over a technical or procedural justice. The conclusion is that the irregularity by the investigating agency under

Section 17 of PC Act, with no credence added to Ex.P82, does not have 192 C.C.03/2005/I CBI Court/VSP any bearing on the merits of the trial and the investigation and subsequent trial holds good. The Point is accordingly answered.

252. Before parting the conclusion as to validity of sanction and investigation irregularities, the delay in registering the case almost 8 months after search, delay in filing the charge sheet, suppression of multiple documents collected during the investigation by the I.O, misconception of facts apparent on record and finally galore of arithmetic mistakes with difference in lakhs in the charge sheet does not shift from the emphasis of the court. These circumstances are considerably unwarranted and draws the prosecution case away from factual premise.

XXII. POINT No.4:

4)Whether the prosecution proved the guilt of the accused beyond all reasonable doubt for the offences

under Section 13(2) r/w 13(1)(e) of P.C Act ?

253. Therefore in due consideration of rival evidence and meritorious arguments, either side which empathically taken this court to justification of facts in accordance with the law and the calculations arrived thereto this Court made the following conclusions:

I. Final calculation arrived by the Court:

In view of the above discussion and merits held by the Court on the every aspect asserted and contradicted by the either side, this Court concluded the calculation of assets of the accused as follows :

a) Assets of the accused at the beginning of the check period under Statement-A 193 C.C.03/2005/I CBI Court/VSP

The total worth of 70 items under Statement-A is Rs.6,35,936/- after correcting the total arithmetic error the amount as per the charge sheet is Rs.6,34,846/-.

Sl.No.Particulars Amount as Amount asAmount per theper the AOarrived by prosecutionthe court according to charge sheet

1.60 items admitted4,26,3534,26,3534,26,353 A and B

2.Remaining 10 items2,08,4932,08,4932,08,493 in statement-A

Item No.14, 15, 61 exclusively belongs to accused worth value Rs.40,477/-

3.Additional 6 itemsNIL2,27,63711,687 claimed by the accused as not considered by the prosecution

1. Addl. ItemNIL10,502 No.1 (wife)(10,502)

2. Addl. ItemNIL1,185 No.2(wife)(1,185)

3. Addl. 3 to 6NILNILNIL denied

4.Addl. ItemsNILNIL35,000 included by the court on merits

1. Fixed deposit NILNIL25,000 dt.4.12.1997 in HDFC Bank discussed at Para No.90 and 91(wife)

2. Fixed depositNILNIL10,000 dt.01.16.1996 with Gayatri Vidya Parished discussed at Para No.96(wife) Total6,34,8468,62,4836,81,533 194 C.C.03/2005/I CBI Court/VSP

b) Assets of the accused at the end of the check period under Statement -B

The total worth of 101 items under Statement-B is Rs.14,53,098/- after correcting the total arithmetic error the amount as per the charge sheet is Rs.14,70,010/-.

Sl.No.Particulars Amount as Amount asAmount per theper the AOarrived by prosecutionthe court according to charge sheet

1.Value of undisputed4,50,7964,50,7964,50,796 items of accused , his wife and daughter in combined statements (60 items)

2.Undisputed items of7,51,9167,51,9163,76,916 the accused (23 items) Value of undisputed NILNIL 3,76,9 items arrived by the 16 court (7,51,916- After deducting item 3,75,000) No.13 and 14 of Statement –B which were added to Statement –C as per discussion under

additional income

claimed by the

3.Undisputed items of89,11889,11889,118 wife of accused (5 items)

4.Gold items purchased46,5702,02946,570 by the accused (8 items)

5.Assets in the name of1,00,000NILNIL G.Venkayya (1 item)

6.Gold items of wife of16,609NILNIL AO ( 2 items)

7.Disputed gold items15,000NILNIL of daughter of AO ( 2 items) Total14,70,00912,93,8599,63,400 In view of revised NIL24,444(-)24,444 values of Item Nos.6,8,48 of 195 C.C.03/2005/I CBI Court/VSP

Statement-B (i.e., Rs.14,70,011 -24,444=14,45,567/-) . A deduction of Rs.24,444 is given to the accused from statement-B

Total 9,38,956

c) Assets acquired by the accused during check period (Statement B- Statement A)

1. Assets acquired in the name of accused and his wife including the admitted common assets in both the statements i.e., (B-A)

Rs.9,38,956 - 6,81,533=2,57,423

2. Assets exclusively standing in the name of the accused including the admitted common assets in the both the statements i.e., (B-A) (Rs.4,50,796+3,76,916+46,570) - (Rs.4,26,353 +40,477)

Rs.8,74,282 - 4,66,830=Rs.4,07,452 - difference of Item No.7,9, and 12 of Statement-A with Statement-B) =Rs.4,07,452 - 24,444=3,83,008/-

d) Income of the accused during the check period under

Statement -C

The total worth of 40 items under Statement-C is Rs.6,98,750.07 after correcting the total arithmetic error the amount as per the charge sheet is Rs.6,98,752.07

Sl.No.Particulars Amount as Amount asAmount per theper the AOarrived by the prosecutioncourt according to charge sheet

1.Value of2,21,9562,21,9562,21,956 undisputed income of accused (16 items) 196 C.C.03/2005/I CBI Court/VSP

2.Undisputed94,96194,96194,961 income standing in the name of wife of accused (17 items)

3.Disputed income2,73,9742,90,4972,78,283 of the accused (2 items)

1. Item No.3 2,70,3742,76,8972,78,283 net salary

2. Item No.183,60014,000- interest on Durga finance

4. Income disputed1,07,8593,48,3593,72,656 in the name of wife of accused ( 5 items)

1. Item23,35973,35973,361 Nos.34,35,3 6

2. Item No.394,50075,00099,095

3. Item No.4080,0002,00,2002,00,200

5.Additional itemsNIL14,69,6125,40,477 claimed by the accused (18 items )

1. Loan repaymentNIL5,44,26644,266 by M.Venkeswara rao to M.Lakshmi (wife)

2. Premature NIL87,53714,092 closure of FD Akshya Deposit certificate (Item No.16 and 17 of Statement D) (wife) 3.Sale of reliance NIL17,7754,775 shares (Item No.18 of Statement-D) (wife) 4.Cybermate NIL20,3509,660 shares (item No.20 of Statement D) (wife) 5.Withdrawal NIL5096414,964 from Jaganadh Vidyapeet (Item No.21 and 22 of Statement-D) (wife) 6.Amount taken asNIL22,00022,000 197 C.C.03/2005/I CBI Court/VSP overdraft loan (wife) 7.Divided from NIL250250 KCP sugars (wife) 8.Refund of NIL870870 telephone deposit (accused) 9.Payment by DSSNIL6,000- Narayana Raju (wife) 10.Premature NIL16,0006000 withdrawals from Gayatri Vidyaparished (wife)

11. Professional NIL48,60048,600 income of Smt.Lakhsmi (wife)

12. Amount NIL3,75,0003,75,000 received from Anji Babu including item No.13 & 14 statement B(accused)

13. Sale of NIL2,80,000NIL National Saving Certificate relates to Item No.12 of Statement- D(accused) Total 6,98,752/-24,25,385/-15,08,333 The value of item (-)11,363 No.33 is reduced as per discussion at Para No.95 Total 14,96,970 The total income of the accused and his wife = Rs.14,96,970 The exclusive income of the accused is = Rs. 8,76,109/- The exclusive income of the wife is = Rs.6,20,861/-

e) Expenditure of the accused during the check period under Statement-D

The total worth of 28 items under Statement-D is Rs.20,33,025.05 after correcting the total arithmetic error the amount as per the charge sheet is Rs.23,68,381.05.

198 C.C.03/2005/I CBI Court/VSP

Sl.No.Particulars Amount as AmountAmount per theas per thearrived by prosecutionAOthe court according to charge sheet

1.Undisputed21,63321,63321,633 expenditure of the accused (8 items )

2.Undisputed7,67,2537,67,2537,67,253 expenditure of the wife of accused (10 items )

3.Disputes expenditure3,61,5941,41,2243,01,761 of the accused (2 items)

1. Payment to 2,26,37272,0002,09,000 GMR institute

2. Domestic 1,35,222.7069,22492,761 expenditure

4.Disputed expenditure10,50,000NILNil in the name of G.Venkayya (6 items) 1.payment to Anji 50,000NilNil Babu (item No.13) 2.Payment to Anji 1,00,000NilNil Babu(item No.14) 3.Payment to 1,00,000NilNil V.Jagannadham(item No.23) 4.Payment to 70,000NilNil daughter of accused (item No.24) 5.Receipt of 6,30,000NilNil 6.30lakhs loan amounts(item No.25) 6.House loan from 1,00,000NilNil Anji Babu (item No.26)

5.Fully disputed items 1,67,900Nil Nil ( 2 items) 1.Item No.27 95,900Nil Nil (marriage expenses of Smt.Bharathi) 2.Item No.2872,000Nil Nil (amount paid to Jagannadham) Total 23,68,3809,30,11010,90,647

The expenditure of the accused and his wife = Rs.10,90,647/-

The exclusive expenditure of the accused is = Rs.3,23,394 199 C.C.03/2005/I CBI Court/VSP

The exclusive expenditure of the wife of accused is =Rs.7,67,253/-

f) Disproportionate assets or savings of the accused:

1. The formula for DA or likely savings = C-[(B-A)+D] or [C-D]=E -[A-B]

2. The DA or savings of the accused and his wife consolidately

C-[(B-A)+D] 14,96,970 - [Rs.2,57,423+10,90,647]- 14,96,970 -[13,48,070] =1,48,900

Since the income exceeds the assets acquired during the check period and the expenditure during the check period, there are no disproportionate assets and the likely savings of the accused and his wife is Rs.1,48,900/-.

3. The DA or savings of the accused exclusively C-[(B-A)+D] 8,76,109- [Rs. 3,83,008+3,23,394]- = -876109-7,06,402 =1,69,707/-

Since the income exceeds the assets acquired during the check period and the expenditure during the check period, there are no disproportionate assets and the likely savings of the accused is

Rs.1,69,707/-

g) Substituting the above calculation with other formula:

[C-D]=E-[A-B]

1. The DA or savings of the accused and his wife consolidately 14,96,970-10,90,647=4,06,323(E savings) 200 C.C.03/2005/I CBI Court/VSP

E-[A-B] = 4,06,323 - 2,57,423=1,48,900/-.

Even accordingly the savings of the accused and his wife is

Rs.1,48,900/- and there is no disproportionate assets.

2.The DA or savings of the accused exclusively :

[C-D]=E-[A-B] [8,76,109-3,23,394]= 5,52,715(E savings)

E-[A-B]= 5,52,715-3,83,008=1,69,707/-

Even accordingly the savings of the accused is Rs.1,69,707/- and there is no disproportionate assets. Hence the accusation laid by the prosecution with regard to alleged disproportionate assets against the accused officer sans justification and is devoid of merits.

254. Conclusion :

Therefore in view of the above discussion and reasons thereto, this Court is of the opinion that the prosecution failed to prove beyond all reasonable doubt that the accused being public servant acquired and possessed in his name and in the name of his family members, a disproportionate assets of Rs.24,86,792.80ps as on 09.04.2001. Consequently it is concluded that the prosecution failed to prove the guilt of accused for the offence under sec.13(1)(e) r/w 13(2) of P.C. Act, 1988.

In the result, accused is found not guilty for the offence punishable under sec. 13(1)(e) r/w 13(2) of Prevention of Corruption

Act, 1988 and he is acquitted under Section 248(1) of Cr.P.C.

The accused is held entitled for return of FD amount of

Rs.3,63,900/-(Rupees Three lakhs sixty three thousand nine hundred only) along with the interest under Ex.P79 after appeal time.

201 C.C.03/2005/I CBI Court/VSP

The existing bail bonds of accused shall stands cancelled.

Accused is directed to execute self bond for Rs.10,000/- (Rupees ten thousand only) with two sureties for like sum each as contemplated under Section 437-A of Criminal Procedure Code, for a period of six months, to ensure his appearance before the appellate court, if warranted.

Dictated to the stenographer Grade-I, transcribed by her,

corrected and pronounced by me in the Open court on this the 9th day of March, 2021.

Sd/- B.Satya Venkata Hima Bindu

PRINCIPAL SPL. JUDGE FOR C.B.I. CASES,

FAC I Addl. SPL.JUDGE FOR C.B.I CASES,

VISAKHAPATNAM.

APPENDIX OF EVIDENCE

LIST OF WITNESSES EXAMINED ON BEHALF OF PROSECUTION.

For Prosecution:

P.W.1 (L.W.1) :G.Gopala Krishna Murthy

P.W.2 (L.W.3):P.H.Suresh Babu

P.W.3 (L.W.4):G.V.M.Raju

P.W.4 (L.W.6):N.Leela Shankar

P.W.5 (L.W.9):J.Butchi Appa Rao

P.W.6 (L.W.11): Muvva Venkateswara Rao

P.W.7 (L.W.16):Imandi Vijaya Lakshmi

P.W.8 (L.W.2):V.R.M.Raju

P.W.9 (L.W.24):V.Jagannadham

P.W.10 (L.W.35):V.Verty Selvan

P.W.11 (L.W.25):D.S.S.Narayana Raju

P.W.12 (L.W.37):K.Siva Sankar

P.W.13 (L.W.38) : V.B.Rama Krishna

P.W.14 (L.W.41) : T.V.Subrahmanyam Panthulu

P.W.15 (Addl.Wit.): M.N.Rao

P.W.16 (L.W.44) : J.Gopala Krishna Murthy

P.W.17 (L.W.46) : Y.Srinivas 202 C.C.03/2005/I CBI Court/VSP

P.W.18 (L.W.48) : P.Samba Siva Rao

P.W.19 (L.W.50): V.Ramesh

P.W.20 (L.W.51) : P.Ravi Kumar

P.W.21 (L.W.54) : M.Krupavathi

P.W.22 (L.W.59) : S.Ishak Mohammed

P.W.23 (L.W.53) : K.Anji Babu

P.W.24 (L.W.62) : K.Praveen Kumar

P.W.25 (L.W.) : D.D.Goel

P.W.26 (L.W.14) : R.V.Sudhakar

P.W.27 (L.W.21) : M.Narayana Rao

P.W.28 (L.W.10): M.Nageswara Rao

P.W.29 (L.W.40) : S.C.Subbarayudu

P.W.30 : A.Sudhakara Rao

P.W.31 : K.L.Narayana

LIST OF WITNESSES EXAMINED ON BEHALF OF DEFENCE SIDE

For Defence:

D.W.1 :Challa Madhavi Latha

D.W2.:P.Venkata Viswanatham

D.W.3:K.Shankara Narayana Chandran

D.W.4:G.Narasimha Rao

D.W.5:P.Santharam

D.W.6:D.Rama Krishna

D.W.7:M.S.S.R.Varma

D.W.8:M.Veerabhadram

D.W.9:P.K.Satya Raju

D.W.10:K.V.Ramana Murthy

D.W.11:P.Ram Narayana Rao

D.W.12:M.Bharathi

D.W.13:Dr.G.Bhagya Rao

D.W.14:Ch.Mangapathi Rao

D.W.15:M.Lakshmi

D.W.16:M.Subrahmanyam 203 C.C.03/2005/I CBI Court/VSP

LIST OF DOCUMENTS MARKED ON BEHALF OF PROSECUTION.

Ex.P.1 :Statement of account alongwith covering letter

Ex.P.1(A):Certified statement of account No.SB.7806 of Smt.M.Lakshmi with Visya Bank Ltd., VZM along with receipt dt.5-5-2003 (marked with consent ).

Ex.P.2 :Xerox copy of term deposit for Rs.10,000/-

Ex.P.2(A):Letter dt.5.5.2003 of Sri Y.Prabhakara Rao, Manager, Indian Bank, Maharanipeta branch, VSP to DSP, CBI, VSP alongwith certified statement of account No.8409. (marked with consent ).

Ex.P.3 :Debit and credit voucher and term deposit receipt.

Ex.P.3(A):Letter Dt.10.2.2003 of Sri Anil B.Atre, company secretary and G.M.(Admn) Finolex Industries, pune. (marked with consent ).

Ex.P.4 :credit voucher of Rs.10,000/- correspondent Ex.P.2.

Ex.P.4(A):Letter Dt.8.2.2003 ofSri M.Bulliabbayi, Secretary, the Andhra Sugars Ltd., Tanuku to DSP/CBI. (marked with consent ).

Ex.P.5 :Kalpatharuvu deposit (KTD) receipt dated 12-2-1996.

Ex.P.5(A):Letter dated 12-02-2003 of Sri V.Vasudevan officer, Investor Service Dept., Industan lever ltd., Mumbai addressed to DSP/CBI/VSP. (marked with consent ).

Ex.P.6 :Statement of account relating to KTD No.98/47/329.

Ex.P.6(A):Letter Dt.15.2.2003 of Sri G.V.Suresh Kumar, Co: Secretary Global Trust Bank Ashoka My Home Chambers alongwith two copies of applications of 19665 and 19666 dt.9.3.95. (marked with consent ).

Ex.P.7 :Statement of account of the accused from 17-06-1999 to 09-04-2001.

Ex.P.7(A):Letter Dt.13.2.2003 of Sri R.V.Krishnan, addressed to DSP/CBI, VSP alongwith the enclosure. (marked with consent ).

Ex.P.8 :Statement of account of accused as on 31-12-1997.

Ex.P.8(A):Letter Dt.24.2.2003 of Sri Parag B.Despande, Company Secretary addressed to DSP/CBI, VSP. (marked with consent).

Ex.P9 :F.D.Receipt dated 18-4-1997 for Rs.21,000/- 204 C.C.03/2005/I CBI Court/VSP

Ex.P.9(A):Regd.Sale deed dt.6.7.94.

Ex.P.10 :F.D.Receipt dated 16-10-2000 for Rs.30,000/-

Ex.P.10(A): Receipt dt.17.2.2003 of DSP/CBI,VSP given to G.Guru Prasad alongwith enclosures. (marked with consent ).

Ex.P11 :F.D.Receipt dated 01-10-1994 for Rs.15,000/-

Ex.P.11(A): Letter Dt.16.2.95 of Brooke Bond Lipton India Ltd., alongwith enclosures. (marked with consent ).

Ex.P.12 :F.D.Receipt dated 12-12-1995 for Rs.20,000/-

Ex.P.12(A): Letter Dt.14.10.98, 24.3.95 of M/s Aarthi consultants Pvt. Ltd., addressed to Smt M.Laxmi. (marked with consent).

Ex.P.13 :F.D.Receipt dated 29-2-1996 for Rs.35,000/-

Ex.P.13(A): Letter Dt.16.1.96 of the Dy.Secretary, the Andhra sugars Ltd., addressed to Smt M.Lakshmi and share certificate bearing No.088255. (marked with consent ).

Ex.P.14 :F.D.Receipt dated 04-1-1994 for Rs.10,000/-

Ex.P.14(A): Share certificate No.54895 of the KCP Ltd., alongwith the letter dt.7.3.96 addressed to Smt M.Laxmi. (marked with consent ).

Ex.P.15 :F.D.Receipt dated 04-1-1994 for Rs.10,000/-

Ex.P.15(A): Letter dt.NIL of Fenolex Industries Ltd., addressed to Smt M.Lakshmi. (marked with consent).

Ex.P.16 :Pronote for Rs.2,00,000/- dated 14-08-2000.

Ex.P.16(A): UTI certificates bearing Nos.308930 140017188 and 3089301 40017189 alongwith enclosures. (marked with consent ).

Ex.P.17 :Pronote for Rs.2,00,000/- dated 15-08-2000.

Ex.P.17(A): Share certificate Nos.2846433, 3050669, 279713 along with allotment advice cum notice dt.19.2.93 and letter of Nagarjuna Fertilisers and Chemicals, Hyderabad. (marked with consent ).

Ex.P.18 :Pronote for Rs.1,00,000/- dated 16-08-2000.

Ex.P.18(A): Part-A Debenture certificate No.A.37872 Part-B-Debenture certificateNo. B-37872 and enclosures. (marked with consent ).

Ex.P.19 :Attested copy of ledger account of Sree Durga Finance.

205 C.C.03/2005/I CBI Court/VSP

Ex.P.19(A): Share certificate No.062, 063 and 064 of LK Pharmaceuticals Pvt.Ltd., KKD and letter dt.15.2.2003. (marked with consent ).

Ex.P.20 :Certifed xerox copy of D.D. for Rs.1,00,000/-

ExP.20(A):Share certificate No.211127 of Asia Television Network Ltd., along with letter Dt.25.10.96 addressed to Smt M.Laxmi. (marked with consent ).

Ex.P.21 :N.J.Stamp register

Ex.P.21(A): Share certificate No.00040222 of Pan clothing and consolidated Co.Ltd., (marked with consent ).

Ex.P.22 :Certified copy of demand draft application for Rs.13,000/-

Ex.P.22(A): Share certificate Nos. 66639 and 66674 of Stil Bin chemicals Ltd., (marked with consent ).

Ex.P.23:Certified copy of demand draft application for Rs.5,000/-

Ex.P.23(A): Deep Discount bond of the Industrial credit and Investiment Corporation of India Ltd., and the letter dt.27.5.97 addressed to Smt M.Laxmi. (marked with consent ).

Ex.P.24 :Certified copy of demand draft application for Rs.2,000/-

Ex.P.24(A): share certificate No.00383713 of the Industrial Finance Corporation of India Ltd., (marked with consent ).

Ex.P.25 :Share certificate was issued in the name of G.Mahalaxmi W/o.Venkayya

Ex.P.25(A): Acknowledgment No.0564 dt.26.4.94 for Rs.10,000/- along with receipt Dt.26.4.94 for Rs.10,000/- and enclosures. (marked with consent ).

Ex.P.26 :Pronote for Rs.1,00,000/- dt.8.3.2001.

Ex.P.26(A): Letter dt.23.02.2003 of the Asst.Manager, The Vysya Bank Ltd., VZM alongwith two credit vouchers both dt.27.3.99 for Rs.1050/- and 350/-. (marked with consent ).

Ex.P.27 :Memo of confirmation No.1129 dt.20.12.94 of Chakravarthi and company, VSP in the name of Smt M.Lakshmi one book in relevent page 1129. (marked with consent ).

Ex.P.28 : Memo of confirmation No.1201, dt.20.01.95 of Chakravarthi and company, VSP in the name of Smt.M.Lakshmi 1 book in relevent page 1201. (marked with consent ).

206 C.C.03/2005/I CBI Court/VSP

Ex.P.29 :Letter dt.17.2.2003 of Sri K.B.Pranesh, Secretary and Corporate GM, (Finance) the KCP Ltd., Ramakrishna building No.2, Dr.P.B.Cherian, Egmore, Chennai. (marked with consent ).

Ex.P.30 :Letter dt.21.2.2003 of S.Chidambaram, Manager M/s KCP Sugar and Industries Corporation Ltd., Rama Krishna buildings No.239, Annasali, Chennai. (marked with consent).

Ex.P.31 :Letter dt.10.5.2003 of Mr.S.Ramachandra Rao, Manager, Andhra Bank, KKD, addressed to VKC Reddy, DSP, CBI, VSP along with certified copy of ledger sheet of KTD No.47/65.

Ex.P.32 : Certified copy of ledger sheet No.109 of Siri shares and M/s D.S.S.Narayana Raju, VZM along with the receipt dt.26.4.2003 of VKC Reddy, DSP, CBI, VSP.

Ex.P.33 :Copy of statement of account no.22271 of accused wife and daughter alongwith covering letter.

Ex.P.34 :Copy of Ledger of M.Lakshmi, W/o M.Subramayam bearing SB A/c No.7598 opened on 29.01.96.

Ex.P.35 :Copy of pass book of M.Subramanyam, SB A/c No.8058 as on 31.12.97, VGB, Dabagardens Branch

Ex.P.36 : Letter dated 14.5.2003 of Sri C.Ramalingam, Asst.Manager, HSBC, Visakhapatnam.

Ex.P.37 : Letter dt.27.5.2003 of Sri C.Ramalinam, Asst. Manager, HSBC, Visakhapatnam.

Ex.P.38 :Certified copies of statement of account bearing No.061- 041133-006 of M.Lakshmi.

Ex.P.39 :Copies of sale deed for Rs.6,00,000/- dt.8.6.2000 in favour of G.Venkatayya.

Ex.P.40 : Copy of sale deed for Rs.5,70,000/- dt.8.6.2000 in favour of G.Venkatayya.

Ex.P.41 :Certified copy of inventory list dated 15/16.03.2001 in RC 8(A) 2001, CBI, VSP.

Ex.P.42 :Certified copy of the locker proceedings

Ex.P.43 :Certified copy of seizer memo relating to seized documents under the covers of seizer memo.

Ex.P.44 :Receipt letter issued by PW20(P.Ravi Kumar) dt.6.2.2003.

207 C.C.03/2005/I CBI Court/VSP

Ex.P.45 :File containing the immovable property returns of Sri M.Subramanyam, ITO, Vizianagaram along with receipt dt.2.6.2003.

Ex.P.46 :Certified copy of search list dated 15.03.2001 in the office premises of accused.

Ex.P.47 :Certified copy of search list dated 15.03.2001 in the residential premises of accused.

Ex.P.48 :Two demand promissory notes for Rs.1,00,000/- and Rs.50,000/-.

Ex.P.49 :Copy of ledger of plots along with plan and receipt.

Ex.P.50 :F.I.R in RC 35(A)/2002 registered on 01.11.2002.

Ex.P.51 : Registered sale deed dt.20.10.1990.

Ex.P.52 :Xerox copies of Indira Vikas Patras attested by the I.O.

Ex.P.53 :Letter dt.17.4.2001 along with file containing intimations relating to accused and order sheet.

Ex.P.53(A): Intimation form along with xerox copy of agreement dated 3-3-2001

Ex.P.53(B): Intimation form.

Ex.P.54 :Sanction order in RC 35(A)/2002 dated 14-05-2004.

Ex.P.55 :Xerox copy of sale agreement dt.3.3.2001.

Ex.P.56 :Xerox copies of ledger extracts pertaining to Sri Lakshmi Finance.

Ex.P.57 :File consisting of pay particulars of M.Subrahmanyam.

Ex.P.58 :Locker advance receipt and rent receipt in the name of M.Kameswara Rao.

Ex.P.59 :File relating to Akshya Deposit certificate in the name of Smt M.Lakshmi.

Ex.P.60 :Receipt dt.12.12.2003 along with three DD applications.

Ex.P.61 :Receipt dt.9.2.2003 along with safe deposit vaults application form.

Ex.P.62 :File relating to statement of account in respect of SB A/c No.6510 standing in the name of Smt M.Lakshmi commenced on 29.11.1999 and closed by 15.5.2000.

Ex.P.63 :Letter dt.12.05.2003 along with statement of joint account No.SB20810.

208 C.C.03/2005/I CBI Court/VSP

Ex.P.64 : Original Pronote dated 01-9-1996 for Rs.50,000/-.

Ex.P.65 : Original Pronote dated 19-03-1997 for Rs.25,000/-.

Ex.P.66 :Details of shares purchased and sold by Smt M.Laxmi.

Ex.P.67 : Fixed deposit receipt of the accused in Andhra Bank dt.12-07- 2005 for Rs.5,60,000/-.(marked with consent)

Ex.P.68 :Fixed deposit receipt of the accused in Andhra Bank dt.20- 09-2004 for Rs.53,112/-(marked with consent)

Ex.P.69 : Fixed deposit receipt of the accused in Andhra Bank dt.04- 08-2004 for Rs.70,200/-.(marked with consent)

Ex.P.70 :Fixed deposit receipt of the accused in Andhra Bank dt.04- 08-2004 for Rs.47,071/-.(marked with consent)

Ex.P.71 : Fixed deposit receipt of the accused in Visakha Grameena Bank dt.04-08-2007.

Ex.P.72 :Fixed deposit receipt of the accused in Visakha Grameena Bank dt.04-08-2007.

Ex.P.73 :Three xerox copies of receipts dated 10.02.1997, 06.03.1997 and 10.04.1997.

Ex.P.74 :Xerox copy of receipt dated 12-12-2000.

Ex.P.75 :Certified copies of I.T.returns of G.Venkayya for the assessment year from 1998-1999 to 2001-2002 certified by D.Pera Raju.

Ex.P.76 :Copy of I.T.Returns of the accused for the assessment years 1998-1999, 1999-2000, 2000-2001 and 2001-2002.

Ex.P.77 :Xerox copy of direct taxes ready reckoner for 10 years ie., from 1993-1994 to 2002-2003(16th edition 2002-2003).

Ex.P.78 :Fixed deposit receipt for Rs.30,000/- dt.27.11.1999 in Vysya Bank, Vizianagaram with connected documents.

Ex.P.79 :Cash seized at the time of search deposited as FD in the Bank of Baroda dt.23.4.2004.

Ex.P.80 :A sum of Rs.2,180.56ps received as interest on SB/Account from SBI, main branch, Vizianagaram as on 9-4-2001 at S.No.9 of statement-C and connected documents.

Ex.P.81 : Letter dated 26-9-2003 of accused.

Ex.P.82 :Proceedings issued by SP/CBI.

Ex.P.83 :Letter dated 08-02-2003 addressed by Mr.K.L.Narayana to Mr.V.K.C.Reddy, DSP, CBI, VSP.(subject to objection).

209 C.C.03/2005/I CBI Court/VSP

LIST OF DOCUMENTS MARKED ON BEHALF OF DEFENCE SIDE.

DEFENCE:

Ex.D.1:Xerox copy of form 16 of I.T.Returns

Ex.D.2:Letter of S.J.V.Peeth dated 28-02-2000

Ex.D.3:Certified copy of calender and judgment in CC.20/2001 in the court of Special Judge for CBI Cases, Visakhapatnam.

Ex.D.4:C.C. of order in Crl.M.P.268/01 in RC.8/2001 of CBI Court, VSP.

Ex.D.5:Xerox copy of receipt dt.03-08-2001 issued by Inspector, CBI/VSP.

Ex.D.6:Certified copy of sale deed dt.15.11.2003.

Ex.D.7: Xerox copy of FDR with original endorsement of withdrawing in cash of Rs.16,000/-.

Ex.D.8:Account statement of M.Lakhsmi from 1-10-1994 to 1-4- 1995.

Ex.D.9:Account statement of M.Lakhsmi from 1-4-1995 to 1-4- 1996.

Ex.D10:Account statement of M.Lakshmi from 1-4-1996 to 1-4- 1997.

Ex.D11:TDS collected and remitted on behalf of Smt M.Lakshmi wife of accused under challan and form 16 (A).

Ex.D12:Account statement for the financial year 1-4-1997 to 31-3-1998 and form 16(A).

Ex.D13:Account statement for the financial year 1-4-1998 to 31-3-1999.

Ex.D14:Account statement for the financial year 1-4-1999 to 31-3-2000 and form 16(A).

Ex.D15:Account statement for the financial year 1-4-2000 to 31-3-2001.

Ex.D16:Account statement from 4-1-1994 to 01-4-1994.

Ex.D.17:Account statement from 1-4-1994 to 1-4-1995.

Ex.D18:Account statement from 1-4-1995 to 1-4-1996.

Ex.D.19:Account statement from 1-4-1996 to 1-4-1997.

210 C.C.03/2005/I CBI Court/VSP

Ex.D20:Account statement from 1-4-1997 to 1-4-1998.

Ex.D21:Account statement from 1-4-1998 to 31-3-1999.

Ex.D22:Account statement from 1-4-1999 to 31-3-2000.

Ex.D23:Account statement from 1-4-2000 to 31-3-2001.

Ex.D24:Death certificate of P.V.Mohana Rao marked through DW2.

Ex.D25:Letter dated 22-12-2012 from UTI.

Ex.D.26:Sale agreement of MSN Raju.

Ex.D.27:Served notice dated 5-10-2001.

Ex.D28:Marriage wedding card.

Ex.D29:Bunch of prescription of Smt M.Lakshmi.

Ex.D30:Death certificate of G.Venkayya.

Ex.D31:Death certificate of M.Seetharam Murthy.

Ex.D32:Certified copy of sale deed dated 11-8-1975.

Ex.D33:Certified copy of sale deed dt.10-08-1975.

Ex.D34:Certified copy of sale deed dt.10-08-1975.

Ex.D35:Intimation letter to department dated 08-10-1975.

Ex.D36:True copy of sale deed.

Ex.D37:True copy of sale deed.

Ex.D38:Letter dated 15-05-1995.

Ex.D39:Application for part final from GPA account dt.19.9.1997.

Ex.D40:G.P.F part final order dt.3.10.1997.

Ex.D41:letter dated 25-9-1980.

Ex.D42:Intimation letter dt.19-5-1993

Ex.D43:Income Tax returns of M.Lakshmi for the assessment years 1997-1998, 1998-1999, 1999-2000, 2000-2001 and 2001- 2002.

Ex.D44:Form 16 of M.Subrahmanyam.

Ex.D45:Receipt (marked with consent).

Ex.D46:Income Tax Returns for the financial years 1998 to 1999.

Ex.D47:Income Tax Returns for the financial years 1999 to 2000.

211 C.C.03/2005/I CBI Court/VSP

Ex.D48:Income Tax returns for the financial years 2000 to 2001.

Ex.D49:Income Tax returns for the financial years 2001 to 2002.

LIST OF X-Series

Ex.X1:Authorised letter dated 22-2-2013.

Ex.X2:UTI Infrastrue Technology and services.

Ex.X3:Death certificate of father of DW6.

Ex.X4:Death certificate of mother of DW6.

Ex.X5:Death certificate of father of DW7.

Ex.X6:Un-registered Joint family property settlement agreement.

Ex.X7:Death certificate of father of DW8.

Ex.X8:Bunch of Telegrams of marriage greetings.

Sd/- B.Satya Venkata Hima Bindu

PRINCIPAL SPL. JUDGE FOR C.B.I. CASES,

FAC I Addl. SPL.JUDGE FOR C.B.I CASES,

VISAKHAPATNAM.

Copy submitted to

The Hon’ble Registrar (Judicial), High Court of Andhra Pradesh.

Copies to:

1. The Superintendent of Police, C.B.I., Visakhapatnam.

2. The Joint Commissioner of Income Tax, Range-III, Dabagardens, Visakhapatnam.

Sd/- B.Satya Venkata Hima Bindu

PRINCIPAL SPL. JUDGE FOR C.B.I. CASES,

FAC I Addl. SPL.JUDGE FOR C.B.I CASES,

VISAKHAPATNAM.

212 C.C.03/2005/I CBI Court/VSP 213 C.C.03/2005/I CBI Court/VSP

IN THE COURT OF THE I ADDL. SPECIAL JUDGE FOR C.B.I.

CASES, VISAKHAPATNAM.

Present:Smt.B.Satya Venkata Hima Bindu

Principal Spl. Judge for C.B.I. Cases,

FAC I Addl. Spl. Judge for C.B.I Cases, Visakhapatnam.

Tuesday this the 9 th day of March, 2021

C.C.No.03/2005

Between:

State represented by the Inspector of Police, C.B.I, Visakhapatnam.

…Complainant And:

Mr.Mutya Subramanyam, S/o Mutya Sita Rama Murthy,Aged 58 years, Formerly ITO, Vizinagaram and Now Tax Recovery Officer, O/o Joint CommissionerofIncomeTax,Range-III, Dabagardens, Visakhapatnam. R/o P-2, Maruthi towers,K.R.M.Colony,Seethammadhara, Visakhapatnam. R/o P-2, Maruthi Towers, K.R.M.Colony, Seethammadhara, Visakhapatnam.

….. Accused

This case came on 03.02.2021 for final hearing before me in the presence of Mr.K.Suryanarayana, Ld. Sr.Public Prosecutor for the

Complainant and of Mr.K.V.Rama Murthy and Mr.B.V.Ravi Kumar,

Advocates for Accused and the matter having stood over for consideration till this day, this Court doth the following:

J U D G M E N T

1.The accused officer Sri Mutya Subramanyam formerly the

Income Tax Officer is arraigned and prosecuted for alleged criminal misconduct under Section 13(1)(e) r/w 13(2) of Prevention of

Corruption Act in RC 35(A)/2002 registered against him by CBI,

Visakhapatnam.

2 C.C.03/2005/I CBI Court/VSP

2.For brevity the Statues under discussion i.e., The Prevention of

Corruption Act is herein after referred as P.C Act/Act, 1988, The Indian

Penal Code is referred as IPC, Indian Evidence Act is referred as

I.E.Act, The Code of Criminal Procedure is referred as Cr.P.C. and the accused officer is referred as AO or accused in short wherever cited.

I. The over view of the prosecution case:

3.The case of the prosecution in brief is that, the AO who is formerly the Income Tax Officer, as on the date of 09.04.2001 was found in possession of disproportionate assets worth

Rs.24,86,792.80ps(Rupees) standing in his name and in the name of his wife, children and father-in-law. It is the further case of the prosecution that the AO amassed and floated the above worth assets during the check period 01.01.1998 to 09.04.2001 disproportionate to his known sources of income, for which he could not satisfactorily account for or render any plausible explanation and thereby alleged to have committed the offence punishable under

Section 13(2) r/w 13(1)(e) of PC Act.

II. Registration of F.I.R.

4.In this case on hand the criminal law was set into motion against the accused under peculiar circumstances. The roots of the accusation against the accused discovers its origin in preceding

Crime No.RC 8(A)/2001 against the accused under Section 7 of PC Act.

The FIR in the present case i.e., Rc.35(A)/2002 was registered on 01.11.2002 enumerating, the AO while functioning as Income Tax 3 C.C.03/2005/I CBI Court/VSP

Officer, Ward II, Vizianagaram during January, 1998 to December, 2001 had amassed assets worth Rs.8,93,000/- approximately, disproportionate to the known source of income. The above information has been striped during course of investigation in RC 8(A)/2001, when search has been conducted at the office and the residential premises of the accused. It is pertinent that the FIR in RC 35(A)/2002 was registered on 02.11.2002 almost after 20 months after registration of RC 8(A)/2001.

III. The brief material of investigation by CBI:

5.The accused joined in Income Tax Department in the year 1970 as a steno and was promoted as an Inspector of Income Tax in 1992 and as an Income Tax Officer in 1995 and in that capacity he worked at

Salary Circle in Visakhapatnam for two years and later he was transferred to Vizianagaram. Thereafter he was placed under suspension with effect from 01.04.2001. His marriage was performed with Mrs.M.Lakshmi on 10.03.1971, he and his wife did not inherit any ancestral property. For investigation purpose the complainant took the check period as 01.01.1998 to 09.04.2001. The accused had assets both movable and immovable worth Rs.6,35,936/- at the beginning of the check period shown in Statement–A and the assets worth

Rs.14,53,098.80ps at the end of the check period shown in Statement-

B. His total income was reflected in Statement-C as Rs.6,98,750.07ps and total expenditure was shown as Rs.23,68,380/- in Statement-D during the check period.

6.The charge sheet further discloses that the AO entered into a false agreement of sale dated 03.03.2001 with one K.Anji babu 4 C.C.03/2005/I CBI Court/VSP resident of Visakhapatnam and falsely shown the sale of his house bearing No.8-5/3-3(ground floor + 1 floor), Pratap Nagar, Kakinada including the Plot for Rs.6.5lakhs and receipt of an amount of

Rs.3.5lakhs. It is further averred that the said K.Anji Babu confessed

before this Court that he never purchased the said house under any

agreement from the AO and never paid any amount to him and that the cheque for Rs.25,400/- drawn by Sri Venkayya and Rs.23,000/- in cash for purchase of Plot No.33 in Juttada village, Pendurthi Mandal,

Visakhapatnam along with development charges were handed over to him by the AO informing him that he being in Government service has to account for, if the Plot was registered in his name and requested to register the same in the name of his father- in-law.

However he further stated that the Plot was not registered and later it was sold for Rs.1,00,000/- and the cheque for the said amount was drawn in favour of G.Venkayya on the instructions of the AO. The said

K.Anji Babu also disclosed that two promissory notes dated 04.10.2002 for Rs.50,000/- and for Rs.4,00,000/- dated 04.01.2001 were written in the name of Sri M.Venkayya by him on the instructions of AO, but asserted that the money was not taken from him and repudiated giving loan of Rs.1,00,000/- to Sri G.Venkayya. The said

K.Anji Babu was tendered pardon by this Court vide Orders in

Crl.M.P.No.285/2004.

7.The investigating officer after recording the statements of all the relevant witnesses and on completion of investigation obtained sanction Order dated 14.04.2004 issued by Sri D.D.Goel,

Commissioner of Income Tax, CIB, Hyderabad under Section 19(1) (c) of PC Act, competent authority to remove Sri M.Subramanyam i.e., 5 C.C.03/2005/I CBI Court/VSP the AO from service, filed charge sheet before this Court enclosing the list of LWs.1 to 65 vide memo of evidence and list of LD.Nos. 1 to 112 including the certified copies of inventories, locker proceedings and search lists in RC 8(A)/2001-CBI/Visakhapatnam.

IV. Taking cognizance by the Court and charges against the

accused :

8. This Court took cognizance against the accused for the offence under Section 13(1)(e) r/w Sec.13(2) of PC Act on 5.04.2005 and on appearance of the accused before this Court, he was furnished with the case documents as provided under Section 207 of Cr.P.C. and was examined under Section 239 Cr.P.C. Thereafter on 09.06.2005 after hearing learned Sr.Public Prosecutor for CBI and learned counsel for accused, this Court framed a charge for the offence under Section 13(1)(e) r/w Sec.13(2) of the PC Act, read over and explained to the accused in Telugu for which he pleaded not guilty and claimed to be tried.

V. Evidence on record:

9.To prove the allegations against the accused, the prosecution preliminarily examined as many as 29 witnesses and admitted in evidence Exs.P1 to P.26, Ex.P31 to Ex.P.66 and closed its side evidence.

VI. Examination of accused under Section 313 Cr.P.C

10.After the initial closure of the prosecution side evidence, the accused was examined under Sec.313 Cr.P.C on 24.01.2013 explaining him the incriminating material in the prosecution side 6 C.C.03/2005/I CBI Court/VSP evidence, for which the accused admitted part of the evidence as true and denied the rest. The accused filed his detailed written statement under Section 243(1) Cr.P.C in reply and sought for adducing defence evidence. However the prosecution sought for examination of

additional witnesses A.Sudhakara Rao and K.L.Narayana vide

applications under Crl.M.P.Nos.980/2019, 2159/2019 dt.18.06.2019 and 27.11.2019. The same were allowed by this Court, consequently

PWs.30 and 31 were additionally examined by the prosecution, marking Exs.P.82 and 83. In pursuance of the same the accused was further examined under Section 313 Cr.P.C. with regard to the incriminating material in the evidence of PWs.30 and 31 on 10.12.2019 wherein which the accused denied the evidence and filed supplementary written statement on 12.12.2019.

VII. Defence Evidence:

11.The accused got examined 16 witnesses as DWs.1 to DW.16 including himself as DW.16 and got marked Exs.D24 to D.49 and

Exs.X1 to Ex.X8 documents on his behalf. During the course of cross examination of prosecution witnesses the defence side got marked

Exs.D1 to D.23 and D.44. The Ex.P73 to Ex.P81 are the prosecution documents marked through the defence witnesses.

VIII. Documents marked with the consent of both sides:

12.Ex.P1(A) to Ex.P26(A) and Ex.27 to Ex.P30, Ex.P67 to Ex.P72 and

Ex.D45 are marked with the consent of both sides as per the written arguments.

7 C.C.03/2005/I CBI Court/VSP

IX. The argument of the prosecution side:

13.At very onset the learned Sr.Public Prosecutor for CBI submitted the personal details of the accused officer stating that the AO hailed from the very humble family at Poduru village, West Godavari District.

His father was a purohit and his mother, a house wife. He has four elder brothers and one elder sister and was married to Smt.M.Lakshmi on 10.03.1971 and was blessed with two children named Bharathi and

Ravi Kumar. The daughter of AO pursued B.Tech from Andhra

University during the year 1991-1995 and M.Tech in Electrics from IIT

Kharaghpur during the year 1995-1997. She got married on 16.11.1997 and presently working as Engineer BEL, Bangalore from

January, 1998, her husband is a Charted Accountant and working as

Manager Finance, Manipal hospital , Bangalore from 2000, earlier he worked in Taj Residency hotels Visakhapatnam, Bangalore and

Cochin.

14.The son of the AO i.e., M.Ravi Kumar studied B.E in EEE from

GRM Institute of Technology, Rajam , Srikakulam District from 1998- 2002 under NRI Quota. The father-in-law of the AO, Sri G.Venkayya retired as Panchayat Executive Officer, Kondamanchili, West Godavari

District about 25 years back. Smt.Mahalakshmi is the mother-in-law of the AO. The A.O. initiated his carrier as Steno in Andhra Paper Mills in 1967 and subsequently worked in several Government departments and finally joined as Steno in the Income Tax Department in the year 1970 and he was promoted as Inspector of Income Tax in the year 1992 and as on Income Tax Officer in 1994. He worked in the capacity of Income Tax Officer at Visakhapatnam and Vizianagaram during the 8 C.C.03/2005/I CBI Court/VSP period 1995 to 2001. In the year 2001 crime in RC 8(A)/2001 was registered against the AO for allegedly demanding illegal gratification from one Venu. In pursuance of investigation in the said crime the AO was found in possession of disproportionate assets worth

Rs.24,86,792/- in his name and the in the name of his family members and the present crime RC 35(A)/2002 was incepted against the accused as offshoot. There is a specific allegations against the AO that he entered into a false agreement with one K.Anji Babu on 03.03.2001 and others misrepresenting transactions in the name of his father-in-law Sri G.Venkayya.

15. The learned Public Prosecutor reiterated the authenticity of the sanction order which was marked as Ex.P54 and the evidence of

PW.4 Sri D.D.Goel competent authority with regard to the disproportionate assets, the learned Public Prosecutor insisted upon the value of assets prior to the check period at Rs.6,35,936/- as mentioned in Statement-A of charge sheet and the assets at the end of the check period as Rs.14,53,098.80ps as mentioned in Statement-

B and accordingly presented the calculation of assets acquired, of value Rs.8,17,162.80ps during the check period(Rs.14,53,098.80ps– 6,35,936/-=8,17,162.80ps). The income of the AO was presented as

Rs.6,98,750.07ps as in Statement –C and expenditure as

Rs.23,68,318/- as in Statement–D. The prosecution side highlighted that neither the AO nor his wife inherited any ancestral property and that there is excess of expenditure amounting to Rs.16,69,630/- during the check period, which in total ended in disproportionate assets of Rs.24,86,792.80ps(Statement A– Statement B=Assets during check period + Expenditure during the check period – Income).

9 C.C.03/2005/I CBI Court/VSP

16.The prime argument of the learned public prosecutor is that the assets at the beginning of the check period includes immovable property acquired by the accused in his name and the in the name of

Smt.B.Subbalakshmi(benami), Sri N.V.V.S Ravi Kumar, fixed deposits(FDs in short) in his name and the name of his wife and deposits in various banks gold items, household items, two wheelers, shares etc.,. The assets at the end of the check period includes unaccounted balance of amounts in the name of the AO in various banks, term deposits in the name of his wife, Indira Vikas Patras, Cash recovered from residential premises of Vizianagaram, gold items and household items, immovable properties, KTDS and household items, shares in his name and in the name of his wife.

17.As far as the income of the AO is concerned it is calculated in total of his net salary, considering the deductions, DA arrears, GPF part final, 5th pay commission arrear of relevant period, interests delivered on various accounts, dividends, hand loans, withdrawals from the finance companies, returns from the deposits, sale of shares, income tax refunds and loan repayments. It is further submitted that the domestic expenditure during the check period is calculated, basing on Data of Bureau, Economics and Statistics and that the repayment of loan by the accused along with purchase of shares and other items was determined as expenditure.

18.As far as the assets of the AO are considered the learned public prosecutor insisted that there are two main items as follows which are clearly proved to be benami transactions of the accused from the 10 C.C.03/2005/I CBI Court/VSP circumstantial evidence and documentary evidence led by the prosecution. Firstly Plot No.47 of 350sq,yards in Resavanipalem,

Visakhapatnam in the name of Smt.M.Bharathi i.e., daughter of accused. Secondly shops measuring 2700sq.yards in G.K.Mansoions,

Pedawaltair in the name of G.Venkayya, father-in-law of the accused.

19.It is further submitted that either the daughter of AO or his father-in-law never had any sustainable source of income to purchase the above said properties. It is also submitted that Sri K.Anji Babu, the proprietor of A.B.K.S. Real Estate was involved in this case as A2 for accompanying the accused in preparing the false and fabricated documents for the purpose of the case for keeping pecuniary sources in benami names. It is argued the AO being Income Tax Officer is well versed with knowledge to make assets and to maintain them without any proper evidence and that he got filed the Income Tax returns through his benamies every year to avoid further complication.

Accordingly recapped the entire prosecution side evidence of PWs.1 to 31 and submitted that, it sufficiently prove the guilt of the accused for having been in possession of disproportionate assets specifically standing in his name and in the name of benamies. The prosecution side relied upon the following list of citations in support of its arguments.

1.State of Madhya Pradesh Vs. Awadh Kishore Gupta and Ors. reported in AIR 2004 SC 517

2.M.Kishan Vs. State reported in 2005 CriLJ 2103

3.State of Karnataka Vs. Jayalalitha reported in 2018 (13)SCC 455

4.State of Bihar V. Lalu Prasad reported in 2008 KHC 5733.

5.Rameshwar Prasad Upadhyaya Vs. The state of Bihar reported in 1971 CriLJ 1708.

6.Sajjan Singh Vs. The state of Punjab reported in 1964 AIR 464 .

11 C.C.03/2005/I CBI Court/VSP

7.Krishnanand Vs. The State of Madhya Pradesh reported in AIR 1977 SC 796

8.State Vs.Bharat Chandra Roul reported in 1995 CriLJ 2417

9.P.Nallammal Vs. State Rep. by Inspector of Police dated 09.08.1999 of the Hon’ble Supreme Court of India

10.K.Ponnuswamy Vs. State of Tamilnadu by Inspector of Police in Crl. Appeal No.759 of 2001 dated 31.07.2001.

11.State of Tamilnadu Tr Inspector of Police Vs. N.Suresh Rajan and others 2014 AIR SCW 942

X. Defence side arguments:

20.The learned counsel for accused contradicting to the version of the prosecution pleaded that initially a false case was registered against the accused officer vide RC 8(A)/2001, in furtherance of which a false trap was laid against the accused on 15.03.2001 and that the

CBI officials on the same day proceeded to the residence of AO and prepared inventory for all the household articles, seized fixed deposits, share certificates and promissory notes vide Ex.P7 and also cash of Rs.2,43,200/- at office and Rs.1,20,700/- at his residence. It is averred that the FIR in the present case i.e, RC 35(A)/2001 was registered after long gap of more than 1 ½ year from the date of search wherein the disproportionate assets are only shown as

Rs.3,97,218/-, however the charge sheet was filed on 26.07.2004 raising the disproportionate assets to the tune of Rs.24,86,792/- on baseless allegations by showing excess expenditure and ignoring actual income of the AO. The contents of the charges sheet were disputed for clubbing the investment made by the wife of accused and ignoring her income. It is stressed upon the fact that Ex.P50 FIR discloses the savings of the accused officer to the tune of

Rs.2,00,450/- and saving during the check period as Rs.2,95,216/- which are in total Rs.4,95,719/- at the end of the check period, but unfortunately nothing was considered as savings in the charge sheet 12 C.C.03/2005/I CBI Court/VSP filed on 26.07.2004, which was filed, four years after the date of search.

21.The learned counsel for the AO submitted that it was mentioned in the charge sheet that except the ancestral property at

Rajahmundry the AO family did not possess any property. In fact the family of the AO consisted of his father four elder brothers and himself. They sold their agricultural properties at Utchili, Atreyapuram

Mandal, East Godavari District under sale deed No.984, 985 and 986 on 16.08.1975 for Rs.13,000/-, 8,000/-, 23,000/- and 500, out of which

Rs.10,000/- was received by the AO and was intimated to the

Department, depositing the same in Andhra Bank, Kakinada which was renewed from time to time, disclosed as Item No.7 of Statement–A for

Rs.30,459/- and as Item No.6 in Statement-B for Rs.40,617/-, which was not encashed till date. It is also submitted that the father of the

AO being karta of Hindu undivided family sold Ac.1.00cents of agricultural land at Utchili on 26.09.1980 for Rs.18,000/- and the same was also intimated to the Department. The family of the AO was also said to have sold one house at Door No.9-4-26 near Chand Choultry,

Rajahmundry on 07.04.1992 vide document No.2736/92 to one

Y.Lakshmi Ammanna. In pursuance of said sale, the karta of the family consolidated the other amounts and gave Rs.50,000/- to his daughter- in-laws including the wife of the AO as per joint family agreement

dated 07.05.1993, which was also intimated to the Department on

19.05.1993.

22.It is further submitted that the accused performed his sons thread marriage(upanayanam) on 06.05.1995 at Rajahmundry after 13 C.C.03/2005/I CBI Court/VSP obtaining GPF advance, and his son received a formal family gifts totaling Rs.50,000/- which were kept with his wife and intimated to the department. The wife of the accused also used to impart music tuitions and earned Rs.1000/- to Rs.1500/- every month and used to used to give loans to known persons and thereby earned some money.

The stirdhana amounts of the wife of the accused her professional income, amount given by her father-in-law and interest thereon together accrued to an amount of Rs.2,00,000/- as on date of 01.01.1992.

23. In the similar manner it is submitted that the father-in-law of late G.Venkayya was also a retired Panchayat Executive Officer having independent source of income and was a long standing income tax assessee till date of his death on 25.01.2007. It is averred that the father-in-law of the AO after his retirement used to stay at

Visakhapatnam and worked in Sri Venkateswara Swamy temple,

Seethammadhara, Visakhapantam during the period from 1993 to 1999 and also he used to give advise in accounts and documentation to known persons and used to save money and purchased some property at Visakhapatnam. Admitting the discovery of some promissory notes in the name of G.Venkayya and one share certificate in the name of his wife and copy of SB account maintained by him in

Andhra Bank, Visakhapatnam to be found at the residence of the AO.

The accused counsel pleaded that the entire transactions were conducted only by the father-in-law of the accused and by no stretch of imagination tag to the AO.

14 C.C.03/2005/I CBI Court/VSP

24.The learned counsel for the accused reiterated that the charge sheet was filed without any basis and showing excessive expenditure specifically tagging the transactions of the father-in-aw, wife and daughter of the AO. In this context, it is specifically highlighted that the marriage of the daughter of AO was performed on 16.11.1997 at

Visakhapatnam and the same was mentioned in the first page of the charge sheet, however the investigating officer reflected it as if performed during check period by incurring expenses of Rs.95,900/- quite contradictingly. In fact the AO performed the marriage of his daughter by withdrawing GPF amount. It is further submitted that certain balances available with the banks/debtors/investors as on 01.01.1998 i.e, beginning of the check period were not taken as assets in Statement–A and quoted the non inclusion of Item No.5 of

Statement–B in Statement-A vide account No.20810, Andhra Bank,

Seethammadhara, wherein the amount as on 01.01.1998 is

Rs.10,502/-. In the similar the amount of Rs.1,185/- vide account

No.7598, State Bank of India, Seethammadhara, Visakhapatnam was not include. It is submitted that some amounts available in the finance companies like Durga Finance Company, Lakshmi Finance

Company were reflected lesser than the actual and that some balances available with the banks/debtors/investors as on 09.4.2001 at the end of the check period were inflated and shown at higher value without any material.

25. It is further submitted the interest accrued on fixed deposits and other items were not taken in the income during the check period, particularly item Nos.7, 9 and 12 in the Statement-A. The learned counsel for the counsel re-insisted the non inclusion of income of the 15 C.C.03/2005/I CBI Court/VSP wife of the AO while simultaneous inclusion of loans extended by her to others on pronotes as expenditure during the check period. In a similar manner the receipts withdrawn from Unit Trust of India by the wife of the AO were not shown as income during the check period, even though the investment made by her were taken as assets at the beginning of the check period, in brief the withdrawals from UTI i.e., 5 cheques received and credited to SB No.6510 of Vysya Bank as per

Ex.P60, but however only three cheques were received shown as receipts and other two cheques of Rs.25,000/- each were ignored. It is submitted that the fixed deposits made during the check period in the name of wife of the AO were taken as expenditure but the cancellation value of the same was not taken i.e., the Item No.16 and 17 of expenditure for Rs.36,000/- and Rs.50,000/-, but their cancellation and income received as shown in SB A/No.6510 vide Ex.P59 and Ex.P62 were not shown in income to the tune of Rs.36,643/- and Rs.50,894/-.

The version of the accused further discloses that some of the shares purchased during the check period by his wife were shown in expenditure but sale proceeds of the same during the check period were not included in the income particularly Reliance shares,

Cybermate share vide Ex.P32 and also that balances drawn from the bank as on 27.03.2000 were also not included as income.

26.The accused also disputed with the amount of domestic expenditure and contended that the same is shown at excessive rate without any basis, as such after the marriage of his daughter it is only himself and his wife were living and at the maximum their domestic expenditure can be considered as only 25% of net salary which comes

Rs.67,280/-. The learned counsel for accused further submitted that 16 C.C.03/2005/I CBI Court/VSP the accused explained about the availability of cash with him and that the investigating officer simply brushed away the explanation accorded by the accused and seized cash of Rs.3,50,000/- It is the version of the accused that Pw.23 i.e., Mr.K.Anji Babu was conveniently converted as approver by CBI without showing him as an accused only with a malafide intention to secure negative evidence against the accused and that Pw.23 factually, with an intention to purchase the house at Kakinada paid Rs.3,75,000/- to him as advance sale consideration on various dates as mentioned in Ex.P55, and that under the pressure of the CBI willfully spoken falsehood as if Ex.P55 is created.

27.It is also submitted that on 03.03.2001 the accused and his wife entered into an agreement of sale with one Mr.M.S.N.Raju to purchase the house site at Vizianagaram and the wife of the accused since have been sufficient balance in her account maintained with M/s

Durga Finance instructed PW.6 to issue a demand draft in favour of the said M.S.N.Raju for Rs.1,00,000/- as evident under Ex.P20 and handed over the same to him. It is averred that the accused with an intention to pay some more amount to M.S.N.Raju towards part sale consideration, have taken the cash which was given to him by PW.23 under Ex.P55 at his office, that in the mean time the CBI commenced unforeseen ride and seized the cash above mentioned.

28.It is further submitted that some of the movable properties and shares belonging to the third parties were shown as assets at the beginning and the end of check period particularly the Item No.4 and 63 of assets at the beginning of the check period, in fact the same 17 C.C.03/2005/I CBI Court/VSP were standing in the name of one Smt.B.Subbalakshmi and father of the accused and the accused is only the custodian of the documents.

The counsel for the accused also submitted that the prosecution examined PW.31 and falsely marked Ex.P83 without any supporting document to falsify the amount of fee particulars of the son of the accused for perusing his engineering graduation. The defence arguments were concluded with a precise statement that the accused was dragged into this case without any basis, only with an intention to prejudice the mind of the Court to secure conviction in trap case filed by CBI in C.C.20/2001, however the same was ended in acquittal.

Accordingly pleads that there is no rationality between the alleged assets, expenditure and income incorporated by the CBI against him and that the entire case against him lacks merits to yield any conviction under Section 13(2) r/w 13(1)(e) of P.C.Act and prays to acquit him of charges leveled against him by the prosecution.

29.The counsel for the accused relied upon the following set of case laws in support of the defence arguments.

1.P.Satyanarayana Murthy Vs State of Andhra Pradesh, reported in 1992 (4) SCC 39

2.B.T.Nagappa Vs State by Lokayuktha Police in

Crl.A.814/2010 dt.8-8-2013 of the Honourable High Court of

Karnataka

3.K.Goverdhan Vs State of A.P., reported in 2001 (1) ALD (Crl.) 886 (A.P.)

4.D.S.P., Chennai Vs K.Inbasagaran reported in 2006 (1) SCC 420

5.Kedarilal Vs State of MP reported in 2015 (14) SCC 505

6.G.Malliga Versus State, rep.by the Dy.Superintendent of Police reported in 2007(1) MLJ (Cri.) 86

7.Ashok Tshering Bhutia Versus State of Sikkim reported in 2011 (4) SCC 402.

8.Akunuri Haranadha Babu Rao Versus The State Rep. by Inspector of Police, Anti Corruption Bureau, Guntur, Vijayawada Range, Krishna District Through Public Prosecutor High Court of Judicature at Hyderabad reported in 2016 ALT (Cri) 350.

18 C.C.03/2005/I CBI Court/VSP

9.S.Lingam Versus State of A.P reported in CDJ 1998 APHC 020.

10.State Inspector of Police Visakhapatnam Vs. Surya Sankaram Karri reported in 2007 (7) SCC 172

11.State of Tamil Nadu Vs. M.M.Rajendran reported in 1998 (9) SCC 268

12.CBI Vs Ashok Kumar Aggarwal, reported in 2014 (14) SCC 295

13.Mansukhlal Vithaldas Chauhan Vs State of Gujarat, reported in (1997) 7 SCC 622

30.Having considered the detailed arguments on either side this

Court proceeds framing the following points for determination:

XI. The Points for determination are :

1) Whether the prosecution proves beyond all reasonable doubt that the accused being a public servant acquired and possessed in his name and in the name of his wife, children and father-in-law assets to the tune of Rs.24,86,792.80ps as on date 09.04.2001 disproportionate to his known source of income during the check period from 01.01.1998 to 09.04.2001 without any plausible explanation?

2) Whether the sanction order issued by PW.25 is legally valid?

3) Whether the authorization under Section 17 of P.C. Act under Ex.P82 is valid?

4) Whether the prosecution proved the guilt of the accused beyond all reasonable doubt for the offences under Section 13(2) r/w 13(1)(e) of P.C Act ?

XII. POINT No.1:

31.To substantiate the charges under Section 13(2) r/w 13(1)(e) of

Prevention of Corruption Act the following ingredients are to be established by the prosecution.

(1)the accused is a public servant, (2)the nature and extent of the pecuniary resources or property which were found in his possession (3)it must prove the known sources of income of the accused 19 C.C.03/2005/I CBI Court/VSP (4)that such resources or property found in possession of the accused were disproportionate to his known sources of income.

Once the above ingredients are satisfactorily established, the offence of criminal misconduct under Section 13(1)(e) is inferred, unless the accused is able to account for such resources or property.

The law is settled that in case of allegation of disproportionate assets the prosecution has to prove that all the assets of the accused along with the expenditure during the check period exceeds his known sources of income. In this case hand, the specific allegations against the accused are that the accused, Sri M.Subramanyam formerly

Income Tax Officer at Vizianagaram/ Visakhapatnam being public servant found in disproportionate assets to the tune of

Rs.24,86,792.80ps standing in his name and in the names of his wife, children and father-in-law as on 09.04.2001 for which he could not account for. In view of the rival contentions averred by the prosecution and the counsel for the accused in detailed arguments before this

Court and as well as the written arguments submitted, the issues raised contradictingly by both sides were answered by appreciating the evidence adduced on behalf, along with the documentary evidence as follows.

32.Generally disproportionate assets is calculated as [(B-A)+D]-C wherein as already discussed Statement-A reflects the assets in the possession of the accused before the check period, Statement -B is assets in the possession of the accused after the check period,

Statement -C reflects income of the accused during the check period,

Statement -D the expenditure of the accused during the check period.

20 C.C.03/2005/I CBI Court/VSP

Essential difference of A and B reflects the assets required by the accused in the check period which is further added to his expenditure as it also reflect his assets and the result is subtracted from his income and the difference if any is ascertained as disproportionate assets, which the accused has to account for. In application of the above formula initially it is to ascertain exact assets of the accused

before and at the end of the check period as per Statements A and B

so as to calculate the assets acquired during the check period.

Thereafter the exact income and expenditure of the accused is required to be determined. Therefore for brevity the Point No.1 is divided into following sub points.

XIII. Sub points (i to iv) i.Whether the accused possessed assets worth Rs.6,35,936/- as shown in Statement-A at the beginning of the check period i.e., as on 01.01.1998?

ii.Whether the accused possessed assets worth

Rs.14,53,098.80/- as shown in Statement-B at the end of the check period i.e., as on 09.04.2001?

iii. Whether the income of the accused is Rs.6,98,750.07 as shown in Statement-C during the check period i.e., from 01.01.1998 to 09.04.2001?

iv.Whether the expenditure of the accused is Rs.20,33,025.05 as shown in Statement-D during the check period i.e., from 01.01.1998 to 09.04.2001?

21 C.C.03/2005/I CBI Court/VSP

XIV. Sub Point-(i)

Assets at the beginning of the check period Statement -A

i)Assets at the beginning of the check period as per the prosecution were reflected in Statement-A of the charge sheet and the same is extracted below for better appreciation.

STATEMENT - A

Sl.Name of the DocumentRs.Ps No. 1Plot bearing No.160, Pratap Nagar, Kakinada in the6,150-00 name of Sri M.Subramanyam(including stamp duty and Registration charges) purchased on 26.03.77 2House bearing No.8-5-3-3, Pratapnagar (ground26,600-00 floor) on Plot No.160, Pratapnagar, Kakinada, Constructed by Sri M.Subramanyam in 1978 3House bearing No.8-5-3-3, Pratapnagar, Kakinada37,000-00 on Plot No.160, Pratap Nagar, Constructed in 1984 in the name of Sri M.Subramanyam (first floor) 4Plot of 350 sq.yards in S.No.190/5-B and 191/1,8,594-00 Narendrapuram village, Rajanagenam (M), E.G.Dist in the name of Smt.Deekshithulu Subba Laxmi, W/o Deekshithulu Sreerama Murthy Registered sale deed dt.20.10.90 5A plot of 200 sq.yards bearing No.232 in9,009-00 S.No.199/10, 13, 14 and 15 of Dakamarri village, Bheemunipatnam Madnal, Visakhapatnam in the name of Sri M.V.S.S.R.Ravi Kumar, S/o M.Subramanyam–saledeeddated 06.07.1994(including Registration charges and cost plantations) 6KTD No.96/39/159 dt.12.02.96 of Andhra Bank3,815-00 Dabagardens, Visakhapatnam ( in the name of Sri M.Subramanyam) 7KTD No.96/39/90 dt.27.1.96 of M.Subramanyam30,459-20 with Andhra Bank Dabagardens Branch, Visakhapatnam.

8Deposit with Sri GVM Raju on 01-05-1996 by the10,000-00 wife of the accused 22 C.C.03/2005/I CBI Court/VSP 9FD No.061-041133-0515 with HSBC Bank in the25,000-00 name of the wife of Sri M.Subramanyam taken on 04.12.1997 10Deposits in Durga Finance by the W/o Sri91,000-00 M.Subramanyam 01.10.94 of Rs.15,000/- (cash) 12.12.95 of Rs.20,000(cash) 29.02.96 of Rs.35,000/- by cheque No.074811 of Andhra Bank, Seethammadhara and 18.04.1997 of Rs.21,000/- by cheque No.671512 of SBI, Seethammadhara.

11Deposits in Lakshmi Finance by the W/o Sri20,000-00 M.Subramanyam on 4.1.94 12Deposit with Visakha Grammena Bank,16,033-00 Dabagardens, (later transferred to Vizianagaram) in the name of Sri M.Subramanyam taken on 26.4.1994 transferred to Vizianagaram branch on 29-8-98.

13Deposit dt.22.04.1995 of A-1 with Radha Finance,5,000-00 VSKP 14Balance in SB A/c No.2042 of Sri M.Subramanyam20,271-32 with Sri Visakha Grammena Bank, Dabagrdens, Visakhapatnam as on 31.12.97 15Balance in A/c No.8058 with SBI, Sri Venkateswara17,606-00 Metta Branch, Visakhapantam in the name of Sri M.Subramanyam as on 31.12.97 16Balance on SB A/c No.8409 of Indian bank,5,257-00 Maharanipeta in the name of wife of Sri M.Subramanyam 172 Nos. of gold bangles purchased in 1971 weighing1400-00 GMS.24 18 1 Gold Necklace studded with white stones and10,062-00 pendent weighing about 25 Gms purchased in 1996.

191 Gold 3 row chain with Lakshmi coin weighing650-00 about 49 Gms purchased in 1971 201 Gold necklace with pendent weighing about 236,219-00 Gms. Purchased in 1991 211 Gold name plate in the style of Mutya purchased417-00 in 1990 221 gold necklace wg. About 3 ½ tolas purchased in15000-00 1997 231 Gold chain wg. About 2 ½ tolas purchased in10,000-00 1997 241 Gold chain pendent wg. About 1 tola purchased4,000-00 23 C.C.03/2005/I CBI Court/VSP in 1997 251 Gold step chain wg. About 2 ½ tola purchased10,000-00 in 1994 262 Ear studs and two ear tops, purchased in 19965,000-00 wg. About 1 tolam 273 Gold flowers with hair pins purchased in 19962,400-00 28 Various silver articles wg. About 200 Gms2,000-00 purchased in 1996 293 silver small statues of idols wg. About 8 tolas400-00 purchased in 1985 302 small steel almarahs purchased in 19751500-00 311 wooden dressing table purchased in 1985500-00 32 1 cane sofa set with cushion(2+1) purchased in2,000-00 1996.

331 polar ceiling fan purchased in 1990400-00 34One 25’’ Colour T.V. with stand purchased in 1996.22,000-00 351 Wooden dining table with 4 chairs purchased in700-00 1981 36One 3 seater sofa purchased in 1985500-00 37One handing chair purchased in 1996600-00 382 ceiling fans purchased in 19961,000-00 391 wooden T-poy purchased in 197180-00 403 H.P. Gas cylinders purchased in 19851500-00 411 master wall clock purchased in 1986100-00 42 1 wooden double cot with mattress purchased in500-00 1971 431 Godrej almariah purchased in 19958,000-00 441 Aristocrat red colour brief case purchased in1,000-00 1995 45One 24 inches VIP suit case purchased in 19961,000-00 461 Orient ceiling fan purchased in 1971200-00 471 Wooden deewan cot with mattresses purchased 500-00 in 1985 481 triple door big size Videocon refrigerator 9,000-00 purchased in 1994 491 inverter purchased in 19953,000-00 24 C.C.03/2005/I CBI Court/VSP 501 Grinder purchased in 19932,500-00 512 Gas stoves purchased in 1971600-00 52Steel utensils psurhcase from 1971 to 20016,000-00 531 Preethi mixee purchased in 19971,000-00 541 Tata Cordless phone purchased in 19972,000-00 551 Bajaj Chetak scooter A.V.V.5241 purchased in4,000-00 1985 5650 shares in Brook Bond (Hindustan Liver LTd.,)19,900-00 purchased on 09.01.95 by the wife of Sri M.Subramanyam.

57200 shares in Global trust Bank purchased on15,200-00 25.01.95 by the wife of Sri M.Subramanyam 58 100 shares in Andhra Sugars purchased on12,600-00 23.12.95 by the wife of Sri M.Subramanyam and 100 shares in KCP purchased on 09.1.96 59100 shares in Finolex Industries Ltd., purchased on5,800-00 16.02.95 by the wife of Sri M.Subramanyam 60UTI mutual funds in the name of Sri296-00 M.Subramanyam 61200 shares in Nagarjuna Fertilisers and chemicals2,600-00 purchased on 13.12.85 and 12.11.92 by Sri M.Subramanyam 62100 shares in APPLE Finance Ltd., (Apple7,400-00 Industries-Aptech) purchased on 27.01.95 by the wife of Sri M.Subramanyam 63300 shares in LK Pharmaceuticals Pvt., LTd.,30,000-00 purchased on 29.06.93 and 09.07.94 in the name of Sri M.Sitarama Murthy, father of Sri M.Subramanyam 64100 shares in Asia Television NetworK Ltd., in the1,000-00 name of wife of Sri M.Subramanyam 65100 shares in PAN clothing and consolidated co.,2,850-00 Ltd., in the name of the wife of Sri M.Subramanyam 66100 shares in Stilbene Chemicals Ltd., in the name3,820-00 of the wife of Sri M.Subramanyam purchased on 01.01.94 67One Bond in the Industrial Credit & Investment24,399-00 Corporation of India Ltd., in the name of the wife of Sri M.Subramanyam purchased on 28th May, 25 C.C.03/2005/I CBI Court/VSP 1997.

68100 shares in the Industrial Finance Corporation of3,500-00 India Ltd., in the name of Sri M.Subramanyam purchased on 04.07.94 69Investment in UTI by the wife of the Sri19,059-00 M.Subramanyam dated 13.3.94(in cash) 70Investment in UTI by the wife of Sri16,900-00 M.Subramanyam dated 08.01.96(in cash)

Total: 6,35,936.00

33.As per the charge sheet there are 70 items worth Rs.6,35,936/- mentioned under Statement-A as assets at the beginning of the check period by the accused. Except for arithmetic error in calculation, the assets under Statement-A remained undisputed by the accused.

Therefore qua prosecution evidence on record the assets of the accused at the beginning of the check period is concluded as

Rs.6,34,846.52 with correction to the arithmetic error in the charge sheet. However the accused contended the prosecution left over certain items without including the Statement-A.

XV.Additional Items as per the accused not considered by the prosecution in the Statement-A:

34.The accused seriously contended that the investigating officer intentionally omitted six number of assets worth Rs.2,27,637/- to

Statement–A which was gross misleading account of statement and prays to include the following items to the assets of the beginning of the check period.

35.Item No.1: The version of the accused is that as on 01.01.1998 there is balance amount of Rs.10,502/- in SB A/c No.20810 of Andhra 26 C.C.03/2005/I CBI Court/VSP

Bank, Seethammadhara Vizag relating to Smt.M.Lakshmi wife of the accused. It is submitted that the account was transferred to Andhra

Bank, Vizianagaram as A/c No.22271 and the amount as on 09.04.2001 at the end of the check period was shown at Item No.5 of assets at the end of the check period of Rs.5,282/-. It is contended that the opening balance as on 01.01.1998 has to be shown in the assets at the beginning of the check period. It is submitted that the interest of Rs.894/- was also to be shown as income during the check period at Sl.No.16 of Statement-C and submitted that the investigating officer intentionally omitted this value in Statement-A.

The counsel for the accused relied upon the evidence of PW.29 and contents of document under Ex.P63.

36.Accordingly when look into the evidence of the then Assistant

Manager, Andra Bank, Seethammadhara who was examined as Pw.29 it goes to show that on the instructions of the Manager he handed over the statement of joint account standing in the name of

M.Lakhmi and Kurm.Bharathi vide A/c No.20810 opened on 28.12.1994. He further stated that by the end of 31.12.1997 there is a balance of Rs.10,502.20ps in the account with accrued interest of

Rs.894/- and that the account was transferred to Vizianagarm on 10.11.1998. The entire file was marked as Ex.P63. Neither the evidence of Pw.29 nor the contents of Ex.P63 were in dispute by the prosecution. It is the evident from the contents of Ex.P63 and the evidence of PW.29 that there is a balance of Rs.10,502.20ps in the joint account of the wife of the accused and his daughter at Andhra

Bank, of which the interest accrued was reflected at Item No.16 of

Statement-C. The investigation officer did not mention any reason for 27 C.C.03/2005/I CBI Court/VSP excluding the balance amount in Statement–A and only including the interest therein in Statement-C. In absence of any reasonable explanation from the prosecution the above said balance amount of

Rs.10,502.20ps is warranted to be part of Statement-A as asset at the beginning of the check period and accordingly included.

37.Item No.2 : the version of the accused is that as on 01.01.1998 there is balance amount of Rs.1185/- in SB A/c No.7598 of State

Bank of India, Seethammadhara, Vizag relating to Smt.M.Lakshmi wife of the accused and that the accused intentionally omitted the same in Statement-A. The counsel for the accused relied upon the evidence of PW.13 and contents of document under Ex.P34.

Accordingly when look into the evidence of PW.13 the then

Dy.Manager, S.B.I branch, Seethammadhara, it is evident that a balance of Rs.1185/- was lying in the S.B account 7598 in the name of M.Lakshmi wife of the accused as on 31.03.1997 and the said account was transferred to Fort Branch on 13.07.1998 with accumulated interest of Rs.42/- credited to the account. The entire statement of account was marked as Ex.P34. It is evident from the contents of Ex.P34 that as on date of 07.06.1997 there is an opening balance of Rs.1185/- and an amount of Rs.910/- as on February, 1998. In the cross examination of Pw.13 ascertained that the balance stood as Rs.1185/- as on 31.12.1997. Accordingly the said amount can be rightly considered as the asset at the beginning of the check period standing in the name of the wife of the accused.

38.Item No.3: The accused contended that the Item No.B- 23(Statement-B) i.e., One BPL VCD player purchased in 1998 was 28 C.C.03/2005/I CBI Court/VSP actually purchased in the year 1997 for Rs.7,500/- and was falsely shown by the investigating officer as purchased in the year 1998 .

However no evidence was adduced by the accused in this regard besides showing the Item under undisputed list in the written arguments. Hence this Item cannot be added to the Statement-A.

39.Item No.4: The accused contended that the Item No.B- 28(Statement-B) i.e., One Khitan AIR Cooler purchased in 1998 was actually purchased in the year 1996 for Rs.4000/- and was falsely shown by the investigating officer as purchased in the year 1998. In absence of any evidence was adduced by the accused in this regard this Item cannot be added to the Statement-A.

40.Item No.5 : The accused contended that the Item No.B- 41(Statement-B) i.e.,One Vijaya geyser purchased in 1998 was actually purchased in the year 1995 for Rs.4000/- and was falsely shown by the investigating officer as purchased in the year 1998.

The absence of any evidence on part of the accused, the contention raised to add this item in Statement-A is rejected.

41.Item No.6 : The version of the accused is that as per the contents of page 2 of FIR and the evidence of PW.24 and DW.16 an amount of Rs.2,00,450/- was shown as savings of the accused at the beginning of the check period but for the reasons better known the

CBI without any explanation filed charge sheet intentionally omitting to show the savings. Accordingly relying upon the evidence of PW.24 and

DW.16 along with the contents of FIR under Ex.P50 the accused pleads to add an amount of Rs.2,00,450/- to the Statement-A. It is 29 C.C.03/2005/I CBI Court/VSP the evident from the deposition of PW.24 the then Inspector of Police

CBI that he registered FIR, it is Ex.P50 against the accused under

Section 13(2) r/w 13(1)(e) of PC Act. As raised by the counsel for the accused the contents of Ex.P50 FIR categorically shows that the accused officer had an amount of Rs.2,00,450/- towards savings at the starting of the check period and the total savings at the end of the check period is averred as Rs.4,95,719/- and is likely savings during the check period is shown as Rs.2,95,269/-. However the charge sheet reflects the savings of the accused as Nil. It is settled proposition and the FIR is not substantial piece of evidence and can be used only for contradiction or corroboration under specific circumstances. The FIR is the primary information relating to the commission of alleged offence against which the criminal law was set into motion. Based upon the contents of the FIR the investigating officer takes up the investigation and the detailed facts of the alleged offence along with the evidence oral and documentary was filed

before the Court in the form of charge under Section 173 Cr.P.C. There

is no hard and fast rule that the contents of the FIR shall be reflected in the same manner in the charge sheet. In case the accused want to rely upon the contents of the FIR he can, at the least contradict with the informant and any reliance on the contents of the FIR contradicting with the charge sheet shall be proved by leading an independent evidence. In this case on hand, no specific evidence led by the accused to bring on record as his likely savings prior to the check period. Accordingly the amount mentioned in FIR as savings prior to the check period cannot be included under Statement-A.

30 C.C.03/2005/I CBI Court/VSP

42.Conclusion for Statement-A:

In view of the above discussion, an amount of Rs.10,502/- balance as on 01.01.1998 as per Ex.P63 in the bank account standing in the name of wife of accused at Andhra Bank, Seethammadhara and an amount of Rs.1,185/- lying in the account of wife of the accused at

State Bank of India, Seethammadhara branch which were ignored by the investigating agency are added to the Statement-A. Accordingly the total value of Statement-A assets is concluded as

Rs.6,34,846+10,502+1185=6,46,533/- at this point of

discussion.

XVI. Restriction of discussion pertaining to the monitory

value at this stage:

43.It is pertinent to note in a case for disproportionate assets the accused disputes with the disproportionate assets alleged against him under two heads. Firstly the value of the assets and secondly the ownership of the assets as in this case. For the sake of convenience the point as to the value of assets is determined initially preserving the determination of ownership of assets as contradicted by the accused to the later stage. In pursuance of the same this

Court proceeds for determination of the assets acquired during the check period by the accused under Statement-B.

XVII. Sub point (ii) ii).Whether the accused possessed assets worth

Rs.14,53,098.80/- as shown in Statement-B at the end of the check period i.e., as on 09.04.2001?

31 C.C.03/2005/I CBI Court/VSP

44.In this regard when the assets under Statement-B in specific are looked into, there are 101 items in total worth Rs.14,53,098.80ps as per charge sheet. However there is a clerical error in calculation wherein the exact value is Rs.14,70,011/- Out of the said 101 items 60 items were reflected in both statement A and B as follows.

Assets both at the beginning and at the end of the check

period.

SlSl.No.Sl.No. inNature of Asset Amount asAmount as per Noin C.S C.S.per C.SC.S. StatemStatementStatement-B State ent-B–A Rs.Rs. ment -A 1142PlotbearingNo.160,6,1506,150 Pratap Nagar, Kakinada in thenameofSri M.Subramanyam (including stamp duty and Registrationcharges) purchased on 26.03.77 2243House bearing No.8-5-3/3,26,60026,600 Pratapnagar (ground floor) onPlotNo.160, Pratapnagar,Kakinada, ConstructedbySri M.Subramanyam in 1978 3344House bearing No.8-5-3/3,37,00037,000 Pratapnagar, Kakinada on Plot No.160, Pratap Nagar, Constructed in 1984 in the nameofSri M.Subramanyam (first floor) 4445Plot of 350 sq.yards in8,5948,594 S.No.190/5-B and 191/1, Narendrapuramvillage, Rajanagenam (M), E.G.Dist inthenameof Smt.Deekshithulu Subba Laxmi, W/o Deekshithulu SreeramaMurthy Registeredsaledeed dt.20.10.90 5546A plot of 200 sq.yards9,0099,009 32 C.C.03/2005/I CBI Court/VSP bearingNo.232in S.No.199/10, 13, 14 and 15 ofDakamarrivillage, Bheemunipatnam Madnal, Visakhapatnam in the name of Sri M.V.S.S.R.Ravi Kumar.

6647KTDNo.96/39/1593,8153,815 dt.12.02.96 of Andhra BankDabagardens, Visakhapatnam ( in the nameofSri M.Subramanyam) 776KTDNo.96/39/9030,45940,617 dt.27.1.96of M.Subramanyamwith Andhra Bank Dabagardens Branch, Visakhapatnam.

8948FD No.061-041133-051525,00034,619 with HSBC Bank in the name of the wife of Sri M.Subramanyam taken on 04.12.1997 9128DepositwithVisakha16,03320,699 GrammenaBank, Dabagardens,(later transferredto Vizianagaram) in the name of Sri M.Subramanyam takenon26.4.1994 transferredto Vizianagaram branch on 29-8-98.

101349Deposit dt.22.04.1995 of5,0005,000 A-1 with Radha Finance, VSKP 1117502 Nos. of gold bangles14,00014,000 purchasedin1971 weighing Gms 24.5 (wife) 121851 1 Gold Necklace studded10,06210,062 with white stones and pendent weighing about 25 Gms purchased in 1996.

1319521 Gold 3 row chain with650650 Lakshmi coin weighing about 49 Gms purchased in 1971(wife) 33 C.C.03/2005/I CBI Court/VSP 1420531 Gold necklace with6,2196,219 pendent weighing about 23 Gms purchased in 1991(daughter) 1521541 Gold name plate in the417417 style of Mutya purchased in 1990 (accused) 1622551 gold necklace wg. About15,00015,000 3 ½ tolas purchased in 1997 about 38grs(wife) 1723561 Gold chain wg. About 210,00010,000 ½ tolas purchased in 1997 1824571 Gold chain pendent wg.4,0004,000 About 1 tola purchased in 1997. accused 1925581 Gold step chain wg.10,00010,000 About 2 ½ tola purchased in199429grms (daughter) 2026592 Ear studs and two ear5,0005,000 tops, purchased in 1996 wg. About 1 tola about 11 grms (wife) 2127603 Gold flowers with hair2,4002,400 pins purchased in 1996 (wife) 222861 Various silver articles wg.2,0002,000 About 200 Gms purchased in 1996 2329623 silver small statues of400400 idols wg. About 8 tolas purchased in 1985 2430632 small steel almarahs15001500 purchased in 1975 2531641 wooden dressing table500500-00 purchased in 1985 263265 1 cane sofa set with2,0002,000-00 cushion(2+1) purchased in 1996.

2733661 polar ceiling fan400400-00 purchased in 1990 283467One 25’’ Colour T.V. with2200022,000-00 stand purchased in 1996.

2935681 Wooden dining table with700700-00 34 C.C.03/2005/I CBI Court/VSP 4 chairs purchased in 1981 303669One3seatersofa500500-00 purchased in 1985 313770Onehandingchair600600-00 purchased in 1996 3238712 ceiling fans purchased in10001,000-00 1996 3339721 wooden T-poy purchased8080-00 in 1971 3440733 H.P. Gas cylinders15001500-00 purchased in 1985 3541741 master wall clock100100-00 purchased in 1986 364275 1 wooden double cot with500500-00 mattress purchased in 1971 3743761Godrejalmariah80008,000-00 purchased in 1995 3844771 Aristocrat red colour10001,000-00 brief case purchased in 1995 394578One 24 inches VIP suit10001,000-00 case purchased in 1996 4046791 Orient ceiling fan200200-00 purchased in 1971 4147801 Wooden deewan cot with500500-00 mattresses purchased in 1985 4248811 triple door big size 9,0009,000-00 Videocon refrigerator purchased in 1994 4349821 inverter purchased in 3,0003,000-00 1995 4450831 Grinder purchased in 2,5002,500-00 1993 4551842 Gas stoves purchased in600600-00 1971 465285Steel utensils psurhcase6,0006,000-00 from 1971 to 2001 4753861 Preethi mixee purchased1,0001,000-00 in 1997 35 C.C.03/2005/I CBI Court/VSP 4854871 Tata Cordless phone2,0002,000-00 purchased in 1997 4955881 Bajaj Chetak scooter4,0004,000-00 A.V.V.5241 purchased in 1985 50568950 shares in Brook Bond19,90019,900-00 (Hindustan Liver LTd.,) purchased on 09.01.95 by thewifeofSri M.Subramanyam.

515790200 shares in Global trust15,20015,200-00 Bankpurchasedon 25.01.95 by the wife of Sri M.Subramanyam 525891 100 shares in Andhra12,60012,600-00 Sugars purchased on 23.12.95 by the wife of Sri M.Subramanyam and 100 shares in KCP purchased on 09.1.96 536092UTI mutual funds in the296296-00 nameofSri M.Subramanyam 546294100 shares in APPLE7,4007,400-00 FinanceLtd.,(Apple Industries-Aptech) purchased on 27.01.95 by thewifeofSri M.Subramanyam 556395300sharesinLK30,00030,000-00 Pharmaceuticals Pvt., LTd., purchased on 29.06.93 and 09.07.94 in the name of Sri M.Sitarama Murthy, fatherofSri M.Subramanyam 566496100 shares in Asia1,0001,000-00 Television NetworK Ltd., in the name of wife of Sri M.Subramanyam 576597100 shares in PAN clothing2,8502,850-00 and consolidated co., Ltd., in the name of the wife of Sri M.Subramanyam 36 C.C.03/2005/I CBI Court/VSP 586698100 shares in Stilbene3,8203,820-00 Chemicals Ltd., in the name of the wife of Sri M.Subramanyam purchased on 01.01.94 596799OneBondinthe24,39924,399-00 IndustrialCredit& Investment Corporation of India Ltd., in the name of thewifeofSri M.Subramanyam purchased on 28th May, 1997.

6068100100 shares in the3,5003,500-00 IndustrialFinance Corporation of India Ltd., in thenameofSri M.Subramanyam purchased on 04.07.94

Total: 4,26,353 4,50,796.00

45.As per the written arguments 60 items were reflected in both statements s A and B, wherein the value of 60 items in Statement A is

Rs.4,26,353 and Statement B is Rs.4,50,796/-. The difference is

Rs.24,443/-. There is an acceleration is with regard to the Item No.7, 9 and 12 of Statement-A corresponding to Item Nos.6,48 and 8 of

Statement-B. Precisely Item No.7 of Statement-A is KTD No.96/39/90

dated 27.01.1996 in the name of M.Subramanyam with the Andhra

Bank, Dabagardens Branch, Visakhapatnam. As per the accused this item was not encashed either at the beginning of the check period or during the check period and no income is received during the check period for this fixed deposit. Hence the value as on beginning of the check period is sought to be taken at the end of the check period in similar time. In this regard the prosecution vide its additional written statement also assents, that the value does not increase or decrease.

Hence the value of Item No.7 of Statement -A for Rs.30,459/- 37 C.C.03/2005/I CBI Court/VSP remains same in the Statement -B at Item No.6. In the same manner

Item No.9 is fixed deposit No.061-041133-0515 with HSBC Bank in the name of wife of accused taken on 04.12.1997 and Item No.12 of

Statement -A is deposit with Visakha Grameena Bank, Dabagardens in the name of accused taken on 26.04.1994 transferred to Vizinagaram branch on 09.08.1998 for value of Rs.25,000 and 16,033. Value of these FDs was also accelerated in Statement-B to the extent of

Rs.34,619 and 20,699/- in Statement B as Item No.48 and 8. Though these items were undisputed the argument of the accused is that no income is received from these fixed deposit during the check period and their value should be considered as same at the end of the check period also. In this regard the prosecution vide its additional written statement also assents, that the value does not increase or decrease. Therefore the accused is entitled for reduction of difference of value of Rs.24,443/- in Statement A and B, for all the three from Statement-B.

46.There are 23 items which are not disputed by the accused either in terms of value or ownership. The 23 items worth Rs.7,51,917/- are as follows:

Sl.Item No. asDescription of the item Rs.Ps No.per charge sheet in Statement- B 11Balance in S.B A/c No.5015 of Sri2,705-00 M.Subramanyam as on 09.04.2001 with Visakha Grammena Bank, Vizianagaram.

22Balance in S.B A/c No.20232 of Sri16,750-00 M.Subramanyam with Andhra Bank,GandhiNagarBranch, Kakinada as on 09.04.2001.

38 C.C.03/2005/I CBI Court/VSP 33Balance in S.B A/c No.11718 of10,712-56 Sri M.Subramanyam with SBI Main Branch, Vizianagaram as on 09.04.2001 49Term deposit No.739871 dt.6-1-10,000-00 2001 of Sri Visakha Gramena Bank in the name of Sri M.Subramanyam 512112 Nos of Indira Vikas Patras of2,80,000-00 face value of Rs.2,500/- each taken on 09.04.99, 12.04.99, 23.04.99, 24.04.99, and 29.05.99 613Cash from residential premises of1,20,700-00 Sri M.Subramanyam at Vizianagarm 714Cash from the office of Sri2,43,000-00 M.Subramanyam 822 3 plastic chairs purchased in 1998300-00 9231 BPL VCD player purchased in7,500-00 1998 102420 ACD cassettes and 40 cassettes2,000-00 purchased in 1998-2001 11251 Rakshak Stabiliser purchased600-00 in2000 12266 video cassettes purchased in600-00 1998-2001 132760 Audio cassettes purchased1,800-00 1998-2001 14281 Kaitan air cooler purchased in4,000-00 1998 15291 samsung A/c Machine 1 tonne20,000-00 with Unit stab stabilizer purchased in 2000(as declared in 1 to 6 statements) 163020 sarees purchased in 1990 to15,000-00 2001 173110 pairs of shirts and Trousers5,000-00 purchased in 1995 to 2001 18373 plastic chairs purchased in 1998300-00 193815 Nos. of sarees purchased from1,500-00 1990 to 2001 20391 iron folding cot purchased in600-00 1998 39 C.C.03/2005/I CBI Court/VSP 21401 acqua flow water filter purchased3,500-00 in 1999 22411 Vijay Geyser purchased in 19984,000-00 2393200 shares in Nagarjuna Fertilisers1,350-00 and Chemicals purchased on 13.12.85 and 12.11.92 by Sri M.Subramanyam

Total: 7,51,917.00

47.Further there are 5 items worth Rs.89,180/- contended to be standing in the name of his wife Smt.M.Lakshmi and one item worth

Rs.1,00,000/- contended to be standing in the name of his father-in- law G.Venkayya by the accused. Irrespective of the ownership claim the values of these 6 assets were also not disputed by the accused.

The table of the above mentioned items were extracted below.

Sl.No.Item No. asDescription of the item Rs.Ps per charge sheet in Statement- B 244Balance in SBV A/c of the wife of2,836-00 Sri M.Subramanyam as on 9.4.2001 255Balance in A/c No.22271 of Smt.5,282-00 M.Lakshmi and M.Bharathi wife Vizianagaram, Andhra Bank 267KTD No.2000/532 dt.14.10.2000 in35,000-00 the name of wife of Sri M.Subramanyam with Andhra Bank, Vizianagaram 2710Deposits with Durga Finance by41,000-00 the W/o Sri M.Subramanyam 2811Deposits with Lakshmi Finance on5,000-00 04.01.94 by the wife of Sri M.Subramanyam

Total: 89,118.00 40 C.C.03/2005/I CBI Court/VSP

48.Excluding the above mentioned 60+29(89) items there are 12 items disputed by the accused with regard to their value in Statement-B. These items includes Item Nos.15 to 21, Item Nos.32 to 36 of Statement-B extracted below

Sl.No.Item No. asDescriptionValue per Statement-B 1156 gold bangles wg.about 22,555-00 68grms purchased in 1999

2.16(wife)2 Nos. of gold bangles11,609-00 1999studded with green stones wg.About35Gms purchased in 1999.

3171 gold necklace studded9,816-00 with green stones and pendent wg. About 30 gms. Purchased in 2000 4181 Gold bracelet wg. about 82,524-00 Gms purchased in 1998 5191 diamond gold ring1,577-00 purchased in 1998 wg about 5 Gms 6201 gold ring studded with818-00 green stones purchased in 2000 wg. About 2.50 gms 7212 Nos. of gold ear studs with2,780-00 stones purchased in 2000 wg. About 8.50gms 8321 small bracelet wg. About1,500-00 4 Gms purchased in 1998 9331 gold chain and beads5,000-00 chain with locket wg. About 1 tula purchased in 2000 1034(daughter)2 small gold anklets10,000-00 weighing about 2 tolas 2001 purchased in 2001 1135(daughter)2 small gold bangles wg.5,000-00 About 1 tola purchased in 2001 2001 1236(wife)2 small ear rings. 2 small5,000-00 finger rings wg. About 1 ½ 1999 tolas purchased in 1999 41 C.C.03/2005/I CBI Court/VSP

49.The AO contends that the Item Nos.34 and 35 of Statement –B worth Rs.15,000/- belongs to his daughter and Item No.36 and 16 of

Statement-B worth Rs.16,609/- belongs to his wife. However there is no dispute with regard to the value of the assets. The accused completely disputes with gold items of value Rs.46,570/- mentioned at

Item Nos.32,18,19,15,33,17,20 and 21 in the statement-B contending that the said Items are purchased prior to the check period.

Admittedly the prosecution did not adduce any evidence to show that the above said gold items were purchased by the accused during the check period neither the accused adduced any evidence on that point. However the learned counsel for the accused relied upon the

Judgment of Hon’ble High Court of Andhra Pradesh between

G.V.S.Lingam Vs. State reported in 1999 (1) ALD 413. The learned counsel submitted that in view of the principle laid down in the above case law whenever there is a dispute with regard to the year of acquisition to gold, the gold items have to be spread over the entire service of the accused and it has to be divided by the average value of the gold by following gold rates in respect to years. However the close perusal of the citation referred by the learned counsel for accused, the rule provision slightly defers wherein in case of ambiguity with regard to the date of acquisition of the gold, it is presumed that the gold is acquired by the accused now and then during the span of check period and was valued accordingly as per the gold rate in the market in the corresponding years. The relevant paragraph was extracted below :

“ In this case, working out the value of the assets (gold) on the basis of the market value as on the date of search would imply that it is presumed that the said 42 C.C.03/2005/I CBI Court/VSP assets were acquired on the date of search or in the vicinity of that date. In the absence of any evidence as to the date or the period of acquisition of such assets, the question is what would be the date or period which could be ascribed for the acquisition of those assets. It is a complex question which is not easy to answer. But any rate the assumption that they were acquired on the date of check does not appear justified. Considering the circumstance that in rural Indians in general and people belonging to Vysya Community in particular are known to be fond of gold and assuming that the accused has had resources throughout the check period, it appears more reasonable to presume that the said gold might have been acquired periodically every now and then if not in every year proportionately. Thus, in the absence of any evidence as to the period during which the gold was acquired and considering the above circumstances, it appears more reasonable to presume that the gold under item No.18 of the Annexure-C might have been acquired periodically every now and then. If it is assumed that gold might have been acquired proportionately in every year throughout the period of check, the value of the gold based on the market value prevailing in the relevant years would come to

Rs.3,40,454-72 ps. (this work out is shown in the calculation sheet furnished on behalf of the accused wilh notice to the learned Addl. Standing Counsel and the same has not been disputed). Thus, the value of the gold articles under Item No.18 of Annexure would be

Rs.3,40,454-72 ps. Thus the value of the gold assets 43 C.C.03/2005/I CBI Court/VSP would stand reduced by Rs.5,09,170-08 ps (Rs.8,39,625-00 - 3,30,454-00 - 5,09,170-08)”.

50.In the view of the principles laid by the above case law the total gold under dispute by the accused including the gold alleged to be belongs to his wife and daughter comes to 224grams. The check period is between 01.01.1998 to 09.04.2001 i.e., 4 years. The total weight of the gold when divided by four, the possible amount of gold purchased during the each year between 1998 to 2001 is 56grams.

As per the particulars of the market rates of the gold and silver for wealth tax purposes based upon the Bombay Bullion Association

Limited statistics, the ornamental value of 24character gold for the year 1998 to 2001 is 370, 388, 401.50, 384 rupees per gram.

According to the said market value the value of gold purchased in the year 1998 to 2001 is Rs.20,720+21,728+22,484+21,504 totaling

Rs.86,436/-. However the market value data produced by the accused does not show any reliable source or issuing authority and is only a

Photostat copy as to the quotation reported in Financial Express ,

Mumbai Edition during the corresponding years. More specifically the value as per the said data exceeds the value fixed by the investigating officer. Accordingly, this Court is of the opinion that it is reasonable to calculate the value of the gold ornaments mentioned in the statement A and B as mentioned in the inventory in absence of any evidence in contrary.

51.Conclusion :

As already discussed above, the prime contention of the accused officer is that the financial transactions of his family members i.e., his 44 C.C.03/2005/I CBI Court/VSP wife, father-in-law and daughter were attributed to him by the investigating officer conveniently to incriminate against him. The discussion with regard to the ownership of the assets whether they belong to the accused or by his family members is reserved for discussion at the later stage consolidately for statements A,B,C and

D and at present the discussion is limited with regard only with the disputed value of the assets. Accordingly the value of the assets under

Statement-B on monitory terms remains same with deduction of

Rs.24,444/- in view of revised values of Item Nos.6,8,48 of

Statement-B i.e., Rs.14,70,011-24,444=14,45,567/- at this point.

XVIII. Sub point (iii) iii).Whether the income of the accused is Rs.6,98,750.07 as

shown in Statement-C during the check period i.e., from

01.01.1998 to 09.04.2001?

52. Conventionally Statement-C in disproportionate assets case reflects the total income of the accused during the check period. As per the charge sheet the total income of the accused during the check period is Rs.6,98,750.07ps under 40 items. Admittedly there is a calculation error where the actual total value is Rs.6,98,752.07ps.

The undisputed items of the accused as per the written arguments includes 16items amounting to Rs.2,21,956 extracted below :

INCOME DURING THE CHECK PERIOD(STATEMENT –C)

Undisputed items of Accused

Sl.Item No.asDescription of the item Name of theRs.Ps NperDocument o.statement- C 11Receipt of hand loan from late20,000-00 K.Satyanarayana, Retd., ITO and Smt.K.RajaRatnam,W/olate 45 C.C.03/2005/I CBI Court/VSP

K.Satyanarayana taken on 20.11.98 to SriM.SubramanyambyDD Nos.973910dt.18-11-98,for Rs.5,000/- of SBI, Seethammadhara Branch, 971490 dt.18-11-98 for Rs.2,000/- of SBI, Port Branch, 638650 dt.18-11-98 for Rs.13,000/- paid by Stm.K.RajaRatnamW/oSri K.Satyanarayana 22Receiptofhandloanfrom10,000-00 M.V.Narasimha Murthy, Retd., AO Central Excise Department (Brother of accused ) taken on 20.11.98 to Sri M.Subramanyam in cash 34D.A arrears paid in May, 98, Sept, 98,8,035-00 April, 99, September, 99, April, 2000, September, 2000, April 2001 and from January,1998 to March, 1998 to Sri M.Subramanyam.

45GPF part final (taken on 15.11.98) by50,000-00 Sri M.Subramanyam.

56Fifty Pay Commission arrears 2nd10,256-00 installment paid on in May, 1998 to Sri M.Subramanyam.

67Interest on Bank A/c No.SB 5015 of Sri1,228-00 M.Subramanyam with Sri Visakha Grammena Bank, Vizianagaram 78Interest on SB A/c No.20232 of Sri1,123-00 M.Subramanyam with Andhra Bank, Gandhi Nagar Branch, Kakinada, 89Interest on SB A/c No.11718 of A-12,180-00 with S.B.I, Main Branch, Vizianagaram ason09.04.2001ofSri M.Subramanyam 910Interest on SB A/c No.2042 of Sri660-00 M.Subramanyam with Sri Visakha GrameenaBank,Dabagardens, Visakhapatnam 1017Interest on SB A/c No.8058 of SBI,116-00 VenkateswaraMettabranch, Visakhapatnam in the name of Sri M.Subramanyam 1123Dividend on the shares of Nagarjuna960-00 Fertilizers and Chemicals of Sri M.Subramanyam (Rs.360,400 and Rs.200 credited on 12.11.98, 3.11.99 and 17.11.2000(Rs.360+400+200) 46 C.C.03/2005/I CBI Court/VSP 1227Return of hand loan by Sri P.K.Satya4,000-00 Raju, Retd., ITO, credited on 17-12-98 to A/c No.5015 of Sri M.Subramanyam maintainedwiththeVisakha Grammena Bank, Vizianagaram (DD No.11/TT -0216738 dt.8-12-98) 1328 Rental income from House No.8-5-3-3,1,01,000-00 Pratap Nagar, Kakinada of Sri M.Subramanyam (from 1-1-98 to June, 99, credited to A/c No.5015 of Visakha Grammena Bank, Vizianagaram and from July, 99 to April, 2001 to A/c No.20232ofAndhraBank, Gandhinagar branch Kakinada) 1429Refund from Jodiac Resorts Private9,630-00 Ltd., Visakhapatnam on 12-12-2000 in cash to Sri M.Subramanyam (invested by cheques for Rs.4,000/-, Rs.4,000/- and Rs.1635/-) 1537Dividend on 100 shares on Industrial400-00 Finance Corporation of India of Sri M.Subramanyam (Rs.150+Rs.150+Rs,100 credited on 17.7.98, 12.9.98 and 3.11.99 to SB A/c No.2042 of Sri M.Subramanyam maintainedwithSriVisakha GrammenaBank,Dabagardens, Visakhapatnam) 1638Income Tax refunds (Rs.582/- 286/-2,368-00 and 1500/- credited on 1.6.99, 23.12.99 and 5.1.2000 to SB account No.11718 of SB, Vizianagaram of Sri M.Subramanyam

Total: 2,21,956.00

53.The undisputed income alleged to be relating to the wife of the accused as per the written arguments discloses 16 items amounting to Rs.94,961/- extracted below :

Undisputed items in the name of wife of accused as claimed by the accused

Sl.Item No.Description of the item Rs.Ps No.as per charge sheet 47 C.C.03/2005/I CBI Court/VSP 1711 Interest on SB A/c No.8409 of Indian118-00 Bank,MaharanipetaBranch Visakhapatnam of the wife of Sri M.Subramanyam 1812Interest on SB A/c No.7806 of the wife461-00 of Sri M.Subramanyam maintained with Indian Bank, Vizianagaram 1913Interest on SB A/c No.6510 of the wife236-00 of Sri M.Subramanyam with Vysya Bank Ltd., Vizianagaram 2014Interest on SB A/c No.22271 of328-83 Smt.M.Lakshmi and M.Bharathi wife and daughter of Sri M.Subramanyam respectively from the date of transfer from Seethammadhara branch on 4- 11-98 to the date of closure i.e., 21-4- 2001.

2115Interest on SB A/c No.7598 of42-00 Smt.M.LakshmiW/oSri M.SubramanyamwithSBI, Seethammadharabranch, Visakhapatnam from 1-1-98 to its transfer to Vizianagaram branch 13-7- 98.

2216Interest on SB A/ No.20810 in the894-00 name M.Lakshmi and M.Bharathi wife and daughter of Sri M.Subramanyam with Andhra Bank Seethammadhara Branch, Visakhapatnam 2319 Dividend on 100 shares of Finolex275-00 Industries Ltd., of the wife of Sri M.Subramanyam 2521Dividend on the shares of M/s The1,661-00 Andhra Sugars Ltd., of the wife of Sri M.Subramanyam 2622Dividend on Global Trust Bank Ltd.,1,200-00 shares of the wife of Sri M.Subramanyam 2723Dividend on shares of Nagarjuna960-00 Fertilizers 2824Dividend on the shares of Apple120-00 FinanceLtd.,oftheApple Industries/AptechwifeofSri M.Subramanyam 2925Dividend on KCP shares of the wife of125-00 Sri M.Subramanyam 48 C.C.03/2005/I CBI Court/VSP 3026Withdrawals from Lakshmi Finance45,000-00 Co., on 15.04.98, 10.08.99 and 16.5.2000 by the wife of Sri M.Subramanyam(Rs.15,000 each) 3130Return of loan by Smt.Madhavi Latha,10,000-00 W/o Sri C.Raja on 16.2.98 to Sri M.Subramanyamthecheque No.A/573-589301 dt.13-2-98 of SBI, Dondaparthi credited to A/c No.20810 of Andhra Bank, Seethammadhara Branch of the W/o Sri M.Subramanyam 3231Return of Deposit from M/s10,000-00 Chakravathi and Co., on 18.3.98 credited on 20.3.98 to the A/c No.20810oftheW/oSri M.Subramanyam 3332Return of Deposit from DSS Narayan10,471-00 Raju of Vizianagaram on 14.8.2000 to the W/o Sri M.Subramanyam 3433Sale of 100 shares of Copran by DSS13,650-00 Narayana Raju of the w/o Sri M.Subramanyam

Total: 94,961-00

54.Accordingly it is pertinent that the value of the item No.1 to 10,11,12,13,14,15,16,17,19,21,22,23,24,25,26,27,28,30,31, 32 and 33 is undisputed and remains same.

55. Disputed items by the accused in Statement –C

The following are the items disputed by the accused.

Sl.No.Item No.Name of the DocumentRs.Ps as per charge sheet 353Net Salary from 01.01.98 to2,70,374-00 09.04.2001 of Sri M.Subramanyam 3618Interest on Durga Finance Scheme3,600-00 credited on 2.11.98 to SB A/c No.5015 of A-1 maintained with the VisakhaGrammenaBank, Vizianagaram 49 C.C.03/2005/I CBI Court/VSP

Total: 2,73,974.00

56.The accused deferred with the value of Item No.3 and Item

No.18 of Statement–C wherein the Item No.3 is the Net salary of the accused and Item No.18 is interest on Durga Finance Scheme credited on 02.11.1998 to SBI A/c No.5015 of accused maintained with Visakha

Grameena Bank, Vizianagaram. The particulars of the these items in detailed.

57.Item No.18 : As per the prosecution the net salary of the accused from 01.01.1998 to 09.04.2001 is Rs.2,70,374/-. The accused claims his net salary during the check period as Rs.2,76,897/-. The prosecution in order to prove the salary of the accused examined

PW.27 who worked as Income Tax Officer, Vizianagaram from 2001 to 2004. PW.27 deposed that he furnished the pay particulars of the accused to the Additional Commissioner, Visakhapatnam for the period from 01-01-1998 to 09-09-2001 in two spells, according to which the gross pay was Rs.4,33,141/- and the net salary was Rs.2,71,760/-. The file consisting of those pay particulars has been marked as Ex.P57. In the cross examination it was elicited that the total gross salary paid to the accused from January, 1998 to March, 2001 was Rs.4,50,739/- and net salary paid was Rs.2,89,358/-. PW.27 also disclosed that an amount of Rs.28,810/- was paid to the accused as travelling allowances during the period from 12.3.1999 to 16.6.2000 which is not the part of gross salary. He admitted that he stated before investigating officer, that the accused was paid net amount of Rs.2,70,374/- as salary along with Rs.8,035/- as DA arrears, Rs.50,000/- GPF part final withdrawal 50 C.C.03/2005/I CBI Court/VSP and Rs.10,256/- as 5th pay commission 2nd installments for the above period.

58.The contention of the accused is that the salary of the accused for the month of March, 1998 was not reflected in Ex.P57 and net salary for the month of March, 1998 which comes to Rs.6,523/- is to be added to the salary of the accused. In the cross examination of

PW.27 it was clearly admitted that the salary particulars of March, 1998 were not mentioned in Ex.P57. The prosecution in the additional written arguments reported no objection for adding the March salary of Rs.6,523/- which was drawn on the first working day of April.

Further even considering the average of the annual net income for 12 months as per Ex.P76 marked by the prosecution and remained undisputed, there is a deprecation of value of net income when compare to the pay particulars under Ex.P57.Therefore, the accused is rightly entitled for addition of net salary for the month of March, 1998 i.e., Rs.6,523/- for item No.3 of Statement-C. It is also pertinent that as per charge sheet the net salary of the accused at Item No.3 of Statement –C is shown Rs.2,70,374/- however the evidence of

PW.27 goes to show that the net salary of the accused from 01.01.1998 to March, 2012 was Rs.2,71,760/- . The sum of net salary as per Ex.P57 is also Rs.2,71,760/-. Accordingly by adding the net salary for the month of March, 1998 i.e., Rs.6,523/- to Rs.2,71,760/- the total net income of the accused from 01.01.1998 to 09.4.2001 goes to Rs.2,78,283/-.

59.Item No.18: As per the investigating agency, an amount of

Rs.3,600/- received by the accused as interest on Durga Finance 51 C.C.03/2005/I CBI Court/VSP

Scheme is shown as Item No.18 of Statement –C. The contention of the accused is that it is actually Rs.14,000/- received by him along with interest from Durga Finance Scheme which is about Rs.13,600/- after deduction of TDS amount of Rs.400/-. In this regard the prosecution got examined PW.6 M.Venkateswarlu the Managing Partner of Durga Finance as well as Sri Lakshmi Finance Co., Visakhapatnam, which subsequently stopped functioning in the year 2002. As far as

Item No.18 of Statement–C is considered his evidence in chief does not disclose any substantial statement.

60.However in the cross examination PW.6 stated admitted that the accused paid him Rs.10,000/- by way of cheque dated 02.09.1995 drawn on Visakha Grameena Bank, Dabagardens, Visakhapatnam and this amount was repaid by him to the accused with interest of

Rs.4,000/-. He also stated that out of the interest amount of

Rs.4,000/- he repaid in cash a sum of Rs.3,600/- retaining Rs.400/- towards TDS and issued Form-16A the Photostat copy of which was marked as Ex.D1.

61.The witness was recalled subsequently for further cross examined by the accused on 21.11.2012, wherein he stated that he paid Rs.13,600/- after deduction TDS amount of Rs.400/- to the accused on 31.08.1998 as covered under Ex.D1. The close perusal of

Ex.D1 which is the Photostat copy of Form-16A goes to show that an amount of Rs.400/- was deducted from the amount of Rs.4,000/- credited to the accused on 31.08.1998 after deducting TDS amount of Rs.400/- vide challan No.0021 at Syndicate Bank, Dabagardens,

Visakhapatnam. There is no whisper about the transaction of 52 C.C.03/2005/I CBI Court/VSP crediting total amount of Rs.13,600/- including original deposit to the accused on 31.08.1998 in Ex.D1. Even the contents of Ex.P76 the income tax returns of the accused for the assessment year 1999-2000 i.e., for financial year 1998-1999, also discloses about Rs.400/- as tax collected at source. Though the interest from M/s Durga Finance

Scheme is reflected as Rs.4,000/- including TDS as other source of income, it does not help the accused to bring on record receiving the

additional amount of Rs.10,000/- deposited with Durga Finance

Scheme.

62.It is pertinent from the evidence of PW.6 that the deposit of

Rs.10,000/- was made by the accused in Durga Finance Scheme prior to the check period i.e., 02.09.1995 by way of cheque. Admittedly this amount was not shown in Statement-A as asset at the beginning of the check period. The accused did not raise any objection initially to add the deposit amount of Rs.10,000/- under Statement–A. In the written arguments the learned counsel for the accused appraised that the interest from Durga Finance Scheme was credited on 02.11.1998 to SBI A/c no.5015 of accused maintained with Visakha Grameena

Bank, Vizianagaram. In this regard it is important to look into the documents marked by PW.1 G.Gopalakrishna Murthy, the then

Manager, Visakha Grammena Bank, Vizianagaram, particularly Ex.P1 which is statement of A/c SB 5015 of the accused at Visakha

Grammena Bank, Vizianagaram. It discloses about the deposit of cheque for Rs.3,600/- however does not reflect any transaction of crediting deposit of Rs.10,000/- from M/s Durga Finance. PW.6 did not disclose in his evidence whether he repaid the amount in cash or by way of cheque. Accordingly the mere oral evidence of PW.6 merely 53 C.C.03/2005/I CBI Court/VSP an admission in cross examination does not itself constitute sufficient evidence of proof as to receiving of deposit of Rs.10,000/- by the accused along with the interest of Rs.3,600/- on 02.11.1998. Hence the accused is not entitled any inclination in the value of income at

Item No. 18 of Statement-C .

63.Disputed Items in the monetory terms, alleged to be the income on the wife of the accused are as follows:

Sl.No.Item No.Description of the item Rs.Ps as per charge sheet 3634Realisation of Unit 64 by the wife of14,166-00 Sri M.Subramanyam and credited to A/c No.6510 of the Vysya Bank Ltd., on 7.3.2000 3735Realisation of Unit 64 by the wife of2,754-00 Sri M.Subramanyam and credited to A/c No.6510 of the Vysya Bank Ltd., on 7.3.2000 3836Realisation of Unit 64 by the wife of6,439-00 Sri M.Subramanyam and credited to A/c No.6510 of the Vysya Bank Ltd., on 06.04.2000 3939Loan repayment by Sri G.V.N.Raju4,500-00 S/o late G.S.Raju, Proprietor, Visakha Securities, Visakhapatnam on 16-7-2000 4040Withdrawals from Durga Finance of80,000-00 Rs.10,000/- on 8-6-99, Rs.15,000/- each on4-11-99, 5-11-99, 6-11-99, 8-11-99, Rs.10,000/- on 31-7- 2000(the amount of Rs.10,000/- on 8-6-99 was paid by DD No.09-27240 of Bank of Baroda, Asilmetta branch, The remaining were in cash

Total: 1,07,859.07 54 C.C.03/2005/I CBI Court/VSP

64.Item Nos.34,35 and 36:

The realization of Unit 64 by the wife of accused and credited to her A/c No.6510 maintained with Vysya Bank Limited on different dates was shown as Rs.2,574/-, Rs.14,166, Rs.2,754/- and Rs.6,439/- at item Nos.34,35 and 36 of Statement-C by the investigating agency.

The contention of the accused is that all these UTI items were credited to the account of the wife of the accused vide five cheques in her account i.e., four cheques on 25.02.2000 and one cheque on 23.03.2000 for total amount of Rs.73,360/-. It is argued that the investigating agency conveniently omitted two cheques for

Rs.25,000/- each and decreased the total value of Item Nos.34,35 and 36 by Rs.50,000/- and accordingly prays for addition of Rs.50,000/- to the total amount of Rs.23,359/-.

65.In this regard the prosecution did not choose to examine any witness, however the accused got examined DW.5 P.Santha Ram the

Regional Manager, UTIITSL, Dwarakanagar, Visakhapatnam who was authorized to give evidence under Ex.X1 authorization letter. The evidence of DW.5 goes to show that the wife of the accused

Smt.Lakshmi was possessing US 64 scheme units and towards the said units the Unit Trust of India paid on different dates by way of cheques that was on 25.02.2000 a sum of Rs.52,754.58ps(three cheques), on 25.02.2000 Rs.14,166.60ps and on 23.03.2000

Rs.6,439.46ps and all the payments in total for sum of

Rs.73,360.64ps. The letter dated 22.02.2013 containing the particulars of the above payment was marked as Ex.X2. DW.5 also stated that the computer generated letter dated 22.12.2012 55 C.C.03/2005/I CBI Court/VSP mentioned on Ex.X2 was sent to Smt.M.Lakshmi and the same is marked as Ex.D25. He further asserted that the cheques covered under Ex.X2 were honored and encashed by Smt.Lakshmi. The prosecution did not choose to cross examine the witness and accordingly the evidence of DW.5 and contents of Ex.X2 and issuance of Ex.D25 to Smt.M.Lakshmi by UTIITSL remains undisputed.

Accordingly the close perusal of Ex.X2 and Ex.D25 clearly discloses the details of repurchase payment made under US 64 unit certificate for total amount of Rs.73,360.64ps. There is no much dispute with regard to the Item No.34 and 35 for Rs.14,166/- and Rs.6,439/- of

Statement–C . However as far as Item No.35 is considered the total value is Rs.52,764.58 under cheques dated 25.02.2000.

66.Similarly the contents of Ex.P62 the SB A/c No.6510 maintained with Vysya Bank, Vizianagaram relating to Smt.M.Lakshmi also corroborates the above transactions. Ex.P62 was got marked by the prosecution through PW.29 to prove its case. The statement of account of Sm.M.Lakshmi on 29.11.1999 to 30.6.2000 clearly shows the credit of Rs.52,754.58ps by clearance under three different transactions for Rs.2,754/-, 25,000/- and 25,000/- along with transactions under Item No.34 and 36 for Rs.14,166.60ps and

Rs.6,436.46ps . Accordingly in view of evidence of DW.5 and contents of Ex.X2, Ex.D25 and Ex.P62 statement, this Court is of the opinion that an amount of Rs.50,000/- was to be added on merits to Item

No.35 of Statement-C. Accordingly the total value of income under

Item Nos.34,35 and 36 of Statement-C is calculated as Rs.73,360.64ps rounding off to Rs.73,361.

56 C.C.03/2005/I CBI Court/VSP

67.Item No.39:

As per the charge sheet an amount of Rs.4,500/- is shown as income at Item No.39 of Statement-C as loan repayment by Sri

G.V.M.Raju, S/o G.S.Raju, Proprietor, Visakha Securities, Visakhapatnam on 16.07.2000. In this regard, the prosecution got examined PW.3

G.V.M.Raju who is the proprietor of Visakha Securities, Visakhapatnam.

He deposed that the Visakha Securities was originally started in the name and style of Chakravarthi & Co., and that he borrowed an amount of Rs.50,000/- in the year 1996 from Smt.Lakshmi who is the wife of the accused and that again he borrowed an amount of

Rs.25,000/- in the year 1997 from her and that for both the said advances he paid an amount of Rs.25,000/- in lump sum towards interest and that in total he paid an amount of Rs.1,00,000/- to her.

During the course of his cross examination he stated that he paid an amount of Rs.25,000/- to her in April, 1997 and the balance amount of

Rs.75,000/- from 1998 to May, 2000. He was recalled and further cross examined on 02.01.2013 during which he admitted that Ex.P64 is the promissory note executed by him for the amount of Rs.50,000/-

dated 01.09.1996 and that Ex.P65 is another promissory note executed

by him for Rs.25,000/- on19.03.1997 and that he furnished the details of shares purchased and sold by Smt.M.Lakshmi which are covered under Ex.P66.

68.In fact Ex.P64 and Ex.P65 were the documents seized by the investigating agency. However the prosecution did not tend to mark the documents in the chief examination of PW.3. It is during the further cross examination of PW.3 having been recalled by the accused,

Ex.P64 and Ex.65 were marked. The Ex.P64 and Ex.P65 on the face of 57 C.C.03/2005/I CBI Court/VSP the record clearly shows that they were executed by PW.3 on 01.09.1996 and 19.3.1997 in favour of Smt.M.Lakshmi. Both the documents were much prior to the check period. The same was reflected in 161 Cr.P.C statement of PW.3. However the investigating officer did not prefer to mention the said promissory notes and repayment of Rs.1,00,000/- during the period 1998 to 2000 in the any of the statements. The very purpose of examining Pw.3 is contradicting from the case against the accused.

69.In this regard the defence counsel relies upon the contents of documents under Ex.D43 which includes income tax return of

Smt.M.Lakshmi for assessment period 1997-1998, 1998-1999, 1999- 2000, 2000-2001 to ascertain repayment of loan along with the interest. The cash flow statement of Smt.M.Lakshmi for the financial year 1997-1998 clearly shows a part payment of Rs.25,000/- and interest Rs.11,929/- by Sri G.V.M.Raju(PW.3). In the like manner the cash flow statement of Smt.M.Lakshmi financial year 1998-1999 reflects the repayment of loan amount of Rs.25,000/- and interest of

Rs.6,965/- by Sri G.V.M.Raju(PW.3). The cash flow statement of

Smt.M.Lakshmi financial year 1999-2000 discloses the repayment of loan amount of Rs.25,000/- with interest of Rs.5,296/- and Rs.4,500/- full repayment with interest of Rs.410/- during the financial year 2000- 2001.

70. Accordingly the entire repayment of loan amount to Sri

G.V.M.Raju to Smt.M.Lakshmi wife of accused Rs.74,500/- (Rs.4,500+25,000+25,000 +20,000) principal with interest of

Rs.24,595/- (Rs.11,929/-+6,960+ 5,296+410). It is pertinent that the 58 C.C.03/2005/I CBI Court/VSP prosecution neither sought for re-examination of PW.3 nor contradicted with his version of taking loan from Smt.M.Lakshmi and repayment of the same with interest as deposed by him. Even during cross examination of DW.16 through whom Ex.D43 was marked, there is no specific denial with regard to the loan extended to Sri G.V.M.Raju and subsequent repayment by him with interest.

71.Accordingly taking into the consideration and the evidence of

PW.3 and contents of Ex.P64 and Ex.65 and Ex.D43, this Court is of the opinion that PW.3 G.V.M.Raju obtained loan of Rs.75,000/- from

Smt.M.Lakshmi wife of accused under Ex.P64 and Ex.P65 promissory notes and repaid the same with interest of Rs.24,595/- along with

principal amount of Rs.74,500/- though there is a slight balance in

the repayment of principal amount as per the income tax returns for the financial year 2000-2001 of Smt.M.Lakshmi the same recorded and consider as full repayment. Since the principal was repaid during the check period the same is to be considered as income during the check period. Hence this Court is of the opinion that it is the reasonable to substitute the amount of income at Item No.39 with

Rs.99,095/-.

72.Item No.40:

The withdrawal from Durga Finance by the wife of the accused is reflected as Item No.40 of Statement-C for Rs.80,000/- in the charge sheet. The contention of the accused is that his wife withdrawn a total amount of Rs.2,00,200/- from M/s Durga Finance towards deposits made by her and that I.O intentionally omitted to add

Rs.1,20,200/- to the existing amount of Rs.80,000/- under Item No.40.

59 C.C.03/2005/I CBI Court/VSP

In this regard the prosecution examined PW.6 and got marked Ex.P19 and Ex.P20.

73.When the evidence of PW.6 was appraised on this aspect it goes to show that on 18.4.1997 FD receipt for Rs.21,000/- by Sri Durga

Finance was issued in favour of wife of the accused and that she issued a cheque bearing No.67521 of SBI, Seethammadhara,

Visakhapatnam in respect of the amount deposited. The corresponding

FD is marked as Ex.P9. PW.6 also deposed that the FD receipt for

Rs.30,000/- dated 16.10.2000 was issued by the Sri Durga Finance in favour of Smt.Lakshmi and the said amount was paid by her through cheque bearing No.428221 of Andhra Bank. The corresponding FD receipt is marked as Ex.P10.

74.It is further stated that FD for Rs.15,000/- dated 01.10.1994,

FD for Rs.20,000/- dated 12.12.1995, FD for Rs.35,000/- dated 29.02.1996 were issued by Durga Finance in favour of M.Lakshmi and in respect of all these FDRs she paid the deposit money in cash. The said three FDs were marked as ExsP11, 12 and 13 respectively. It is further stated that two FDRs each for Rs.10,000/- dated 04.01.1992 were issued by Sri Lakshmi Finance Company in favour of Smt.Lakshmi and that in respect of these two FDs she deposited in cash and the same were marked as Ex.P14 and Ex.P15.

75.Pw.6 further stated that maturity amount under the said FDR receipts was repaid back to her and that the attested copy of ledger account extract of Sri Durga Finance which was marked as Ex.P19 shows that Smt.Lakshmi withdrawn cash of Rs.15,000/- on 60 C.C.03/2005/I CBI Court/VSP 04.11.1999, Rs.15,000/- on 05.11.1999, Rs.15,000/- on 06.11.1999,

Rs.15,000/- on 08.11.1999, Rs.20,000/- on 09.11.1999. In the cross examination he admitted that on behalf of Durga Finance he obtained demand draft for Rs.10,000/- in favour of Smt.Lakshmi and delivered to her and that he paid the cash of Rs.10,000/- on 31.07.2000 to Smt.Lakshmi on behalf of Sri Durga Finance. He further stated that at the request of Smt.Lakshmi the Finance clerk of

Durga Finance i.e., A.N.Kumar obtained demand draft for Rs.1,00,000/- in favour of M.S.N.Raju, the Xerox copy of DD is marked as Ex.P20 which correspondence to Item No.7 of Statement-D. He further stated that the total amount paid to Smt.Lakshmi is Rs.2,00,200/- towards deposits made by her.

76.PW.6 further asserted that under Ex.P19 there is an entry

dated 02.03.2001 in favour of Smt.Lakshmi for Rs.1,00,200/- and that

in respect of Ex.P14 and Ex.P15 FDs. The corresponding account statements of Sri Durga Finance bearing the signature of PW.6 from the period 01.10.1994 to 01.04.1995, 01.04.1995 to 01.04.1996, 01.04.1996 to 31.03.1997, 01.04.1997 to 31.03.1998, 01.04.1998 to 31.03.1999, 01.04.1999 to 31.03.2000 and 01.04.2000 to 31.03.2001 and the corresponding Form-16A copies were marked as Exs.D8 to

D15.

77.The close perusal of the evidence of PW.6 it is evident that the opening balance of Smt.Lakhsmi as per her account statement as on 09.04.2001 is Rs.1,23,851/- and the outstanding balance payable

Smt.Lakshmi as on 09.04.2001 is Rs.38,603/-. It is also pertinent that PW.6 deposed that the total amount paid to Smt.Lakshmi 61 C.C.03/2005/I CBI Court/VSP towards the deposit made by her is Rs.2,00,200/-. Pertinently there is no much dispute by the either side with regard to Rs.80,000/- in total withdrawn by Smt.Lakshmi from Durga Finance on 04.11.1999, 5.11.199, 6.11.1999, 8.11.1999 and 9.11.1999 as per Ex.P19 ledger extract. However in the cross examination PW.6 clearly elicits about payment of Rs.10,000/- to Smt.Lakshmi on 31.07.2000 and obtaining demand draft for Rs.1,00,000/- in favour of Sri M.S.N.Raju under

Ex.P20. Both the transactions are clearly evident from the entry

dated 31.7.2000 and 02.03.2001 of Ex.P19. Similarly as per the

contents of Ex.D14 the payment of Rs.10,000/- by way of DD on Bank of Baroda was paid to Smt.Lakshmi on 08.06.1999. In fact Ex.P19 is the document marked by the prosecution itself and it cannot be presumed to be disputed by the prosecution.

78. It is pertinent that the prosecution did not dispute with the any fact elicited in the cross examination and never choose to re-examine the witness when he was subsequently recalled for further cross examination and marking defence Ex.D18 to Ex.D23. Inspite of the same the payment dated 08.06.1999 is also evident from Ex.P19 ledger extract. Accordingly the total payment made by Sri Durga

Finance to Smt.Lakshmi during the check period is

Rs.80,000+Rs.10,000+Rs.10,000+Rs.1,00,200 including the amount amount given to Sri M.S.N.Raju through DD, which amounts to

Rs.2,00,200 in total. Accordingly the version of the defence is completely corroborated with the evidence of PW.6 and the documents of contents of Ex.P19 and Ex.D14. The prior deposits with Durga

Finance by smt.Lakshmi and corresponding fixed deposits were let in evidence by the prosecution under Ex.P9 to Ex.P15 and were not in 62 C.C.03/2005/I CBI Court/VSP dispute accordingly the veracity of Ex.P9 to Ex.P15 does not warrant any discussion. In view of the above discussion, this Court is of the opinion that the total income derived in the name of Smt.Lakshmi under Item No.40 of Statement-C is Rs.2,00,200/-.

79. Additional Income not considered by the prosecution as per accused:

The accused claims that there are 18 Items worth

Rs.14,69,612/- which are not included by the investigating officer as income in Statement-C and pleads to include the same to the income of the accused during the check period. The description of the said 18 items as per the written arguments is as follows: Sl.No.Description of the item Amount as per AO 1Loan repayment by M.Venkateswara5,44,266 Rao to M.Lakshmi during the check period 2Premature closure of Fixed Deposit 36,643 3Premature closure of Fixed Deposit 50,894 4Sale value of Reliance shares 17,775 5Sale value of Cybermate shares 20,350 6Withdrawal from Jagannath Vidya Peeth25,450 7Withdrawal from Jagannath Vidy Peeth25,514 8Amount drawn from HSBC Bank out of22,000 FD amount 9Dividend from KCP sugar & Industries 250 Coprn.,(LD.104) 10Refund of telephone deposit 870 11Payment by DSS Narayanaraju(PW.11) 6000 12Premature withdrawal from Gayatri16,000 Vidya Parishat on 4-8-98 13Professional income of M.Lakshmi, wife15,000 of accused as shown in her I.T returns(Ex.D43) for the financial year 2000-01 14Professional income of M.Lakshmi, wife15,000 of accused as shown in her I.T returns(Ex.D43) for the financial year 1999-2000 15Professional income of M.Lakhsmi, wife15,000 of accused as shown in her I.T returns (Ex.D43) for the financial year 1998-99 16Professional income of M.Lakshmi, wife3,600 of accused as shown in her I.T returns (Ex.D43) for the period 1-1-98 to 31-3- 98. 17Amount retained by AO with regard to3,75,000 the sale agreement transaction with K.Anji Babu(PW.23) 18Sale consideration received by selling 2,80,000 National Savings Certificate Total 14,69,612 63 C.C.03/2005/I CBI Court/VSP

80.The discussion with regard to the above said items in view of evidence on record is as follows:

Item No.1: Loan repayment to Smt.Lakshmi by

M.Venkateswara Rao during the check period:

The accused contended that PW.6 during his cross examination deposed that he returned a sum of Rs.50,000/- on 10.10.2000,

Rs.2,00,000/- on 12.10.2000, Rs.2,00,000/- on 10.01.2001 and

Rs.94,266/- on 05.02.2001 under pronotes marked as Ex.P16 to

Ex.P18. It is the version of the accused that the amount returned by

PW.6 under Ex.P16 and Ex.P18 which would contribute considerable income was wantonly suppressed by the prosecution.

81.In this regard the evidence of PW.6 in the chief examination discloses that he borrowed Rs.2,00,000/-, Rs.2,00,000/- and

Rs.1,00,000/- on 14.08.2000, 15.08.2000 and 16.08.2000 respectively from Smt.M.Lakshmi wife of the accused and executed three ponotes in her favour agreeing to pay interest at the rate of 2%p.a. The said promissory notes were marked by the prosecution as Exs.P16,P17 and

P18. The prosecution did not consider this statement made by PW.6 as incriminating its case against the accused. Pertinently in furtherance of this statement PW.6 in his cross examination deposed that he repaid the entire amount under Ex.P16 to Ex.P18 as stated above. The corresponding income tax returns of Smt.Lakshmi for the financial year 2000-2001 under Ex.D43 also discloses about the extension of loan to PW.6 and subsequent repayment by him along with interest which comes to Rs.5,44,266/-.

64 C.C.03/2005/I CBI Court/VSP

82.The argument raised by the prosecution is that the repayment of loan by PW.6 to the accused is not intimated to his department and except the income tax returns of the accused there are no other documents to prove the amount received from PW.6. and no source of amounts was submitted by the accused to include it as additional income and pleads to set aside the contention of the accused.

suffering repetition at this point, this Court is only discussing on the quantitative determination of assets of the accused and accordingly the merits at this stage is whether there is any monetory transactions by way extending loan to PW.6 and whether there is any corresponding repayment. As already discussed the evidence of PW.6 and the contents of Ex.P16 to Ex.P18 promissory note categorically shows that the wife of the accused extended loan of Rs.5,00,000/- on different occasion in the month of August, 2000 to PW.6 and the contents of Ex.D43 expeditiously shows the repayment by PW.6 with interest. This Court hence accedes to the version of the accused in part reserving the discussion as to the source of the loan extended to the PW.6 and whether it is the accused who extended the loan to

PW.6 to later stage. However the entire transaction of extending loan and repayment of the same is within the check period. Accordingly the loan amount of Rs.5,00,000/-, indispensably constitute expenditure under Statement-D and only the interest thereon is considered as income. Therefore the plea of accused to include the entire principal amount with interest is negated. The accused is only entitled for inclusion of interest amount of Rs.44,266/- in Statement-C.

65 C.C.03/2005/I CBI Court/VSP

83.Item No.2 and 3:Premature closure of fixed deposits:

The accused disputes with the Item Nos.16 and 17 of statement-D under this head which includes the fixed deposit of

Rs.36,000/- and Rs.50,000/- prematurely closed and credited to the

SB account of the wife of the accused under Ex.P78, Ex.P59. The argument of the accused is that the I.O wantonly did not consider the premature closure of FDs and omitted to show the income of

Rs.36,643/- and Rs.50,894/-.

84.In this regard, it is pertinent to look into the evidence of PW.28 the then Assistant manager, ING Vysya Bank, Vizianagaram.

Accordingly to his evidence, vide letter dated 23.2.2003 he furnished the locker advance receipt and rent receipt standing in the name of Sri

Kameswara Rao which is marked as Ex.P58. He also furnished to the

CBI, Visakhapatnam pay-in-slip for Rs.15,000/- to issue Akshya deposit certificate in the name of Smt.M.Lakshmi dated 27.11.1999 which maturity date is 27.11.2000. PW.28 also stated that the said deposit was encashed on 25.02.2000 for Rs.50,894/- and connected file was marked as Ex.P59. Further Pw.28 deposed that he furnished Ex.P62 file to the CBI, Visakhapantam which is the statement of account in respect of SB A/c No.6510 standing in the name of Smt.M.Lakshmi commenced on 29.11.1999 and closed on 15.05.2000. Accordingly to PW.28 as per Ex.P62 the interest accrued from 06.03.2000 to 15.05.2000 is Rs.236/-. The premature closure of Akshya fixed deposit for Rs.50,000/- which is corresponding to Item No.17 of Statement-D is undisputed. There is another Akshya fixed deposit for Rs.36,000/- which was encashed on 25.02.2000 was omitted in the chief examination of PW.28. However in the cross examination by the 66 C.C.03/2005/I CBI Court/VSP learned counsel for the accused, Pw.28 stated that on 25.02.2000 a sum of Rs.36,643/- and on the same day Rs.50,894/- after closing the

FDs were credited to the account under Ex.P62. The close perusal of entries dated 25.02.2000 of Ex.P62 file relating to statement of account in respect of SB A/c No.6510 standing in the name of

Smt.M.Lakshmi at Vysya Bank, Vizianagaram commenced on 29.11.1999 and closed by 15.5.2000 clearly discloses the corresponding closure of fixed deposits. In fact the corresponding entries and the Item No.16 and 17 of Statement-D were not in dispute.

The only point for determination here is that whether the premature closure of fixed deposits mentioned at Item No.16 and 17 of

Statement–D can be shown as income in Statement-C. It is pertinent that these Akshya fixed deposit were issued in the name of

Smt.M.Lakshmi on 27.11.1999 and were closed prematurely on 25.2.2000 . Both these fixed deposits were issued only during the check period. Accordingly there is no illegality in reflecting the same

Statement-D as expenditure. However the accrued interest as per

Ex.D62 over these fixed deposits is Rs.643/- and Rs.894/-. Accordingly the accused is only entitled to inclusion of the interest over the FDs under Statement-C. Hence the accused is entitled to addition of

Rs.1492/-(Rs.643+894) under the income statement.

85. Item No.4 Sale value of Reliance shares:

This item correspondence to Item No.18 of Statement-D i.e.,

Rs.13,000/- purchase value of 100 reliance shares from

D.S.S.Narayana Raju on 30.06.1999. The contention of the accused is that these shares were purchased by his wife on 30.06.1999 and the same were sold during the check period for Rs.17,775/- and that 67 C.C.03/2005/I CBI Court/VSP the sale value along with profit is to be added to the income column. In this regard the prosecution examined PW.11 D.S.S.Narayana

Raju. He deposed that he did shares business in the name of style of

Siri Shares at Vizianagaram and that he was acquainted with the accused and that Mrs.Lakshmi who is the wife of accused had purchased shares from him. The statement of account of his shares business relating to the shares in the name of M.Lakhsmi was marked as Ex.P32. According to him he purchased 100 shares of

Reliance in his name and the money financed by Smt.Lakshmi and subsequently sold the same for Rs.17,775/-. The contents of Ex.P32 clearly shows the purchase date of the said Reliance shares 23.06.1999 for Rs.13,000/- and subsequent sale is on 07.09.1999 for

Rs.17,775/- since the purchase and sale of shares was made during the check period the accused is not entitled to claim the sale value as income. However he is entitled for addition of profit of Rs.4,775/- (17,775-13000) in the income statement.

86. Item No.5: Sale value of Cybermate Shares:

The purchase of the value of Cybermate shares was shown as expenditure under item 20 of Statement–D. The contention of the accused is that the sale value of this share which were sold during the check period was not included in the income. In this regard the prosecution examined PW.11 D.S.S.Narayana Raju. He deposed that he did shares business in the name of style of Siri Shares at

Vizianagaram and that he was acquainted with the accused and that

Mrs.Lakshmi who is the wife of accused had purchased shares from him. The statement of account of his shares business relating to the shares in the name of M.Lakhsmi was marked as Ex.P32. According to 68 C.C.03/2005/I CBI Court/VSP him in the month of September, 1999 he purchased 100 shares of

Cyber mate Info in her name which he sold away in December, 1999 for Rs.20,350/- and he issued a cheque for Rs.10,000/- in March, 2000/- to her. During the cross examination he stated that he paid

Rs.6,000/- on 05.09.1999 and Rs.10,000/- on 21.03.2000 in total

Rs.16,000/- to smt.Lakhsmi during the financial year 1999-2000 and the said entries were covered under Ex.P32. He also further stated that those two amounts were issued by him vide cheques drawn on

Karnataka Branch, Vizianagaram.

87.It is pertinent that the Item No.20 of Statement-D reflects the purchase of 100 share of Cybermate Info on 10.09.1999 for Rs.10,690/- by the wife of the accused from PW.11. It is evident from the evidence of PW.11 that the said shares were sold by him in the month of December, 1999 for Rs.20,350/- for commission of Rs.150/-.

The purchase and sale of the above said shares was made during the same year within the check period. Accordingly the value of investment is undoubtedly falls under the column of expenditure.

However the profit of Rs.9,660/- is to be calculated under the head of income which the investigating officer has incorrectly not included.

Accordingly the accused is entitled for inclusion of Rs.9,660/- as

additional income in Statement-C for corresponding entry of Item

No.20 in Statement-D.

88. Item No.6 & 7 : Withdrawal from Jagannath Vidya Peeth:

The deposits made by the wife of the accused for Rs.18,000/- each with Jagannath Vidya Peeth on 05.02.1998 and 28.01.1998 were reflected as Expenditure at Item No.21, 22 of Statement-D. The 69 C.C.03/2005/I CBI Court/VSP contention raised by the accused is that these deposits were withdrawn subsequently by her on different dates within the check period and the interest along with principal was to be added as part of income.

89.In this regard the cross examination of prosecution witness PW.9

Sri V.Jagannadham discloses that he used to run Jagannadh Vidya

Peeth, Visakhapatnam during the check period at Prakashrao peta,

Visakhapatnam giving ITI training to the students and that the said

Vidya Peeth stopped functioning in the year 2002. He admitted the letter issued on the letter head of Sri Jagannadh Vidya Peeth dated 28.2.2000 acknowledging the two fixed deposits in the name of

Smt.M.Lakshmi and the same is marked as Ex.D2. The contents of

Ex.D2 discloses that smt.M.Lakshmi deposited two fixed deposits for

Rs.18,000/- on 05.02.1998 and 28.01.1998. According to PW.11 he repaid Rs.28,450/- by 28.2.2000 for FD dated 05.02.1998 through check No.108845 and he discharged the FD dated 28.1.1998 by 28.2.2000 by issuing cheque for Rs.25,514/-. The contents of Ex.D2 shows that for both the fixed deposits an amount of Rs.25,450/- and

Rs.25,514/- was issued along with interest . Accordingly it can be inferred that for two fixed deposits worth Rs.18,000/- each made in the year 1998, the wife of the accused received Rs.50,964/- along with the interest. Accordingly excluding the principal amount, which was deposited and received during the check period, the interest of

Rs.14,964/- is liable to be added to the income of the accused.

70 C.C.03/2005/I CBI Court/VSP

90. Item No.8 Amount drawn from HSBC Bank :

It is contended that the wife of the accused Smt.M.Lakshmi has taken over draft loan from HSBC bank on 27.03.2000 for Rs.22,000/- by way of DD and the same is to be credited to the income of the accused. On this aspect the accused relied upon the evidence of

PW.15 and contents of Ex.P38 and Ex.P1(A). In this regard PW.15

M.M.Rao the Dy. Branch Manager, HSBC Bank, Visakhapatnam for confrontation of letter furnished by him as to the information regarding the fixed deposits standing in the name of Smt.M.Lakshmi along with statement of account. The Ex.P38 i.e., Statement of account of Smt.M.Lakshmi marked in the chief examination was confronted to the witness in the cross examination with regard to the availing loan of Rs.22,100/- at Page No.14. However PW.15 deposed that he cannot say whether Smt.M.Lakshmi availed any loan as per entry dated 27.03.2000. Subsequently Ex.P1(A) document i.e., certified statement of account No.7806 of

Smt.M.Lakshmi with Indian Bank, Visakhapatnam was marked with consent of both sides, which categorically shows the deposit of cheque for Rs.22,000/- drawn on HSBC Bank. In the additional written arguments filed by the prosecution it is contended that as per the evidence of PW.15 the wife of the accused had deposit of Rs.34,619/- on 04.12.2000 and the date of maturity is 4.12.2003 and that originally Smt.M.Lakshmi made fixed deposit of Rs.25,000/- on 04.12.1997 and it was matured for Rs.34,696.60ps as on 04.12.2000 and she again renewed it on the said date which is to be matured on 04.12.2003 and that on the same day she availed loan of Rs.22,000/- and on 23.7.2000 purchased demand draft of Rs.22,100/. The evidence of PW.11 and the contents of Ex.P36, Ex.P37 and Ex.P38 71 C.C.03/2005/I CBI Court/VSP corroborates the part of prosecution version as to the original fixed deposit of Rs.25,000/- on 04.12.1997 and subsequent renewal on 04.12.2000 which is to be matured on 04.12.2003.

91.The investigating officer ought to have to shown the fixed deposit dated 04.12.1997 as assets prior to the check period. The subsequent renewal does not preclude the accused from the benefit of already existing asset prior to the check period. The argument of the prosecution that as the renewal of the FD was not considered as expenditure, the loan availed on the FD cannot be considered as income is completely unsustainable. As the prosecution itself admits availing loan of Rs.22,000/- by Smt.M.Lakshmi from HSBC bank from her secured deposits the said amount is liable to be added to the income column. Similarly the fixed deposit dated 04.12.1997 which was subsequently renewed on 04.12.2000 is also liable to be added to the assets prior to the check period.

92. Item No.9: Dividend from KCP sugar & Industries Corp.,

The accused disputes that the dividend of Rs.125/- on 23.09.1998 and Rs.125/- on 27.08.1999 from KCP Sugar & Industries

Corporation Ltd., received by Smt.M.Lakshmi was intentionally excluded by the investigating officer under Statement-C. The prosecution did not raise any objection for inclusion of this amount to the Statement-C. Further the contents of Ex.P30 Letter dt.21.2.2003 of S.Chidambaram, Manager M/s KCP Sugar and Industries Corporation

Ltd., and Ex.P33 copy of statement of account no.22271 of

Smt.M.Lakshmi and Bharathi maintained at Andhra Bank, which was marked the consent of both sides clearly elicits the receipt of the 72 C.C.03/2005/I CBI Court/VSP above dividend. Accordingly the amount of Rs.250/- is added to the

Statement-C.

93. Item No.10 : Refund of telephone deposit :

The accused claims the addition of refund of Telephone deposit received by him by way of cheque No.693952 from Telephone

Department credited to the SB A/c No.5015 of the accused to his income. This was undisputedly reflected in page-2 of Ex.P1

Statement of account maintained by the accused at Sri Visakha

Grameena Branch, Vizianagaram. The addition this amount is undisputed by the prosecution. Accordingly the eligible for inclusion of

Rs.870/- which was refunded to him by the Telecom department during the check period.

94. Item No.11 : Payment by DSS Narayanaraju(PW.11)

The accused raised that the amount of Rs.6,000/- issued by way of cheque drawn Karnataka Bank, Vizianagaram in the name of

Smt.Lakshmi on 06.09.1999 is to be added as additional income. The prosecution contends that according to the evidence of PW.11 he sold Reliance shares for Rs.17,775/- and Koparan shares for

Rs.13,650/- on 06.09.1999 and he issued cheque of Rs.6,000/- drawn on Karnataka bank and that the said sale proceeds were already covered under Item No.18 and 19 in Statement-D. Accordingly pleads to ignore the claim of the accused on this aspect.

95.It is pertinent from the evidence of PW.11 and contents of

Ex.P32 that PW.11 purchased 100 copran shares in the name of

Smt.M.Lakshmi on 23.08.1999 for Rs.11,363/- and subsequently sold 73 C.C.03/2005/I CBI Court/VSP the same for Rs.13,650/- on 04.09.1999. The purchase value of these shares was reflected under Item No.19 of Statement–D and the sale value was reflected at Item No.33 of statement-C. Admittedly the said Rs.6,000/- was issued by PW.11 in pursuance of sale of copran shares. Factually the prosecution ought to show only the profit over the sale of copran shares in the Statement-C as such the purchase and sale of the said shares was made during the check period.

Inspite of the same the entire sale value was shown as income at

Item No.33 of Statement-C which is quite contradictory when compare with similar sale and purchase of Reliance and Cybermate shares. Accordingly the accused is not entitled to any additional amount under the cheque for Rs.6,000/- issued by PW.11

D.S.S.Narayana Raju without any substantial explanation for payment.

Further the value of item No.33 of Statement-C is reduced to

Rs.2,287/- confining only profits on sale of copran shares excluding the

principal amount by this Court.

96. Item No.12. Premature withdrawal from Gayatri Vidya

Parishat on 04.08.98

The accused claims for addition of the amount regarding premature withdrawal of fixed deposit from Gayatri Vidya Parishat on 04.08.1998 which amounts to Rs.16,000/-. This item was not mentioned in any of the statement in the charge sheet. However the evidence of PW.9 V.Jagannadham in his further cross examination elicit that he is the President of Sri Gayatri Vidya Parished Society,

Visakhapatnam, which used to accept fixed deposit from the public.

PW.9 further disclosed that the wife of the accused made fixed deposit for Rs.10,000/-on 01.06.1996 and had withdrawn the fixed deposit 74 C.C.03/2005/I CBI Court/VSP prematurely on 04.08.1998 for Rs.16,000/- . The Xerox copy of FDR with original endorsement by PW.11 is marked as Ex.D7. The prosecution did not sought for re-examination of the witness or disputed the contents of Ex.D7. It is also pertinent that the IT returns of Smt.Lakshmi under Ex.D43 for financial year 1998-1999 also reflects the same. Accordingly the principal amount of fixed deposit i.e., Rs.10,000/- which is prior to the check period is entitled to be added to the assets before check period under Statement-A and the interest therein Rs.6,000/- is added to the income under Statement-C.

97. Item Nos.13 to 16: Professional income of Smt.M.Lakshmi from 1998-2001.

It is the contention of the accused is that his wife Smt.M.Lakshmi used to teach music lessons to the children and thereby earned

Rs.48,600/- during the check period and thereby the same is to be added to the Statement-C. On this aspect when we look into the evidence of Smt.M.Lakshmi who was examined as DW.15, she specifically stated that “ I used to teach music lessons since 1972 to 2001 and was earning money every month”. In the entire cross examination the prosecution did not deny anywhere that

Smt.M.Lakshmi never earned any money by teaching music lessons during the check period. The only stray statement elicited in the cross examination is that she did not take any certificate from the music teacher from whom she learnt music. This statement does not help the prosecution in any manner to deny the personal income of

Smt.M.Lakshmi by way of instructing music lessons. Further there are some prosecution witnesses who also corroborate the version of 75 C.C.03/2005/I CBI Court/VSP the accused that Smt.Lakshmi is earning some amounts on her own by teaching music classes.

98.In this regard, PW.6 in his cross examination stated that “I am acquainted with smt.M.Lakshmi since 1992 and she was residing at

Seethammadhara, Visakhapatnam and she is a Teacher of Classical

Music and vocal. I observed that she was teaching music lessons to about 15 students. She was earning Rs.15,000/-per month from the students for teaching music and this fact was informed to me by her”.

99.In the similar manner PW.9 stated that “ I was frequent visitor to the house of the accused and observed that the wife of the accused used to teach music to the students numbering 15”. It is evident that PW.11 stated in his cross examination “ I know

Smt.Lakshmi for the last 20 years. I know that Smt.Lakshmi is a musical teacher. My daughter Siri attended music classes conducted by Smt.Lakshmi for two or three months in the year 1999. I paid

Rs.150/- per month to my daughter to Smt.Lakshmi. She was teaching about 10 students”.Further the income tax returns of Smt.Lakshmi under Ex.D43 clearly elicit that her income from music tuition is

Rs.15,000/- for the financial year 1997-1998, Rs.15,000/- for the financial year 1998-1999, Rs.15,000/- for the financial year 1999-2000 and Rs.15,000/- for financial year 2000-2001. Since the check period is from 01.01.1998 to 09.04.2001 the accused claims the professional income of Smt.Lakshmi from 01.01.1998 to 31.3.1998 as Rs.3,600/-.

The contention of the prosecution is that as per the evidence of DW.13

Dr.Bhagyarao, the wife of the accused suffered from depression and anxiety and migraine and was under his treatment for the last 17 76 C.C.03/2005/I CBI Court/VSP years. Hence in view of her health condition it cannot be presumed that she earned the income mentioned in the IT returns by teaching music lessons. Inspite of the argument of the prosecution, the prosecution did not raise any question to DW.13 in the cross examination whether the ill-health of Smt.Lakshmi possibly hinders her capacity to teach music. The impression of depression, anxiety and migraine in the normal course of living does not preclude any person for carrying out their daily or professional activities. Unless and until there is some substantial denial by the prosecution as to the statements made by the witnesses about PW.15 teaching music lessons to the children and evidence in contrary, its argument cannot be considered on merits. Accordingly the professional income of the

Smt.Lakshmi during the check period which amounts to Rs.48,600/- (15,000+15,000+15,000+3,600) is added to Statement-C.

100. Item No.17 : Amount retained by AO with regard to the sale agreement transaction with K.Anji Babu(PW.23)

The accused claims that he entered into agreement of sale under

Ex.P55 with PW.23 on 03.03.2001 with regard to disposal of his house at Kakinada. He states that he received advance sale consideration of

Rs.3,75,000/- i.e., Rs.25,000/- on 03.03.2000 i.e., date of agreement,

Rs.1,00,000/- on 08.03.2001, Rs.2,50,000/- on 13.2.2001 from PW.23.

He further claims that Rs.2,43,000/- which was seized at his office and cash of Rs.1,20,700/- seized at his residence is the part of the amount received by him towards advance sale consideration of Rs.3,75,000/- and pleads to add the advance sale consideration received by him under Ex.P55 to his income under Statement-C.

77 C.C.03/2005/I CBI Court/VSP

101. The prosecution alleges that the accused has created the agreement of sale dated 03.03.2001 for Rs.6,50,000/- under Ex.P55 with the support of K.Anji Babu(PW.23) to falsely prove that the cash of

Rs.2,43,000/- which was seized at his office and cash of Rs.1,20,700/- seized at his residence was received by him towards advance sale consideration for disposal of his house at Kakinada. It alleges that the entire transaction under Ex.P55 is a fake transaction. In fact these amounts were shown as Item No.13 & 14 of Statement-B under assets at the end of the check period.

102. As per the evidence of PW.22 the then Inspector of Police,

Visakhapatnam on 15.03.2001 in pursuance of investigation in RC 8/2001 he conducted searches in the office of the accused at ITO,

Ward-II, Vizianagaram in the presence of mediators and an amount of

Rs.2,43,200/- was seized in cash along with an assessment file related to Mr.Althi Venu an LIC Agent and the visitors book of ITO, Ward-II.

PW.22 also disclosed that, the said search was conducted from 7.30pm to 9.30p.m and that some other documents along with above mentioned cash were seized under search list, the certified copy of which is marked as Ex.P.46.

103. PW.22 further stated that subsequently they conducted searches at the residential house of the accused at Plot No.126, TSR Colony,

Vizianagaram and an amount of Rs.1,20,700/- in cash along with some documents including five fixed deposit receipts of different values in the names of the accused and his family members were seized. The certified copy of the search list was marked as Ex.P47.

The inventory list prepared pertaining to the movable property at the 78 C.C.03/2005/I CBI Court/VSP house of the accused was also prepared by Pw.22 in the presence of the mediators and the same was marked as Ex.P41.

104. The evidence of PW.22 with regard to the above mentioned searches under Ex.P.46 and Ex.P47 was corroborated by the evidence of one of the mediator who was examined as PW.17. PW.17 who was working as LDC at Central Excise, Visakhapatnam during the year 2001 stated that on 15.03.2001 on the instructions of their Additional

Commissioner he contacted S.T.Mishra, Inspector in CBI,

Visakhapatnam and consented to act as mediator along with one ASR

Murthy who was already present there, with regard to complaint received by the CBI. Pw.17 further stated that thereafter they proceeded to Income Tax Office at Vizianagaram, in the 1st floor of the office a trap was laid against the accused and at the end of the trap proceedings, they again proceeded to the house of the accused at 11.00PM in the night and that the CBI officers conducted search in the house of the accused and seized a cash of Rs.1,20,000/- and prepared

Ex.P41 inventory for the movable items recording their valuation, as per information given by the accused and his wife. According to him the proceedings closed at 2.00AM. Though Pw.17 did not made any whisper about the amount of Rs.2,43,000/- seized from the accused at his office, the said seizure was not in dispute.

105. Precisely the accused claims the amount under item Nos.13 and 14 of Statement-B as part of advance sale consideration of

Rs.3,75,000/- received by him on different dates from PW.23 for disposal of his house at Kakinada. These items were seized by the investigating agency in the searches conducted in RC 8/2001. The 79 C.C.03/2005/I CBI Court/VSP corresponding certified copies of search memos were marked as

Ex.P46 and Ex.P47. As per the contents of the charge sheet these amounts were deposited vide FD No.232696 dated 23.04.2004 in Bank of Baroda, M.V.P.Colony, Visakhapatnam in the name of the accused as per the Orders of Crl.M.P.78/2004. Though these amounts were mentioned by the prosecution in the charge sheet as seized by the investigating officer, the prosecution did not choose to mark the corresponding FD as exhibit. The same was marked as Ex.P79 through the accused who was examined as DW.16.

106. Under these circumstances, the crucial point of determination is that whether the accused genuinely entered into agreement of sale with K.Anji Babu(PW.23) for disposal of his house which was shown as

Item No.3 in Statement-A and received Rs.3,75,000/- towards advance sale consideration and that whether the amount of Rs.2,43,000/- seized at the office of the accused and Rs.1,20,700/- seized at his residence forms the part of advance sale consideration alleged to have received by him from K.Anji Babu(PW.23). There is no dispute with regard to existence of house bearing No.8-5-3-3, Pratap Nagar,

Kakinada in Plot No.160 standing in the name of accused which is shown by the prosecution as asset prior to the check period at Item

No.3 of statement-A. It is pertinent that the subject matter of the alleged agreement of sale dated 03.03.2001 is item No.3 of statement-A. Therefore it is reasonable to appraise this issue by framing a separate point.

1) Whether the accused entered into agreement of sale

dated 03.03.2001 with Anji Babu

80 C.C.03/2005/I CBI Court/VSP

In this regard the accused in his evidence as DW.16 reiterated that the amount seized under Item No.13 and 14 of Statement –B received by him as an advance for sale of immovable property under

Ex.P55 from PW.23. Accordingly it is pertinent to look into the evidence of PW.23 who is the Managing Partner of ABK Real Estate,

Visakhapatnam on this aspect. His evidence goes to show he did Real

Estate business from 1994 to 2004 and was acquainted with the accused since 2001. According to him the accused informed him that

CBI, Visakhapatnam conducted ride on him and seized Rs.3,63,700/- from him and requested to help him. He further stated that on the instructions of the accused he agreed to purchase his plot and the house building in Pratap Nagar, Kakinada for Rs.6,50,000/- and payment of advance of Rs.25,000/- was reduced into writing on stamp papers.

107. The argument of the prosecution is that the accused failed to accord proper explanation during the seizure of above said amount of Rs.3,63,700/- and created a false story with the help of PW.23. On this aspect PW.23 further stated that the said agreement was scribed on two stamp papers each worth Rs.100/- and the stamp papers were purchased by him subsequent to the date of agreement.

According to him one Ravi Varma scribed the agreement as to the instructions of the accused and that Ch.Mangapathi Rao, resident of

FCI colony, Marripalem and K.Jagannadha Rao, resident of Port

Quarters attested the agreement. Though PW.23 stated that he do not remember the date of agreement on which it was scribed he testified the date of agreement as 02.03.2001.

81 C.C.03/2005/I CBI Court/VSP

108. The prosecution reiterates from the evidence of PW.23 that the entire agreement was concocted and is antedated on the stamp papers purchased subsequently. In this regard the prosecution also examined the stamp vendor as PW.7. Smt.I.Vijayalakshmi who was examined as PW.7 deposed that she is resident of Visakhapatnam and worked as Stamp vendor from 1992 to 2003 and used to sell judicial and non-judicial stamps. She stated that she was maintaining Register for sale of stamp and admitted the register shown to her by the prosecution as the register maintained by her during the period 01.01.2001 to 31.12.2001, the same was marked as

Ex.P21.

109. With regard to the questioned stamp papers on which the alleged agreement of sale between the accused and K.Anji Babu was scribed, Pw.7 stated that the entry dated 02.03.2001 for sale of two non-judicial stamp each worth Rs.100/- in total of Rs.300/- with serial

No.403929 and 403930 is not under her handwriting and is appearing in the register in the name of Konduri Anji Babu and that she do not remember whether she sold the stamps to Konduri Anji Babu, s/o

Subba Rao.

110. The prosecution did not tend to mark the said agreement of sale inspite of the fact that the very existence of agreement is not in dispute. The only argument of the prosecution is that the said agreement is fabricated subsequently to the date of seizure of amounts from the accused in RC 8/2001. The prosecution did not mention about the original agreement of sale anywhere. However the

Photostat copy of the same was marked in the cross examination of 82 C.C.03/2005/I CBI Court/VSP

PW.23. Wherein he admitted that the said Xerox copy of the agreement dated 02.03.2001 shown to him contains the numbers of the stamp papers under Ex.P21. The contents of Ex.P21 registered maintained by the stamp vendor Pw.7 categorically shows that on 02.03.2001 stamp papers with Sl.Nos.3131 and 3036 were sold to

Konduri Anji Babu.

111. As per the evidence of PW.23 in his cross examination the said stamp papers were subsequently purchased to the date of purchase recorded under Ex.P21 and that the stamp papers might have been purchased two or three months later from the date of trap of the accused. The date of agreement as per Ex.P55 is 03.03.2001. Now the question is whether the stamp paper on which the original agreement was scribed were purchased subsequently as contended by the prosecution and stated by PW.23. In this connection when we look into cross examination of PW.7 I.Vijayalakshmi, stamp vendor, she categorically stated that the entire writing in Ex.P21 belongs to her and no transaction under Ex.P21 would take place in her absence.

PW.7 specifically admitted that the entry dated 02.03.2001 in Ex.P21 was scribed by her and further admitted that she affixed her signatures on the NJ stamps sold to PW.23. Her cross examination is contradicting with her statements made in the chief examination.

Wherein she denied the entries pertaining to Sl.Nos.403929 and 403930 does not belongs to her.

112. Admittedly PW.7 is the custodian of Ex.P21 Register and she categorically denies any transaction under Ex.P1 in her absence or by any of her family members. So in view of this evidence, it is to be decided whether there are any circumstances to presume that the 83 C.C.03/2005/I CBI Court/VSP stamp papers on which the original agreement of sale under Ex.P55 was scribed were purchased subsequent to date i.e., 02.03.2001 contradicting to the entries in Ex.P21. It is not the evidence of PW.7 that the above said stamp papers were sold to K.Anji Babu on subsequent date and that the entries in Ex.P21 register are false. It is not the case of the prosecution that the said stamp papers were not sold by PW.7 to K.Anji Babu. According to the evidence of PW.23 he purchased the stamp papers about two to three months later from the date of trap of the accused. At the initial point of cross examination he admitted that that he was aware on 16.03.2001, about the trap of the accused on 15.03.2001. Accordingly he might have purchased the stamp papers in the month of May or June for execution of the agreement of sale dated 03.03.2001. At this point it is important to look into the provisions of section 103 of Indian Evidence Act which reads that the burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence, unless it provided by any law the proof of that fact shall lie on any particular person. Before fixing the burden of proof as to proof of date of purchase of stamp papers it is important to take into consideration the presumption under Section 114(f) and the definition of “may presumption” under Section 3 of Indian Evidence Act which reads as follows:

Section 114 :Court may presume existence of certain facts. —

The Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case. Illustrations The Court may presume— 84 C.C.03/2005/I CBI Court/VSP …..

(f) That the common course of business has been followed in particular cases;

Section 4 “May presume”.—Whenever it is provided by this Act that the Court may presume a fact, it may either regard such fact as proved, unless and until it is disproved, or may call for proof of it.

113. In this case on hand, Pw.7 is a certified registered stamp vendor during the specified period from 1992 to 2003. The registered maintained by her under Ex.P21 forms record of relevancy under

Section 34 of Indian Evidence Act and attracts presumption under

Section 114(f) of the Evidence Act that the common course of business was followed by PW.7. The presumption under Section 114(f) which is “may presumption” as defined under Section 3 wherein the Court may presumes the fact as proved unless and until it is disproved or call for proved. The contents of the Ex.P21 were well corroborated with the evidence of PW.7 and the only clog in her chief examination that the entries were not in her handwriting was clarified in the cross examination. PW.7 did not testify at any point that she sold the stamp papers to PW.23 two to three months after the date of entries mentioned in Ex.P21 or two to three months from date of trap against accused on 15.03.2001. In view of this evidence the burden as per the provisions of Section 103 of Indian Evidence Act lies on the prosecution side that is particularly on Pw.23 to prove without any contradiction by adducing a reasonable evidence that the stamp papers dated 02.03.2001 were purchased from Pw.7 subsequently thereafter the entry made in the Ex.P21. However except stray denial,

Pw.23 did not corroborate his statement on this aspect with any 85 C.C.03/2005/I CBI Court/VSP reasonable evidence. The prosecution did not choose either to examine the scribe of the document or the attestors inspite of the fact that the PW.23 himself purchased the stamp papers and admitted his acquaintance with the attestors Ch.Managapathi Rao and

Jaganmohana Rao.

114. The another important fact that was elicited in the cross examination of PW.23 is that the CBI officials took the original agreement dated 02.03.2001 from his office and did not issue any receipt. Though repeatedly Pw.23 stated the agreement as dated 02.03.2001 even during the confrontation of Photostat copy under

Ex.P55, the factual date on Ex.P55 is 03.03.2001. Accordingly though there is slight misconception of date regarding the date of agreement of sale in the evidence of PW.23, in absence of any other proof regarding a parallel similar transaction between Pw.23 and accused, it is presumed that the disputed transaction is under Ex.P55 and the original agreement of the same was seized by the investigating agency from PW.23. It is quite surprisingly that why the prosecution did not brought on record the original agreement of sale dated 03.03.2001. If in case the investigating officer never seized the original agreement of sale from PW.23 if is quite suspicious how he concluded the falsification of the said agreement of sale. It is pertinent that the I.O did not even tend to file the Photostat copy of agreement along with the charge sheet and the prosecution proceeded on the entire aspect without even marking the said agreement of sale, atleast its Photostat copy. In view of the same it is not extraneous to take a negative presumption against the investigating agency under 86 C.C.03/2005/I CBI Court/VSP

Section 114(g) that the same was suppressed being unfavourable to the case instituted by the CBI against the accused on this aspect.

115. It is pertinent from the contents of Ex.P55 that there is a payment made to accused as a part of advance sale consideration in three installments ie..,Rs.25,000/- on 03.03.2001, the date of agreement, secondly Rs.1,00,000/- on 08.03.2001 under first endorsement made on the back side of the page number 1 of the agreement and finally Rs.2,25,000/- on 13.03.2001 under second endorsement made on the back side of the page number 1 of the agreement. It is also evident that K.S.Chandran and Jaganmohan Rao were the attestors for the endorsement dated 03.03.2001 and

Ch.Mangapathi Rao and G.Narasingha Rao are the attestors for the second endorsement dated 13.03.2001. It is speculative that Pw.23 did not mentioned anywhere in his chief examination about the endorsement on the agreement of the sale and denied about payment of advance consideration, because it is not the case that PW.23 did not execute Ex.P55 but it was antedated. The prosecution did not take any steps to examine any of the attestors to prove that the endorsements on the back of the agreement are false. Particularly when the contents of the documents stands substantial against the oral evidence under Section 91 and 92 of the Indian Evidence Act.

116. Besides the accused himself got examined two of the attestors as defence witness. Initially DW.3 K.S.N.Chandran testified that he was acquainted with the both the accused and PW.23 who is the vendee under Ex.P55 and that he witnessed further advance consideration of Rs.1,00,000/- to the accused on 08.03.2001 as per 87 C.C.03/2005/I CBI Court/VSP the endorsement. He asserted that, he attested the endorsement as first attestor and admits his signature on Ex.P55. He also supported the version of the accused by stating that the Mr.K.Jaganmohan rao working in MES attested as second witness and he is known to him.

He further stated that at the time of scribing the endorsement and also passing of further consideration PW.23 was present and the said transaction took place in the office of PW.23 located behind Sagam

Sarat Theater.

117. In the similar lines DW.4 G.Narasimha Rao testified that the signature appearing on the endorsement dated 13.03.2001 on Ex.P55 belongs to him and corroborated about the other attestor

Mangapathi. He also further stated that the said endorsement was scribed in the office of PW.23 located behind Sangam Sarat Theater and at the time of endorsement PW.23 paid further consideration of

Rs.2,50,000/-.

118. The prosecution did not elicit anything contradictory to their statements in chief examination by cross examining DW.3 and DW.4, further contradicting to his version in chief examination Pw.23 at the end of his cross examination admitted that “in my presence and in the presence of attestors the accused affixed his signature on the original of Ex.P55 and also on the endorsements”. It is specifically noted that both DW.3 and Dw.4 categorically stated that in the year 2003 they were examined by the CBI officials with regard to their signature on Ex.P55 and they stated above mentioned facts. The point remains ambiguous why the CBI suppressed the statements of these attestors besides examining them during the course of 88 C.C.03/2005/I CBI Court/VSP investigation under Section 161 Cr.P.C. This fact again inclines this

Court to draw adverse inference under Section 114(g) of I.E.Act against the acts of the investigating agency.

119. Before making a conclusion on this point it is also relevant to discuss the another contention made by the accused disputing the item No.13 and 14 of Statement-D(Expenditure Statement). According to the charge sheet these items relates to payment of Rs.50,000/- on 04.10.2000 and Rs.1,00,000/- on 04.01.2000 to K.Anji Babu/PW.23.

The argument of the accused is that the payment under both these items belongs to his father-in-law i.e., Sri G.Venkayya and he has no connection with these transaction. The evidence of Pw.23 is also on the relevant point. Pw.23 stated that “At the request of the accused I executed one pronote for

Rs.1,00,00/- in favour of Venkayya father-in-law of the accused and another pronote for Rs.50,000/- executed by me in favour of Venkayya.

I have not received any cash consideration under both the demand pronotes marked Ex.P48. Subsequently I came to know that the name of father-in-law of the accused is G.Venkayya and not Mutyala

Venkayya. I delivered both the pronotes to the accused”.

120. The prosecution asserts these transactions were made by the accused in the name of Sri G.Venkayya and in order to discharge this burden relied upon the evidence of PW.23 and promissory notes under Ex.P48. Initially when we look into the contents of two promissory notes under Ex.P48 they were dated 04.01.2001 and 04.10.2000 for Rs.1,00,000/- and 50,000/- executed by K.Anji Babu.

However both the documents were executed in favour of one Sri 89 C.C.03/2005/I CBI Court/VSP

Mutya Venkayya. As per the evidence of PW.23 referred above he did not receive any consideration under the above two promissory notes and were executed at the request of the accused.

121. The prosecution attempted to bring on record that total amount of Rs.1,50,000/- under the above mentioned promissory notes includes the part of unaccounted expenditure of the accused carried in the name of G.Venkayya under Item Nos.13 and 14 of Statement-D. In the lines of prosecution these pronotes were got executed by the accused in his favour in the name of G.Venkayya. If it is the case the accused extended the amount of Rs.1,00,000/- and Rs.50,000/- to

Pw.23, the statement of Pw.23 that he did not receive any consideration under these pronotes in his evidence totally destructs the version of the prosecution on this aspect. If at all when no consideration is passed prosecution did not come up with any explanation what is the purpose gained by the accused in obtaining the above promissory notes.

122. The another point that attracts the attention of this Court is that if the accused himself requested K.Anji Babu to execute the above two promissory he would get them drafted very meticulously so that they would assist him in screening his disproportionate assets if any. The accused is not presumed to be sheer negligent in obtaining the pronotes in the name of Mutya Venkayya the person whose existence is not mentioned on record. It cannot be excepted that the accused with all his prudence would obtain the pronotes in the name of Mutya Venkayya instead of G.Venkayya i.e., Gopavajula

Venkayya who is his own father-in-law. Pw.23 in the position of the 90 C.C.03/2005/I CBI Court/VSP executor of the document is obliged with a burden to explain the ambiguity which he did not attempt to do either in his examination in chief or cross examination. Moreover in his cross examination he admitted that he was acquainted with the relation between the accused and G.Venkayya by the year 1993 and they were instances of borrowing money by means of handloan from G.Venkayya between 1993 to 2002 in form of cheques or cash and he used to execute promissory notes in his favour. Accordingly it is clearly evident that

PW.23 had monetary transactions of taking loans from G.Venkayya since 1993. There is no specific reason why he executed Ex.P48 promissory notes as Mutya Venkayya when he intends to execute in the name of G.Venkayya father-in-law of the accused. Further adding much more to the ambiguity existing the address of promisor and promissee under pronote dated 04.01.2001 is one and the same. It remained unexplained whether Sri Mutya Venkayya and Sri Koduri Anji

Babu were the residence of the self same address. Accordingly it is obvious that the knowledge of the accused about the execution of these pronotes is suspicious and far from proof of facts.

123. There is also an additional aspect with also attracts relevancy with the evidence of Pw.23 i.e., Item No.26 of Statement-D. According to the prosecution it is the alleged house loan of Rs.1,00,000/- taken the father-in-law of Sri M.Subramanyam from K.Anji Babu for purchase of eight shops. In this regard the prosecution did not elicit anything from the chief examination of Pw.23.

124. The version of the accused is that Pw.23 carried Real estate business in the name and style ABK Real Estate from 1994 onwards 91 C.C.03/2005/I CBI Court/VSP and that Plot No.33 was proposed to Sri G.Venkayya in his venture and that inspite of receiving the amount from G.Venkayya he did not allot the plot and on repeated demands of G.Venkayya he issued a cheque bearing no.153036 for Rs.1,00,000/- in favour of G.Venkayya drawn on SBH, main road, Visakhapatnam during March, 2000 and asked him to treat it as advance anticipating that the plot would be sold at higher price and he would get more profits. It is also submitted that under these circumstances G.Venkayya showed this transaction as loan received from ABK Real Estates as Rs.1,00,000/- in his IT returns in Ex.P75 for assessment year 2000-2001.

125. It is further submitted Pw.23 sold the plot No.33 to Smt.Vedula

Nagaratnam under Ex.D6 for Rs.58,750/- and on the request of

Pw.23/Anji Babu that he incurred loss in the transaction under Ex.D6 certified copy of sale deed dt.15.11.2003 in favor of Vedula

Nagaratnam and he could not sell the plot for higher price,

G.Venkayya therefore returned Rs.50,000/- on 27.03.2004 to Pw.23 by way of cheque. The accused submits that he has no connection with the entire transaction and this amount was utilized by G.Venkayya for purchasing seven shops in his favour which was also reflects in his IT returns and accordingly prays to delete Item No.26 of

Statement-D.

126. As already referred though the prosecution did not bring on record any evidence with regard to Item No.26 of Statement-D, Pw.23 however stated in his chief examination that from the layout of plots of his real estate business at Pendurthi the accused purchased one

Plot No.33 in the name of G.Venkayya for Rs.24,500/- paid by the 92 C.C.03/2005/I CBI Court/VSP accused by way of cheque and he maintained the accounts. He further stated that subsequently when the layout got approved he collected Rs.23,000/- in cash. The account statement along with the plan and receipt was marked as Ex.P49.

127. The close perusal of Ex.P49 discloses that the account statement was reflecting the payment transaction by way of cash and cheques from 17.04.1993 to 04.03.1997 for total amount of Rs.25,400/- in the name of G.Venkayya. Wherein the entire transaction is prior to check period. Now the question is whether the accused really obtained loan of Rs.1,00,000/- from Pw.23 or whether it is independent transaction between Pw.23 and G.Venkayya. Admittedly G.Venkayya passed away by the time of trial and the entire record does not disclose anywhere that the investigating officer examined and recorded the statements of G.Venkayya at the time of investigation. However the accused got marked the income tax returns of the G.Venkayya as

Ex.P75 by examining the then Dy.Commissioner, Income Tax

Department as DW.10.

128. Inspite of the fact that the Ex.P49 is a transaction prior to the check period and if Pw.23 intends to testify that the entire transaction is made by the accused and not G.Venkayya contrary to the contents of the documents under Ex.P49. His statement needs some corroborative evidence either oral or documentary, particularly when the version of the accused is brought on record from the contents of

Ex.P75 and evidence of Dw.10. It is relevant to refer the evidence of

Dw.10 who clearly stated that the IT returns of G.Venkayya 1998-1999 shows that loans and advances as Rs.7,00,000/- and vacant site owned 93 C.C.03/2005/I CBI Court/VSP by him at Pendurthi valued at Rs.25,400/- which is akin to the transaction under Ex.P49. The mere statement of Pw.23 referring with the documentary contents under Ex.P49 cannot be perse believed as the proof of fact alleged against the accused. Pw.23 would have furnished his account statements and IT returns or that of the business carried by him, throughout to disprove the transactions under Ex.P48 and Ex.P49 in the name of G.Venkayya. Particularly when it is the version of the Pw.23 the transaction under Ex.P49 were made by means of cheques he could easily bring on record that the said cheques were issued by the accused and not G.Venkayya.

129. It is pertinent that in connection with this transaction under

Ex.P49 and subsequent sale to Vedula Nagaratnam and monetory adjustment with G.Venkayya. Pw.23 in his cross examination stated that “It is true that the cheque for Rs.50,000/- dt.27.3.2004 was issued in favour of A.B.K. It is true that in connection with Ex.D6 we have paid

Rs.1,00,000/- by way of cheque bearing No.153036 drawn on S.B.H, main branch, Visakhapatnam in March, 2000 in favour of late Sri

G.Venkayya. I do not know whether G.Venkayya is alive or not. It is true that though the plot under Ex.D6 not sold but we have paid the cash of Rs.1,00,000/- to G.Venkayya in 2000. I do not remember whether the payment of Rs.1,00,000/- in March, 2000 to G.Venkayya in what form it was showed. It might be true that in our accounts showed the said payment of Rs.1,00,000/- as loan and Venkayya also showed in accounts. It is true that in our accounts it was recorded a sum of

Rs.25,400/- received from G.Venkayya. At times G.Venkayya was not available the accused used to bring the cheques of G.Venkayya and 94 C.C.03/2005/I CBI Court/VSP delivered to me. Therefore, I have said the examination in chief that the accused paid sum of Rs.25,400/-. I cannot say whether in which year the payment of Rs.1,00,000/- to G.Venkayya was closed as settled. Might have given a receipt for Rs.1,00,000/- in the year 2001 to G.Venkayya that the said amount between us as settled. In the I.T returns of me and G.Venkayya it might have been showed as

Rs.1,00,000/- was settled”.

130. The version of Pw.23 in the cross examination completely interferes with the allegation made by the prosecution against the accused on this aspect. It is pertinent to note that all the above three transactions i.e., sale deed dated 03.03.2001, promissory notes dated 04.10.2000 and 04.01.2001 and Rs.1,00,000/- advanced by A.B.K.Real estate to G.Venkayya in view of allotment of plot No.33 at Pendurthi are documented. As per Section 61 of I.E Act the contents of a document may be proved either by way of primary evidence under

Section 62 or secondary evidence under Section 63 of the Act. In sequence the provisions of Section 91 and 92 of the Act discusses about the exclusion of oral evidence by documentary evidence. It is pertinent that except under specific exemptions and provisos provided under Section 91 and 92 the witness cannot contradict with the contents of the documents. In this case on hand the endeavor of the prosecution is that to bring on record the entire above mentioned transaction were entered by Pw.23 other than the purpose and terms disclosed in the documents. It is that the transaction record in the document was never intended to be acted upon between the parties and were sham. In such case the relaxation under the proviso (1) of

Section 91 I.E. Act where something is required to brought on record 95 C.C.03/2005/I CBI Court/VSP to invalidate the document and extent of oral evidence is permissible.

The prosecution is always entitled to prove the reality of the transaction and that Pw.23 never intended to act upon and that the intention prefixing is totally different.

131. However the proof of fact and burden of proving the same on prosecution is heavier and it never shifts. The burden on the prosecution shall never end on mere creation of suspicious. The fact alleged against the accused needs to be proved beyond all reasonable doubt. Particularly when the prosecution intends to prove a fact based on the the evidence of Accomplice.

132. Evidence of accomplice :It is evident on the record that PW.23

K.Anji Babu filed Crl.M.P.285/2004 under Section 306Cr.P.C and

Section 5(2) of P.C Act seeking tender of pardon even before filing of charge sheet. The preliminary examination of the petitioner K.Anji

Babu was made on 24.06.2004 and his statement was recorded on 16.07.2004 in the open Court. Subsequently the petition was allowed as per Orders dated 21.07.2004.Beforediscussing the merits of the evidence of Pw.23 it is necessary to overview the law relating to test evidentiary value of an Accomplice under illustration(b) of Section 114 and Section 133 of I.E Act. They read as follows :

Section 133: Accomplice.—An accomplice shall be a competent witness against an accused person; and a conviction is not illegal merely because it proceeds upon the uncorroborated testimony of an accomplice.

Section 114(b) :

96 C.C.03/2005/I CBI Court/VSP

(b) That an accomplice is unworthy of credit, unless he is corroborated in material particulars;

133. Precisely to define an accomplice is a guilty of associate or partner crime, a person who is connected with the offence, who make admission of facts showing that he had a conscious hand. The combined effect of Section 133 and 114(b) illustration is that it is not illegal to convict a person on the uncorroborated testimony of an accomplice. However the illustration under Section 114(b) of I.E.Act lays down a rule of prudence that an accomplice is unworthy of credit unless his evidence is corroborated in material particulars. The rule of law accepted as per the precedents is that the evidence accomplice must satisfy two steps firstly the evidence must show he is a reliable witness and secondly his evidence must receive sufficient corroboration.

134. In this case on hand the contention raised is that by the accused that Pw.23 was not shown as accused at any point of time by the investigating agency and was never arrested in connection with the crime. There is nothing on record to show Pw.23 was co-accused along with the accused officer. It was reiterated that Pw.23 was forced to be an accomplice and that his statement were made under the compulsion of the CBI officials. Accordingly pleads that he is not a trustworthy witness and in view of number of contradictions cited in his evidence prays that the evidence of Pw.23 cannot be relied upon in favour of the prosecution.

97 C.C.03/2005/I CBI Court/VSP

135. The English law defines the approver as “ one who confesses himself guilty of felony and accuses others of the same crime to safe himself from punishment. Similarly The Black Law Dictionary defines accomplice as “ a person who knowingly, voluntarily and it common intent with the principle offender units in the commission of a crime, one who is in somewhere concerned or associated in commission of crime; partaker of guilt; one who aids or assist or is an accessory. These two definitions make it clear that every approver is an accomplice but need not be vice-versa.

136. The provisions of Section 306 Cr.P.C dealing with tender of pardon to accomplice held as follows:

306. Tender of pardon to accomplice.

(1) With a view to obtaining the evidence of any person supposed to have been directly or indirectly concerned in or privy to an offence to which this section applies, the Chief Judicial Magistrate or a

Metropolitan Magistrate at any stage of the investigation or inquiry into, or the trial of, the offence, and the Magistrate of the first class inquiring into or trying the offence, at any stage of the inquiry or trial, may tender a pardon to such person on condition of his making a full and true disclosure of the whole of the circumstances within his knowledge relative to the offence and to every other person concerned, whether as principal or abettor, in the commission thereof.

137. Initially the provisions of the above referred Section expresses a flexibility including any person supposed to have been directly or indirectly concerned or privy to an offence, entitled to seek tender of pardon as accomplice . This includes any person who was in privity to 98 C.C.03/2005/I CBI Court/VSP the offence. There is no specific averment that the accused or co- accused is alone entitled to seek tender of pardon. However the subsequent sub sections when read along Section 308 Cr.P.C dealing with trial of the persons not complying the conditions of the pardon under Section 306 and 307 Cr.P.C it makes it evident that an accomplice is undoubtedly Participes criminis i.e., participant in crime, whether principle or accessories before or after the fact or person committing, procuring or aiding or abetting. In this case on hand

Pw.23 was never cited as accused in the initial FIR or in the charge sheet and this fact is determining on merits.

138. As already stated supra the evidence of accomplice requires both reliability and corroboration as such he himself contributed to the accused for the commission of alleged offence. The reliability of the evidence of the accomplice is always put to question unless and until it was found credible and cogent under the circumstances of the case and the other existing evidence on record . In this regard when the cross examination of Pw.23 looked into, he stated that his statement was recorded by CBI officials for two to three times on 16.03.2001, one month thereafter when they seized the original of

Ex.P55 and at the time of tendering pardon. He further stated that he was made to stay at CBI office during the day time for about three days continuously after the seizure of agreement from him. He admitted that on the advice of CBI he got the affidavit prepare through his advocate and presented before the Court and the affidavit was presented before the Court after it was seen by the CBI officer and he furnished a copy of the affidavit to them. He categorically admitted that at the instance of CBI and at their 99 C.C.03/2005/I CBI Court/VSP instructions the contents of petition in Crl.M.P.285/2004 was incorporated and further admitted that the petition in Crl.M.P.285/2004 was prepared by the CBI and made him present before the Court.

The tender of pardon can be extended to accomplice at any stage of the investigation or enquiry into or trial of the offence and it is not extraneous to presume the investigating agency or the prosecution bargaining with the accomplice to disclose the facts to the Court.

These circumstances, gathers the basis for the established principles that the testimony of accomplice is to be corroborated in all the material aspects.

139. In Ravinder Singh v. State of Haryana (1997) 11 SCC 720 the Hon’ble Apex Court observed that:

“An approver is a most unworthy friend, if at all, and he having bargained for his immunity, must prove his worthiness for credibility in Court. This test is fulfilled, firstly if the story he relates involves him in the crime and appears intrinsically to be a natural and probable catalogue of events that had taken place. Secondly, once that hurdle is crossed, the story given by the approver so far as the accused on trial is concerned, must implicate him in such a manner as to give rise to a conclusion of guilt beyond reasonable doubt”.

140. In view of the above case law it is evident that the evidence of accomplice warrants a corroboration which renders his evidence probable, true and reasonable safe to act upon. The similar proposition was held by Hon’ble Apex Court in Sarwan Singh Rattan 100 C.C.03/2005/I CBI Court/VSP

Singh v. State of Punjab (AIR 1957(SC 637)); Haricharan Kurmi

and another v. State of Bihar (AIR 1964 SC 1184); Pira Singh v.

State Punjab(AIR 1969 SC 961); Rampal Pithwa Rahidas and

others v. State of Maharastra (1994 SCC(Cri)851) and Bangaru

Laxman v. State(through CBI) and another ((2012) 1 SCC 500).

In this case the persuasion of the CBI officials on the PW.23 is clearly evident from the statement made in his cross examination and the involvement of the investigating agency in filing Crl.M.P.284/2005 is also apparent. It is not hazardous if the said persuasion by the investigating agency is to being out the true facts of the case. But in case if the evidence of accomplice before the court comes out in different colour with a blemish and taint of being concocted the role of investigating agency remains suspicious interfering with the trustworthiness of the accomplice.

141. Coming to the evidence of Pw.23 it was completely concentrated to bring on record that Pw.23 K.Anji Babu executed Ex.P55 agreement of sale dated 03.03.2001 on stamp papers antedated, purchased by him on later date other than 02.03.2001 from Pw.7 Smt.I.Vijaya

Lakshmi. It is also stated by him that he never paid any consideration as such Rs.25,000/- on 03.03.2001, Rs.1,00,000/- on 08.03.2001 and Rs.2,50,000/- on 13.03.2001 as averred by the accused and the agreement under Ex.P55 was executed to help the accused to accord an explanation to the amount seizure from him during the trap laid in RC.8(A)/2001 and never intended to act upon.

However the evidence of Pw.7 certified stamp vendor proves to be self-contradictory to the prosecution version and there is no record to 101 C.C.03/2005/I CBI Court/VSP show that the Pw23 purchased the stamp papers bearing Sl.Nos.3031 and 3032 from Pw.7 other than the date i.e., 02.03.2001 mentioned in

Ex.P21 register maintained by Pw.7. It is not the contention of the prosecution that Pw.7 was involved in falsification of record and hand- in-glove with accused. The prosecution cannot lead adverse evidence which is self-destructive. Even the evidence of Pw.23 only discloses that these stamp papers were purchased on subsequent date to the date of agreement and he do not remember on which date the agreement was scribed. Whenever the witness is an accomplice his evidence is required to be disclosing the complete facts in his knowledge. It is Pw.23 who executed the agreement under Ex.P55.

When he claims that it was scribed on stamp papers purchased subsequently other than the date mentioned on it, there is an obligation rests on him under Section 106 Indian Evidence Act to specify the actual date on which the stamps were purchased and on which date the agreement was executed irrespective of the intention to act upon as it is a different fact.

142. Mere mentioning that the stamps were purchased on later date and agreement was written on later date does not inspires his truthfulness. Pw.23 being the person who wishes the Court to believe in existence of fact , the burden lies on him under Section 103 of I.E.

Act to prove the same at least to the extent of preponderance of possibility. Particularly when the law presumes affirmative, negative has to be proved. Particularly of a document corroborated by the other evidence as such by the evidence of attestors Dw.3 and Dw.4 as well as stamp vendor Pw.7 as in this case. The proof of fact led by the prosecution should be backed by some intelligent reasoning and 102 C.C.03/2005/I CBI Court/VSP principle of prudence. It is not only the case on hand Pw.23 is unable to prove the agreement under Ex.P55 as fabricated, antedated, unintended and not acted upon but the merits lies in the fact proved by the accused by establishing reasonable evidence through

Dw.3 and Dw.4 who clearly deposed about the passing of consideration from Pw.23 to accused. It is further damages the evidence of Pw.23 who in cross examination made admissions in contrary. Irrespective of his evidence, Pw.23 was never forbidden from filing his account statements, income tax returns to prove that no monetary transactions akin to the consideration passed under Ex.P55 took place on particular dates. The denial of the prosecution that the accused did not given reasonable explanation for the amount of Rs.3,63,700/- seized from his office and residence stands alone and the stray statement of Pw.23 without any corroboration and further negated by defence evidence and evidence of Pw.7. The burden on prosecution still suffers incompleteness for non-examination of the scribe of the document nor any other persons acquainted with the transactions.

143. Even considering the aspects of amount lent on Ex.P48 promissory note, they worth no merits for inherent contradiction of contents as already discussed above. Though the promissory notes under Ex.P45 are considered to be true for argument sake, they fail for want of consideration as admitted by Pw.23. Further the evidence of

Pw.17 in his cross examination categorically says that the promissory notes under Ex.P48 are not seized under Ex.P47 search list. In view of the evidence of Pw.17 it is for the prosecution to bring on record from where the promissory notes under Ex.P48 were brought into existence.

It is similar case with the loan amount of Rs.1,00,000/- lent to 103 C.C.03/2005/I CBI Court/VSP

G.Venkayya mentioning at Item No.26 of Statement-D. Even considering the same to be true receiving loan falls under the head of income and not under the expenditure list. Irrespective of the same

Pw.23 failed to bring on record either oral or documentary to affirm that the said amount was lent to the accused and not G.Venkayya.

144. It is also evident from the record that the accused intimated about his agreement with Anji Babu for sale of his house at

Kakinada which was marked under Ex.P53(B) with consent of both sides. In fact the entire file containing intimations under Rule 18 of

CCS(Conduct) Rules relating to the accused along with order sheets was handed over to the investigating officer by the then

Commissioner of Income Tax vide letter dated 17.4.2001. This gives valid presumption that the accused intimated the transaction with

K.Anji Babu to his department much prior to 17.04.2001. It is also evident that the accused filed Crl.M.P.78/2004 under Section 451 r/w 457 Cr.P.C on 23.02.2004 contending that the amount of Rs.2,43,200/- and Rs.11,20,700/- were seized from his office and residence by the investigating agency in course of conducting searches at his office and residential premises in RC 8(A)/2001 and claims that the said amount was no way related to his crime and sought for return of the same or to direct the respondent to deposit the same in any nationalized bank.

145. The accused filed similar petition Crl.M.P.141/2001 in RC 8(A)/2001 on 09.04.2001 disclosing the entire facts about the agreement with K.Anji Babu and receiving the seized amount as consideration under the said agreement of sale dated 03.03.2001 for 104 C.C.03/2005/I CBI Court/VSP sale of his house at Kakinada. The same was subsequently closed as not pressed by the petitioner preserving his right to claim the same at later date. However during the disposal of C.C.20/2001 in its judgment dated 02.06.2006 this court made an averment that the said fact is not taken into consideration in the Judgment as the same is open for discussion in the present C.C.3/2005 pending as on date on the file of this Court against the accused.

146. It is pertinent that evenprior to the date of filing

Crl.M.P.141/2001 in R.C.8(A)/2001 on 09.04.2001 by the accused,

the investigating agency is continuing its investigation and registered

FIR in RC 35(A)/2002 on 01.11.2002, the charge sheet was filed on 26.07.2004 almost two years after registering the FIR. It is most surprising that the investigating agency did not take any initiation to produce Pw.23 as an approver before this Court and it is Pw.23 himself approached this Court seeking tender of pardon vide Crl.M.P.285/2004 on 08.06.2004, and notice were issued to the prosecution on 09.06.2004, and preliminary enquiry conducted on 26.04.2004 thereafter the matter was posted for recording the statement of accomplice/Pw.23 on 16.08.2004. However Pw.23 made a written request before this Court to record his statement on 06.08.2004 as he was chronic patient of BP and sugar, accordingly his statement was recorded on 16.07.2004. The matter still remains ambiguous as to why the investigating officer remains silent since 09.04.2001 without any action on the aspect of producing Pw.23 before this Court. Further filing of petition under Section 306 Cr.P.C by Pw.23 after pressing the

Crl.M.P.78/2004 on 08.04.2004 by the accused adds to the

suspiciousness of the investigating agency. The elaborate delay of the 105 C.C.03/2005/I CBI Court/VSP investigating agency, the uncorroborated evidence of Pw.23 without any specification or certainty totally shackles the case of the prosecution on the aspects of disproving the agreement of sale dated 03.03.2001 and promissory note under Ex.P48 and as to the loan extended to G.Venkayya by Pw.23 under Item No.26 of Statement of-

D. All these circumstances when summed up they categorically shows that the entire evidence of Pw.23 who was referred as accomplice is concocted, sham and is prejudiced by the influence of investigating agency. In Haricharan Kurmi and another v State of Bihar(supra) it has been held that in dealing with a case against the accused person the Court cannot start with a confession of co-accused; it must begin on other evidence adduced by the prosecution after it has formed its opinion with regard to the quality and effect of said evidence, then it is permissible to turn to the confession in order to receive assurance to the conclusion of the guilt which the judicial mind is about to reach on the said other evidence and that the confession of co-accused person cannot be treated as substantive evidence and can be pressed into service only when the Court is inclined to accept the other evidence and feels necessity of seeking an assurance in support of his conclusion deducible from the said evidence. In this case on hand the prosecution case entirely incepted from the statement of PW.23 with remained foiled on merits and remained uncorroborated.

Accordingly the entire evidence of PW.23 is ruled out and concluded to be unreliable. The Prosecution completely failed to disprove the agreement of sale dated 03.03.2001 in letter and spirit and equally failed to prove the transactions under Item Nos.13,14 and 26 of

Statement-D Expenditure against the accused.

106 C.C.03/2005/I CBI Court/VSP

147. In view of the above discussion, the accused is entitled for inclusion of amount of Rs.3,75,000/- received by him towards advance sale consideration received from Pw.23 to disposal of his house at

Kakinada as additional income under Statement-C. Consequently the amounts under Item Nos.13 and 14 are deleted from Statement-B.

Similarly the accused is also entitled for deletion of Item No.13,14 and 26 from Statement-D expenditure.

148. Item No.18: Sale consideration received by selling

National Savings Certificate

The plea of the accused is that he purchased National Savings

Certificate(NSC) prior to the date of the check period and subsequently during the check period he disposed off the same for Rs.2,80,000/- and purchased 112 Indira Vikas Patras(IVS for short) covered under 12 of Statement-B. It is further submitted that the accused intimated the transaction to his department and reflected the income in the income returns for the financial year 1999-2000 covered under Ex.P76. The counsel for the accused refers to the note on the rare side of the page in Ex.P76 “ computation of total income indicates that I purchased NSCs from time to time ever since I joined in service in

Income Tax department for Rs.1,50,000/- and intimated to the department at the respective stations, were sold away during April and May, 1999. The maturity value of Rs.2,80,000/- were invested by purchasing IVP certificates. Since it is an investment of both savings no tax is payable. Hence no tax is payable”. The arguments of the defence is that this amount is to be considered as additional income of the accused.

107 C.C.03/2005/I CBI Court/VSP

149. It is not in dispute that 112 number of Indira Vikas Patras of face value of Rs.2,500/- each were purchased on 09.04.1999, 12.4.1999, 23.04.1999, 24.09.1999, 29.05.1999 by the accused for total worth of Rs.2,80,000/- and the same were mentioned in Item

No.12 of Statement-B as asset at the end of the check period. In fact these 112 Indira Vikas Patras were seized during the locker operation on 09.04.2001 under Exs.P43 as per the evidence of mediator Pw.18,

Pw.19 the then Dy.Manager, Vysa Bank, Vizianagaram and Pw.24 the

Investigating Officer. Though these documents were seized from the locker in the name of one Kameswara Rao maintained at Vysa Bank at

Vizianagaram the same was not disputed by the accused. The argument of the accused is twofold, firstly the purchased National

Savings Certificate(NSC) prior to the check period and disposed off for Rs.2,80,000/- during the check period i.e., in the month of April and

May, 1999. There is obligation on the accused to show that he purchased NSC certificates worth value Rs.1,50,000/- prior to check period i.e., 01.01.1998. However this item was not shown as asset at the beginning of the check period and the accused never raised any point on it except reiterating the statement in his chief examination as DW.16. Secondly the argument of the accused is that he disposed off the said NSCs during the period April and May, 1999 for Rs.2,80,000/- and re-invested the amount by purchasing 112

Indira Vikas Patras worth Rs.2,80,000/-. The accused did not file any document in support of his contention as to the sale of the above said NSCs in the month of April and May, 1999. Though it was contended that the said disposal and purchase was intimated to the 108 C.C.03/2005/I CBI Court/VSP department no specific document was produced in the Court. The only supporting document is the endorsement made by the accused on the rare side of page containing computation of total income annexed to the income tax returns for assessment year 1999-2000 under Ex.P76. Unless and until the accused produced authenticated document disclosing the above said purchase and sale of NSCs, the subsequent purchase of Indira Vikas Patras mentioned at Item No.12 of Statement-B cannot be deleted. In fact the purchase of these 112

Indira Vikas Patras contributes to the expenditure of the accused which reciprocates under Statement-B as asset at the end of the check period. Accordingly the argument of the accused on this point to add the amount of Rs.2,80,000/- as additional income is negated.

Further there are two miscellaneous items with regard to which the accused examined DW.1, DW.7, DW.9, DW.11. Initially the evidence of

Dw.1 refers about the payment of Rs.10,000/- by way of cheque to

Smt.Lakshmi on behalf of Capital Growth Consultancy. Secondly the evidence of Dw.9 reflects the repayment of Rs.4,000/- was hand loan in the year 1998. However except the oral evidence of DW.1 and DW.9 there is no corroboration and the amounts mentioned by DW.1 and

Dw.9 does not attracts any merits for inclusion under Statement-C.

Similarly the evidence of DW.11 the then income tax officer,

Visakhapatnam elicit about the intimation of the accused dated 27.03.2001 with regard to the agreement dated 03.03.2001 in the name of Smt.Lakshmi and himself from M.S.N.Raju for sale consideration of Rs.6,00,000/- to purchase 1920sq.yards at Block No.5,

Railwaystation Road, Vizianagaram and the said intimation form was marked as Ex.P53(A) with consent. This agreement marked as Ex.D26 was supported by the evidence of DW.7 M.S.S.R.Varma the son of 109 C.C.03/2005/I CBI Court/VSP

M.S.S.R.S.N.Raju who died on 19.05.2005 as per Ex.X5. According to

DW.7 the transaction under Ex.D26 marked not fructified and on serving notice under Ex.D27 his father sold the property to the third parties. Pertinently this transaction under Ex.D26 was not disputed by the prosecution. However the return of advance consideration by

M.S.N.Raju was not corroborated with any documentary evidence except that of the oral evidence of DW.7. Hence this amount is also not entitled to be included in Statement-C.

150. Conclusion as to Statement-C:

In view of the above discussion, the total income under

Staement-C arrived by the Court is concluded as 14,96,970/- as follows:

Sl.NParticulars Amount as Amount asAmount o.per theper the AOarrived by prosecutionthe court according to charge sheet

1.Value of undisputed2,21,9562,21,9562,21,956 income of accused (16 items)

2.Undisputed income94,96194,96194,961 standing in the name of wife of accused (17 items)

3.Disputed income of2,73,9742,90,4972,78,283 the accused (2 items) Item No.3 net salary 2,70,3742,76,8972,78,283 Item No.18 interest3,60014,000- on Durga finance

4. Income disputed in1,07,8593,48,3593,72,656 the name of wife of accused ( 5 items) Item Nos.34,35,3623,35973,35973,361 Item No.394,50075,00099,095 Item No.4080,0002,00,2002,00,200

Additional items14,69,6125,40,477

claimed by the accused (18 items )

1. Loan -5,44,26644,266 110 C.C.03/2005/I CBI Court/VSP repayment by M.Venkeswara rao M.Lakhsmi (wife)

2. Premature -87,53714,092 closure of FD Akshya Deposit certificate (Item No.16 and 17 of Statement D) (wife)

3. Sale of -17,7754,775 reliance shares (Item No.18 of Statement-D) (wife)

4. Cybermate -20,3509,660 shares (item No.20 of Statement D) (wife)

5. Withdrawal -5096414,964 from Jaganadh Vidyapeet (Item No.21 and 22 of Statement-D) (wife)

6. Amount taken -22,00022,000 as overdraft loan (wife)

7. Divided from -250250 KCP sugars (wife)

8. Refund of -870870 telephone deposit (accused)

9. Payment by -6,000- DSS Narayana Raju (wife)

10.-16,0006000 Premature withdrawals from Gayatri Vidyaparished (wife)

11.-48,60048,600 Professional income of Smt.Lakhsmi (wife)

12. Amount -3,75,0003,75,000 received from 111 C.C.03/2005/I CBI Court/VSP

Anji Babu including item No.13 & 14 statement B(accused)

13. Sale of 2,80,000- National Saving Certificate relates to Item No.12 of Statement- D(accused) Total 6,98,752/-24,25,385/-15,08,333 The value of item (-)11,363 No.33 is reduced as per discussion at Para No.95 14,96,970

XIX. Sub point (iv )

The total value of expenditure under Statement-D of charge sheet is Rs.20,33,025.05. However there is a clerical error in totaling and the corrected value as per the items mentioned in the charge sheet is Rs.23,65,380/-. Considering the arithmetical correction the total expenditure of the accused was herein determined under the following sub point:

iv) Whether the expenditure of the accused is

Rs.20,33,025.05 as shown in Statement-D during the

check period i.e., from 01.01.1998 to 09.04.2001?

Expenditure during the check period as per the

prosecution under Statement –D Sl.Name of the DocumentRs.Ps No. 1Payment to Sri K.Raja Ratnam W/o Sri13,000-00 K.Satyanarana by DD dt.16.12.98 of SBI, VizianagaramMainBranchbySri M.Subramanyam(cheque No.5/573-369589 dt.12- 12-98 of the SBI Vizianagaram for Rs.13,000+5,000+2000) 2DD commission for the above DD 39-00 3Payment to Sri K.Satyanarayana by DD5,000-00 dt.16.12.98 of SBI, Vizianagaram Main Branch, by 112 C.C.03/2005/I CBI Court/VSP

Sri M.Subramanyam 4 DD commission for the above DD25-00 5Payment to Sri K.Satyanarayana by DD2,000-00 dt.16.12.98 of SBI, Vizianagaram Branch 6DD Commission for the above DD 25-00 7Payment of Sri M.S.N.Raju by DD No.3969511,00,200-00 dt.02.03.2001 from Bank of Baroda, Asilmetta Branch, Visakhapatnam including DD charges for purchase of site at Vizianagaram not yet Regd., 8Commission to the Vysya Bank, Vizianagaram for144-00 taking 3 DDs all dt.21.11.98 for Rs.30,000/- 9Loans to one Sri Muvva Venkateswara Rao by the5,00,000-00 wife of the accused on 14.08.2000, 15.08.2000 and 16.08.2000 in cash 10Payment of acquiring locker No.28 with Vysya2,26,372-00 Bank Ltd., Vizianagaram paid on 27-3-99 11Domestic expenditure at 30% of gross salary1,35,222-70 12Payment for acquiring Locker no.28 with Vysya1,050-00 Bank Ltd., Vizianagaram paid on 27-3-99.350-00 13Payment to Sri K.Anji babu on 04.10.200050,000-00 14Payment to Sri K.Anji babu on 04.01.20011,00,000-00 15Payment to Sri DSS Narayana Raju of Siri Shares,10,000-00 Vizianagaram on 11.6.99 by DD (through Durga Finance) DD No.27240 dt.31-7-2000 of Bank of Baroda, Asilametta branch taken by M/s Durga Finance 16Akshya FD No.0059879 with Vysya Bank,36,000-00 Vizianagaram taken on 27.11.99 the wife of Sri M.Subramanyam 17Akshya FD No.0059879 with Vysya Bank,50,000-00 Vizianagaram taken on 27.11.99 the wife of Sri M.Subramanyam 18Purchase of 100 shares of Reliance Industries13,000-00 LTd., by the wife of Sri M.Subramanyam on 30.06.99 from M/s DSS Nayana Raju, Vijayanagaram 19Purchase of 100 shares of Copron by the wife of11,363-35 Sri M.Subramanyam on 23.08.99 M/s DSS Narayana Raju, Vizianagaram 20Purchase of 100 shares of Cybermate Info on10,690-00 10.09.99 by the wife of Sri M.Subramanyam from 113 C.C.03/2005/I CBI Court/VSP

M/s DSS Narayana Raju, Vizianagaram 21DepositwithJaganadhVidyaPeeth,18,000-00 Visakhapatnam by the wife Sri M.Subramanyam on 5.2.98 in cash 22DepositwithJagannadhVidyaPeeth,18,000-00 VisakhapatnambythewifeofSri M.Subramanyam on 28.01.98 in cash 23PaymenttoV.JagannadhamChartered1,00,000-00 Accountant, Visakhapatnam on 8.3.2001 by the father of law of Sri M.Subramanyam 24Alleged payment of Rs.70,000/- to the daughter70,000-00 of A-1 by his father in law for purchase of a Plot No.47, Resapuvanipalem, Visakhapatnam and a house in the said Plot in 1998, by the daughter of A1(shown by her in her IT returns as one of the sources for purchase of the house) 25Alleged receipt of Rs.6.30lacs, by the father in6,30,000-00 law of A1 (from the persons to whom the alleged to have given as loans and advances) for purchase of 8 shops of 2700 sft., in G.K.Mansion, Peda Walter, Visakhapatnam in 1998 (shown as one of the sources for purchase of the shops in his IT returns) 26 Alleged house loan of Rs.1,00,000/- taken by1,00,000-00 the father in law Sri M.Subramanyam from Sri K.Anjibabu by purchase 8 shops 27Expenses incurred of Sri M.Subramanyam95,900-00 towards the marriage in his daughter Smt.T.Bahrathi 28Amount paid to Sri V.Jagannadham in72,000-00 installments in 1998 and 99 of Sri M.Subramanyam against a loan of Rs.65,000/- gives to Smt.T.Bharathi, his daughter

Total: 20,33,025.05

a) Admitted expenditure during the check period as per the accused. The following 8 items of value Rs.21,633/- under

Statement-D 114 C.C.03/2005/I CBI Court/VSP

Undisputed Items-Accused

Sl.Item No.Description of the itemRs.Ps No.as per charge sheet 11Payment to Sri K.Raja Ratnam W/o Sri13,000-00 K.Satyanarana by DD dt.16.12.98 of SBI, Vizianagaram Main Branch by Sri M.Subramanyam(chequeNo.5/573- 369589 dt.12-12-98 of the SBI Vizianagaram for Rs.13,000+5,000+ 2000) 22DD commission for the above DD 39-00 33. Payment to Sri K.Satyanarayana by DD5,000-00 dt.16.12.98 of SBI, Vizianagaram Main Branch, by Sri M.Subramanyam 44 DD commission for the above DD25-00 55Payment to Sri K.Satyanarana by DD2,000-00 dt.16.12.98 of SBI, Vizianagaram Branch 66DD Commission for the above DD 25-00 78Commission to the Vysya Bank,144-00 Vizianagaram for taking 3 DDs all dt.21.11.98 for Rs.30,000/- 812Payment for acquiring Locker no.28 with1400-00 Vysya Bank LTd., Vizianagaram paid on 27-3-99.(1050+350)

Total: 21,633-00

b) The accused also admitted the expenditure under the following 10 items of value Rs.7,67,253/- under Statement-D. However claims them to be the expenditure of his wife.

Undisputed items – wife of accused

SlItemDescription of the item Rs.Ps No. as No per charge t sheet 97Payment of Sri M.S.N.Raju by DD1,00,200-00 No.396951 dt.02.03.2001 from Bank of Baroda,AsilmettaBranch, Visakhapatnam including DD charges for purchase of site at Vizianagaram not yet 115 C.C.03/2005/I CBI Court/VSP

Regd., 109Loans to one Sri Muvva Venkateswara5,00,000-00 Rao by the wife of the accused on 14.08.2000, 15.08.2000 and 16.08.2000 in cash 1115Payment to Sri DSS Narayana RAju of Siri10,000-00 Shares, Vizianagaram on 11.6.99 by DD (through Durga Finance) DD No.27240 dt.31-7-2000 of Bank of Baroda, Asilametta branch taken by M/s Durga Finance 1216Akshya FD No.0059879 with Vysya Bank,36,000-00 Vizianagaram taken on 27.11.99 the wife of Sri M.Subramanyam 1317Akshya FD No.0059879 with Vysya Bank,50,000-00 Vizianagaram taken on 27.11.99 the wife of Sri M.Subramanyam 1418Purchase of 100 shares of Reliance13,000-00 Industries LTd., by the wife of Sri M.Subramanyam on 30.06.99 from M/s DSS Nayana Raju, Vijayanagaram 1519Purchase of 100 shares of Copron by the11,363-00 wife of Sri M.Subramanyam on 23.08.99 M/s DSS Narayana Raju, Vizianagaram 1620Purchase of 100 shares of Cybermate10,690-00 Info on 10.09.99 by the wife of Sri M.SubramanyamfromM/sDSS Narayana Raju, Vizianagaram 1721Deposit with Jaganadh Vidya Peeth,18,000-00 Visakhapatnam by the wife Sri M.Subramanyam on 5.2.98 in cash 1822Deposit with Jagannadh Vidya Peeth,18,000-00 Visakhapatnam by the wife of Sri M.Subramanyam on 28.01.98 in cash

Total: 7,67,253-00

c) The following items were disputed by the accused in respect of their monetary value:

Sl.Item as perDescriptionAmount No.statement-D

1.10Payment to GMR institute 2,26,372-00 of Technology, Rajam for the education of the son of 116 C.C.03/2005/I CBI Court/VSP the accused

2.11Domestic expenditure at1,35,222-70 30% of gross salary

151. Item No.10:

The contention of the accused is that he incurred only a sum of

Rs.72,000/- and Rs.144/- for demand draft charges towards the educational expenditure of his son Ravi Kumar. However the contention of the prosecution is that the accused paid Rs.2,26,371/- towards educational expenditure. In this regard the prosecution examined

Pw.31 and relied upon the contents of the documents marked under

Ex.P83. Pw.31 K.L.Narayana the then Correspondent in GMR, Institute of Technology during the year 2002-2004 testified that “ on the requisition given by the CBI Department I have furnished the details of tuition fee and hostel fees and miscellaneous fee related to

Mr.M.V.S.S.R.A.Ravi Kumar son of Mr.M.Subramanyam for the period between 04-11-1998 and 06-08-2001. Ex.P83 is the letter dated 08- 02-2003 addressed by me to K.C.V.Reddy, DSP, CBI, Visakhapatnam.

152. The learned counsel for the accused raised objection at the time of marking Ex.P83 on the ground that it is hit by Section 161Cr.P.C and argued that during the course of investigation IO should not compel or instruct any witness to address signed letters containing case details, which is nothing but nailing down the witness to stick to the contents in the said letter and the same is against the spirit of Section 161Cr.P.C. It is further submitted that the Investigating Officer inspite of securing necessary fee payment register, receipts and other records 117 C.C.03/2005/I CBI Court/VSP obtained Ex.P83 letter from Pw.31 and attempted to exaggerate the fee paid by the accused.

153. The bare perusal of the contents of Ex.P83 categorically shows that the accused paid an amount of Rs.2,26,372/- to GMR Institute of

Technology, Rajam towards the education of his son during the check period. The contention of the accused is that the contents of Ex.P83 is incorrect and ex.P83 which does not contain any mode of payment or fee receipt number was pressed into service with malafide intention by Pw.31 due to pressure of CBI officials in connection with CC 20/2001, wherein the entire business Groups of GMR(Grandhi

Mallikarjuna Rao) are under scrutiny of CBI. However there is no evidence oral or documentary to show that Pw.31 was persuaded by the CBI officials. Irrespective of the same it is evident that Pw.31 did not produce any concerned registers or account books based on which the calculation in Ex.P81 were made. Accordingly the intimation letters made by the accused officer to the department with regard to fee paid towards education of his son under Ex.P53(A) becomes relevant.

154. In this regard the order sheet approved on 19.07.1999 under

Ex.P53 reads about the intimation of the accused regarding the expenditure incurred for the admission of his son in the Engineering college. It discloses that the accused intimated that he has to incur an expenditure of Rs.82,000/- for admission of his son in Engineering,

Rajam and proposed to meet his expenditure from his personal savings of Rs.32,000/- and part final withdrawal from GPF amount into

Rs.50,000/-. The accused also furnished the copies of bank account 118 C.C.03/2005/I CBI Court/VSP bearing SB A/c No.41/805 of SBI and SB A/c No.2042(5015) of Sri

Visakha Grameena Bank, Vizianagaram and proceedings of sanctioning part final withdrawal of GPF. The intimation as to the payment was given under Form-II dated 05.11.1998. This document remains undisputed and the fact is evident that the accused officer intimated about incurring expenditure of Rs.82,000/- for admission of his son.

The subsequent note dated 22.07.1999 placed on record goes to show that the accused officer intimated about the payment of

Rs.67,000/- towards the college fee of his son along with the sources.

This was supported by Form-II dated along with the covering letter

dated 10.12.1999 payment of fee for the year 1998-1999. The

subsequent intimation was with regard to the payment of

Rs.60,000/- intimated to the department on 22.10.2000 along with the sources and the same is evident from the Form-II dated 22.10.2000. So the total expenditure incurred towards the education of his son by the accused during the check period as per Form-II intimations under Ex.P53 is Rs.2,09,000/-. It is evident from the contents of Ex.P83 that the fee particulars of the final year are beyond the check period and thereby omitted from consideration.

The brief comparison of the pay particulars under Ex.P83 with that of the intimation made by the accused under Ex.P53 is Rs.2,26,372- 2,09,000/-=17,372/-. All the three intimations made by the accused are supported by the accurate financial sources and the prosecution is not in dispute with the documents under Ex.P53. The accused in his examination in chief as DW.16 stated that he spent only Rs.72,144/- paying to GMR Institute of Technology, Rajam as per Ex.P60 towards education of his son. Ex.P60 receipt dt.12.12.2003 along with three DD applications. All the DD applications are dated 21.11.1998 and receipt 119 C.C.03/2005/I CBI Court/VSP

dated 12.12.2003 was issued by Assistant Manager, Vysya Bank to

the Dy.Superintendnet of Police, CBI. The above said receipt deals with the collection of DDs from the bank by the investigating officer. It cannot be expected that the accused paid the entire fees for three academic years in the year 1998 itself. Accordingly coming back to the evidence of PW.31 and the contents of Ex.P83, they are not corroborated by any other documentary records such as fee registers or account books. The evidence of Pw.31 therefore is not taken into consideration. In view of the above discussion, the calculation accorded vide Form-II dated 05.11.1998, 10.12.1999 and 22.10.2000 under Ex.P53 which are undisputed are taken into consideration as the expenditure incurred by the accused towards education of his son during the check period is concluded as Rs.2,09,000/- (Rs.82,000+67,000+60,000).

155. Item No.11 :

The contention of the accused is that his domestic expenditure is not more than 25% of his net salary and that when he informed the same to the investigating officer to instructed him to address a letter.

It is also submitted when he addressed letter under Ex.P81 to the

Superintendent of Police, CBI wherein he agreed for 25% of net salary as domestic expenditure inspite of the same the investigating office without any basis calculated the domestic expenditure of the accused as 30% of gross salary against the settled principles. Hence prays to consider the domestic expenditure as 25% of net salary.

According to the charge sheet the domestic expenditure of the accused is shown Rs.1,35,222/- at Item No.11 of Statement-D. The prosecution did not accord any plausible explanation how this amount was 120 C.C.03/2005/I CBI Court/VSP arrived. As per the ratio laid down by Hon'ble Apex Court in Sajjan

Singh Vs. State of Punjab reported in AIR 1964 Supreme Court

464, 1/3rd income is to be taken as non-verifiable expenditure. As per the evidence of the prosecution according to Pw.27 the gross salary of the accused is Rs.4,33,141/- and net salary of the accused is

Rs.2,71,760+6,523(as per discussion for Item No.3 of Statement-C).

Accordingly 1/3rd of the same would be Rs.92,761/-. Therefore the value of the domestic expenditure under Item No.12 of Statement-

D is considered as Rs.92,761/-. Except the above mentioned Item

No.10 and 11 of Statement-D all other items were undisputed by the accused with regard to their monetary value and the dispute sustains only with regard to the point whether the transaction stands in the name of the family members of accused or not or irrelevant. The discussion thereto was as follows:

156. Items fully disputed by the accused under Statement-D.

Sl.No.Item Description of the Item Amount No.as per charge sheet 127Expenses incurred by the accused 95,900-00 towards marriage of his daughter Smt.Bharathi

2.28Amount paid to Sri 72,000-00 Jagannadham(PW.9) in installments in 1998-99 by accused against the loan of Rs.65,000/- given to his daughter Smt.Bharathi

157. Item No.27:

The argument of the accused is that the marriage of his daughter Smt.Bharathi was performed 16.11.1999 which is prior to 121 C.C.03/2005/I CBI Court/VSP check period and the prosecution wantonly introduced the expenditure under this item to incriminate against the accused. In this regard the prosecution did not adduce any evidence to support its contention.

However the accused himself examined as DW.16 testified that he performed the marriage of his daughter in the year 1997 by taking part final loan of Rs.80,000/- from GPF. The loan application dated 19.07.1997 and order dated 03.10.1997 are marked Ex.D39 and

Ex.D40. Similarly the evidence of DW.12 Smt.Bharathi daughter of accused also goes to show her marriage was performed in the year 1997 and corresponding wedding card is marked as Ex.D28 along with bunch of marriage greetings 89 in number as Ex.X8. The documentary contents Ex.D28 and Ex.X8 categorically discloses the marriage of the daughter of the accused was performed on 16.11.1997 which is much prior to the check period. The evidence of PW.6 and PW.9 also discloses that the marriage of Smt.Bharathi daughter of accused was held on 16.11.1997 at TTD Kalyanamandapam and they attended the same. There is no reasoning how the investigating officer included the expenditure much prior to the check period in the charge sheet.

In the fact the prosecution subsequently in its additional written arguments conceded the fact averred by the accused stating that the accused performed the marriage of his daughter on 16.11.1997 for that purpose he obtained GPF advance of Rs.50,000/- from his department on 15.11.1997 and took hand loan of Rs.20,000/- meet the total expenditure Rs.1,00,000/- as per statements 1 to V1 LD.83. The act of the investigating agency manipulating the fact apparent on record discovered in the investigation is nothing but dereliction of official duties and is not expected. Accordingly in view of the above 122 C.C.03/2005/I CBI Court/VSP discussion the expenditure under Item No.27 is completely deleted from the Statement-D.

158. Item No.28:

The version of the prosecution is that smt.M.Bharathi daughter of the accused obtained loan of Rs.65,000/- from Sri Jagannadham and the accused repaid total loan amount of Rs.72,000/- on her behalf in installments during the year 1998-1999. On this aspect it is relevant to look into the evidence of PW.9 Sri V.Jagannadham surprisingly

V.Jagannadham in his entire evidence did not state anywhere about lending money to Smt.Bharathi or about subsequent repayment either by her or the accused on her behalf. The prosecution did not produce any document to bring on record the alleged loan transaction between V.Jagannadham and Smt.Bharathi. The charge sheet does not even disclose the date on which the alleged loan was transacted between Smt.Bharathi and V.Jagannadham. The burden of prosecution was already referred above is to prove an allegation against the accused beyond reasonable doubt. The attempt of a prosecution to incriminate against the accused by mere raising an allegations in the charge sheet does not relieve its burden. Accordingly the uncorroborated version of the prosecution with regard to expenditure of the accused under Item No.28 of Statement-D is denied from consideration. The accused is entitled for deletion of Item No.28 of

Statement-D.

159. Now the next point for consideration is that:

Whether Smt.Lakshmi, Smt.T.Bharathi and G.Venkayya

are benamidars of the accused as alleged by the prosecution?

123 C.C.03/2005/I CBI Court/VSP

The prime contention of the prosecution is that the accused amassed huge assets disproportionate to his known source of income in the name of wife, daughter and father-in-law and that they acted as benamidars for the property acquired by him. The accused denies the allegations made by the prosecution as false and baseless and contended that his wife Smt.Lakshmi, his daughter Smt.M.Bharathi and his father-in-law G.Venkayya are having their own source of income and the IT returns filed by them proves the said fact. It is also submitted that all the financial transaction alleged against accused were intimated to the income tax department and investigation officer wantonly did not considered their independent source of income and suppressed their IT returns with an intention to falsely implicate the accused in the disproportionate assets case. The learned counsel for the accused argued that the accused has no connection with financial transaction of his family members and whatever assets purchased by them, expenditure ascribed to them were met by them from their own source of income. In this aspect the counsel for the accused referred to the deposition of Smt.Lakshmi(DW.15) and Smt.Bharathi (DW.12) and Ex.D46 to Ex.D49 and Ex.P75. It is also contended that the prosecution had shown Smt.M.Lakshmi, Smt.M.Bharathi and Sri

G.Venkayya as conspirators to the alleged accusation of assets and that never intended to examine them at any point of time to discharge its burden. The counsel for the accused referred to case law between P.Satyanarayana Murthy Vs State of Andhra Pradesh,

reported in 1992 (4) SCC 39, B.T.Nagappa Vs State by

Lokayuktha Police in Crl.A.814/2010 dt.8-8-2013 of the

Honourable High Court of Karnataka and K.Goverdhan Vs State

124 C.C.03/2005/I CBI Court/VSP of A.P., reported in 2001 (1) ALD (Crl.) 886 (A.P.) with regard to the burden of proof on prosecution to prove the benami transactions.

160. The counsel for the accused argued that the prosecution ignoring the established principle that “the burden of proving a particular transaction is Benami and the owner is not real owner rests on the person asserting it to be so”, did not place any iota of evidence and alleged the AO that he acquired disproportionate assets in the name of his benamidars. It is also submitted that despite the fact that the prosecution has failed to discharge its initial burden the accused examined Smt.M.Lakhsmi, Smt.Bharathi to prove their transactions and got marked the death certificate of G.Venkayya marked as Ex.D30. Accordingly the accused pleads that the evidence of PW.12,15 and 16 and other documentary evidence establish that all the three alleged benamidars have separate independent source of income and AO has nothing to do with their financial status.

161. In consideration to the rival arguments on the above issue the following sub points are framed for determination:

1. Whether Smt.Bharathi had independent source of income ?

2. Whether Smt.Lakshmi had independent source of income ?

3. Whether Sri G.Venkayya had independent source of income?

4. Whether the prosecution to discharged its initial burden of proving the alleged benami transaction?

5. Whether the income tax returns are rebuttable and question of Conclusiveness of the income tax returns?

Sub Point No.1:

1. Whether Smt.Bharathi had independent source of income ?

125 C.C.03/2005/I CBI Court/VSP

162. The version of the accused the learned counsel for the accused submitted that Smt.Bharathi daughter of accused is having separate source of income and her financial status is completely different.

According to the accused his daughter was born in 1973 after completion of X class, she had studied in Government Polytechnic,

Bheemili and thereafter studied B.Tech in Andhra University Night

College and subsequently she persuade M.Tech at IIT Kharaghpur and got married 16.11.1997 which was prior to check period and while pursuing her B.Tech during the period 1993-1996 she used to impart tuitions to X Class and Intermediate students and thereby earn some income. She joined in Bharat Electronics, Bangalore in 1998 and also accustomed to file her income tax returns regularly. Her husband

T.Rama Murthy is working as Chief Financial officer at Manipal hospital,

Bangalore earning good amount of income. There is no necessity for the daughter of the accused depend on her father financially any time during the check period.

163. It is further pleaded that the investigation officer intentionally suppressed all these facts and tagged multiple items under Statement –B and Statement-D which related to Smt.Bharathi to the accused so as to buildup false case against him. The total list of items alleged to be the assets of the accused standing in the name of Smt.Bharathi are as follows:

Statement-A

Sl.No.Sl.No. in C.S Description of document Amount

Statement -A 1211 Gold necklace with6,219-00 126 C.C.03/2005/I CBI Court/VSP pendent weighing about 23 Gms. Purchased in 1991 2251 Gold step chain wg. About10,000-00 2 ½ tola purchased in 1994 327-inpart One gold flower out of three800-00 with hairpin

Statement-B

Sl.No.Sl.No. in C.S Description of document Amount

Statement -B 134Two small gold anklets 25Gms10,000-00 235Two small bangles 11.5gms5,000-00 3531 Gold necklace with pendent6,219-00 weighing about 23 Gms. Purchased in 1991 4581 Gold step chain wg. About 210,000-00 ½ tola purchased in 1994

5.60One gold flower out of three800-00 with hairpin (2400/3)

Statement-D

Sl.No.Sl.No. in C.S Description of document Amount

Statement -D 124Alleged payment of Rs.70,000/-70,000-00 to the daughter of A-1 by his father in law for purchase of a Plot No.47, Resapuvanipalem, Visakhapatnam and a house in the said Plot in 1998, by the daughter of A1(shown by her in her IT returns as one of the sources for purchase of the house) 228AmountpaidtoSri72,000-00 V.Jagannadham in installments in (already 1998 and 99 of Sri discussed at M.Subramanyam against a loan 127 C.C.03/2005/I CBI Court/VSP ofRs.65,000/-givestoPara No.158) Smt.T.Bharathi, his daughter

164. In order to prove the version of the prosecution with regard to the gold items claimed by Smt.Bharathi, it entirely relied upon the contents of Ex.P41 certified copy of inventory list dated 15/16.03.2001 in RC 8(A) 2001, CBI, Visakhapatnam and Ex.P42 certified copy of the locker proceedings marked through PW.18. In this regard PW.18 stated that on 09.04.2001 he acted as mediator for the locker proceedings conducted by Inspector Praveen Kumar(PW.24) at Vysya Bank,

Vizianagaram. He testified that in their presence the accused took the locker key from the Manager after duly acknowledging the same in the register. The said locker was standing in the name of Kameswara Rao who was also present there and opened the locker along with the accused. He asserted the locker proceedings by the investigating officer with regard to the 15gold ornaments and 112 Indira Vikas

Patras found in the locker. The certified copy of seizure memo dated 09.04.2001 is marked as Ex.P43. The evidence of PW.18 is in consonance with the evidence of K.Praveen Kumar(Pw.24), the then

Inspector of Police, CBI to some extent. However it is noted that Pw.24 is silent about the preparation of inventory with regard to the gold ornaments found in the locker.

165. In contrary the daughter the accused officer was examined as

Dw.12. She deposed “I am working as Member in Senior Research Staff,

CRL, Bharathi Electronics, Bangalore since 01.05.1998. My husband

T.Ramoji working as Director, finance in Manipal hospital. I am an 128 C.C.03/2005/I CBI Court/VSP income tax assessee from the assessment year 1998-1999. I have furnished my income tax files to CBI officer. My marriage was performed in the year 1997. The gold jewellery i.e., bangles two in number(Item No.50 of Ex.P41 of my daughter, pair of anklets(Item

No.49 of Ex.P41) of my daughter, gold necklace, step chain (item No.7 and 47 of Ex.P41) of mine and hairpin(item No.54 of Ex.P41) were kept with my father for safe custody. The gold step chain was presented to me by my inlaws. The other gold jewellery items were acquired by me and my husband. My daughter name of T.Sarada

Mani born in the year 2000”.

166. The accused seriously argued that the income tax returns of

Smt.Bharathi was seized by the investigating officer i.e., VKC Reddy and he acknowledged the receipt of the same vide Ex.D45 which was marked through Dw.12, however the prosecution during the entire trial suppressed the income tax details of Dw.12 and did not file the same

before the Court. The efforts made by the accused to summon the

said documents from the CBI office, Visakhapatnam vide

Crl.M.P165/2019 remained futile and the prosecution further reported

that the IT file of Smt.Bharathi was not available in the office of CBI and gave consent to mark Ex.D45 and copies of income tax returns of Smt.Bharathi vide Crl.M.P.166/2019. In consequences of the orders in the above referred Crl.M.Ps, DW.12 was again recalled as per the orders in Crl.M.P.304/2019 dated 14.03.2019 and was further examined by the counsel for the accused. The copy of receipt given by the investigating office as token of receipt of copies of income tax returns for the financial years 1997-1998 to 2000-2001 to Dw.12 was marked as Ex.D45. Further the copies of income tax returns for the financial 129 C.C.03/2005/I CBI Court/VSP years 1997-1998 to 2000-2001 corresponding to assessment years 1998-1999 to 2001-2002 were marked as Ex.D46 to Ex.D49. Dw.12 further stated that “assessment orders were passed by the income tax officials for those four years. The said orders were enclosed to the IT returns respectively. Those income tax returns would reflect all my income sources. I am an income tax assessee. My income sources relating to the Five gold ornaments which are disputed in this case are also mentioned in the income tax returns. The presentation of gold chain to me by my father-in-law was taken place on 16.11.1997 on the eve of my marriage”.

167. As per the evidence of Dw.12 she claims that One gold anklets wg.23gms, two small gold bangles wg.11.5gms, one gold flow with hairpin worth Rs.800/-, one gold necklace with pendent wg.23gms and one gold step chain wg.2 ½ tolas, belongs to her. Her deposition clearly shows that the gold step chain was presented by her inlaws at the time of marriage. However this gold step chain, one gold necklace with pendent and one gold flower were shown in Statement-

A at item Nos.21,25, and 27 and were also reflected in Statement-B at item Nos.58, 51,and 60. Accordingly there is much dispute with these items and want of proof with regard to the ownership of Smt.Bharathi is only auxiliary. The dispute with regard to gold anklets and two gold bangles reflected at Item No.34 and 35 of Statement-B as purchased by the accused in the year 2001. Dw.12 claims that both the items belongs to her daughter T.Saradamani born in the year 2000.

130 C.C.03/2005/I CBI Court/VSP

168. The prosecution claims to have been relieved of its burden by examining PW.18, PW.24 and marking Ex.P41. The onus obviously shifts on the accused to prove that the above said gold ornaments does not belongs to him but his daughter. The close perusal of balance sheet as on 31.03.1999 annexed to the IT returns for assessment year 1999-2000 under Ex.D47 shows that DW.12 is in possession of 85gms of gold in the relevant period. Her gross salary is disclosed as

Rs.90,659/- in addition to the income from house property and other sources.

169. The gross salary of DW.12 for assessment year 2001-2002 is

Rs.1,62,298/-, for assessment year 2000-2001 is Rs.1,61,189/- and for assessment year 1999-2000 is Rs,90,659/-. The total income for assessment year 1998-1999 is shown as Rs.59,010/-. The source of income specifically for assessment year 1998-1999 is shown as income from tuitions, interest received from deposits. The prosecution nowhere disputed that DW.12 is not working as Member Senior

Research Staff, CRL, Bharathi Electronic, Bangalore since May, 1998.

The prosecution also did not dispute about the earning capacity of

T.Ramoji husband of DW.12 who is working as Director, Finance at

Manipal Hospital. It is also evident on record that the investigating officer received the income tax returns of Smt.Barathi for the financial year 1997-1998 to 2000-2001 and issued Ex.D45 receipt. These documents were not filed along with the charge sheet and when the accused is tried to summon these documents the prosecution reported that the same were not available in the office of CBI and consent for making Ex.D45. The acts of the prosecution undoubtedly gives raise to adverse presumption under the provisions of Section 114(g) of I.E.

131 C.C.03/2005/I CBI Court/VSP

Act which holds that the evidence which could be and is not produced would, if produced the unfavourable to the person who withholds it. The prosecution even subsequently did not made any attempt to rebut this presumption that may be considered against it.

170. Further, admittedly the marriage of Dw.12 was performed prior to check period. Once a daughter is married she is presumed to be segregated from her maternal family and considered as a member of matrimonial family. Particularly when the husband is well earning, the entire maintenance and expenditure of her, shall be met by her husband. The maternal family of a married women shall be concerned only with expenditure on customary practices. Considering the income of DW.12 under Ex.D46 to Ex.D.49 and the undisputed financial capacity of her husband, it is not extraneous to presume that

Dw.12 is capable of purchasing the gold items mentioned at Item

No.34 and 35 of Statement-B. In this regard her statement that the said items were kept in the custody of her father along with item

Nos.21,25 and 27 of Statement-A attracts the attention of the Court.

The stray line in the cross examination that she is not in the custody of the receipts for the purchase of the said gold items does not destroy her evidence in total as such the prosecution also did not produce receipt or bill on record to show that the said gold items were purchased by the accused during the check period, except claiming so, based upon his admitted possession under Ex.P41 inventory list. The general practice of married daughters keeping some of their gold ornaments with custody of their parents cannot be ruled out absolutely. Dw.12 in her cross examination categorically 132 C.C.03/2005/I CBI Court/VSP stated that she have no relatives at Bangalore. Hence considering both Dw.12 and her husband working, it can be presumed that

Dw.12 might have kept some gold ornaments with her parents for safe custody.

171. The factum of possession is most fundamental relation between a man and thing, which is a difficult concept to determine in the field of law. Legally speaking the concept of possession is segregated into two elements i.e., Corpus of Possession and Animus of Possession. The

Corpus of Possession determines the physical contact, control or custody of a person over a thing or object. The physical control or custody of a person over a thing must be always accompanied with an intention to exercise such control or custody which is called as

Animus possidendi. The aspect of legal ownership can be determined only when even both the elements of Corpus and Animus possidendi are present. The mere possession without the intention of the possessor to exclude others from interfering with his right over the thing or object in his custody does not alone stands as proof of his ownership and Corpus without Animus is ineffective.

172. Accordingly the burden of prosecution at this point is to prove that the gold ornaments found in the possession of the accused were purchased by him out of his funds which were not satisfactorily explained. The mere proving the possession of gold ornaments with the accused does not terminate the burden of proof on the prosecution. The prosecution should bring on record from the evidence either by oral or documentary that the above said gold ornaments were not only in the physical custody of the accused but 133 C.C.03/2005/I CBI Court/VSP also in his exclusive enjoyment excluding the others having purchased by him. When it comes to the onus of the proof on the accused as to rebutting the evidence of prosecution it is only to the extent of preponderance of possibilities and never absolute.

173. Therefore, the accused by examining his daughter DW.12 and thereby marking Ex.D46 to Ex.D49 satisfactorily explained the possession of the gold ornaments under Item Nos.34 and 35 of

Statement-B. It is convincingly brought on record by the accused that the said items actually belongs to Dw.12 and were only in his possession for safe custody. Hence it is concluded that

Smt.Bharathi is having her own independent source of income and the item Nos.34 and 35 of Statement-B are held to be exclusive properties of Smt.Bharathi and deleted from the list of assets at the end of the check period in the name of the accused.

174. Sub Point No.3:

3. Whether Sri G.Venkayya had independent source of income ?

Sri G.Venkayya is the father-in-law of the accused. There are certain items in the charge sheet which are standing in the name of

G.Venkayya tagged to the accused as benami transactions.

175. It is the contention of the accused that Sri G.Venkayya studied upto Degree and worked in Pachayat Raj Department at various levels and retired during the year 30.04.1977 as Panchayat Raj Extension

Officer at the age of 55 years. Thereafter retirement he received 134 C.C.03/2005/I CBI Court/VSP pension and got sufficient sources to maintain himself and his family. He also received superannuation benefits. The same is evident from EX.P75 income tax returns of G.Venkayya which the prosecution did not choose to mark. It is submitted by the counsel for the accused that Sri G.Venkayya is an accountant and document writer and taken up different activities to earn income on his own even after the superannuation and page 57 of Ex.P75 explains the same.

Accordingly to the accused Sri G.Venkayya after his retirement worked at Sri Venkateswara Swamy Temple, BHEL, Hyderabad, later he shifted his family to Visakhapatnam and worked as Manager Sri Venkateswara

Swamy temple, Seethammadhara and used to reside by the temple which is evident from the chief examination of Pw.16. The learned counsel for the accused tried to bring to the consideration of this

Court about the family particulars of G.Venkayya and submitted that

G.Venkayya was blessed with three sons and five daughters, wherein the wife of accused Smt.Lakshmi is his 3rd daughter. All his sons were well settled in Government Department and one of them worked and retired as Income Tax Officer. It is also averred that G.Venkayya was habituated to lend money to friends and close relatives on interest and re-invest the money, in course of which he purchased shares in

Harsha Ratna Industries and shops in GK Mansions with his own funds.

It is the version of the accused that the CBI obtained income tax file of

G.Venkayya from the Chief Commissioner of Income Tax and filed the same along with the charge sheet, but however the prosecution for the reasons better known did not choose to mark the same as exhibit.

The income tax returns of the G.Venkayya categorically mentioned all his income, expenditure and assets and the prosecution being aware of the same which would be against his case suppressed the same. It 135 C.C.03/2005/I CBI Court/VSP is further submitted the accused in order to prove his bonafides got examined the Dy.Commissioner of Income Tax as DW.10 and got marked the income tax file of G.Venkayya as Ex.P17 and seeks its perusal by the Court. The argument of the prosecution is that all the transactions made by G.Venkayya are in fact made by the accused and the same are benami transaction which the accused could not account for. In view of the rival contentions the assets in dispute in the name of G.Venkayya are discussed as follows:

176. Item No.101 of Statement-B:

To prove this transaction the prosecution got examined Pw.9

V.Jagannadham. The evidence of Pw.9 goes to shows that he flouted

M/s Harsha Ratna Industries Limited, Visakhapatnam with others and the company sold 1000 shares of total value Rs.1,00,000/- to

G.Venkayya who is the father-in-law of the accused and the said amount was paid through a cheque bearing No.39411 dated 07.08.2000 drawn on Andhra Bank. The share certificate issued in the name of Mrs.G.Mahalakshmi who is the wife of G.Venkayya and same is marked Ex.P25. The contents of Ex.P25 are not in dispute. It is not the evidence of Pw.9 G.Venkayya purchased the shares under

Ex.P25 on behalf of the accused. Further during the course of his cross examination PW.9 deposed that he got acquaintance with the father-in-law of the accused as he was visiting Sri Venkateswara

Swamy temple and that he requested G.Venkayya to purchase shares in their company and accordingly G.Venkayya issued a cheque from his account and purchased shares under Ex.P25 in the name of his wife and specifically stated that accused has nothing with the transaction.

136 C.C.03/2005/I CBI Court/VSP

The prosecution did not dispute this statement of Pw.9 who was examined on its behalf.

177. It is pertinent on record that the investigating officer did not endeavor at any time to record the statement of G.Venkayya.

However it was brought on record by the accused G.Venkayya was died pending trial and his death certificate marked as Ex.D30 through

DW.15 Smt.M.Lakshmi. As per the contents of Ex.D30 G.Venkayya died on 25.01.2007 Further the evidence of Dw.10 the then

Dy.Commissioner of Income tax discloses that he processed the income tax returns of G.Venkayya for the assessment years from 1998-1999 to 2001-2002 certified by D.Pera Raju and the connected file was marked as Ex.P75 and according to DW.10 those income tax returns were accepted by the Income Tax Department and he also stated that during the post retirement period G.Venkayya shown in his income returns that he was working as Accountant and Document writer and he retired as Executive Officer, Panchayat. The prosecution did not elicit anything contrary to the evidence of Dw.10 and contents of Ex.P75 by cross examining the witness.

178. The purchase of shares by G.Venkayya in the name of his wife is evident from the particulars of Ex.P25 share certificate dated 09.10.2000. In this context when the balance sheet annexed to income tax returns of G.Venkayya pertaining to the assessment year 2000-2001 clearly discloses that a investment for Rs.1,00,000/- was made by G.Venkayya by purchasing shares from Sri Harsha Ratna

Industries in the name of his wife G.Mahalakshmi. The prosecution without brining on record at any time the statement of G.Venkayya or 137 C.C.03/2005/I CBI Court/VSP any documentary or oral evidence to show that G.Venkayya has no financial source of income, further suppressing his income tax returns collected by the IO during the investigation, tried to impress on this

Court that all transactions relating to Venkayya were made by the accused. Hence this item is excluded from the assets of the accused under Statement-B

179. Item No.25 of Statement-D: Similarly there is another transaction under Item No.25 of Statement D relating to G.Venkayya which is also to be looked into before concluding the merits of the above investment alleged by the prosecution. As per the charge sheet the item No.25 of Statement-D is referred as “alleged receipt of

Rs.6.30lacs, by the father in law of A1 (from the persons to whom the alleged to have given as loans and advances) for purchase of 8 shops of 2700 sft., in G.K.Mansion, Peda Walter, Visakhapatnam in 1998 (shown as one of the sources for purchase of the shops in his IT returns)”.

180. The prosecution did not let any evidence on this point. However the income tax returns of G.Venkayya under Ex.P75 for the assessment year 2001-2002 discloses that G.Venkayya purchased shops measuring 2700sft., on 08.06.2000 for sum of Rs.11,70,000/- and incurred a sum of Rs.1,30,007/- towards stamp duty and registration expenses. The total cost of the shop is shown as

Rs.13,00,077/- and the sources for the said cost were mentioned as sale proceeds of 200 shares of Dalmia Cements sold i.e., 56,200/, sale proceeds of 300 shares of Blue Star Ltd., sold ie.., Rs.59,850/-, sale proceeds of gold jewellery Rs.1,54,995/-, loans and advances given 138 C.C.03/2005/I CBI Court/VSP earlier and now realized Rs.6,30,000/-, rent deposits received from tenants for Rs.3,00,000/- and loan received from ABK Real Estate for

Rs.1,00,000/-.

181. The two sale deeds dated 08.06.2000 for Rs.5,70,000/- and

Rs.6,00,000/- corresponding to the above said purchase of shops were annexed to the income tax returns. This transaction was made by

G.Venkayya during the check period. However the same was not disputed by the prosecution. The contention of the prosecution as per the charge sheet is that the amount of Rs.6,30,000/- said to have been loans and advances given earlier and realized by G.Venkayya belongs to the accused. It is contended that G.Venkayya never extended any such loans and advances or made any subsequent realization out of them. It is stressed upon that the entire amount of

Rs.6,30,000/- mentioned in Ex.P75 is the amount extended to the

G.Venkayya by the accused. There is no evidence either oral or documentary produced by the prosecution to show that the accused parted the said amount of Rs.6,30,000/- to G.Venkayya. The prosecution did not dispute with the fact that the G.Venkayya retired as Executive Officer, Panachayat and was receiving pension thereafter his retirement. It does not even dispute the statement made by the prosecution witness that G.Venkayya even subsequent to the retirement was working in Venkteswara Swamy temple and also as

Accountant and document writer. The income tax returns of

G.Venkayya categorically shows that he is receiving pension of

Rs.16,553/- during the assessment year 2001-2002, Rs.16,380/- during the assessment year 2000-2001, 1999-2000, 1998-1999. There is a specific note annexed to the assessment year 1998-1999 that 139 C.C.03/2005/I CBI Court/VSP

G.Venkayya was utilizing his superannuation benefits by advancing the same. The balance sheet of G.Venkayya as on 31.03.1998 shows the assets under loans and advances as Rs.7,00,000/-. Similarly

Rs.7,50,000/- as on 31.03.1999, Rs.70,000/- as on 31.03.2000 and

Rs.3,20,000/- as on March, 2001. Though the prosecution showed that

G.Venkayya purchased the property (commercial shops) at GK

Mansions, Pedawaltair, Visakhapatnam as in the year 1998, the actual date of purchase is 08.06.2000. In fact Ex.P75 documents were seized by the investigating agency itself. However it could not be explained by prosecution why there is a mistake apparent in mentioning the said date in the charge sheet. From the balance sheet enclosed to the income tax returns it is clearly evident that by the end of 31.03.1999 itself, G.Venkayya was owning assets worth Rs.7,50,000/- under loans and advances. The balance sheet as on 31.03.2000 categorically discloses that he paid advance of Rs.8,00,000/- for the purchase of shops and the assets under the head loans and advances for

Rs.70,000/-. This calculation clearly support the version of the accused that G.Venkayya utilized an amount of Rs.6,50,000/- realized from the loans and advances extended by him and incurred the same for purchase of the property in the year 2000. In the cross examination of Dw.10 did not choose to raise a slice of objection with regard to the transactions under Ex.P75. It is quite unexplainable how the prosecution without any piece of evidence attributed this transaction to the accused and further without referring anything in the charge sheet contended in the written arguments at Page No.10 that the investment for the purchase of these shops was the money of the accused. This argument of the prosecution is completely nullified by the vendor of G.Venkayya who was examined as PW.16 140 C.C.03/2005/I CBI Court/VSP

182. Item No.23 and Item No.26 of Statement-D:The accused also disputed about item No.23 and item No.26 of statement-D as his expenditure. The contention of the accused is that both these transitions are exclusively belongs to Sri G.Venkayya. Initially item

No.23 is payment of Rs.1,00,000/- on 08.03.2001 by G.Venkayya to

V.Jagannadham. Item No.26 is the alleged house loan of Rs.1,00,000/- taken by G.Venkayya from K.Anji Babu to purchase eight shops. The version of the prosecution is that both these transactions were made by the accused in the name of his father in law G.Venkayya. With regard to the item No.23 the prosecution relied upon the evidence of

PW.9 and Ex.P26 and Ex.P75. The evidence of Pw.9 V.Jagannadham categorically elicit he borrowed some of Rs.1,00,000/- from G.Venkayya on 08.03.2001 and executed Ex.P26 promissory note. In the cross examination he reiterated that the transaction under Ex.P26 is between himself and G.Venkayya and accused has nothing to do with and he repaid the entire amount including the interest under Ex.P26 to a tune of Rs.1,15,000/- to G.Venkayya. Even in his chief examination he asserted that the amount under Ex.P26 is given to him by

G.Venkayya. The prosecution did not dispute with the statement of

Pw.9 on his aspect and never considered his statement for re- examination.

183. Coming to the Item No.26 the prosecution relied upon the evidence of Pw.23 and Ex.P49. This aspect was already discussed in the preceding paragraphs No.123 to 130 while discussing the evidence of PW.23 and was ruled out from consideration.

141 C.C.03/2005/I CBI Court/VSP

184. Item Nos.24 and 28 of Statement-D:In the like manner there are two other transactions referred under Item Nos.24 and 28 of

Statement-D tagged to the expenditure of the accused which were in contra contended by the accused to be absolutely independent transaction of smt.Bharathi with G.Venkayya. Initially Item No.24 deals actual loan of Rs.70,000/- taken by DW.12 from G.Venkayya father-in-law of the accused for the purpose of purchasing a house along with site at Resapuvanipalem. In fact Dw.12 is the granddaughter of the G.Venkayya. The purchase of house property at

Resapuvanipalem by Dw.12 is not disputed. It is evident from the

Photostat copy of sale deed dated 30.06.1998 annexed to the income tax returns for the assessment year 1999-2000 of Dw.12 under Ex.D47.

As per Ex.D47 Dw.12 purchased old tiled house at Resapuvanipalem for total consideration Rs.9,19,658/- in stamp duty and registration charges. The total source of amount for purchasing the property is mentioned vide “Note on house property”. It clearly indicates Dw.12 borrowed an amount of Rs.70,000/- from G.Venkayya, Rs.3,00,000/- from M.Venkateswara Rao and Rs.65,000/- from VJM Finance along with other loan amounts. Hence taking of loan of Rs.70,000 by

Dw.12 from G.Venkayya is not in dispute. The contention of the prosecution is that this amount is not extended by G.Venkayya and same was given by the accused officer to his daughter. The prosecution did not let any evidence on this point and strangely contended that this property was purchased by the accused in the name of Smt.Bharathi as benami, which is completely devoid of merits. In contra the above referred income tax returns of

G.Venkayya categorically shows that his annual income including pension is approximately more than Rs.1,00,000/-, income from 142 C.C.03/2005/I CBI Court/VSP profession of accountancy and document writing Rs.40,000/-, interest from loans and advances more than Rs.60,000/- followed by income from house property from the year 2000. The evidence of PW.20 on this aspect P.Ravi Kumar who is the lessee of shop premises purchased by G.Venkayya at G.K.Mansions also discloses the payment of monthly rent to G.Venkayya and transfer of advance amount from previous owner Bhavanarayana to G.Venkayya. All these factors evidently shows the sustainable sources of income to G.Venkayya. It cannot be said that G.Venkayya is an improbable non earning person or financially dependable person. Therefore the transactions under

Item Nos.23,24,25 and 26 of Statement-D are concluded to be complete independent transactions of G.Venkayya.

185. In the same manner Item No.28 of Statement-D relates to alleged amount of Rs.72,000/- along with interest paid to Sri

V.Jagannadham in installments in 1998 and 99 by Sri M.Subramanyam against a loan of Rs.65,000/- given to Smt.T.Bharathi, his daughter.

Though V.Jagannadham was examined as Pw.9 nothing was elicited by the prosecution on his point in his chief examination . However the income tax returns of Smt.Bharathi for the assessment year 1999- 2000 under Ex.D47 referred above also discloses a confirmation letter dated 04.08.1998 issued by V.Jagannadham, Chairman of, VJM

Finance and Investment Pvt Ltd., Visakhapatnam. The said letter elicit that an amount of Rs.65,000/- was extended to Smt.Bharathi as loan for meeting the cost of purchasing an old tiled house and the same is given by him from the funds available in their bank account,

Andhra Bank, Akkayyapalem branch. In view of the discussion above made the income tax returns of Smt.Bharathi under Ex.D46 to Ex.D49 143 C.C.03/2005/I CBI Court/VSP and income tax returns of G.Venkayya under Ex.P75 remains undisputed and proves the financial capacity of G.Venkayya and

Bharathi. These facts envisages the capacity of G.Venkayya for extending loans and subsequent realization and also financial capacity of Bharathi for repayment of loans obtained by her. Hence the item No.28 of Statement is also concluded as exclusive transcation between PW.9 and Smt.T.Bharathi.

186. Sub Point No.2:

2. Whether Smt.Lakshmi had independent source of income ?

Smt.Lakshmi is the wife of the accused officer. As per the prosecution she is averred as one of the prominent benamidar for the disproportionate assets of the accused officer and considerable number of transactions on her name were tagged to the accused.

The part of Items in A,B,C and D statements in the charge sheet were admitted by the accused to be in the name of his wife. Now the point of consideration is whether all these items conclude the disproportionate assets of the accused as alleged or frames any merits to consider as assets from separate income of Smt.Lakshmi.

187. On this aspect the accused got examined his wife as DW.15.

The argument of the accused goes to show that his wife Smt.Lakshmi used to teach music classes to the children and the said fact was evident from the evidence of Pws.6, 9, 11 and 12. During the year 1995 the accused officer performed Upanayanam(Thread marriage) of his son for which he has taken GPF advance of Rs.6,000/- and 144 C.C.03/2005/I CBI Court/VSP incurred an expenditure of Rs.10,000/-. His son got Rs.50,000/- as customary gifts from family members, relatives and friends which was intimated by the accused to his department under Ex.D38 and the said amount was kept with the wife of accused officer. It is further averred that the father of the accused disposed of the family properties and out of the sale proceeds gave Rs.50,000/- to her and also her co-daughter-in-law for the purpose of marriage expenses of children. This was intimated by the AO to his department under

Ex.D42. Likewise at the time of marriage Smt.Lakshmi received 15tulas of gold and Rs.20,000/- of cash by her parent-in-laws likewise other daughter-in-laws and she also got some brass and copper item.

The amount received by Smt.Lakshmi were utilized by her to carry out independent financial transactions like purchasing shares, lending amounts, investing in fixed deposit etc., with an intention to save some profits by the time of marriages of her children. All the assets purchased by her including movable and immovable are made by her own source of income and accused is no way connected to this.

188. In contrary the prosecution argued that all the assets standing in the name of Smt.M.Lakshmi wife of accused were made by the accused and she never had any source of independent income and relied on the case law between M.Kishan Vs. State reported 2005 (1) ALD 462 and Rameshwara Prasad Upadhyaya vs. The State of Bihar AIR 1971 SC 2471. Initially in Judgment between M.Kishan

Vs. State the Hon’ble High Court of Andhra Pradesh denied the appeal of the accused to set aside the conviction for the offence under

Section 13(1)(e) and 13(2) of Act, 1988 with observation that “in the present case the prosecution cases sufficient evidence that the 145 C.C.03/2005/I CBI Court/VSP appellant purchased properties with his money in the name of wife and brother-in-law and the seizure of the documents from the house of appellant, the non examination of appellant wife and the contention raised by the prosecution that he had no source of income are clear circumstances to establish that the appellant purchased the properties in the name of wife and brother-in-law. Though the appellant tried to establish his case through the evidence of some witnesses, neither he nor his wife entered the witness box and explained as to why the documents i.e., sale deed of the form house which are in the name of one Mr.Kishore Kumar who is the son of his wife’s sister and the RC Book and Insurance certificate which are in the name of P.Babu Rao, brother-in-law of the appellant were kept in the house of the appellant”.

189. The core basis for the opinion rendered by the Hon’ble High

Court is that despite seizure of title deeds from the possession of the accused which prima facie released the prosecution burden, the accused did not let any convincing evidence either documentary or oral by examining himself or his wife so as to discharge his onus.

190. Similarly in the Judgment between Rameshwara Prasad

Upadhyaya vs. The State of Bihar, the Hon’ble Apex Court dismissed the appeal against conviction of the appellant in a disproportionate assets case confirming the concurrent findings of the trial court and High Court withan observation “There was no explanation forthcoming as to how the two houses in Balia happened to stand in the name of the step-brother, nor was there any evidence that they or the lands or the said business belonged to take family.

146 C.C.03/2005/I CBI Court/VSP

Equally was there no proof that the father had diverted the income from the lands and the business towards making deposits in the savings accounts, the more substantial of which were in the account in the name of the appellant's wife. The entire contention was on an assumption that all these properties and the business belonged to the family, and that the father had diverted the income there from in the savings accounts and towards the purchase of the trucks. The first assumption was based on the sole ground that there was no account in the name of the father. But there was no evidence as to the extent of the income or as to the manner in which the father had dealt with it. The houses also were assumed to be family properties although they stood in the name of the step brother. It was easy to prove them to be the family properties, if they were so, by producing the title deeds or any other similar evidence, If the money lending business was substantial enough to lay aside such a sum as Rs. 80,000/-, there would have to be a licence for a business of that extent and there would also be an income-tax laibility, through both of which it would have been possible to show that it belonged to the joint family, its extent and the diversion of its capital or gains in the savings bank accounts or towards the purchase of the trucks. None of these things was even attempted”.

191. It is pertinent that the Hon’ble Apex Court confirmed the conviction of the accused for falling short to prove his defence. In this case the accused did not adduce any evidence to prove that the properties alleged as disproportionate assets are family properties as claimed him and no evidence was let to prove the claim of money lending business either by producing the licence for the said business or the liability of income tax.

192. In the light of above case laws, it is evident on record that the prosecution examined PWs.6,9,11 and 12 to bring on record several transactions attributed to the Smt.M.Lakshmi. But however the 147 C.C.03/2005/I CBI Court/VSP prosecution did not elicit anything from the chief examination of its witnesses that the accused is behind these transactions and persuaded his wife in the frontline. The prosecution as contended by the accused never choose to examine Smt.Lakshmi as witness nor cited as accused for allegedly abetting the accused to amass disproportionate assets. Under these circumstances to elicit the merits of facts in issue hereunder it is important to look into the evidence of

Smt.M.Lakshmi who was examined as DW.15.

193. DW.15 deposed that her marriage with the accused was performed on 10.03.1971 and that her father-in-law had presented 20 tulas of gold and her father gave 5 tulas of gold at the time of her marriage and that one of her daughters namely Madhavi died in 1983 and so she suffered depression, during which time her parents used to live with her wherever her husband was working. Her father retired as an Executive Officer in the department of Panchayat Raj in 1977 and after retirement his father worked as an Accountant and

Document writer and that her father had acquired shops in

Pedawaltair and was living with the rental income and that her father was an income tax assessee but died in the year 2007, the correspondent death certificate was marked as Ex.D10. According to her, her father-in-law having disposed of some property had given

Rs.50,000/- to her towards marriage expenses of her children and that she used to teach music lessons from 1972 to 2001 and was earning money every month and she invested Rs.20,000/- in Lakshmi Finance and Rs.1,00,000/- and odd in Durga Finance belonging to PW.6 and that she lent an amount of Rs.5,00,000/- to PW.6 under Ex.P16 to

Ex.P18 promissory notes and that PW.6 has returned that amount with 148 C.C.03/2005/I CBI Court/VSP interest and that she lent Rs.50,000/- on one occasion and

Rs.25,000/- on another occasion to PW.3 under Ex.P64 and Ex.P65 promissory notes which debts were repaid by PW.3 and that she purchased shares from PW.11 and that she taught music lessons to the daughter of PW.11. According to her she invested Rs.18,000/- each on different occasions and also Rs.10,000/- on another occasion with PW.9 who relates to Jagannadh Vidya Peta and Gayatri Vidya

Praished and that he repaid those amounts.

194. DW.15 has further deposed that she has got bank accounts in

Vysya Bank, Indian bank, HSBC and Andhra Bank, Visakhapatnam and that she is not dependent on her husband and that she has got financial resources of her own and she was managing them on her own. According to her the marriage of DW.12 who is her daughter was held on 16.11.1997 and that during the upanayanam of her son held in the year 1995 money gifts of Rs.50,000/- was received which was invested with PW.6 and others and that she has been taking treatment for depression from DW.13.

195. The prosecution in the cross examination cited to DW.13 that she is not a qualified music teacher and due to her treatment DW.13 she was not in a position to take music classes and was not earning. It is further suggested to her that no gold was presented to her by her father or her inlaws and she did not invest money in Durga Finance or

Lakshmi finance and never advance any amount on pronotes to Pw.6 or Pw.3 and that she did not purchase shares from Pw.11 and did not invest any money to Pw.11. It is also suggested to her she did not receive cash gift of Rs.50,000/- during the Upanayanam of his son 149 C.C.03/2005/I CBI Court/VSP and only to help her husband she is deposing false. However all the suggestions made by the prosecution were denied by DW.13.

196. It is evident from the evidence of Dw.15 and arguments advanced by the counsel for the accused that an amount of

Rs.50,000/- received from her inlaws, Rs.50,000/- received as cash gift during the Upanayanam of his son along with amount earned by her by teaching music lessons to children and Stridhana amounts and gold constitute the major source of income of Dw.15.Whether the

Dw.15 was earning income by teaching music class was already decided under the discussion for item No.13 to 16 of Statement-C.

197. Hence falling back to the assets of Smt.M.Lakshmi when we look into the evidence of accused who was examined as DW.16, he deposed that “ our joint family owned two houses bearing No.9-7-11 and another house located Chanda Choultry Street, Rajahmundry .

The house bearing Door No.9-4-26 was sold in the year 1992 for

Rs.81,000/-. The true copy of sale deed is Ex.D7. The sale money was with my father. In the year 1993 we brothers and my father entered into joint family agreement Ex.X6. Under Ex.X6 allotted cash of Rs.50,000/- towards marriage expenses of my children and

Rs.50,000/- allotted to my wife. I intimated to the department under

Ex.D42 the letter dated 19.05.1993 under Ex.X6, my wife received

Rs.50,000/- . My wife is an income tax assessee and she was examined by the CBI officer. My wife worked as Music teacher and she was earning in beginning Rs.200/- per month and later on Rs.1,000/- to Rs.1200/- per month, my wife for her first Sreemantham function received gifts in cash of Rs.15,000/- . The IT returns of my wife are 150 C.C.03/2005/I CBI Court/VSP collected by CBI officer . My wife was doing money lending business with gift money given for her Sreemantham, the gift money of my son received at the time of Upanayanam, the earnings as Music teacher and money of Rs.50,000/- received under Ex.X6. The amount of

Rs.1,02,000/- at Sl.No.7 of Statement –B was purchased by my wife under Ex.P20 as advance to purchase house plot jointly in my name and in the name of wife under Ex.P53(A)”.

198. In order to support the version of the accused that the wife received Rs.50,000/- in view of the family settlement dated 07.05.1993, the accused got examined his brother’s son

M.Veerabadram as Dw.8. Dw.8 testified that the accused is his junior paternal uncle and that his paternal grandfather namely Mr.Seetha

Rama Murthy had five sons and a daughter among whom, his father is eldest and the accused is youngest and that all of them entered into an unregistered family settlement dated 07-05-1993 which is

Ex.X6 and that his father died on 25-01-2010 as per the death certificate under Ex.X7 and during his life time his father handed over

Ex.X6 to DW.8 and that under Ex.X6 the wife of the accused was given an amount of Rs.50,000/-.

199. The close perusal of contents of Ex.X6 categorically shows that an amount of Rs.50,000/- was extended to DW.15. Dw.10 testified that he was present at the time of transaction under Ex.X6. Though the prosecution suggested to DW.10 that no transaction took placed under

Ex.X6 the same was denied by him. There is nothing in contrary to disbelieve the evidence of DW.10. In pursuance of the evidence of

DW.10 and DW.16 on this aspect that the contents of Ex.D42 i.e., 151 C.C.03/2005/I CBI Court/VSP intimation letter by the accused to his department is to be looked into.

The documentary contents of Ex.D42 shows that the accused intimated to his department, the receipt of Rs.50,000/- by his wife from his father. Similarly the cash flow statement of Smt.M.Lakshmi for the financial years 1995-1996 annexed to Ex.D43 income tax returns for the assessment year 1997-1998 categorically shows that she received an amount of Rs.50,000/- as gifts at the time of thread marriage of her son Ravi Kumar.

200. The corresponding income tax returns of Smt.M.Lakshmi marked under Ex.D43 discloses the annual income of Smt.M.Lakshmi from short term gain and sale of shares, interest on loans, deposits in finance institution, income from music tuitions, bank interest and dividends is shown as Rs.71,201/- for assessment year 1997-1998,

Rs.78,088/- for assessment year 1998-1999, Rs.85,990/- for assessment year 1999-2000 and Rs.1,07,921/- for assessment year 2000-2001 and Rs.1,22,850/- for assessment year 2001-2002. The income tax returns of Smt.M.Lakshmi were never challenged by the prosecution except making a suggestion in the cross examination of

DW.15 and DW.16 that the same is fabricated. The prosecution did not tend to examine the Income tax officials to contradict with the income tax returns of Smt.M.Lakshmi under Ex.D43.

201. It is pertinent that under Section 13(1) (e) r/w 13(2) of P.C. Act when the prosecution establishes the essential ingredients of criminal misconduct by adducing standard of evidence, that the public servant is, or was at any time during the period of his office, in possession of pecuniary resources or property disproportionate to his known source 152 C.C.03/2005/I CBI Court/VSP of income, within the knowledge of prosecution, the prosecution discharges its burden of proof and burden of proof is lifted from the shoulders of prosecution and descends on the defence. It is the onus on the public servant to satisfactorily account for the possession of such properties and pecuniary resources. When it comes to the onus shifted on the accused it is always a point for consideration whether the accused has to prove his case with same of amount rigor and certainty as that of the prosecution. In this regard it is necessary to refer the proposition laid by the Hon’ble Apex Court dealing a similar case between Ravindra Kumra Dey vs. State of Orissa 1977 AIR 170 wherein it is held as follows:

“The Evidence Act does not contemplate that the accused should prove his case with the same strictness and rigour as the prosecution is required to prove a criminal charge. In fact, from the cardinal principles referred to above, it follows that, it is sufficient if the accused is able to prove his case by the standard of preponderance of probabilities as envisaged by s. 5 of the Evidence Act as a result of which he succeeds not because he proves his case to the hilt but because probability of the version given by him throws doubt on the prosecution case and, therefore, the prosecution cannot be said to have established .the charge beyond reasonable doubt. In other words, the mode of proof, by standard of benefit of doubt, is not applicable to the accused, where he is called upon to prove his case or to prove the exceptions of the Indian Penal Code on which he seeks to rely. It is sufficient for the defence to give a version which competes in probability with the prosecution version, for that would be sufficient to throw suspicion on the prosecution case entailing its rejection by the Court. This aspect of the matter is no longer res integra but is concluded by several authorities of this Court. In Harbha- jan Singh v. State of Punjab (1) this Court observed as follows:

153 C.C.03/2005/I CBI Court/VSP "But the question which often arises and has been frequently considered by judicial decisions is whether the nature and extent of the onus of proof placed on an accused person who claims the benefit of an Exception is exactly the same as the nature and extent of the onus placed on the prosecution in a criminal case; and there is consensus of judicial opinion in favour of the view that where the burden of an issue lies upon the accused, he is not re- quired to discharge that burden by leading evidence to prove his case beyond a reasonable doubt. That, no doubt, is the test prescribed while deciding whether the prosecution has discharged its onus to prove the guilt of the accused; but that is not a test which can be applied to an accused person who seeks to prove substantially his claim that his case falls under an Exception. Where an accused person is called upon to prove that his case fails under an Exception, law treats the onus as dis- charged if the accused person succeeds "in proving a preponderance of probability." As soon as the preponderance of probability is proved, the burden shifts to. the prosecution which has still to discharge its original onus. It must be remembered that basically, the original onus (1) [1965] 3 S.C.R. 235, 241 never shifts and the prosecution has, at all stages of the case, to prove the guilt of the accused beyond a reasonable doubt."

The same view was taken in a later case in State of U.P. v. Ram Swarup & Anr.(1) where this Court observed as follows:

"That is to say, an accused may fail to establish affirmatively the existence of circum- stances which would bring the case within a general exception and yet the facts and circumstances proved by him while discharging the burden under section 105 of the Evidence Act may be enough to cast a reasonable doubt on the case of the prosecution, in which event he would be entitled to an acquittal. The burden which rests on the accused to prove the exception is not of the same rigour as the burden of the prosecution to prove the charge beyond a reasonable doubt. It is enough for the accused to show, as in a civil 154 C.C.03/2005/I CBI Court/VSP case, that the preponderance of probabilities is in favour of his plea."

202. It is evident from the above principle laid by the Hon’ble Apex

Court and also from the provisions of 101 and 102 of Indian Evidence

Act that the obligation to prove a fact is always on the prosecution and is called burden of proof which remains constant. Whenever the prosecution discharges initial burden the onus essentially switches to the accused who was not necessarily to disprove the fact but to raise a uncertainty about it. There is no obligation on the accused to disprove the fact alleged by the prosecution and it is sufficient enough to raise a reasonable suspicion about the existence of the same or plausible explanation as the case may be. Accordingly coming back to the facts of the case on hand the accused the onus on the accused is only restricted to adduce evidence which is sufficient to raise to a suspicion or reasonable justification to infer that the alleged transactions tagged to him does not belong to him. In this regard the evidence of Smt.Bharathi and Smt.M.Lkahsmi and other prosecution witnesses who never spoke about the active involvement of the accused behind the transactions and also the income tax returns of the wife, daughter and father-in-law of the accused suffices the onus of rebutting the prosecution version. Accordingly no justification can be attributed to the argument of the prosecution that Smt.Lakshmi has no independent source of income and the case laws relied by the prosecution in M.Kishan Vs State and Rameshwara Prasad

Upadhyaya Vs. the State of Bihar cited supra, which fail for want of plausible evidence on part of the accused officer has no relevance to the facts on hand. The fact that Smt.Lakshmi is a married women 155 C.C.03/2005/I CBI Court/VSP cannot itself impress that she is depending on the accused and despicable of financial dimensions. All her income tax returns, cash flow statements and intimations made by the accused to his department categorically conclude that Smt.Lakshmi since the time of her marriage is in possession of money and gold advanced to her as

Stridhana and attained considerable source of income by teaching music classes and thereby reinvesting the amounts. Her efforts of savings throughout till the check period with the amounts received

additionally from her family members as gifts and share, cannot be

disregarded. Therefore it is sufficiently inferred that Smt.Lakshmi is having independent source of income and corresponding transactions of her own.

203. Sub Point No.4

4.Whether the prosecution to discharged its initial burden of proving the alleged benami transaction?

As per the prosecution the accused amassed huge disproportionate to his known source of income in the name of his wife, daughter and father-in-law who acted as his benamidars. The counsel for accused strenuously argued that the burden of proof to prove a benami transaction is on the prosecution and the prosecution has to discharge its burden beyond all reasonable doubt and relied upon the case law between K.Goverdhan Vs State of A.P., reported in 2001 (1) ALD (Crl.) 886 (A.P.) where in it is held as follows:

“ 22. There is another aspect of the matter which deserves to be mentioned. Mere fact that the ostensible owner had no source of income in itself would not lead to any inference that the property in question was purchased with 156 C.C.03/2005/I CBI Court/VSP the income of a particular person. The absence of any source of income to the ostensible owner would merely indicate that the property might have been acquired with the income flowing from someone else. As to who that someone else is a matter of evidence and proof. That circumstance cannot lead to an inference that the property in question was acquired with the income from the accused.”

204. A similar reference is made to the case law between

P.Satyanarayana Murthy Vs State of Andhra Pradesh, reported

in 1992 (4) SCC 39. In this case the Hon’ble High Court of Andhra

Pradesh discussing the settled proposition laid by Hon’ble Apex

Court in Krishanand Agnihotri Vs. State of M.P (AIR 1977 SC

796) regarding the burden of proof of proving benami transitions opined as follows:

“ 8.................. Needless to say that this Court in a series of decisions have laid down the guidelines in finding out the benami nature of a transaction. Though it is not necessary to cite all those decisions, it will suffice to refer to the rule laid down by Bhagwati, J. as he then was in Krishnanand Agnihotri Vs State of M.P. In that case, it was contended that the amounts lying in fixed deposit in the name of one Shanti Devi was an asset belonging to the appellant and that Shanti Devi was a benamidar of the appellant. The learned Judge speaking for the Bench has disposed of that contention holding thus: It is well settled that the burden of showing that a particular transaction is benami and the owner is not the real owner always rests on the person asserting it to be so and this burden has to be strictly discharged by adducing legal evidence of a definite character which would either directly prove the fact of benami or establish circumstances unerringly and reasonably raising an inference of that fact. The essence of benami is the intention of the parties and not unoften, such intention is shrouded in a thick veil which cannot be easily pierced 157 C.C.03/2005/I CBI Court/VSP through. But such difficulties do not relieve the person asserting the transaction to be benami of the serious onus that rests on him nor justify the acceptance of mere conjectures or surmises as a substitute for proof.”

205. The learned counsel for the accused further argued that the prosecution did not let any evidence to prove that the alleged assets were acquired by the accused in the name of the wife, daughter and father-in- law and submitted it is not the burden of the accused officer to adduce evidence to prove or disprove the allegation of benami transaction and relied upon the case law between B.T.Nagappa Vs

State by Lokayuktha Police in Crl.A.814/2010 dt.8-8-2013 of

the Honourable High Court of Karnataka wherein it was held as follows:

“ 47. The prosecution asserts that the transactions that covered by the sale deeds in the name of his wife and children are benami. The burden is on the prosecution to discharge the same by adducing legal and acceptable evidence. The burden should be strictly discharged to prove the fact of benami transactions. In order to prove the transaction is benami, the vendors of the properties are the attestors and document writing of the documents are proper persons to prove the benami nature of transactions. ......................... As already stated, the burden of proof lies on the prosecution to prove the alleged benami nature of transactions. In this case the prosecution utterly failed to prove that the accused has purchased properties in the name of his wife and children and the transactions are benami in nature.”

206. The counsel for the accused submitted that, though it is bounden duty of the prosecution to prove the nature of transaction as benami, it never made an attempt to examine the alleged benamidars or cared to show them as accused. Inspite of the same the accused 158 C.C.03/2005/I CBI Court/VSP examined his wife and daughter as DW.12 and DW.15 and made all the efforts to disprove the concocted benami allegations by the prosecution. The accused relied upon the evidence of DWs.10,12, 15 and that of himself as DW.16 and also the documentary contents of

Ex.D46 to Ex.D49, Ex.D43 and Ex.P75 to draw the attention of the

Court that the prosecution miserably failed to prove the allegations of the so called benami transactions.

207. A benami transaction in a broader sense is a transaction or an arrangement where the property is transferred or is held by a person and consideration for such property has been provided, or paid by, another person; and the property is held for immediate or future benefit, direct or indirect of the person who has provided the consideration. There is no straightjacket formulae which can be uniformly applicable to determine a transaction benami or law.

However the Hon’ble Apex Court in various Judgments cited the following factors which can be weighed by the Court in an enquiry as to benami transaction :

1. The source from which the purchase money came

2. Nature and possession of the property after the purchase

3. Motive if any, for giving the transaction a benami colour.

4. The position of parties and the relationship between them

5. Custody of title deed or documents if any.

6. The conduct of parties concerned in dealing with the property.

208. It is evident from the citations above referred by the counsel

for the accused that burden of proof stress on the party pleading the

transaction as benami. The basis for this established principle lies 159 C.C.03/2005/I CBI Court/VSP inherently in the provisions of Section 101 and 102 of Indian Evidence

Act extracted below.

101. Burden of proof.—Whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist. When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person.

102. On whom burden of proof lies.—The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.

209. The above two section of laws clearly depict that the burden of proof lies on the person who fails in the proceedings initiated by him if he could not discharge the said burden by adducing cogent evidence. The Hon’ble Apex Court in case between Vallimmal Vs.

Subramaniam and others (2004) 7 SC 233 held that “This Court in a number of judgments has held that it is well- established that burden of proving that a particular sale is benami lies on the person who alleges the transaction to be a benami. The essence of a benami transaction is the intention of the party or parties concerned and often, such intention is shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of any part of the serious onus that rests on him, nor justify the acceptance of mere conjectures or surmises, as a substitute for proof”.

210. It is pertinent from the above case law that the burden of proving that a particular transaction is benami and the person apparent executing the transaction is not the real owner, always thrusts on a person asserting it to be so. Accordingly the burden on the prosecution to bring on record sufficient evidence to prove that all 160 C.C.03/2005/I CBI Court/VSP the alleged transactions in the name of Smt.Bharathi, Smt.M.Lakshmi and Sri G.Venkayya were made by the accused. The prosecution should let in evidence to prove that the source of money involved in the transaction is rooted from the accused and that the possession or title of such transaction stood in the name of alleged benamies only in view of the fiduciary relationship between them or otherwise. The prosecution shall also prove that the motive of the accused is only to screen the alleged disproportionate assets made the transaction in the name of his family members.

211. In contra the evidence on record does not prove either the motive of the accused or circumstances ensuring the entire investment for the alleged transactions by the accused. The most surprisingly much of prosecution evidence leads only towards the proof of transaction and nothing against the accused. Particularly the evidence of PW.3 G.V.M.Raju, PW.6 M.Venkateswara Rao, PW.9

V.Jagannadham, PW.20 P.Ravi Kumar and also other witnesses.

Moreover suppressing the income tax returns of G.Venkayya under

Ex.P75 and the contents of income tax returns of Smt.Bharathi under

Ex.D46 to Ex.D49 and that of Smt.Lakshmi under Ex.D43 by the prosecution also constructs an adverse inference against the prosecution case. It is the duty of the investigation officer and prosecution to bring out real facts and unvarnished truth before the

Court and not merely to bolster up the prosecution case with such evidence as may enable the court to record a conviction, as held by the Hon’ble Apex Court in Jamuna Chaudhary & others Vs. State of Bihar 1974 AIR 1822. The prosecution or the investigating officer 161 C.C.03/2005/I CBI Court/VSP is not expected to suppress the material facts which are crucial to the case from the court which is against the process of fair trial.

212. The prosecution in fact has to discharge its burden to prove the alleged benami transactions by adducing a legal evidence of definite character that may either directly involved the accused or establishing circumstances unerringly and reasonably raising an inference of the fact of benami transaction. Inspite of the same it foiled its case on this aspect of benami transaction, attracting an adverse inference under Section 114(g) against it by suppressing the above referred material facts.

213. Before concluding it is apt to refer the proposition laid by the

Hon’ble Apex Court on this aspect in case law between Krishanand

vs.State of Madhya Pradesh AIR 1977 SC 796 as follows:

“The essence of benami Is the intention of the parties and not unoften, such intention is shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of the serious onus that rests on him, nor justify the acceptance of mere conjectures or surmises as a substitute for proof. (Vide Jayadayal Poddar v. Mst. Bibi Hazra . It is not enough merely to show circumstances which might create suspicion, because the court cannot decide on the basis of suspicion. It has to act on legal grounds established by evidence”.

214. Thus from the above discussion, it can be unresistingly concluded that the burden of proof shouldered on the prosecution alleging the benami transaction is absolute and any short fall on its part never shifts the onus of proof on the accused and that in this 162 C.C.03/2005/I CBI Court/VSP case the prosecution lucidly failed to prove that all the monetary transactions standing in the name of Smt.Lakshmi, Smt.Bharathi and

G.Venkayya who are the family members of the accused were provided by the accused. The prosecution equally failed to bring on record that Smt.Lakshmi, Smt.Bharathi and G.Venkayya are not having any independent source of income and sourced their money transactions from the accused and further failed to raise any point of suspicion against the evidence led by the accused eliciting the independent income and transactions of the above referred family members.

215. Sub Point No.5:

5.Whether the income tax returns are rebuttable and the

question of Conclusiveness of the income tax returns?

In continuation of the above discussion, wherein the burden of proof on prosecution and onus on the accrued are at conflict owing to the facts and circumstances of the case the income tax returns filed by Smt.M.Lakshmi, Smt.Bharathi and G.Venkayya and that of the accused place a very important. It is to be decided what is the evidentiary value of the income tax returns marked under Ex.P75,

Ex.P76, Ex.D43 and Ex.D46 to D49. The contention of the prosecution is that the income returns of an assessee does not itself become conclusive and the same cannot be a ground to conclude that the entire income actually belongs to the assessee. On this point the prosecution relied upon two citations firstly State of Tamilnadu Tr

Inspector of Police Vs. N.Suresh Rajan and others, reported in 2014 AIR SCW 942, wherein the Hon’ble Apex Court at Para No.43 held as follows:

163 C.C.03/2005/I CBI Court/VSP “The property in the name of an income tax assessee itself cannot be a ground to hold that it actually belongs to such an assessee. In case this proposition is accepted, in our opinion, it will lead to disastrous consequences. It will give opportunity to the corrupt public servants to amass property in the name of known persons, pay income tax on their behalf and then be out from the mischief of law.

216. A similar reliance was also laid in case law between State of

Karnataka Vs. Selvi.J.Jayalalitha and others reported in

2018(13) SCC 455 wherein the Hon’ble Apex Court held that “While observing that mere declaration of property in the income tax returns does not ipso facto connote that the same had been acquired from the known lawful sources of income, the Trial Court held the view that the prosecution could successfully establish that the respondents and their firms/companies, who posed to be income tax assessees, had no independent or real source of income and that it was the finance of A1 that was really in circulation and thus it could prove beyond reasonable doubt that the only source of money the acquisition of large assets was that of hers”.

217. In contra the accused relied upon the following decisions supporting the conclusiveness of income tax returns as sufficient enough to discharge his onus.

1. D.S.P., Chennai Vs K.Inbasagaran reported in 2006 (1)

SCC 420 in which it has been observed as follows:

“ The wife of the accused has not been prosecuted and it is only the husband who has been charged being the public servant. In view of the explanation given by the husband and when it was been substantiated by the evidence of the wife, the other witnesses who have been produced on behalf of the accused coupled with the fact that the entire money has been treated in the hands of the wife and she has owned it and she has been assessed by the Income tax Department, it will not be proper to 164 C.C.03/2005/I CBI Court/VSP hold the accused guilty under the prevention of Corruption Act as his explanation appears to be plausible and justifiable. The burden is on the accused to offer plausible explanation and in the present case, he has satisfactorily explained that the whole money which has been recovered from his house does not belong to him and it belonged to his wife. Therefore, he has satisfactorily accounted for the recovery of the unaccounted money. Since the crucial question in this case was of the possession and the premises in question was jointly shared by the wife and the husband and the wife having accepted the entire recovery at her hand, it will not be proper to hold husband guilty. Therefore, in these circumstances, we are of the opinion that the view taken by the High Court appears to be justified and there are no compelling circumstances to reverse the order of acquittal. Hence, we do not find any merit in this appeal and the same is dismissed.”

218. G.Malliga Versus State, rep.by the Dy.Superintendent of

Police reported in 2007(1) MLJ (Cri.) 86 in which it has been observed as follows:

“Para-20: In this respect the judgment in Ananda Bezbaruah v. Union of India (1994 Crl. L.J. 12) is pressed into service wherein, the Gauhati High Court has held as follows:

“It is not mere acquisition of property that constitutes an offence, under the provisions of the Act but its failure to satisfactorily account for makes the possession offending.

Thus where accused was charged with the offence of having resources and property disproportionate to his income and trial court failed to consider and evaluate the income-tax return which clearly established that the property included in the assets of accused and shown to be disproportionate is the wife's property bought from her own resources and should have been excluded from assets of the accused and the income which should have been taken as savings was taken as expenditure thereby overlooking the actual savings and expenditure, which if 165 C.C.03/2005/I CBI Court/VSP calculated, showed that income of accused was proportionate to his source of income, inclusion of property of wife, without evaluating the materials on record, which a satisfactorily accounted for the assets disproportionate to income, do not establish the ingredients of the offence and order of framing of charge in such circumstances is liable to be quashed.

219. Kedarilal Vs State of MP reported in 2015 (14) SCC 505 in which it has been observed as follows:

“12. In the instant case, every single amount received by the appellant has been proved on record through the testimony of the witnesses and is also supported by contemporaneous documents and intimations to the Government. It is not the case that the receipts so projected were bogus or was part of a calculated device. The fact that these amounts were actually received from the sources so named is not in dispute. Furthermore, these amounts are well reflected in the Income Tax Returns filed by the appellant. In similar circumstances, the acquisitions being reflected in Income Tax Returns weighed with this court in granting relief to the public servant. In M.Krishna Reddy Vs State [2]. It was observed in para 14:- “......... Therefore, on the face of these unassailable documents i.e., the wealth tax returns, we hold that the appellant is entitled to have a deduction of Rs.56,240/- from the disproportionate assets of Rs.2,37,842/-.” Similarly in DSP Chennai Vs.K.Inbasagaran [3], the fact that the money was treated in the hands of the wife of the public servant and that she was assessed by the Income Tax Department was taken note of while accepting the explanation given by the public servant.

13. If the amounts in question, which were duly intimated and are reflected in the Income Tax Return are thus deducted, the alleged disproportionate assets stands reduced to Rs.37,605/-, which is less than 10% of the income of the Appellant. In Krishnanand Vs. State of Madhya Pradesh [4] and in M.Krishna Reddy (Supra), this court had granted benefit to the public servants in similar circumstances. We respectfully follow said decisions.

166 C.C.03/2005/I CBI Court/VSP

14. In our view there is no violation of Section 13(1)(e) read with section 13(2) of the Act. We, therefore, set aside the judgment and order in appeal and acquit the appellant of the charges leveled against him. The appeal thus succeeds and is allowed. The appellant is already on bail. The bail bonds shall stand discharged.”

220. The contention of the counsel for the accused is that where an assessee had established the income and expenditure particulars

before the Income Tax Authority they shall have binding effect on

the case of the prosecution in view of the above judicial precedents and submitted that the prosecution cannot tag the accused to the income of others and the exhibits Ex.P75, Ex.P76, Ex.D43, Ex.D46 to

Ex.D49 cannot be concluded as implausible.

221.The detailed consideration of above case laws referred by the both sides, it is pertinent that long since the Hon’ble Apex Court in number of Judgment asserted the admissibility of the income tax returns in evidence. It is pertinent that in State of Tamilnadu Tr

Inspector of Police Vs. N.Suresh Rajan and others relied by the prosecution the Hon’ble Apex Court laid the said proposition while disposing the appeal against discharge petition under section 239

Cr.P.C dismissed by the Special Judge. The substance of the Paragraph cited by the prosecution was made by the Hon’ble Supreme Court referring to the case of R.S.Naik vs. A.R.Autulay (1986) 2 SCC 716 allowing an appeal setting aside the order of discharge against the respondent who was in the relevant time Chief Minister of the

State of Maharashtra.

167 C.C.03/2005/I CBI Court/VSP

222. The Hon’ble Apex Court held that “while passing impugned orders the Court has shifted the material for the purpose finding out whether or not there is a sufficient ground for proceeding against the accused but whether that would warrant a conviction. We are of the opinion that this was not the stage where the Court should have appraised the evidence and discharged the accused as if it was passing an order of acquittal. Further the defect of investigation itself cannot be a ground for discharge. In our opinion the order impugned suffers from where error and calls for rectification”. It is pertinent that the Hon’ble Apex Court made such note reserving the conclusiveness of income tax in full pledged trial.

223. However in the subsequent Judgment between Kedarilal Vs

State of MP cited by the accused , the Hon’ble Supreme Court referring to the case law between Krishna Reddy Vs. State,

D.S.P.Chennai Vs. K.Inbasagaran and Krishanand Vs. State of

MP held the income tax returns as unassailable documents favoured the explanation accorded by the public servant as to the income assessed by the income tax Department in his name or in the name of others connected to him. Accordingly it can be humbly held that much reliance can be placed on the Kedarilal Vs State of MP over

Suresh Rajan Case cited supra.

224. The another important case which the prosecution tried to evaluate before this Court is the case between State of Karnataka

Vs. Selvi.J.Jayalalitha and others. It is the one of the important

Judgment, having prevalence over the arena of cases relating to disproportionate cases. The Hon’ble Apex Court discussed the 168 C.C.03/2005/I CBI Court/VSP broader respective of law relating the allegations falling under the purview of Section 13(1)(e) of 1988 Act. It is evident that the Hon’ble

Supreme Court made a clear averment that income tax does not ipsofacto connote that the same had been acquired from the known lawful sources of assessee. The Hon’ble Court did not ruled out the earlier proposition laid in Krishna Reddy Vs. State, D.S.P.Chennai

Vs. K.Inbasagaran, Krishanand Vs. State of MP, State of A.P

vs J.Satyanarayana. However the Hon’ble Apex Court stressed that the income tax returns filed in evidence are rebuttable and the prosecution could successfully established that the persons who posed on record as income tax assessee actually had no independent or real source of income and entire financial circulated from the public servant who was alleged to be in possession of assets disproportionate to his income.

225. The facts of Selvi.J.Jayalalitha and others cited supra are that the accused A1 the former Chief Minister of Thamilnadu and co- accused A2, A3 and A4 are charged and prosecuted for the offences under Section 13(1)(e) r/w 13(2) of 1988 Act and further under Section 120-B and Sec.109 of IPC. The Appeal before the Hon’ble Apex Court lies from the Judgment rendered by the Hon’ble High Court of

Karnataka acquitting the accused A1 to A4 against the conviction rendered by the trial Court. In the said case on hand the accused

A2 to A4 concisely relied upon their income tax returns to accord huge amount of disproportionate assets standing in their name. In this case the burden on the prosecution and shifting of onus is twofold wherein when the accused discharged their onus by raising a preponderance of possibility and filing their income tax returns, the 169 C.C.03/2005/I CBI Court/VSP onus automatically shifted to the prosecution to bring on record the accused A2 to A4 never had any independent source of income and rooted the entire finance from A1. In the said case on hand the trial

Court and the Hon’ble Apex Court opined that the prosecution rebutted the income tax returns produced by the accused and brought on record that the accused A2 to A4 were devoid of independent sources of income. In view of opinion held by the Hon’ble Apex Court there is a simultaneous burden on the income tax assessee wherein they were averred as accused to prove their lawful sources. But in case on hand

Smt.Smt.M.Lakshmi, Smt.Bharathi and G.Venkayya were never referred as accused neither by the investigation agency nor the prosecution during the trial. There is no blemish of conspiracy or abetment attributed to them. As far as this case concerns they are only the witnesses in defence examined by the accused to discharge his onus sufficient to raise the preponderance of possibility creating a doubt in the case of prosecution. The witness cannot be placed in the position of accused to prove their bonafides in par with the prosecution case.

The witness cannot be compelled to prove the sources of income beyond the income tax returns already accepted by the income tax authorities nor the accused in absence of any material in contra provided by the prosecution.

226. Further as per the evidence led by the accused Ex.P75,

Ex.P76 Ex.D43, Ex.D46 to Ex.D49 are collected by the I.O during the investigation. The prosecution did not produce any evidence negating the evidence adduced by the accused and rather got impeached by the adverse inference under Section 114(g) for suppressing these documents from the knowledge of the Court. Accordingly this Court is 170 C.C.03/2005/I CBI Court/VSP of the opinion that with all due respects, the opinion rendered by

Hon’ble Apex Court in Selvi.J.Jayalalitha and others does not

intricate upon the facts and circumstances of the case under discussion.

227. Further the Hon’ble Apex Court dealing with a similar situation upholding credibility of income tax returns refuting the suppression of the same by the prosecution held sufficient, for vitiating the prima facie case against the accused for the offences under Section 5(1)(d) read with s.5(2) of the Prevention of Corruption Act, corresponding to

Section 13(1)(e) and 13(2) of Act, 1988. The relevant proposition was extracted below:

Mohd. Mumtaz vs Nandini Satpathy And Ors reported in 1987

SCC (1) 279 “The Income Tax Officer examined in detail each one of the items of assets said to have been unaccounted and suppressed and the order passed by the Income Tax Officer which has been placed on record clearly explains all the items as also entries pertaining to the house construction and other assets and shows that there is nothing to indicate the respondent No. 1 was possessed of assets disproportionate to his means. The application moved by the Special Public Prosecutor for withdrawal from the prosecution was therefore clearly bonafide and in furtherance of public justice and it was clearly a false and vexatious criminal prosecution which had been launched against respondent No.1 which was sought to be halted. The learned Special Judge also on these facts took the view that no useful purpose would be served by continuance of the prosecution and he accordingly permitted the withdrawal. The High Court too maintained the order of the learned Special Judge. We agree that in the light of the facts on record and the order passed by the Income Tax Officer which explains all the items of 171 C.C.03/2005/I CBI Court/VSP assets alleged to be unaccounted and sup- pressed, the charges against respondent No. 1 appear to be groundless”.

228. Hence in detailed reconciliation of series of case laws cited by the prosecution and the counsel for the accused, this Court is of the considerable opinion that the income tax returns pertaining to the accused, G.Venkayya, Smt.M.Lakshmi and Smt.Bharathi under Ex.P75,

Ex.P76, Ex.D43, Ex.D46 to Ex.D49 suffices sufficient standard of proof for relinquishing the onus on the accused. In absence of any reliable evidence dissuading the defence of the accused that Smt.M.Lakhsmi,

Smt.Bharathi and G.Venkayya has their own source of income as reflected in income tax returns, the contents of Ex.P75, Ex.P76,

Ex.D43, Ex.D46 to Ex.D49 held conclusive as to the merits of the facts under discussion against stray plea of prosecution that they were filed untimely. Hence from the detailed consideration of rival evidence, conclusions emerged thereto in the preceding discussion, this court concludes that the accused adduced sufficient evidence both oral and documentary which categorically affirm that Smt.Bharathi,

Smt.Lakshmi and G.Venkayya are having independent sources of income, sufficiently capable of carrying out their own transactions.

Further the prosecution with best of its efforts could not bring on record any incriminating substance forthcoming against the evidence of Smt.Bharathi and Smt.Lakshmi and the contents of documents marked under Ex.P75, Ex.P76, Ex.D43, Ex.D46 to Ex.D49.

The cash flow statements coupled with account details and relevant documents annexed to the income tax returns exclusively confirm the financial status of Smt.Lakshmi and G.Venkayya even prior to the check period. There is no material justified by the prosecution to 172 C.C.03/2005/I CBI Court/VSP prove the alleged benami transactions either on fact or law.

Accordingly the transactions of Smt.Lakshmi, Smt.Bharathi and

G.Venkayya tagged to the accused does not attracts any credentiality and deserve to be segregated from the transactions of the accused officer. Hence in view of merits determined above, the expenditure of theaccusedunderStatement-Disconcludedas

Rs.10,90,647/- asfollows:

Expenditure of the accused during the check period under Statement-D arrived by the Court.

Sl.No.Particulars Amount as AmountAmount per theas perarrived by prosecutionthe AOthe court according to charge sheet

1.Undisputed21,63321,63321,633 expenditure of the accused (8 items )

2.Undisputed7,67,2537,67,2537,67,253 expenditure of the wife of accused (10 items )

3.Disputes expenditure of3,61,5941,41,2243,01,761 the accused (2 items)

1. Payment to GMR 2,26,37272,0002,09,000 institute

2. Domestic 1,35,222.7069,22492,761 expenditure

4.Disputed expenditure10,50,000NILNil in the name of G.Venkayya (6 items)

1. payment to Anji50,000NilNil Babu (item No.13)

2. Payment to Anji 1,00,000NilNil Babu(item No.14)

3. Payment to 1,00,000NilNil V.Jagannadham(it em No.23)

4. Payment to 70,000NilNil daughter of accused (item No.24)

5. Receipt of 6,30,000NilNil 6.30lakhs loan amounts(item No.25) 173 C.C.03/2005/I CBI Court/VSP

6. House loan from 1,00,000NilNil Anji Babu (item No.26)

5.Fully disputed items 1,67,900NilNil ( 2 items)

1. Item No.27 95,900 (marriage expenses of Smt.Bharathi)

2. Item No.2872,000 (amount paid to Jagannadham) Total 23,68,3809,30,11010,90,647

XX. POINT No.2:

2) Whether the sanction order issued by PW.25 is legally valid?

229. The legal position enshrined relating to importance of sanction under Section 19 of Prevention of Corruption Act is without equivocation. The Statute forbids taking of cognizance by the Court against the public servant except with the previous sanction of an authority competent to grant such sanction in terms of clauses (a)(b)

(c) Section 19(1). The competency of the Court trying the accused much so depends upon the existence of valid sanction. The question regarding the validity of sanction when raised by the accused, draws an utmost importance to be decided on merits.

230. In this case on hand the prosecution obtained Ex.P54 sanction under Section 19(1)(C ) of Act 1988 from D.D.Goel the then

Commissioner of Income Tax, (CIB), Hyderabad who was examined as

Pw.25 to prosecute the accused before this Court. The learned public prosecutor reiterated the authenticity of the sanction order which was marked as Ex.P54 while submitted the detailed arguments for consideration.

174 C.C.03/2005/I CBI Court/VSP

231. The counsel for accused submitted that the sanctioning authority is bound to consider entire material collected by the investigating agency during the investigation and thereafter accord sanction by application of mind. In contra it is argued that in this case on hand the sanction obtained under Ex.P54 is completely devoid of merits and deviated from the legal procedure and accepting the same is complete prejudice to the accused. It is submitted while according the sanction, the sanction authority shall peruse the FIR, charge sheet along with the calculation of assets under statements

A,B,C and D and all the material documents procured by the investigating officer in course of investigation and had to come to a logical and legal conclusion that there is prima facie substance against the accused suffice enough to prosecute him. It is further submitted that in the case on hand the sanctioning authority, skipped the facts apparent on the face of the record from consideration, particularly the opening balance of Rs.2,00,650/- as on 01.01.1998 mentioned in the

FIR, similarly the sanctioning authority carried away with the allegations of the investigation agency as to the expenditure of the

Rs.95,900/- incurred by the accused in view of marriage of his daughter Smt.Bharathi, specifically when the date of marriage of

Smt.T.Bharathi is evidently much prior to the check period on record.

It is submitted that the sanctioning authority without considering and applying its own independent mind accord sanction which is unreliable and placed reliance on case law between Mansukhlal Vithaldas

Chauhan Vs State of Gujarat, reported in (1997) 7 SCC 622 in which it has been observed as follows:

175 C.C.03/2005/I CBI Court/VSP “ The sanctioning authority has to apply its own independent mind for the generation of genuine satisfaction whether prosecution has to be sanctioned or not and the mind of the sanctioning authority should not be under pressure from any quarter and its discretion should be shown to have not been affected by any extraneous consideration.”

232.It is further argued that the investigating authority is obliged to sent the entire relevant record to the sanctioning authority including the FIR, documents, statement of witness and relevant material and the scrutiny of whole record is to be made by the sanctioning authority while discharging his duty to accord or reject the sanction. The learned counsel for the accused drew the attention of this Court to the point that the Crl.M.P.285/2004 was filed by Pw.23 K.Anji Babu seeking tender of pardon on 08.06.2004 and the notice was issued to the prosecution on 09.06.2004. The preliminary examination of Pw.23 was conducted on 24.06.2004 and statement was recorded on 16.07.2004 advancing from 16.08.2004. The Orders in Crl.M.P 285/2004 was

pronounced on 21.7.2004. It is submitted that these proceedings

were conducted after Ex.P54 sanction order and that it is clearly apparent that the sanctioning authority Pw.25 never received these proceedings. According to the accused counsel the sanction order without scrutiny of relevant material crucial to the case is invalid and the following Judgments are referred on this aspect firstly State of

Tamil Nadu Vs. M.M.Rajendran reported in 1998 (9) SCC 268 in which it has been observed as follows:

“The High Court, has come to the finding that all the relevant materials including the statements recorded by the Investigating Officer had not been placed for 176 C.C.03/2005/I CBI Court/VSP consideration by the City Commissioner of Police, Madras because only a report of the Vigilance Department was placed before him. The High Court has also come to the finding that although the Personal Assistant to the City Commissioner of Police, Madras has deposed in the case to substantiate that proper sanction was accorded by the City Commissioner of Police, the witness has also stated that the report even though a detailed one was placed

before the Commissioner by him and on consideration of

which the Commissioner of holdings Police had accorded the sanction, it appears to us that from such deposition, it cannot be held conclusively that all the relevant materials including the statements recorded by the Investigating Officer had been placed before the Commissioner of Police. It appears that the Commissioner of Police had occasion to consider a report of the Vigilance Department. Even if such report is a detailed one, such report cannot be held to be the complete records required to be considered for sanction on application of mind to the relevant materials on records. Therefore, it cannot be held that the view taken by the High Court that there was no proper sanction in the instant case is without any basis”.

233.Secondly CBI Vs Ashok Kumar Aggarwal, reported in 2014 (14) SCC 295 in which it has been observed as follows:

8(a)“ The prosecution must send the entire relevant record to the sanctioning authority including FIR, disclosure statements, statements of witnesses, recovery memos, draft charge sheet and all other relevant material. The record so sent should also contain the material/document, if any which may tilt the balance in favour of the accused and on the basis of which, the competent authority may refuse sanction. 8(b)The authority itself has to do complete conscious scrutiny of the whole record so produced by the prosecution independently applying its mind by taking into consideration all the relevant facts before grant of 177 C.C.03/2005/I CBI Court/VSP sanction while discharging its duty to give or withhold the sanction. 8(c )The power to grant sanction is to be exercised strictly keeping in mind the public interest and the protection available to the accused against whom the sanction is sought. 8 (d)The order of sanction should make it evident that the authority had been aware of all relevant facts/materials and had applied its mind to all the relevant material. 8(e)In every individual case, the prosecution has to establish and satisfy the court by leading evidence that the entire relevant facts had been placed before the sanctioning authority and the authority had applied its mind on the same and that the sanction had been granted in accordance with law.”

234. The learned for the accused argued that prosecuting the accused on the basis irregular sanction is as prejudice as prosecuting him without sanction against the spirit of Section 19 of the Act and emphatically submitted that the entire proceedings of the prosecution in this case are vitiated due to lack of valid sanction under Section 19 of P.C Act.

235.In consideration of the rival arguments when we look into the evidence let by the prosecution, on this aspect, Pw.25 Sri D.D.Goel who is the then Commissioner of Income Tax testified that he is competent authority to remove the accused who was then working as

ITO, Visakhapatnam and that he received FIR, Statement of witnesses and computation of income and expenditure of the accused during the check period along with a request to sanction prosecution of the accused. He further deposed that he had gone through the documents and found the prima facie case against the accused and 178 C.C.03/2005/I CBI Court/VSP accorded sanction for prosecution of the accused and sent the Order

dated 14.05.2004 to the Vigilance Section of our Department and

who in turn forwarded to CBI, Visakhapatnam. The sanction order is marked as Ex.P54.

236. The counsel for the accused confronted Pw.25 in the cross examination wherein it was elicited that Pw.25 received the concerned documents from the Vigilance Department along with draft sanction order and he denied the suggestion that except the draft sanction order he did not receive any other documents from CBI,

Visakhapatnam. He denied the suggestion that he is not the sanctioning authority and he did not apply his mind to the facts of the case and mechanically accorded sanction.

237. It is evident from the case laws referred on record pertaining to the validity of sanction that the following are the important ingredients to constitute valid sanction under Section 19 of the Act, 1988.

1. The competency of sanctioning authority

2. Production of all vital documents pertaining to the involvement of the accused in the offence before the sanctioning authority by the investigating agency.

3. Application of mind and independent scrutiny by the sanctioning authority to conclude prima facie case against the accused to sanction prosecution.

238. In this case on hand, the competency of Pw.25 the then

Commissioner of income(CIB) to remove the accused officer from the service is not proved contrary and thereby held conclusive. With regard to submission of entire material before the sanctioning 179 C.C.03/2005/I CBI Court/VSP authority it is observed that the sanctioning order was issued on 14.05.2004. The tender of pardon to Pw.23 was granted vide Orders

dated 21.7.2004 in Crl.M.P.284/2005 filed on 09.06.2004. It is prima

facie evident on record that the proceedings in Crl.M.P.284/2005 were not filed before the sanctioning authority. Now the point for consideration is whether the failure of the I.O to produce these proceedings before the sanctioning authority vitiates the entire sanction proceedings. It is not in dispute that the statement of witness were not produced before the sanctioning authority. The contents of the 161 Cr.P.C statements filed before this Court categorically discloses that the alleged transaction between the accused and Pw.23 along with disputed cheques and pronotes connected with G.Venkayya father-in-law of the accused. Accordingly it cannot be precluded that the said transactions are omitted from the knowledge of sanctioning authority. When the provisions of Section 306 Cr.P.C are looked into it entitles the Court to tender pardon to accomplice at any stage of the investigation, enquiry or trial of an offence. This provision is inherently absorbed under Section 5 of the Prevention of Corruption

Act. Accordingly there is no bar for the proceedings under P.C Act that the tender of pardon should be only during the stage of investigation. There is a possibility of an accomplice or approver seeking tender of pardon subsequent to filing of charge sheet or amid the trial. In such cases there is no possibility for the investigating officer to act retrospectively communicating the same to the sanctioning authority, in cases dealing under P.C Act. Therefore it can be safely inferred the proceedings under Section 306 Cr.P.C akin to provisions under Section 5 of PC Act has nothing to do with the sanctioning authority. Accordingly the non filing of proceedings in 180 C.C.03/2005/I CBI Court/VSP

Crl.M.P.285/2004 before the sanctioning authority is not in prejudice to

the prosecution and entire sanction is not vitiated on the ground.

239. The next contention of the accused is that the clerical mistake in the calculation of the assets and the inclusion of marriage expenses of daughter of the accused and non-consideration of savings mentioned in the FIR by the sanctioning authority is illegal. It is established principle that the function of sanctioning authority is only to conclude a prima facie case against the accused so as to facilitate his prosecution before the court of law. The sanctioning authority is not expected to go into the merits of the charge sheet or weigh the evidence and settle the accused guilty or innocent. It is sufficient enough on record that all the vital documents involving the accused are produce before the sanctioning authority and the sanctioning authority acts with a reasonable prudence by application of mind.

The contents of Ex.P54 clear elicit that the sanctioning authority carefully considering the material placed before it considered that the accused shall be prosecuted for an offence under Section 13(1)(e) r/w 13(2) P.C. Act. A mere error or irregularity in sanction is not considered as fatal unless it has resulted in failure of justice or has occasioned thereby and the provisions of Section 19(1) deals with matter of procedure and does not go into root of jurisdiction.

Accordingly the above said imperfection does not interfere with the sanction order under Ex.P54 and the same is found within the guidelines evaluated under the case laws cited by the accused. The contention of the accused on this aspect is accordingly ruled out.

181 C.C.03/2005/I CBI Court/VSP

XXI. POINT No.3:

3) Whether the authorization under Section 17 of P.C.

Act under Ex.P82 is valid?

240. The learned counsel for the accused assailed the very competency of the investigating officer Sri K.Praveen Kumar and Sri

V.K.C.Reddy to conduct the investigation and contended that they were not duly authorized as per Section 17 of P.C.Act. The said

K.Praveen Kumar registered the case in RC 35(A)/2002 and later part of investigation is concluded by Sri V.K.C Reddy.

241. On this point Pw.24 in the chief examination testified that he worked as the Inspector of Police, CBI, Visakhapatnam from 1999 to 2007 and that on 01.11.2002 as per the orders of Superintendent of

CBI, Visakhapatnam, he registered a case in RC 35(A)/2002 under

Section 13(2) r/w 13(1)(e) of the PC Act, 1988 against the accused.

The corresponding FIR is marked as Ex.P50. He further stated that on 13.11.2002 the case was transferred to V.K.C.Reddy(late)

Dy.Superintendent of Police, CBI, Visakhapatnam for the purpose of further investigation. It is also pertinent that he conducted part of investigation in RC 8(A)/2001 against the accused. In the cross examination by the counsel for the accused he stated that he follow the CBI manual in the investigation of crime and that the SP, CBI,

Visakhapatnam instructed him in writing to register the crime and to investigate. He acceded that Ex.P50 does not bear the proceedings issued or endorsement made by Superintendent, CBI directing him to register and investigate the case. According to PW.24 the said endorsement was available in the office. Subsequently to authenticate 182 C.C.03/2005/I CBI Court/VSP proceedings of SP, CBI authorizing the Dy. Superintendent, CBI to investigate the crime, the prosecution got examined the then SP, CBI,

Visakhapatnam as Pw.30. PW.30 A.Sudhakara Rao deposed that he authorized V.K.C.Reddy the then DSP, CBI, SPE, Visakhapatnam to conduct investigation of this case and issued proceedings marked as

Ex.P82.

242. However with regard to initial investigation regarding to Pw.24 in the cross examination he admitted that he has given oral instructions to Mr.K.Praveen Kumar for registration of the case, but have not issued any written proceedings. It is the version of the accused that the proceedings under Ex.P82 does not bear any date and was issued subsequently to the Judgment of the Hon’ble Supreme

Court in State Inspector of Police Visakhapatnam Vs. Surya

Sankaram Karri reported in 2007 (7) SCC 172 wherein the necessity of authorization under Section 17 PC Act was discussed as mandatory by Statute. The relevant proposition relied by the counsel

for the accused is extracted below:

Para-9 :“Provisions of the 1988 Act, no doubt, like the 1947 Act seek to protect public servant from a vexatious prosecution. Section 17 provides for investigation by a person authorized in this behalf. The said provision contains a non-obstante clause. It makes investigation only by police officer of the ranks specified therein to be imperative in character. The second proviso appended to Section 17 of the Act provides that an offence referred to in clause (e) of sub-Section (1) of Section 13, shall not be investigated without the order of a police officer not below the rank of a Superintendent of Police. Authorization by a Superintendent of Police in favour of an officer so as to enable him to carry out investigation in terms of section 17 of the Act is a statutory one. The 183 C.C.03/2005/I CBI Court/VSP power to grant such sanction has been conferred upon the authorities not below the rank of Superintendent of Police. The proviso uses a negative expression. It also uses the expression "shall". Ex-facie it is mandatory in character. When the authority of a person to carry out investigation is questioned on the ground that he did not fulfill the statutory requirements laid down therefore in terms of the second proviso, the burden, undoubtedly, was on the prosecution to prove the same. It has not been disputed

before us that the Investigating Officer, P.W.41, did not

produce any record to show that he had been so authorized. Shri K. Biswal, the Investigating Officer, while examining himself as P.W.41, admitted that he had not filed any authorization letter”.

Para-11: The approach of the learned Special Judge, to say the least, was not correct. When a statutory functionary passes an order, that too authorizing a person to carry out a public function like investigation into an offence, an order in writing was required to be passed. A statutory functionary must act in a manner laid down in the statute. Issuance of an oral direction is not contemplated under the Act. Such a concept is unknown in Administrative Law. The statutory functionaries are enjoined with a duty to pass written orders”.

243. It is submitted that the CBI, Visakhapatnam subsequent to these

Judgment in order to cover up its latches in a systematic manner had filed petitions in all the disproportionate assets cases pending before this court by enclosing alleged orders issued under Section 17 of P.C.

Act. Such one petition was filed on 07.01.2008 vide Crl.M.P.26/2008 and the same was dismissed by this Court as the alleged proceedings does not contain any date. The prosecution again came up with

Crl.M.P.560/2013 to receive the said proceedings on record, after

facing the dismissal by this Court on 08.07.2013 approached the

Hon’ble High Court vide CRLP No.7904/2013. Having faced dismissal

184 C.C.03/2005/I CBI Court/VSP by the Hon’ble High Court, approached Hon’ble Supreme Court and filed CRLA 853/2019, the same was allowed on 07.05.2019 permitting the prosecution to bring the order of authorization on record. After receiving the orders of the Supreme Court, Pw.30 was examined and

Ex.P82 was brought on record. The contention of the accused is that the document of Ex.P82 is totally concocted and brought into existence only in the year 2008. The absence of reference of proceedings, date of issuance and signature of VKC Reddy as token of receiving the order from PW.30 was appraised before this Court to convince that the authorization order was false. The counsel for the accused drew the attention of the Court to the cross examination of

PW.30, where he admitted that “ It is true that I used to put the dates under my signature but is only whenever required in all case. I have put the date below my signatures in Ex.P50. In all cases of FIR I used to put the date below my signature. Ex.P82 does not contain the date below my signature and it also does not bear any date. It is true that even on my deposition recorded by this Court in C.C.9/2005 I put dates below my signatures. Soon after registration of this case , I issued

Ex.P82 either at the end of 2002 or at the beginning of 2003, but I cannot say the exact date on which Ex.P82 is issued.

244. The close perusal of the Ex.P50 FIR discloses that there is no corresponding endorsement by the Superintendent of police authorizing PW.24 to register and investigate the case. According to him the SP, CBI, Visakhapatnam instructed him to register and investigate the crime and the said endorsement is available in the office and same is not filed into the Court. On this aspect PW.30 in his cross examination stated that he had given oral instructions to 185 C.C.03/2005/I CBI Court/VSP

Mr.Praveen Kumar for registration of the case but have not issued any written proceedings. The evidence of Pw.24 and Pw.30 is quite contradicting to each other and the prosecution did not accord any explanation to ruleout the ambiguity. Accordingly the availability of authorization in writing to Pw.24, IO who conducted the initial investigation is disbelieved.

245. Mr.VKC Reddy is the investigating officer who carried out the crucial part of the investigation. According to the prosecution Mr.VKC

Reddy died pending trial. However no authenticated evidence either oral or document was adduced by the prosecution. This latch on part of the prosecution is impacting, as such the non examination of the

IO cannot be ignored equally in all cases. Coming back to the point in issue the Ex.P82 proceedings are undated. The evidence of Pw.30 in his cross examination draws an inference that he was habituated put date below his signature, which was in contra, inEx.P82. Even considering the non-mentioning of date by Pw.30 as latent, the most important proceedings which interfere with the legality of the investigation, cannot be expected to be undated. For argument sake even if it is considered a mistake in over sight, Pw.30 shall atleast expected to be in position to mention a exact date on which the said proceedings might have issued. It is reluctant that PW.30 in his cross examination responded evasively stating that “I issued Ex.P82 either at the end of 2002 or at the beginning of 2003, but I cannot say the exact date on which Ex.P82 is issued”.

246. The another important fact that which interfere with the argument of the prosecution is that the existence of Ex.P82 was first 186 C.C.03/2005/I CBI Court/VSP time brought on the record as raised by the counsel for the accused for the first time on 07.01.2008 vide Crl.M.P.26/2008. In fact the case was registered against the accused on 01.11.2002. There is no explanation from the prosecution either in the petition in

Crl.M.P.26/2008 or subsequently with regard to the delay of almost six

years from the date of registration of FIR and four years from the date of filing the charge sheet on 05.04.2004. It is conspicuous on record that the attempt of prosecution to bring Ex.P82 on record had been rejected twice on the file of this Court and also by the Hon’ble High

Court. That the dissatisfied prosecution approached the Hon’ble

Supreme Court vide CRLA.No.853/2019 and been successful to bring the order of authorization on record. It is pertinent that the accused had been repeatedly disputing the truth and veracity of the Ex.P82 from the time of its inception on record before this Court and the

Hon’ble Appellate Courts. Unfortunately for some reasons this

substantial controversy had been remained shrouded in the arguments before Hon’ble Apex Court. The Hon’ble Supreme Court was pleased to allow the petition upholding that substantive justice is beyond procedural or technical justice and besides directed an enquiry with report on CBI, Visakhapatnam calling for explanation for delay.

247. Admissibility of document on record is completely different from the proof of the document. The mere bringing on record the Ex.P82 does not relieve the prosecution from its burden to prove the same when the issuance of the same itself is contended to be false and after thought by the accused. Inspite of the fact that the prosecution fell short with corroborating evidence, the statement of Pw.24 and 187 C.C.03/2005/I CBI Court/VSP

Pw.30 before this Court totally evacuate the merits of Ex.P82.

Accordingly the issuance of Ex.P82 by Pw.30 authorizing Mr.VKC Reddy well intime, does not merits any acceptance and the argument of the prosecution on this aspect is rejected. The genuineness and transparency of investigation is very basis of fair trial which concomitant to preservation of fundamental right of accused under

Article 21 of the Constitution of India. It is from the righteousness of the investigation the defence of the accused emergences and any injudicious, suppression of facts tampers the entire concept of fair trial.

248. Hence, now the next point for consideration as this Court disbelieved Ex.P82 whether the entire investigation can be vitiated as laid down in State Inspector of Police Visakhapatnam Vs.Surya

Sankaram Karri referred supra. It is undoubted that the Division

Bench of Hon’ble Apex Court in this case held the provisions of Section 17 PC Act as mandatory and any violation on that point as infraction of justice. However the Hon’ble Apex Court in Ashok Tshering Bhutia

Versus State of Sikkim reported in 2011 (4) SCC 402 referring to

Rishbud & Anr. v. State of Delhi, Munnalal v. State of U.P.,

Khandu Sonu Dhobi & Anr. v. The State of Maharashtra, State

of M.P. v. Bhooraji & Ors., ; State of M.P. v. Ramesh Chand

Sharma, and State of M.P. v. Virender Kumar Tripathi,opined that the issue regarding an investigation by officer not authorized by law as res integra. It reiterated that the defect or irregularity in investigation has no bearing on competency of the Court or procedure relating to cognizance or trial. Further referring to Division Bench

Judgment Kalpnath Rai v. State where the oral approval from the 188 C.C.03/2005/I CBI Court/VSP competent officer is considered sufficient to legalize the further action, the opinion in Surya Sankaram Karri supra has been held per incuriam. The relevant paragraphs are extracted below for better understanding:

7.Much has been argued on the issue that investigation has been conducted without a proper order in writing, by an officer not authorised otherwise and sanction has been granted under Section 19 of the PC Act 1988 vide order

dated 5.4.1997, without taking into account the assets

and income shown in Ext. D-4, though the said assets represented known sources of income within the meaning of Section 13(1)(e) and the Explanation attached thereto. It has further been submitted that an invalid sanction cannot be the foundation for the prosecution and thus, the entire investigation and trial stood vitiated as the investigation without proper authorisation and invalid sanction goes to the root of the jurisdiction of the court and so the conviction cannot stand.

8. The issues raised hereinabove are no more res integra. The matter of investigation by an officer not authorised by law has been considered by this Court time and again and it has consistently been held that a defect or irregularity in investigation however serious, has no direct bearing on the competence or procedure relating to cognizance or trial and, therefore, where the cognizance of the case has in fact been taken and the case has proceeded to termination, the invalidity of the precedent investigation does not vitiate the result, unless a miscarriage of justice has been caused thereby. The defect or irregularity in investigation has no bearing on the competence of the Court or procedure relating to cognizance or trial. (Vide H.N.

Rishbud & Anr. v. State of Delhi, AIR 1955 SC 196; Munnalal v.

State of U.P., AIR 1964 SC 28, Khandu Sonu Dhobi & Anr. v. The State of Maharashtra, AIR 1972 SC 958; State of M.P. v. Bhooraji & Ors., AIR 2001 SC 3372; State of M.P. v.

189 C.C.03/2005/I CBI Court/VSP

Ramesh Chand Sharma, (2005) 12 SCC 628; and State of M.P. v. Virender Kumar Tripathi, (2009) 15 SCC 533).

9. In Kalpnath Rai v. State (Through CBI), AIR 1998 SC 201, a case under the provisions of Section 20 of Terrorist and Disruptive Activities (Prevention) Act, 1987, this Court considered the issue as to whether an oral direction to an officer to conduct investigation could meet the requirement of law. After considering the statutory provisions, the Court came to the conclusion that as oral approval was obtained from the competent officer concerned, it was sufficient to legalise the further action.

10. In State Inspector of Police, Vishakhapatnam v. Surya Sankaram Karri, (2006) 7 SCC 172, a two-Judge Bench of this Court had taken a contrary view without taking note of the earlier two-Judge Bench judgment in Kalpnath Rai (supra) and held as under:

"When a statutory functionary passes an order, that too authorizing a person to carry out a public function like investigation into an offence, an order in writing was required to be passed. A statutory functionary must act in a manner laid down in the statute. Issuance of an oral direction is not contemplated under the Act. Such a concept is unknown in administrative law. The statutory functionaries are enjoyed with a duty to pass written orders. However, the Court taking note of subsequent proceedings recorded its conclusions as under:

`It is true that only on the basis of illegal investigation a proceeding may not be quashed unless miscarriage of justice is shown, but in this case as we have noticed hereinbefore, the respondent had suffered miscarriage of justice as the investigation made by PW 41 was not fair'."

11. In the instant case, the officer has mentioned in the FIR itself that he had orally been directed by the Superintendent of Police to investigate the case. It is evident from the above that the judgments in Kalpnath Rai (supra) and Surya Sankaram Karri (supra) have been decided by two Judge Benches of this Court and in the 190 C.C.03/2005/I CBI Court/VSP latter judgment, the earlier judgment of this Court in Kalpnath Rai (supra) has not been taken note of. Technically speaking it can be held to be per incuriam. There is nothing on record to show that the officer's statement is not factually correct. We have no occasion to decide as which of the earlier judgments is binding. It is evident that there was a direction by the Superintendent of Police to the officer concerned to investigate the case. Thus, in the facts and circumstances of the case, the issue as to whether the oral order could meet the requirement of law remains merely a technical issue. Further, as there is nothing on record to show that the investigation had been conducted unfairly, we are not inclined to examine the issue further.

12. Same remained the position regarding sanction. In the absence of anything to show that any defect or irregularity therein caused a failure of justice, the plea is without substance. A failure of justice is relatable to error, omission or irregularity in the sanction. Therefore, a mere error, omission or irregularity in sanction is not considered to be fatal unless it has resulted in a failure of justice or has been occasioned thereby.

249. Subsequently the decision in Ashok Tshering Bhutia(supra) was upheld by the another Division Bench of Hon’ble Supreme Court in Vinod Kumar Garg v. State (Govt., of National Capital

Territory of Delhi) reported in (2020) 2 SCC 88.

19. The last contention of the appellant is predicated on Section 17 of the Act and the fact that the investigation in the present case was not conducted by the police officer by the rank and status of the Deputy Superintendent of Police or equal, but by Inspector Rohtash Singh (PW-5) and Inspector Shobhan Singh (PW- 7). The contention has to be rejected for the reason that while this lapse would be an irregularity and unless the irregularity has resulted in causing prejudice, the conviction will not be vitiated and bad in law. The appellant has not alleged or even argued that any 191 C.C.03/2005/I CBI Court/VSP prejudice was caused and suffered because the investigation was conducted by the police officer of the rank of Inspector, namely Rohtash Singh (PW-5) and Shobhan Singh (PW-7).

250. Similarly the precedent established in Prabhu v.Emperor reported in AIR 1944 Mad 369, Lumbhardar Zutshi vs The King reported in (1950) 52 BOMLR 480 envisages that if cognizance is in fact taken on a police report initiated by the breach of a mandatory provision relating to investigation there can be no doubt that the result of trial, which follows it cannot be set aside. Unless the illegality in the investigation can be shown to have brought about a miscarriage of justice and that an illegality committed in the course of investigation does not effect the competence and the jurisdiction of the court for trial.

251. Accordingly the legal position as on date considering the catena of decisions of the Hon’ble Apex Court even presuming the error committed by CBI in submitting the charge sheet without the proceedings under Section 17, the cognizance taken by this Court and subsequent trial based on the charge sheet cannot be set aside unless and until a grave miscarriage of justice to the accused is proved on record. In this case on hand, the accused did not elicit anything as to how the technical irregularity under Section 17 of PC Act infringed his right to fair trial. Therefore duly conceding with the opinion of the

Hon’ble Apex Court this Court reiterates the substantial justice shall

always prevails over a technical or procedural justice. The conclusion is that the irregularity by the investigating agency under

Section 17 of PC Act, with no credence added to Ex.P82, does not have 192 C.C.03/2005/I CBI Court/VSP any bearing on the merits of the trial and the investigation and subsequent trial holds good. The Point is accordingly answered.

252. Before parting the conclusion as to validity of sanction and investigation irregularities, the delay in registering the case almost 8 months after search, delay in filing the charge sheet, suppression of multiple documents collected during the investigation by the I.O, misconception of facts apparent on record and finally galore of arithmetic mistakes with difference in lakhs in the charge sheet does not shift from the emphasis of the court. These circumstances are considerably unwarranted and draws the prosecution case away from factual premise.

XXII. POINT No.4:

4)Whether the prosecution proved the guilt of the accused beyond all reasonable doubt for the offences

under Section 13(2) r/w 13(1)(e) of P.C Act ?

253. Therefore in due consideration of rival evidence and meritorious arguments, either side which empathically taken this court to justification of facts in accordance with the law and the calculations arrived thereto this Court made the following conclusions:

I. Final calculation arrived by the Court:

In view of the above discussion and merits held by the Court on the every aspect asserted and contradicted by the either side, this Court concluded the calculation of assets of the accused as follows :

a) Assets of the accused at the beginning of the check period under Statement-A 193 C.C.03/2005/I CBI Court/VSP

The total worth of 70 items under Statement-A is Rs.6,35,936/- after correcting the total arithmetic error the amount as per the charge sheet is Rs.6,34,846/-.

Sl.No.Particulars Amount as Amount asAmount per theper the AOarrived by prosecutionthe court according to charge sheet

1.60 items admitted4,26,3534,26,3534,26,353 A and B

2.Remaining 10 items2,08,4932,08,4932,08,493 in statement-A

Item No.14, 15, 61 exclusively belongs to accused worth value Rs.40,477/-

3.Additional 6 itemsNIL2,27,63711,687 claimed by the accused as not considered by the prosecution

1. Addl. ItemNIL10,502 No.1 (wife)(10,502)

2. Addl. ItemNIL1,185 No.2(wife)(1,185)

3. Addl. 3 to 6NILNILNIL denied

4.Addl. ItemsNILNIL35,000 included by the court on merits

1. Fixed deposit NILNIL25,000 dt.4.12.1997 in HDFC Bank discussed at Para No.90 and 91(wife)

2. Fixed depositNILNIL10,000 dt.01.16.1996 with Gayatri Vidya Parished discussed at Para No.96(wife) Total6,34,8468,62,4836,81,533 194 C.C.03/2005/I CBI Court/VSP

b) Assets of the accused at the end of the check period under Statement -B

The total worth of 101 items under Statement-B is Rs.14,53,098/- after correcting the total arithmetic error the amount as per the charge sheet is Rs.14,70,010/-.

Sl.No.Particulars Amount as Amount asAmount per theper the AOarrived by prosecutionthe court according to charge sheet

1.Value of undisputed4,50,7964,50,7964,50,796 items of accused , his wife and daughter in combined statements (60 items)

2.Undisputed items of7,51,9167,51,9163,76,916 the accused (23 items) Value of undisputed NILNIL 3,76,9 items arrived by the 16 court (7,51,916- After deducting item 3,75,000) No.13 and 14 of Statement –B which were added to Statement –C as per discussion under

additional income

claimed by the

3.Undisputed items of89,11889,11889,118 wife of accused (5 items)

4.Gold items purchased46,5702,02946,570 by the accused (8 items)

5.Assets in the name of1,00,000NILNIL G.Venkayya (1 item)

6.Gold items of wife of16,609NILNIL AO ( 2 items)

7.Disputed gold items15,000NILNIL of daughter of AO ( 2 items) Total14,70,00912,93,8599,63,400 In view of revised NIL24,444(-)24,444 values of Item Nos.6,8,48 of 195 C.C.03/2005/I CBI Court/VSP

Statement-B (i.e., Rs.14,70,011 -24,444=14,45,567/-) . A deduction of Rs.24,444 is given to the accused from statement-B

Total 9,38,956

c) Assets acquired by the accused during check period (Statement B- Statement A)

1. Assets acquired in the name of accused and his wife including the admitted common assets in both the statements i.e., (B-A)

Rs.9,38,956 - 6,81,533=2,57,423

2. Assets exclusively standing in the name of the accused including the admitted common assets in the both the statements i.e., (B-A) (Rs.4,50,796+3,76,916+46,570) - (Rs.4,26,353 +40,477)

Rs.8,74,282 - 4,66,830=Rs.4,07,452 - difference of Item No.7,9, and 12 of Statement-A with Statement-B) =Rs.4,07,452 - 24,444=3,83,008/-

d) Income of the accused during the check period under

Statement -C

The total worth of 40 items under Statement-C is Rs.6,98,750.07 after correcting the total arithmetic error the amount as per the charge sheet is Rs.6,98,752.07

Sl.No.Particulars Amount as Amount asAmount per theper the AOarrived by the prosecutioncourt according to charge sheet

1.Value of2,21,9562,21,9562,21,956 undisputed income of accused (16 items) 196 C.C.03/2005/I CBI Court/VSP

2.Undisputed94,96194,96194,961 income standing in the name of wife of accused (17 items)

3.Disputed income2,73,9742,90,4972,78,283 of the accused (2 items)

1. Item No.3 2,70,3742,76,8972,78,283 net salary

2. Item No.183,60014,000- interest on Durga finance

4. Income disputed1,07,8593,48,3593,72,656 in the name of wife of accused ( 5 items)

1. Item23,35973,35973,361 Nos.34,35,3 6

2. Item No.394,50075,00099,095

3. Item No.4080,0002,00,2002,00,200

5.Additional itemsNIL14,69,6125,40,477 claimed by the accused (18 items )

1. Loan repaymentNIL5,44,26644,266 by M.Venkeswara rao to M.Lakshmi (wife)

2. Premature NIL87,53714,092 closure of FD Akshya Deposit certificate (Item No.16 and 17 of Statement D) (wife) 3.Sale of reliance NIL17,7754,775 shares (Item No.18 of Statement-D) (wife) 4.Cybermate NIL20,3509,660 shares (item No.20 of Statement D) (wife) 5.Withdrawal NIL5096414,964 from Jaganadh Vidyapeet (Item No.21 and 22 of Statement-D) (wife) 6.Amount taken asNIL22,00022,000 197 C.C.03/2005/I CBI Court/VSP overdraft loan (wife) 7.Divided from NIL250250 KCP sugars (wife) 8.Refund of NIL870870 telephone deposit (accused) 9.Payment by DSSNIL6,000- Narayana Raju (wife) 10.Premature NIL16,0006000 withdrawals from Gayatri Vidyaparished (wife)

11. Professional NIL48,60048,600 income of Smt.Lakhsmi (wife)

12. Amount NIL3,75,0003,75,000 received from Anji Babu including item No.13 & 14 statement B(accused)

13. Sale of NIL2,80,000NIL National Saving Certificate relates to Item No.12 of Statement- D(accused) Total 6,98,752/-24,25,385/-15,08,333 The value of item (-)11,363 No.33 is reduced as per discussion at Para No.95 Total 14,96,970 The total income of the accused and his wife = Rs.14,96,970 The exclusive income of the accused is = Rs. 8,76,109/- The exclusive income of the wife is = Rs.6,20,861/-

e) Expenditure of the accused during the check period under Statement-D

The total worth of 28 items under Statement-D is Rs.20,33,025.05 after correcting the total arithmetic error the amount as per the charge sheet is Rs.23,68,381.05.

198 C.C.03/2005/I CBI Court/VSP

Sl.No.Particulars Amount as AmountAmount per theas per thearrived by prosecutionAOthe court according to charge sheet

1.Undisputed21,63321,63321,633 expenditure of the accused (8 items )

2.Undisputed7,67,2537,67,2537,67,253 expenditure of the wife of accused (10 items )

3.Disputes expenditure3,61,5941,41,2243,01,761 of the accused (2 items)

1. Payment to 2,26,37272,0002,09,000 GMR institute

2. Domestic 1,35,222.7069,22492,761 expenditure

4.Disputed expenditure10,50,000NILNil in the name of G.Venkayya (6 items) 1.payment to Anji 50,000NilNil Babu (item No.13) 2.Payment to Anji 1,00,000NilNil Babu(item No.14) 3.Payment to 1,00,000NilNil V.Jagannadham(item No.23) 4.Payment to 70,000NilNil daughter of accused (item No.24) 5.Receipt of 6,30,000NilNil 6.30lakhs loan amounts(item No.25) 6.House loan from 1,00,000NilNil Anji Babu (item No.26)

5.Fully disputed items 1,67,900Nil Nil ( 2 items) 1.Item No.27 95,900Nil Nil (marriage expenses of Smt.Bharathi) 2.Item No.2872,000Nil Nil (amount paid to Jagannadham) Total 23,68,3809,30,11010,90,647

The expenditure of the accused and his wife = Rs.10,90,647/-

The exclusive expenditure of the accused is = Rs.3,23,394 199 C.C.03/2005/I CBI Court/VSP

The exclusive expenditure of the wife of accused is =Rs.7,67,253/-

f) Disproportionate assets or savings of the accused:

1. The formula for DA or likely savings = C-[(B-A)+D] or [C-D]=E -[A-B]

2. The DA or savings of the accused and his wife consolidately

C-[(B-A)+D] 14,96,970 - [Rs.2,57,423+10,90,647]- 14,96,970 -[13,48,070] =1,48,900

Since the income exceeds the assets acquired during the check period and the expenditure during the check period, there are no disproportionate assets and the likely savings of the accused and his wife is Rs.1,48,900/-.

3. The DA or savings of the accused exclusively C-[(B-A)+D] 8,76,109- [Rs. 3,83,008+3,23,394]- = -876109-7,06,402 =1,69,707/-

Since the income exceeds the assets acquired during the check period and the expenditure during the check period, there are no disproportionate assets and the likely savings of the accused is

Rs.1,69,707/-

g) Substituting the above calculation with other formula:

[C-D]=E-[A-B]

1. The DA or savings of the accused and his wife consolidately 14,96,970-10,90,647=4,06,323(E savings) 200 C.C.03/2005/I CBI Court/VSP

E-[A-B] = 4,06,323 - 2,57,423=1,48,900/-.

Even accordingly the savings of the accused and his wife is

Rs.1,48,900/- and there is no disproportionate assets.

2.The DA or savings of the accused exclusively :

[C-D]=E-[A-B] [8,76,109-3,23,394]= 5,52,715(E savings)

E-[A-B]= 5,52,715-3,83,008=1,69,707/-

Even accordingly the savings of the accused is Rs.1,69,707/- and there is no disproportionate assets. Hence the accusation laid by the prosecution with regard to alleged disproportionate assets against the accused officer sans justification and is devoid of merits.

254. Conclusion :

Therefore in view of the above discussion and reasons thereto, this Court is of the opinion that the prosecution failed to prove beyond all reasonable doubt that the accused being public servant acquired and possessed in his name and in the name of his family members, a disproportionate assets of Rs.24,86,792.80ps as on 09.04.2001. Consequently it is concluded that the prosecution failed to prove the guilt of accused for the offence under sec.13(1)(e) r/w 13(2) of P.C. Act, 1988.

In the result, accused is found not guilty for the offence punishable under sec. 13(1)(e) r/w 13(2) of Prevention of Corruption

Act, 1988 and he is acquitted under Section 248(1) of Cr.P.C.

The accused is held entitled for return of FD amount of

Rs.3,63,900/-(Rupees Three lakhs sixty three thousand nine hundred only) along with the interest under Ex.P79 after appeal time.

201 C.C.03/2005/I CBI Court/VSP

The existing bail bonds of accused shall stands cancelled.

Accused is directed to execute self bond for Rs.10,000/- (Rupees ten thousand only) with two sureties for like sum each as contemplated under Section 437-A of Criminal Procedure Code, for a period of six months, to ensure his appearance before the appellate court, if warranted.

Dictated to the stenographer Grade-I, transcribed by her,

corrected and pronounced by me in the Open court on this the 9th day of March, 2021.

Sd/- B.Satya Venkata Hima Bindu

PRINCIPAL SPL. JUDGE FOR C.B.I. CASES,

FAC I Addl. SPL.JUDGE FOR C.B.I CASES,

VISAKHAPATNAM.

APPENDIX OF EVIDENCE

LIST OF WITNESSES EXAMINED ON BEHALF OF PROSECUTION.

For Prosecution:

P.W.1 (L.W.1) :G.Gopala Krishna Murthy

P.W.2 (L.W.3):P.H.Suresh Babu

P.W.3 (L.W.4):G.V.M.Raju

P.W.4 (L.W.6):N.Leela Shankar

P.W.5 (L.W.9):J.Butchi Appa Rao

P.W.6 (L.W.11): Muvva Venkateswara Rao

P.W.7 (L.W.16):Imandi Vijaya Lakshmi

P.W.8 (L.W.2):V.R.M.Raju

P.W.9 (L.W.24):V.Jagannadham

P.W.10 (L.W.35):V.Verty Selvan

P.W.11 (L.W.25):D.S.S.Narayana Raju

P.W.12 (L.W.37):K.Siva Sankar

P.W.13 (L.W.38) : V.B.Rama Krishna

P.W.14 (L.W.41) : T.V.Subrahmanyam Panthulu

P.W.15 (Addl.Wit.): M.N.Rao

P.W.16 (L.W.44) : J.Gopala Krishna Murthy

P.W.17 (L.W.46) : Y.Srinivas 202 C.C.03/2005/I CBI Court/VSP

P.W.18 (L.W.48) : P.Samba Siva Rao

P.W.19 (L.W.50): V.Ramesh

P.W.20 (L.W.51) : P.Ravi Kumar

P.W.21 (L.W.54) : M.Krupavathi

P.W.22 (L.W.59) : S.Ishak Mohammed

P.W.23 (L.W.53) : K.Anji Babu

P.W.24 (L.W.62) : K.Praveen Kumar

P.W.25 (L.W.) : D.D.Goel

P.W.26 (L.W.14) : R.V.Sudhakar

P.W.27 (L.W.21) : M.Narayana Rao

P.W.28 (L.W.10): M.Nageswara Rao

P.W.29 (L.W.40) : S.C.Subbarayudu

P.W.30 : A.Sudhakara Rao

P.W.31 : K.L.Narayana

LIST OF WITNESSES EXAMINED ON BEHALF OF DEFENCE SIDE

For Defence:

D.W.1 :Challa Madhavi Latha

D.W2.:P.Venkata Viswanatham

D.W.3:K.Shankara Narayana Chandran

D.W.4:G.Narasimha Rao

D.W.5:P.Santharam

D.W.6:D.Rama Krishna

D.W.7:M.S.S.R.Varma

D.W.8:M.Veerabhadram

D.W.9:P.K.Satya Raju

D.W.10:K.V.Ramana Murthy

D.W.11:P.Ram Narayana Rao

D.W.12:M.Bharathi

D.W.13:Dr.G.Bhagya Rao

D.W.14:Ch.Mangapathi Rao

D.W.15:M.Lakshmi

D.W.16:M.Subrahmanyam 203 C.C.03/2005/I CBI Court/VSP

LIST OF DOCUMENTS MARKED ON BEHALF OF PROSECUTION.

Ex.P.1 :Statement of account alongwith covering letter

Ex.P.1(A):Certified statement of account No.SB.7806 of Smt.M.Lakshmi with Visya Bank Ltd., VZM along with receipt dt.5-5-2003 (marked with consent ).

Ex.P.2 :Xerox copy of term deposit for Rs.10,000/-

Ex.P.2(A):Letter dt.5.5.2003 of Sri Y.Prabhakara Rao, Manager, Indian Bank, Maharanipeta branch, VSP to DSP, CBI, VSP alongwith certified statement of account No.8409. (marked with consent ).

Ex.P.3 :Debit and credit voucher and term deposit receipt.

Ex.P.3(A):Letter Dt.10.2.2003 of Sri Anil B.Atre, company secretary and G.M.(Admn) Finolex Industries, pune. (marked with consent ).

Ex.P.4 :credit voucher of Rs.10,000/- correspondent Ex.P.2.

Ex.P.4(A):Letter Dt.8.2.2003 ofSri M.Bulliabbayi, Secretary, the Andhra Sugars Ltd., Tanuku to DSP/CBI. (marked with consent ).

Ex.P.5 :Kalpatharuvu deposit (KTD) receipt dated 12-2-1996.

Ex.P.5(A):Letter dated 12-02-2003 of Sri V.Vasudevan officer, Investor Service Dept., Industan lever ltd., Mumbai addressed to DSP/CBI/VSP. (marked with consent ).

Ex.P.6 :Statement of account relating to KTD No.98/47/329.

Ex.P.6(A):Letter Dt.15.2.2003 of Sri G.V.Suresh Kumar, Co: Secretary Global Trust Bank Ashoka My Home Chambers alongwith two copies of applications of 19665 and 19666 dt.9.3.95. (marked with consent ).

Ex.P.7 :Statement of account of the accused from 17-06-1999 to 09-04-2001.

Ex.P.7(A):Letter Dt.13.2.2003 of Sri R.V.Krishnan, addressed to DSP/CBI, VSP alongwith the enclosure. (marked with consent ).

Ex.P.8 :Statement of account of accused as on 31-12-1997.

Ex.P.8(A):Letter Dt.24.2.2003 of Sri Parag B.Despande, Company Secretary addressed to DSP/CBI, VSP. (marked with consent).

Ex.P9 :F.D.Receipt dated 18-4-1997 for Rs.21,000/- 204 C.C.03/2005/I CBI Court/VSP

Ex.P.9(A):Regd.Sale deed dt.6.7.94.

Ex.P.10 :F.D.Receipt dated 16-10-2000 for Rs.30,000/-

Ex.P.10(A): Receipt dt.17.2.2003 of DSP/CBI,VSP given to G.Guru Prasad alongwith enclosures. (marked with consent ).

Ex.P11 :F.D.Receipt dated 01-10-1994 for Rs.15,000/-

Ex.P.11(A): Letter Dt.16.2.95 of Brooke Bond Lipton India Ltd., alongwith enclosures. (marked with consent ).

Ex.P.12 :F.D.Receipt dated 12-12-1995 for Rs.20,000/-

Ex.P.12(A): Letter Dt.14.10.98, 24.3.95 of M/s Aarthi consultants Pvt. Ltd., addressed to Smt M.Laxmi. (marked with consent).

Ex.P.13 :F.D.Receipt dated 29-2-1996 for Rs.35,000/-

Ex.P.13(A): Letter Dt.16.1.96 of the Dy.Secretary, the Andhra sugars Ltd., addressed to Smt M.Lakshmi and share certificate bearing No.088255. (marked with consent ).

Ex.P.14 :F.D.Receipt dated 04-1-1994 for Rs.10,000/-

Ex.P.14(A): Share certificate No.54895 of the KCP Ltd., alongwith the letter dt.7.3.96 addressed to Smt M.Laxmi. (marked with consent ).

Ex.P.15 :F.D.Receipt dated 04-1-1994 for Rs.10,000/-

Ex.P.15(A): Letter dt.NIL of Fenolex Industries Ltd., addressed to Smt M.Lakshmi. (marked with consent).

Ex.P.16 :Pronote for Rs.2,00,000/- dated 14-08-2000.

Ex.P.16(A): UTI certificates bearing Nos.308930 140017188 and 3089301 40017189 alongwith enclosures. (marked with consent ).

Ex.P.17 :Pronote for Rs.2,00,000/- dated 15-08-2000.

Ex.P.17(A): Share certificate Nos.2846433, 3050669, 279713 along with allotment advice cum notice dt.19.2.93 and letter of Nagarjuna Fertilisers and Chemicals, Hyderabad. (marked with consent ).

Ex.P.18 :Pronote for Rs.1,00,000/- dated 16-08-2000.

Ex.P.18(A): Part-A Debenture certificate No.A.37872 Part-B-Debenture certificateNo. B-37872 and enclosures. (marked with consent ).

Ex.P.19 :Attested copy of ledger account of Sree Durga Finance.

205 C.C.03/2005/I CBI Court/VSP

Ex.P.19(A): Share certificate No.062, 063 and 064 of LK Pharmaceuticals Pvt.Ltd., KKD and letter dt.15.2.2003. (marked with consent ).

Ex.P.20 :Certifed xerox copy of D.D. for Rs.1,00,000/-

ExP.20(A):Share certificate No.211127 of Asia Television Network Ltd., along with letter Dt.25.10.96 addressed to Smt M.Laxmi. (marked with consent ).

Ex.P.21 :N.J.Stamp register

Ex.P.21(A): Share certificate No.00040222 of Pan clothing and consolidated Co.Ltd., (marked with consent ).

Ex.P.22 :Certified copy of demand draft application for Rs.13,000/-

Ex.P.22(A): Share certificate Nos. 66639 and 66674 of Stil Bin chemicals Ltd., (marked with consent ).

Ex.P.23:Certified copy of demand draft application for Rs.5,000/-

Ex.P.23(A): Deep Discount bond of the Industrial credit and Investiment Corporation of India Ltd., and the letter dt.27.5.97 addressed to Smt M.Laxmi. (marked with consent ).

Ex.P.24 :Certified copy of demand draft application for Rs.2,000/-

Ex.P.24(A): share certificate No.00383713 of the Industrial Finance Corporation of India Ltd., (marked with consent ).

Ex.P.25 :Share certificate was issued in the name of G.Mahalaxmi W/o.Venkayya

Ex.P.25(A): Acknowledgment No.0564 dt.26.4.94 for Rs.10,000/- along with receipt Dt.26.4.94 for Rs.10,000/- and enclosures. (marked with consent ).

Ex.P.26 :Pronote for Rs.1,00,000/- dt.8.3.2001.

Ex.P.26(A): Letter dt.23.02.2003 of the Asst.Manager, The Vysya Bank Ltd., VZM alongwith two credit vouchers both dt.27.3.99 for Rs.1050/- and 350/-. (marked with consent ).

Ex.P.27 :Memo of confirmation No.1129 dt.20.12.94 of Chakravarthi and company, VSP in the name of Smt M.Lakshmi one book in relevent page 1129. (marked with consent ).

Ex.P.28 : Memo of confirmation No.1201, dt.20.01.95 of Chakravarthi and company, VSP in the name of Smt.M.Lakshmi 1 book in relevent page 1201. (marked with consent ).

206 C.C.03/2005/I CBI Court/VSP

Ex.P.29 :Letter dt.17.2.2003 of Sri K.B.Pranesh, Secretary and Corporate GM, (Finance) the KCP Ltd., Ramakrishna building No.2, Dr.P.B.Cherian, Egmore, Chennai. (marked with consent ).

Ex.P.30 :Letter dt.21.2.2003 of S.Chidambaram, Manager M/s KCP Sugar and Industries Corporation Ltd., Rama Krishna buildings No.239, Annasali, Chennai. (marked with consent).

Ex.P.31 :Letter dt.10.5.2003 of Mr.S.Ramachandra Rao, Manager, Andhra Bank, KKD, addressed to VKC Reddy, DSP, CBI, VSP along with certified copy of ledger sheet of KTD No.47/65.

Ex.P.32 : Certified copy of ledger sheet No.109 of Siri shares and M/s D.S.S.Narayana Raju, VZM along with the receipt dt.26.4.2003 of VKC Reddy, DSP, CBI, VSP.

Ex.P.33 :Copy of statement of account no.22271 of accused wife and daughter alongwith covering letter.

Ex.P.34 :Copy of Ledger of M.Lakshmi, W/o M.Subramayam bearing SB A/c No.7598 opened on 29.01.96.

Ex.P.35 :Copy of pass book of M.Subramanyam, SB A/c No.8058 as on 31.12.97, VGB, Dabagardens Branch

Ex.P.36 : Letter dated 14.5.2003 of Sri C.Ramalingam, Asst.Manager, HSBC, Visakhapatnam.

Ex.P.37 : Letter dt.27.5.2003 of Sri C.Ramalinam, Asst. Manager, HSBC, Visakhapatnam.

Ex.P.38 :Certified copies of statement of account bearing No.061- 041133-006 of M.Lakshmi.

Ex.P.39 :Copies of sale deed for Rs.6,00,000/- dt.8.6.2000 in favour of G.Venkatayya.

Ex.P.40 : Copy of sale deed for Rs.5,70,000/- dt.8.6.2000 in favour of G.Venkatayya.

Ex.P.41 :Certified copy of inventory list dated 15/16.03.2001 in RC 8(A) 2001, CBI, VSP.

Ex.P.42 :Certified copy of the locker proceedings

Ex.P.43 :Certified copy of seizer memo relating to seized documents under the covers of seizer memo.

Ex.P.44 :Receipt letter issued by PW20(P.Ravi Kumar) dt.6.2.2003.

207 C.C.03/2005/I CBI Court/VSP

Ex.P.45 :File containing the immovable property returns of Sri M.Subramanyam, ITO, Vizianagaram along with receipt dt.2.6.2003.

Ex.P.46 :Certified copy of search list dated 15.03.2001 in the office premises of accused.

Ex.P.47 :Certified copy of search list dated 15.03.2001 in the residential premises of accused.

Ex.P.48 :Two demand promissory notes for Rs.1,00,000/- and Rs.50,000/-.

Ex.P.49 :Copy of ledger of plots along with plan and receipt.

Ex.P.50 :F.I.R in RC 35(A)/2002 registered on 01.11.2002.

Ex.P.51 : Registered sale deed dt.20.10.1990.

Ex.P.52 :Xerox copies of Indira Vikas Patras attested by the I.O.

Ex.P.53 :Letter dt.17.4.2001 along with file containing intimations relating to accused and order sheet.

Ex.P.53(A): Intimation form along with xerox copy of agreement dated 3-3-2001

Ex.P.53(B): Intimation form.

Ex.P.54 :Sanction order in RC 35(A)/2002 dated 14-05-2004.

Ex.P.55 :Xerox copy of sale agreement dt.3.3.2001.

Ex.P.56 :Xerox copies of ledger extracts pertaining to Sri Lakshmi Finance.

Ex.P.57 :File consisting of pay particulars of M.Subrahmanyam.

Ex.P.58 :Locker advance receipt and rent receipt in the name of M.Kameswara Rao.

Ex.P.59 :File relating to Akshya Deposit certificate in the name of Smt M.Lakshmi.

Ex.P.60 :Receipt dt.12.12.2003 along with three DD applications.

Ex.P.61 :Receipt dt.9.2.2003 along with safe deposit vaults application form.

Ex.P.62 :File relating to statement of account in respect of SB A/c No.6510 standing in the name of Smt M.Lakshmi commenced on 29.11.1999 and closed by 15.5.2000.

Ex.P.63 :Letter dt.12.05.2003 along with statement of joint account No.SB20810.

208 C.C.03/2005/I CBI Court/VSP

Ex.P.64 : Original Pronote dated 01-9-1996 for Rs.50,000/-.

Ex.P.65 : Original Pronote dated 19-03-1997 for Rs.25,000/-.

Ex.P.66 :Details of shares purchased and sold by Smt M.Laxmi.

Ex.P.67 : Fixed deposit receipt of the accused in Andhra Bank dt.12-07- 2005 for Rs.5,60,000/-.(marked with consent)

Ex.P.68 :Fixed deposit receipt of the accused in Andhra Bank dt.20- 09-2004 for Rs.53,112/-(marked with consent)

Ex.P.69 : Fixed deposit receipt of the accused in Andhra Bank dt.04- 08-2004 for Rs.70,200/-.(marked with consent)

Ex.P.70 :Fixed deposit receipt of the accused in Andhra Bank dt.04- 08-2004 for Rs.47,071/-.(marked with consent)

Ex.P.71 : Fixed deposit receipt of the accused in Visakha Grameena Bank dt.04-08-2007.

Ex.P.72 :Fixed deposit receipt of the accused in Visakha Grameena Bank dt.04-08-2007.

Ex.P.73 :Three xerox copies of receipts dated 10.02.1997, 06.03.1997 and 10.04.1997.

Ex.P.74 :Xerox copy of receipt dated 12-12-2000.

Ex.P.75 :Certified copies of I.T.returns of G.Venkayya for the assessment year from 1998-1999 to 2001-2002 certified by D.Pera Raju.

Ex.P.76 :Copy of I.T.Returns of the accused for the assessment years 1998-1999, 1999-2000, 2000-2001 and 2001-2002.

Ex.P.77 :Xerox copy of direct taxes ready reckoner for 10 years ie., from 1993-1994 to 2002-2003(16th edition 2002-2003).

Ex.P.78 :Fixed deposit receipt for Rs.30,000/- dt.27.11.1999 in Vysya Bank, Vizianagaram with connected documents.

Ex.P.79 :Cash seized at the time of search deposited as FD in the Bank of Baroda dt.23.4.2004.

Ex.P.80 :A sum of Rs.2,180.56ps received as interest on SB/Account from SBI, main branch, Vizianagaram as on 9-4-2001 at S.No.9 of statement-C and connected documents.

Ex.P.81 : Letter dated 26-9-2003 of accused.

Ex.P.82 :Proceedings issued by SP/CBI.

Ex.P.83 :Letter dated 08-02-2003 addressed by Mr.K.L.Narayana to Mr.V.K.C.Reddy, DSP, CBI, VSP.(subject to objection).

209 C.C.03/2005/I CBI Court/VSP

LIST OF DOCUMENTS MARKED ON BEHALF OF DEFENCE SIDE.

DEFENCE:

Ex.D.1:Xerox copy of form 16 of I.T.Returns

Ex.D.2:Letter of S.J.V.Peeth dated 28-02-2000

Ex.D.3:Certified copy of calender and judgment in CC.20/2001 in the court of Special Judge for CBI Cases, Visakhapatnam.

Ex.D.4:C.C. of order in Crl.M.P.268/01 in RC.8/2001 of CBI Court, VSP.

Ex.D.5:Xerox copy of receipt dt.03-08-2001 issued by Inspector, CBI/VSP.

Ex.D.6:Certified copy of sale deed dt.15.11.2003.

Ex.D.7: Xerox copy of FDR with original endorsement of withdrawing in cash of Rs.16,000/-.

Ex.D.8:Account statement of M.Lakhsmi from 1-10-1994 to 1-4- 1995.

Ex.D.9:Account statement of M.Lakhsmi from 1-4-1995 to 1-4- 1996.

Ex.D10:Account statement of M.Lakshmi from 1-4-1996 to 1-4- 1997.

Ex.D11:TDS collected and remitted on behalf of Smt M.Lakshmi wife of accused under challan and form 16 (A).

Ex.D12:Account statement for the financial year 1-4-1997 to 31-3-1998 and form 16(A).

Ex.D13:Account statement for the financial year 1-4-1998 to 31-3-1999.

Ex.D14:Account statement for the financial year 1-4-1999 to 31-3-2000 and form 16(A).

Ex.D15:Account statement for the financial year 1-4-2000 to 31-3-2001.

Ex.D16:Account statement from 4-1-1994 to 01-4-1994.

Ex.D.17:Account statement from 1-4-1994 to 1-4-1995.

Ex.D18:Account statement from 1-4-1995 to 1-4-1996.

Ex.D.19:Account statement from 1-4-1996 to 1-4-1997.

210 C.C.03/2005/I CBI Court/VSP

Ex.D20:Account statement from 1-4-1997 to 1-4-1998.

Ex.D21:Account statement from 1-4-1998 to 31-3-1999.

Ex.D22:Account statement from 1-4-1999 to 31-3-2000.

Ex.D23:Account statement from 1-4-2000 to 31-3-2001.

Ex.D24:Death certificate of P.V.Mohana Rao marked through DW2.

Ex.D25:Letter dated 22-12-2012 from UTI.

Ex.D.26:Sale agreement of MSN Raju.

Ex.D.27:Served notice dated 5-10-2001.

Ex.D28:Marriage wedding card.

Ex.D29:Bunch of prescription of Smt M.Lakshmi.

Ex.D30:Death certificate of G.Venkayya.

Ex.D31:Death certificate of M.Seetharam Murthy.

Ex.D32:Certified copy of sale deed dated 11-8-1975.

Ex.D33:Certified copy of sale deed dt.10-08-1975.

Ex.D34:Certified copy of sale deed dt.10-08-1975.

Ex.D35:Intimation letter to department dated 08-10-1975.

Ex.D36:True copy of sale deed.

Ex.D37:True copy of sale deed.

Ex.D38:Letter dated 15-05-1995.

Ex.D39:Application for part final from GPA account dt.19.9.1997.

Ex.D40:G.P.F part final order dt.3.10.1997.

Ex.D41:letter dated 25-9-1980.

Ex.D42:Intimation letter dt.19-5-1993

Ex.D43:Income Tax returns of M.Lakshmi for the assessment years 1997-1998, 1998-1999, 1999-2000, 2000-2001 and 2001- 2002.

Ex.D44:Form 16 of M.Subrahmanyam.

Ex.D45:Receipt (marked with consent).

Ex.D46:Income Tax Returns for the financial years 1998 to 1999.

Ex.D47:Income Tax Returns for the financial years 1999 to 2000.

211 C.C.03/2005/I CBI Court/VSP

Ex.D48:Income Tax returns for the financial years 2000 to 2001.

Ex.D49:Income Tax returns for the financial years 2001 to 2002.

LIST OF X-Series

Ex.X1:Authorised letter dated 22-2-2013.

Ex.X2:UTI Infrastrue Technology and services.

Ex.X3:Death certificate of father of DW6.

Ex.X4:Death certificate of mother of DW6.

Ex.X5:Death certificate of father of DW7.

Ex.X6:Un-registered Joint family property settlement agreement.

Ex.X7:Death certificate of father of DW8.

Ex.X8:Bunch of Telegrams of marriage greetings.

Sd/- B.Satya Venkata Hima Bindu

PRINCIPAL SPL. JUDGE FOR C.B.I. CASES,

FAC I Addl. SPL.JUDGE FOR C.B.I CASES,

VISAKHAPATNAM.

Copy submitted to

The Hon’ble Registrar (Judicial), High Court of Andhra Pradesh.

Copies to:

1. The Superintendent of Police, C.B.I., Visakhapatnam.

2. The Joint Commissioner of Income Tax, Range-III, Dabagardens, Visakhapatnam.

Sd/- B.Satya Venkata Hima Bindu

PRINCIPAL SPL. JUDGE FOR C.B.I. CASES,

FAC I Addl. SPL.JUDGE FOR C.B.I CASES,

VISAKHAPATNAM.

212 C.C.03/2005/I CBI Court/VSP 213 C.C.03/2005/I CBI Court/VSP

PSJC/VSKP Page no. 1 C.C.No.08 of 2006

IN THE COURT OF THE PRINCIPAL SPECIAL JUDGE FOR C.B.I. CASES,

VISAKHAPATNAM.

Present: Smt. B. Satya Venkata Hima Bindu,

Principal Special Judge for C.B.I. Cases,

Visakhapatnam.

Friday, this the 10 th day of March, 2023

C.C.No. 08/2006

Between:

State Represented by the Inspector of Police, Central Bureau of Investigation, SPE :Visakhapatnam. …Complainant And :

1.Mr. Perandurai Vasudeva Srinivas S/o P. Vasudeva Rao, aged 49 years, Ex-Branch Manager, Andhra Bank, 12-11-1519, Boudha Nagar, Secunderabad

2.M/s Sai Priya Estates & Resorts Ltd., Represented by its Managing Director Sri Satyanarayana Rao, D. No. 405, Mahalakshmi Apartments, Balaji Nagar, Siripuram, Visakhapatnam.

3.Mr. Dandamudi Papa Rao S/o late Satyanarayana Rao Aged 37 years, D. No. 402, Visalakshi Nagar, Visakhapatnam.

4.Mr. Valluripalli Venkata Nageswar Rao S/o Sri Papa Rao, aged 40 years, D. No. 9-42, Siripuram, Balaji Nagar, Visakhapatnam.

5.Mr. Dandamudi Rama Krishna Prasad S/o Late Satyanarayana Rao Aged 43 years, D. No. 405, Mahalakshmi Apartments, Balaji Nagar, Siripuram, Visakhapatnam.

PSJC/VSKP Page no. 2 C.C.No.08 of 2006

6.Mr. Ayyagari Janaki Rao S/o late A. L. Narayana Rao, Aged 67 years, Flat No. 22, HIG, Lawsons Bay Colony, Visakhapatnam.

7.Mr. Tanikella Venkata Bhaskara Harnath S/o late Mr. Subba Rao, Aged 66 years, D. No. 4-71-2, Lawsons Bay Colony, Visakhapatnam.

(The case against Accused No. 7 was abated As per Docket Order, dt.07.10.2022).

8.M/s Sai Priya Nests Pvt., Ltd., Represented by its Managing Director Mr. Bandi Suryanarayana, D. No. 405, Mahalakshmi Apartments, Balaji Nagar, Siripuram, Visakhapatnam.

….. Accused Nos.1 to 8

This case came on 27.01.2023 for final hearing before me in the presence of Sri A. Chenna Keshavulu, Ld. Public Prosecutor for the Complainant and of Sri G. V. A. Sai Baba, Advocate for Accused No. 1, Sri N. V. V. Prasad, Advocate for Accused No. 2, 4, 5 and 8 and Sri M. Ravi Raj, Advocate for Accused No. 3 and Sri Ch. V. Apparao, Advocate for Accused No. 6 and the case against Accused No. 7 was abated as per Docket Order, dt.07.10.2022 and the matter having stood over for consideration till this day, this Court deliver the following:

J U D G M E N T

1.The accused Mr. P. Vasudeva Srinivas, M/s Sai Priya Estates and Resorts

Limited, represented by Mr. B. Suryanarayanam, Mr. D. Papa Rao, Mr. V.V.

Nageswara Rao, Mr. D. Ramakrishna Prasad, Mr. A. Janaki Rao, Mr. T. V. B.

Harinath and M/s Sai Priya Nests, represented by Mr. B. Suryanarayana hereinafter referred as Accused Nos. 1 to 8 are arraigned and prosecuted for conspiracy and other substantial offences under Indian Penal Code (in short IPC) in this case.

Accused No.1 being Public Servant, arrayed and prosecuted for the offence under

Prevention of Corruption Act, 1988 (in short PC Act) in addition to IPC offences.

PSJC/VSKP Page no. 3 C.C.No.08 of 2006

2. Registration of F.I.R:

The case in RC 09(A)/2004-CBI/Visakhapatnam was registered against

Accused No. 1 and Others on 18.03.2004 under Section 120-B IPC r/w 420 and 471 of IPC and Section 13 (2) r/w 13 (1) (d) of PC Act, on the basis of source information that Accused No. 1 while functioning as Branch Manager, Andhra

Bank, SSI Branch, Gajuwaka, Visakhapatnam entered into criminal conspiracy with private persons and resorted to criminal misconduct by sanctioning loans abusing his official position as Public Servant during the year 2000. After completion of the investigation, charge sheet was filed before this Court against

Accused No. 1 for the offences punishable under Sec. 120-B r/w 420 and 471 of

IPC and Sec. 13 (2) r/w 13 (1) (d) of P.C., Act 1988 and for the offences punishable under Sec. 120-B r/w 420 and 471 of IPC against Accused No. 3 to 7 and Accused

No. 2 and 8 entities.

3. The brief averments of the Charge Sheet:

The case in R.C.9 (A)/2004 relates to fraud pertaining to sanction and disbursal of three different loans granted in the name of M/s Coromandal

Enterprises and to M/s Sai Priya Nests Pvt., Ltd., & M/s Sai Priya Estates and

Resorts Ltd., in the year 2000. For brevity, the allegations against each of them mentioned in the charge sheet are recapitulated as follows:

(I) M/s Coromandal Enterprises:

(i) Investigation discloses that Accused No. 4 and his wife Smt. V. Lakshmi formed a Partnership Firm in the name of M/s Coromandal Enterprises to do business of Tamarind and other agricultural produce in the year 1999 and the

Partnership Firm was not registered. Accused No. 4 opened a Bank Account in the name of Andhra Bank, submitting false and fabricated Registration Certificate

PSJC/VSKP Page no. 4 C.C.No.08 of 2006 dt.07.12.1997 and in conspiracy with Accused No. 1, submitted loan application dt.22.02.2000 in the name of Non Existing Firm M/s Coromandal Enterpirses for

Rs.75,00,000/- to meet working capital requirement for procuring and processing

Tamarind from Agency area of Orissa, Madhya Pradesh and Andhra Pradesh as an

Industrial activity.

(ii)Investigation further discloses that Accused No. 4 submitted an agreement between himself and M/s Bangaramma Cold Storage to the effect that stocks will be processed and stored at later place with a clause that Bank will inspect the stock. The property documents bearing No. 416/1998, 2246/1999, 2247/1999, 2648/1999, 2249/1999, 2250/1999, 2251/1999 and 2252/1999 held in the name of

Accused No. 4 and 5 were offered as collateral securities to secure the loan. The value of the property is far less than the amount of loan requested and Accused No.

7 who was the Panel Valuer, overvalued the property, violating the guidelines formulated by the Bank and Accused No. 1, the then Branch Manager, Andhra

Bank, SSIB, Gajuwaka, Visakhapatnam (hereinafter referred as Bank) ignoring all the guidelines and circulars issued by the Bank and sanctioned Rs.50,00,000/- to the applicant.

(iii)Investigation further discloses that Accused No. 4 instead of procuring the stock, diverted the funds in favour of his relatives who utilized the funds partly in

M/s Sai Priya Estates and Resorts Ltd., and for other purpose and it is further revealed that Accused No. 1 visited M/s Bangaramma Cold Storage and certified as if the stock was available even though there was no stock and did not insist for

Cold Storage Bonds.

(iv)The Investigation further revealed that Accused No. 4 further requested for

Rs.55,00,000/-, Inland Letter of Credit (LC) in favour of M/s Balaji Feeds,

PSJC/VSKP Page no. 5 C.C.No.08 of 2006

Vizianagaram a fictitious firm and that Accused No. 1 ignoring guidelines issued vide HO Cir 045 Ref. 15/5, dt.21.05.1997, Circular No. 182/26/20 Dt.04.11.1998 at Page No. 182/39 Col.No. 4.4.10 and Cir. No. 083 Ref.16/4, dt.26.06.1995 without obtaining private and confidential report on the beneficiary of Inland letter of Credit for large amounts. The LC sanctioned by Accused No. 1 was negotiated at Karur Vysya Bank for Rs.51,00,000/-. On the due date Accused No. 4 did not pay anything from the total loan became Non Performing Asset (NPA). The acts of

Accused No. 1 and 7 caused wrongful gain of Rs.105.15 lakhs (Rs.50.00 lakhs

OCC and Rs.50.15 lakhs LC) to Accused No. 4 and corresponding wrongful loss to

Andhra Bank.

(II) M/s Sai Priya Nests Pvt. Ltd. :

(i)Investigation reveals that Accused No. 5 who was the Managing Director of

M/s Sai Priya Nests Pvt., Ltd., i.e., Accused No. 8 entity entered into criminal conspiracy with Accused No. 1 and in pursuance of the same, fraudulently submitted an application for advance of Rs.75,00,000/- as Packing Credit Limit (In short PCL) and Rs.20,00,000/- Bank guarantee.

(ii)The PCL is to procure Prawn from local farmers for export purpose and the application disclosed that Andhra Bank will take over the outstanding loan liability of Rs.22,76,514/- in the account of M/s Sai Priya Nests Pvt., Ltd., from Union

Bank of India, SSSIB, Visakhapatnam.

(iii)Accused No. 5 and Accused No. 8 entity fraudulently submitted an export proposal bearing No. D020, Dt.07.03.2000 issued by Mr. K. Srinivas, Raja Udyog

Limited, Pune along with his loan application for sanction. Accused No. 1 knowing fully that it is not an export order, sanctioned dishonestly four PCLs by abusing his official position as Public Servant by violating the stipulated guidelines for

PSJC/VSKP Page no. 6 C.C.No.08 of 2006 sanction of Packing Credit by the Bank. Accused No. 4 fraudulently offered stocks (frozen shrimp) as primary security and Accused No. 1 dishonestly did not mention anything about the availability of stock in the sanction order. Accused No. 5 and 4 fraudulently offered property described in Document No. 2251/99, 2253/99, 2254/99 and 2254/99 as collateral security to the loan sanctioned to Accused No. 8 entity.

(iv)Investigation further revealed that Accused No. 4 and 5 acquired this property for consideration of Rs.1.38 lakhs in 1999 but however, Accused No. 6 fraudulently valued his properties as worth Rs.12.95 lakhs in the year 2000 violating the Bank guidelines which stipulates that eight times of the annual income generated from the property or current registration value of the property should be considered for valuation. The valuation of these properties is to be done by Rural Development Officer of the Bank. The registration value of the property as per the documents is only Rs.2.28 lakhs and Accused No. 1 dishonestly accepted the value.

(v)Accused No. 3 offered property in document No. 957/98 which was acquired by him for a consideration of Rs.3.59 lakh in 1998 but Accused No. 7, Panel Valuer dishonestly valued for Rs.49.30 lakh in 2000 to secure the loan sanctioned to

Accused No. 8. Accused No. 3 fraudulently sold the property to 45 persons during the period 21.05.1998 to 08.11.2002. The current registration value of property described in Document No. 957/98 is Rs.5.9 lakh. Accused No. 1 dishonesty accepted the valuation.

(vi)Accused No. 3 also fraudulently offered property in Doc. No. 4452/99 and 4453/99, which he acquired for a consideration of Rs.2.04 lakh in 1999 but

Accused No. 1 dishonestly got it valued for Rs.26.96 lakh in 2000 to secure the

PSJC/VSKP Page no. 7 C.C.No.08 of 2006 loan sanctioned. The value of property described in Document No. 4452/99 and 4453/99 is Rs.2.54 lakh only. Accused No. 1 dishonestly accepted the value of an

additional security submitted by Accused No. 5 vide Document No. 781/97 on

05.05.2000 for Rs.5 lakh. Accused No. 1 dishonestly sanctioned 4 number of

Packing Credit Limits i.e., P.C.1 on 06.03.2000 for Rs.70 lakh, P.C.2 on 05.05.2000 for Rs.20 lakh, P.C.5 on 25.08.2000 for Rs.29 lakh and P.C.6 on 03.10.2000 for Rs.34 lakhs.

(vii)By the above described criminal acts of Accused No. 1, Accused No. 5, 3, 6 and 7, Andhra Bank suffered a wrongful loss of Rs.1.43 crore and corresponding wrongful gain to Accused No. 8 represented by Accused No. 5.

(III) M/s Sai Priya Estates & Resorts Ltd:

(i)Accused No. 5 as Managing Director of M/s Sai Priya Estates and Resorts

Ltd.., opened Current Account bearing No. 110 in Andhra Bank, SSSIB, Gajuwaka on 28.06.2000. Accused No. 5, 4, Mr. V. C. Babu and wife of Accused No. 3 Mrs.

D. V. S. S. Lakshmi Mani formed a limited company in the name of M/s Sai Priya

Estates & Resorts Ltd (M/s SPER) in 1994, in which Accused No. 5 is the

Managing Director (MD), other 3 are Directors. The board of Directors authorized

Accused No.5 to represent the company to avail loan. Accordingly submitted application to Andhra Bank for a Term Loan of Rs.93 lakh to purchase plants, machinery, equipment and OCC limit of Rs.7 lakh for the development of business.

(ii)Accused No. 5 offered properties in Document No. 409/99 worth Rs.9.68 lakhs and two house sites in Document No. 417/98, dt.07.03.1998 worth Rs.63.34 lakhs as collateral security that were far less than the loan amount asked for.

Accused No. 6 (Janaki Rao), Panel Valuer overvalued the property violating the guidelines formulated by the Bank.

PSJC/VSKP Page no. 8 C.C.No.08 of 2006

(iii)Investigation further revealed that Accused No. 5 conspired with Accused

No. 1 in pursuance of the said conspiracy, Accused No. 1 accepted the value of the property in Doc. No. 417/98 as worth Rs.60,34,000/- without obtaining the registration value or valuation report of the valuer and further sanctioned term loan of Rs.87 lakh and OCC limit of Rs.7 lakh towards working capital violating the

Circular No. 182/26/20, dt.04.11.1998 of Andhra Bank and by abusing his official position as Public Servant.

(iv)Accused No. 1 took over the existing loan of Rs.21 lakh from State Bank of

Hyderabad. Accused No. 1 dishonestly transferred the Term loan sanctioned into the current account from which, Accused No. 5 obtained pay orders/demands drafts in favour of his relatives and employees to divert the fund for other purpose, Rs.33 lakh earmarked for purchase of amusement equipment from M/s Arihant Industrial

Corporation Ltd., Pune were not purchased but encahsed in a fictitious account opened in the name of M/s Arihant Industrial Corporation Ltd., Hyderabad.

Apparently the original company has no branch at Hyderabad. The loan fund was misutilized.

(v)Accused No. 5 knowing fully well that Sphere and Co., do not exist submitted false quotations in its name and fraudulently obtained two Pay Orders in favour Sphere and Co., Proprietor Mr D. Papa Rao who has spent Rs.5,00,000/- and returned Rs.1,99,000/- to Accused No. 5. The Investigation concluded that the acts of Accused No. 1 in conspiracy with Accused No. 5 and 6 caused wrongful gain to M/s Sai Priya Estates and Resorts Ltd., and corresponding loss to the Bank.

4. Taken on File :

The case was taken on file against Accused No. 1 U/sec 120-B, 420, 468, 471 r/w 465 IPC and for the offence punishable 13 (1) (d) r/w 13 (2) of P.C. Act,

PSJC/VSKP Page no. 9 C.C.No.08 of 2006 1988 and under Sec. 120-B, 420, 468, 471 r/w 465 IPC against Accused No. 2 to 8.

On receipt of summons, accused appeared before this court and copies of documents relied upon by the prosecution, were served on them as required under

Section 207 Cr.P.C.

5. Framing of Charges:

Accused were examined U/sec.239 of Cr.P.C, The accused denied the allegations made by the prosecution. After hearing both sides and on consideration of material on record, Charges U/secs.120-B, 420, 465 and 471 IPC and u/Sec. 13 (2) r/w 13 (1) (d) of PC Act against Accused No.1, Charges under Sec. 120-B, 420, 468, 465 and 471 IPC against Accused No. 3, 4 & 5 and Accused No. 6, Charges under Secs. 120-B, 420, 465 and 471 of IPC against Accused No. 6 and 7 and under Sec. 120-B and 420 IPC against Accused No. 2 and 8 entities were framed by this Court and the same were read over and explained to the Accused. Accused

No. 1 to 8 pleaded not guilty and claimed to be tried.

6. Evidence on Record:

In order to substantiate its case, the Prosecution examined PWs.1 to 21 and got marked Exs.P.1 to P.259. After completion of prosecution evidence, accused were examined U/sec. 313 Cr.P.C. Exs-D.1 to D.20 were got marked for defence.

7. Prosecution side Evidence:

The prosecution examined Mr. N. S. Chakravarthy, Mr. G. V. V.

Satyanarayana, Mr. M.V. V. Satyanarayana, Mr. K. Srinivas and Mr. K. Pravakar

Rao, Private Persons connected with the case as PW.1, PW.4, PW.8, PW.11 and

PW.13. The Revenue officials Mr. Abdul Raheem, Mr. Mohan Rao and Mr. Tulasi

Das were examined as PW.2, PW.14 and PW.20. The Bank officials Mr. T. L. V.

Padmanabham, Mr. V. Harshavardhan Reddy, Mr. D. Ramachandra Rao, Mr. V.

PSJC/VSKP Page no. 10 C.C.No.08 of 2006

Vydyanath and Mr. Manoj Asapu were examined as PW.3, PW.5, PW.6, PW.10 and

PW.19. The then ATO Officials Mrs. Uma Maheswari and Mrs. Sunitha Rani were examined as PW.7 and PW.9. The Bank officials connected with the case i.e., Mr.

I.T.R.Sastry and Mr. N. Anand were examined as PW.15 and PW.18. The subsequent Panel Valuer Mr. Srinivas was examined as PW.12. Mr. Vijay Shankar,

Director and Scientist of Central Forensic Laboratory who issued Ex-P.121 Expert

Opinion and connected documents vide Covering letter under Ex-P.122 was examined as PW.16. Mr. D. Rajasekhar Rao, Mediator in whose presence specimen signatures and hand writings of Accused were taken was examined as PW.17. The evidence of PW.16 and PW.17 and the documents marked through them were undisputed. Lastly the Investigating Officer Mr. Dibakar Mishra was examined as

PW.21. PW.21 testified about registering FIR in RC.9-A/2004 under Ex-P.239, examination of witnesses and collecting of documents connected with the case.

Prosecution documents covered under Exs P.240 to P.259 were marked through

PW.21.

8. Defence side Evidence:

Mr. G. Apparao, Chief Manager of Union Bank of India was examined as

DW.1 and Exs D.8 to D.19 were marked through him. The Branch Manager,

Andhra Pradesh State Financial Corporation was examined as DW.2 and Ex-D.20 was marked through him.

9.On hearing the learned Public Prosecutor for CBI and the learned counsels

for Accused no.1, 3, 4, 5, 7 and Accused No. 2 & A8 entities, and perusing the

material on record and written arguments filed by Prosecution and Accused No. 2, 4, 5 and 8, the following points are framed for determination .

PSJC/VSKP Page no. 11 C.C.No.08 of 2006

10. Points for determination :

1. Whether prosecution has established offence U/secs.468 of IPC against

Accused No. 3, to 5 beyond reasonable doubt?

2. Whether prosecution has established offence U/secs.465 and 471 of IPC against Accused No. 1, 3, 4, 5, (6) and 7 beyond reasonable doubt?

3. Whether prosecution has established offence U/sec.420 IPC against

Accused No.1 to 8 beyond reasonable doubt?

4. Whether prosecution has established the offence of criminal conspiracy under sec.120-B IPC against Accused No.1 to 8 beyond reasonable doubt?

5. Whether prosecution established offence U/sec. 13 (1) (d) r/w 13 (2) of PC

Act against Accused No.1 beyond reasonable doubt?

11.For brevity, the above points for determination are answered pertaining to the allegations against the Accused No. 1 to 8 in connection with each loan transaction i.e., Coromandal Enterprises, Sai Priya Nests Pvt., Ltd., and M/s Sai

Priya Estates & Resorts Ltd., separately.

(I) Coromandal Enterprises:

1. The case of the prosecution is that Accused No. 4 in conspiracy with other

Accused, fraudulently created Commercial Tax Registration Certificate,Form – B, dt.09.12.1997 bearing CST No. VSP/02/1/2092/97/98 and R.C.No.

VSP/02/1/3164/97-98 Dt.09.12.1997 purportedly issued by Assistant Commercial

Tax Officer, Kurupam Market Circle, Visakapatnam and submitted along with loan application in the name of M/s Coromandal Enterprises and applied for Working

Capital Loan of Rs.70,00,000/- and offered property documents standing in his name and in the name of Accused No. 5 wherein, the value of the property was far less than the loan request and Accused No. 7, Panel Valuer of the Bank submitted

PSJC/VSKP Page no. 12 C.C.No.08 of 2006 the inflated valuation report. It is contended that Accused No.1 in pursuance of conspiracy among the Accused, sanctioned OCC limit of Rs.50,00,000/- to

Accused No. 4 against the Guidelines and Circulars of the Bank, fraudulently certifying the availability of stock which was shown as primary security though there was no stock kept in M/s Bangaramma Cold Storage. It is further alleged that

Accused No.1 ignoring the guidelines and circulars of the Bank, issued Letter of

Credit in favour of M/s Balaji Feeds which is a fictitious firm, as requested by

Accused No. 4 and that the total loan of Rs.105.15 lakhs extended to the Accused turned into Non-Performing Asset (NPA), resulting wrongful loss to the Andhra

Bank and corresponding gain to the Accused.

2.The prosecution to bring on record the particulars pertaining to the opening of account in the name of M/s Coromandal Enterprises and subsequent loan transactions, relied upon the evidence of PW.15 and PW.18. The evidence of

PW.15 is that Ex-P.86 is the application for opening Current Account No. 94, dt.24.02.2000 in the name of M/s Coromandal Enterprises and Ex-P.87 is the photocopy of Partnership Deed, dt.08.02.1999 and Ex-P.88 is the photocopy of

Certificate of Registration with CST No. VSP/02/1/2092/97-98 (Central Sales Tax in short CST) in the name of M/s Coromandal Enterprises, dt.09.12.1997 and Ex-

P.89 is the photocopy of Certificate of Registration with APGST No.

VSP/02/1/3164/97-98 (Andhra Pradesh General Sales Tax in short APGST) in the name of M/s Coromandal Enterprises.

3.Pertaining to the loan transaction, the evidence of PW.15 is that Ex-P.90 is the application for credit facility in respect of M/s Coromandal Enterprises submitted to the Andhra Bank on 20.02.2000 and Ex-P.91 is the corresponding appraisal note, dt.02.03.2000 prepared by Accused No. 1. PW.15 stated that he

PSJC/VSKP Page no. 13 C.C.No.08 of 2006 perused Ex-P.41 photostat copy of Agreement, dt.15.02.2000 between M/s

Bangaramma Cold Storage Pvt. Ltd., and M/s Coromandal Enterprises during his enquiry and that as per contents of Ex-P.41, the stock stored in Cold Storage will be under hypothecation to Andhra Bank, SSSIB, Gajuwaka and Bank authorities have right to inspect the stock.

4.PW.15 further stated that as per Ex-P.92 certified copy of Statement of

Current Account No. 94 pertaining to M/s Coromandal Enterprises for the period from 24.02.2000 to 11.03.2005, the Current Account was opened on 24.02.2000 by depositing amount of Rs.10,000/- and further stated that as per contents of Ex-P.92,

M/s Coromandal Enterprises issued Ex-P.93 Cheque bearing No. 189927 for

Rs.25,60,200/- on 06.03.2000 signed by Accused No. 4 and that the said amount was debited from the Ex-P.92 account and that subsequently Pay Order in favour of

Mr. K. Srinivas for Rs.1.5 lakhs, DD No. 146860 in favour of V. N. Mohan Rao for

Rs.5,00,000/-, D.D. No. 146861 in favour of V. N. Mohan Rao for Rs.5,00,000/-,

D. D. No. 146862 in favour of Mr. R. Srinivas for Rs.2,00,000/- and D. D. No.

146863 for Rs.8,00,000/- in favour of Mr. N. S. Chakravarthy and D. D. No.

146864 for Rs.4,00,000/- in favour of Mr. B. V. Nageswara Rao covered under Ex-

P.54, Ex-P.1 and Ex-P.94 were issued.

5. PW.15 further stated that as per contents of Ex-P.92 M/s Coromandal

Enterprises issued Ex-P.95 Cheque bearing No. 189930 for Rs.20,08,000/- dt.8.03.2000 signed by Accused No. 4 and that the said amount was debited from

Ex-P.92 account and subsequently DD bearing Nos. 146872 and 146873 in favour of Mr. N. S. Chakravarthy for Rs.5,00,000/- each covered under Ex-P.2 and Ex-P.3 were issued and D.D. bearing Nos. 146874 and 146875 in favour of Accused No. 3 for Rs.5,00,000/- each covered under Ex-P.96 (2 sheets) were issued. PW.15 further

PSJC/VSKP Page no. 14 C.C.No.08 of 2006 stated that as per Ex-P.92 Statement of Account, an amount of Rs.1,000/- to Mr. G.

V. K. Rao, Rs.1,00,000/- to Mr. K. Srinivas, Rs.5,000/- to Accused No. 6 was paid on different dates and the borrower availed full loan amount.

6.PW.15 further stated that he perused the connected documents pertaining to the loan account of M/s Coromandal Enterprises wherein Ex-P.22 is the photostat copy of Irrevocable document Credit No. 1051/ILC/1/2000, Dt.18.10.2000, Ex-

P.23 is bunch of documents pertains to M/s Balaji Feeds along with covering letter, dt.19.10.2000 addressed by Manager, Karur Vysya Bank, Ex-P.97 contains letter dt.31.03.2000 and 12.10.2000 addressed by Accused No. 4 to Branch Manager,

Andhra Bank, Ex-P.98 is the Appraisal Note, dt.17.10.2000, Ex-P.99 is the

Sanction letter, dt.17.10.2000, Ex-P.100 is the Letter, dt.12.04.2000 addressed by

Manager, Karur Vysya Bank to the Chief Manager, Andhra Bank and Ex-P.101 is the letter, dt.21.04.2012 addressed by Chief Manager, Andhra Bank.

7.PW.15 concluded that as per Ex-P.91 Appraisal Note, M/s Coromandal

Enterprises applied for secured Overdraft limit of Rs.50,00,000/- for carrying

Tamarind business and the same was sanctioned on 02.03.2000 and that as per Ex-

P.98 Appraisal Note, dt.17.10.2000, on the request of borrower, the Branch converted above referred Secured Overdraft limit to Open Cash Credit (OCC) limit of Rs.50,00,000/- with sub limit of Rs.20,00,000/- against Good Debts of age not more than 90 days. He further stated that the party also requested the Bank for

Inland letter of Credit (ILC) DA (Documents against acceptance) basis for

Rs.55,00,000/-which subsists period of 180 days and the same was issued vide Ex-

P.22 and that the beneficiary as per Ex-P.98 is M/s Balaji Feeds and the purpose is procurement of shrimp feed. PW.15 further stated that the condition stipulated by the Bank is that the borrower shall reduce the OCC Liability to Rs.40,00,000/-.

PSJC/VSKP Page no. 15 C.C.No.08 of 2006

8.With regard to Inland letter of credit, the evidence of PW.15 is that as per

Ex-P.23, the Karur Vysya Bank forwarded bills drawn under letter of Credit (LC) with relevant documents pertaining to M/s Balaji Feeds to Andhra Bank, confirming the issuance of LC and confirming that documents drawn under LC were in order as per the terms of LC and that the LC under Ex-P.23 was negotiated by Karur Vysya Bank and that as per contents of Ex-P.92 Statement of Account subsequently on 21.04.2001 SSSIB Branch, Andhra Bank has paid an amount of

Rs.55,15,000/- to Karur Vysya Bank and that accordingly the LC liability of the borrowers has devolved, increasing the debt to Rs.91,39,243.68ps as on 30.12.2004.

9.Subsequently prosecution examined PW.18 the then Deputy Manager cum

Recovery Officer for NPA Accounts, SSSIB, Gajuwaka to corroborate the evidence of PW.15. The evidence of PW.15 is that Ex-P.86 is the application for opening

Current Account No. 94, dt.24.02.2000 in the name of M/s Coromandal Enterprises with their Bank and as per contents of Ex-P.86, Mr. P. V. Madhusudhana Rao,

Chartered Accountant introduced this Account, but however the account number of the said Mr. P. V. Madhusudhana Rao was not mentioned in the application and that Accused No. 1 who worked as Branch Manager during the relevant point of time, opened this account and that Ex-P.86 bears the signature of Accused No. 1.

PW.18 identifies the signature of Accused No. 1 on Ex-P.86 and further stated that

Ex-P.87 is the photostat copy of Partnership deed, dt.08.02.1999 pertaining to the

M/s Coromandal Enterprises and that Ex-P.88 is the photocopy of Certificate of

Registration with CST No. No.VSP/02/1/2092/97-98 dt.09.12.1997 in the name of

M/s Coromandal Enterprises. Ex.P.89 is Photocopy of Certificate of Registration with APGST No. VSP/02/1/3164/97-98 dt.09.12.1997 in the name of M/s

PSJC/VSKP Page no. 16 C.C.No.08 of 2006

Coromandal Enterprises and Ex.P.90 is the Application for Credit Facilities in respect of M/s Coromandal Enterprises, Andhra Bank, dt.20.02.2000 and Ex.P.91 is the Appraisal Note dt.02.03.2000 pertaining to M/s Coromandal Enterprises appraised by Accused No. 1, bearing the signature.

10.PW.18 further stated that as per Ex-P.142 Manager Certificate of Valuation dt.07.10.2000 pertaining to this loan prepared by Accused No. 1, the value of property for item no.1 is shown as Rs.66,08,000/- and for item no.2 is shown as

Rs.43,68,000/- and as per Ex-P.143 RF 255, dt.03.03.2000, the total extent of land covered under item no.1 to 6 is Ac.05.12cts dry land and the total value of the property is Rs.66,00,000/- and as per Ex-P.144 RF 255 dt.08.03.2000, the total extent of land covered is Ac.03.76cts dry land and the total value of the property is

Rs.43,00,000/-. PW.18 further stated that the bank generally relies on property value given by the panel valuers and the Branch Manager also verifies the property offered as collateral security, physically along with the documents

11.According to PW.18, as per Ex-P.145 sanction letter No.1051/18/158/41, dt.02.03.2000, Accused no.1 sanctioned the credit limit of Rs.50,00,000/- and Ex-

P.41 is the Photostat copy of Agreement dt.15.02.2000 between Bangaramma Cold

Storage Private Limited and Coromandal Enterprises, according to which, the stock stored in the Cold Storage will be under hypothecation to Andhra Bank,

S.S.S.I.B., Gajuwaka and the Bank authorities have right to inspect the stock.

PW.18 corroborated that Ex.P.92 is the certified copy of Statement of Current

Account No.94 pertaining to M/s Coromandal Enterprises for the period from 24.02.2000 to 11.03.2005 and that Letters dt.31.03.2000 and 12.10.2000 covered under Ex.P.97 were addressed by Accused No. 4, Managing Partner Coromandal

Enterprises to Branch Manager, Andhra Bank and that the letters dt.30.04.2000,

PSJC/VSKP Page no. 17 C.C.No.08 of 2006 30.06.2000 and 31.07.2000 covered under Ex-P.146 were addressed by

Coromandal Enterprises to SSSIB Gajuwaka. PW.18 stated that he enquired over the phone about the availability of the stock pertaining to Coromandal Enterprises with Bangaramma Cold Storage and that the auditor of Bangaramma Cold Storage one Mr.Kameswararao informed him that there is no stock pertaining to

Coromandal Enterprises with Bangaramma Cold Storage and persons connected with Coromandal Enterprises never approached them. PW.18 further stated that

Ex.P.98 is the Appraisal Note, dt.17.10.2000, Ex.P.99 is the Sanction Letter dt.17.10.2000 and Ex.P.22 is the letter of credit dt.18.10.2000 issued by Andhra

Bank bear signatures of Accused No.1 and that Ex.P.23 is the letter addressed by

Karur Vysya Bank to Andhra Bank along with enclosures and Ex.P.100 is the

Letter dt.12.04.2000 addressed by Manager, Karur Vysya Bank to the Chief

Manager, Andhra Bank.

12.In the backdrop of evidence of PW.15 and PW.18, the allegations pertaining to M/s Coromandal Enterprises are discussed as follows:

Q.1 Whether Accused No. 4 fraudulently created Central Sales Tax

Registration Certificate in the name of M/s Coromandal Enterprises

and submitted to the Bank along with the Account opening form?

As seen from the evidence of PW.15 and PW.18, Ex-P.86 is the Account

Opening Form submitted by Accused No. 4 in the name of M/s Coromandal

Enterprises which is the Partnership Firm. The disputed CSTand APGST

Registration Certificate in the name of M/s Coromandal Enterprises were marked as Ex-P.88 and P.89. To bring on record that Ex-P.88 and P.89 were false and fabricated documents, prosecution examined PW.7.

PSJC/VSKP Page no. 18 C.C.No.08 of 2006

13.The evidence of PW.7 Mrs. M. Sunitha Rani, Deputy Assistant

Commissioner, Sales Tax, Visakapatnam is that during the year 2005 she worked as

Assistant Commercial Tax Officer, Kurupam Market Circle, Visakhapatnam and that as Assistant Commercial Tax Officer, her duties include issuing Registration

Certificate under APGST and CST Acts and collection of Taxes and that the

Assistant Commercial Tax Officer is the custodian of Registration Certificates,

Records, Registers and Files.

14.PW.7 further stated that she was acquainted with Mr.K.Nagendra the then

Commercial Tax Officer, Kurupam Market Circle, Visakhapatnam and she can identify his signature and that letter dt.13.07.2005 marked as Ex-P.40 bears signature of Mr.K.Nagendra along with her signature. PW.7 further stated that as per the contents of Ex.P.40, one Mr.Nekkanti Satyanarayan applied and obtained

CST Registration certificate bearing no.VSP/02/1/2092 in the name and style of

Mr.R.K.Chemicals at Door No.27-12-34, Durgalamma Temple, Visakhapatnam and that the above information was furnished on verification of office records and registers and that she cannot say who applied for registration of Ex-P.88 and P.89 which are the copies of CST and APGST Certificates of Registration dt.09.04.1997 and 09.12.1997 shown to her.

15.It is argued that Accused No. 4 never submitted any documents covered under Ex-P.88 and P.89 to the Bank and that the list of documents enclosed to the application for opening current account or credit facility never discloses that the above said Certificates of Registration and that the referred certificates does not belong to M/s Coromandal Enterprises under discussion. The Ld., Counsel appraised that none of the prosecution witnesses testified that these documents were submitted by Accused No. 4 to the Bank and even as per evidence of PW.15

PSJC/VSKP Page no. 19 C.C.No.08 of 2006 at paragraph no. 42 no CST or APGST registration certificate is necessary for obtaining loan from SSSIB.

16.The further contention of the Accused is that Ex-P.40 was inadmissible in and evidence of PW.17 based on the contents of Ex-P.40 letter dt.13.07.2005 cannot be looked into as such she cannot ascertain in whose name the purported

CST Registration numbers was issued without verifying the record, as admitted by her in the cross-examination.

17.As seen from the evidence of PW.7, Ex-P.40 letter was addressed by one Mr.

K. Nagendra, the then Commercial Tax Officer, Kurupam Market Circle,

Visakhapatnam to the Investigating Officer, informing that as per the records available in their office, one Mr. Nekkanti Satyanarayana has applied and obtained

CST Registration Certificate bearing No. VSP/02/1/2092 in the name and style of

M/s R. K. Chemicals at Door No. 27-12-34, Durgalamma Temple, Visakhapatnam.

Apparently, Ex-P.88 and P.89 appears to have been issued in the name of M/s

Coromandal Enterprises whose principal place of business was shown as “Durgalamma Colony, Visakhapatnam – 1”. The Certificate of Registration was issued on 09.12.1997 by one Mrs. P. Leela, the then Assistant Commercial Officer,

Kurupam Market.

18.In the above backdrop there are two material points for consideration.

Firstly; whether Ex-P.88 Central Sales Tax (CST) Certificate of Registration is false and fabricated and secondly; whether the same was submitted by Accused

No. 4 to SSSIB Gajuwaka Andhra Bank. As seen from the evidence of PW.7, the

CST Registration Certificate bearing No. VSP/02/1/2092 was issued in the name and style of M/s R. K. Chemicals and not to M/s Coromandal Enterprises. Ex-P.40 do not disclose neither the date of issuance of Registration Certificate in the name

PSJC/VSKP Page no. 20 C.C.No.08 of 2006 of M/s R. K. Chemicals nor any other information connected to the firm except address. As seen from Ex.P.86 and Ex.P.90 M/s Coromandal Enterprises was a

Partnership Firm and same is corroborated from Ex-P.87 Partnership Deed which is also a Prosecution document. According to Ex-P87, business address of M/s

Coromandal Enterprises is HIG – 26, Seethammadhara, NE, Visakhapatnam. It is evident from the contents of document itself that that Ex-P.88, CST Registration

Certificate was issued by Commercial Tax Officer, Kurupam Circle for a Firm in the name of M/s Coromandal Enterprises which is completely different from the address of M/s Coromandal Enterprises reflected in the account opening form and loan application. None of the documents on record disclose that M/s Coromandal

Enterprises has carried business at Door No. 27-12-34, Durgalamma Temple,

Visakhapatnam. In the cross-examination by counsel for Accused in this connection, PW.7 stated that “there is no restriction to issue Registration

Certificate by the Commercial Department to different individuals, firms and companies in the same name and that the address furnished by the assessee is the basis for the identification of the business establishment and that there may be more than one firm or Proprietary concern in the name of Coromondal

Enterprises”. In fact as seen from Ex.P.88 and Ex.P.89, they were issued by the then Assistant Commercial Tax Officer of Kurupam Market,Smt.P Leela .In this regard, PW.7 in her cross-examination stated that Smt P.Leela worked as Assistant

Commercial Tax Officer, Visakapatnam for some time and that the Assistant

Commercial Tax Officer of a specific Circle is alone competent to register and issue Certificate of Registration either under CST or APGST Acts for the commercial entities situated within his jurisdiction and she was not working in

Kurupam Market Circle by the year 1997. From the evidence of P.W.7 it is obvious

PSJC/VSKP Page no. 21 C.C.No.08 of 2006 that Smt. P.Leela isthe appropriate person to testify the veracity of issuing Ex-P.88 and 89.

19. Reverting back to documents on record, except Ex-P.40 letter, there is no other documents, registers or original/attested copy of certificate if Registration in the name of M/s.R.K.Chemicals brought on record by the prosecution. The particulars of Certificate of Registration pertaining to the Central Sales Tax being the part of entries in Public Register falls into the ambit of Sec. 74 of Indian

Evidence Act and can be proved only by adducing certified copies of the relevant extracts according to procedure provided under Sec. 76 of the Act. As per the evidence of PW.7 Mr. K. Nagendra who forwarded Ex-P.40 to the Investigating

Officer is still working. However, for the reasons better known to the Investigating

Officer neither the said Mr. K. Nagendra nor Smt. P. Leela, who purported to have issued Ex-P.88 were cited as witnesses. The non examination of above officials and non production of any document or register pertaining to registration of

M/s.R.K.Chemicals depreciate the case of Prosecution to much extent on this aspect. Therefore, Ex-P.40 letter in solitary addressed by Mr. K. Nagendra having the initial of PW.7 is insufficient to prove the the veracity of entries in a public record and the falsity of Ex-P.88 remains not proved by the Prosecution.

20.Proceeding further the contention in defence is that Ex-P.88 was not submitted by Accused No. 4. As per the Charge Sheet, Ex-P.88 was submitted by

Accused No. 4 along with the Account Opening Form covered under Ex-P.86 dt.24.02.2000 which was subsequent to Application for loan covered under Ex-

P.90, dt.22.02.2000. Accused No. 4 submitted the registration particulars of the

Partnership firm with Directorate of Industries in the loan application itself disclosing the date of registration as 21.02.2000. This fact was corroborated from

PSJC/VSKP Page no. 22 C.C.No.08 of 2006 the Registration Certificate, dt.21.02.2000 obtained by the Investigating Officer under Ex-P.244. Apparently, Ex-P.88 and P.89 pertains to the year 1997-98. There is no evidence on record to show that M/s Coromandal Enterprises floated even prior to Partnership Firm, dt.08.02.1999. As seen from the the Appraisal Note under Ex-P.91, the Partnership Firm was established only on 01.02.1999.

Accordingly there is no possibility for obtain Sales Tax Registration Certificate in the year 1997 and 1998. In addition to to above discussion Ex.P.88 and 89 are only photostat copies and there is no evidence on record to believe that the same was part of loan file. In this connection it is important to look into cross-examination of the Investigating officer P.W.21 wherein he stated “ I did not examine Mrs.P.Leela the then Assistant Commissioner Tax

Officer, Kurupam Market Circle who issued the original of Ex.P.88 and Ex.P.89.

Ex.P.141, Ex.P.188 and Ex.P.246 do not disclose the seizure of Ex.P.88 and

Ex.P.89. I do not know whether there is another proprietary concern in the name of

Coromondol Enterprises. Ex.P.88 and Ex.P.89 do not disclose whether the

Coromondol Enterprises mentioned in it is a Proprietary concern or Partnership firm. …. I have not seized the originals of Ex.P.88 and Ex.P.89.”

In the back drop of evidence of PW.21 no material is available on record to infer that Ex.P.88 and P.89 were connected to M/s Coromandal Enterprises under discussion. Lastly even as per the evidence of PW.18at Para No.42, for obtaining loan from SSSIB, submission of State Sales Tax and Central CST Registration

Certificate are not necessary. Accordingly the contention of Prosecution that

Accused No.4 fraudulently submitted Ex-P.88 to the Bank so as to mislead the bank to procure loan does not stand any merits.

PSJC/VSKP Page no. 23 C.C.No.08 of 2006

Q.2. Whether Accused No. 4 submitted loan application dt.22.02.2000 to

S.S.S.I.B., Andhra Bank for Rs.75,00,000/- loan to meet the working

capital of non-existing firm?

Q.3. Whether M/s Coromandal Enterprises was a non-existing firm?

21.Initially, Ex-P.86 is the application for opening Current Account in the name of M/s Coromandal Enterprises submitted by Accused No.4. Ex-P.87 is the corresponding corroborative document which is undisputed. Ex-P.87 is the

Partnership Deed, dt.08.02.1999 between Mr. V. V. Nageswara Rao and Mrs. V.

Lakshmi W/o Mr. V. V. Nageswara Rao. As per Ex-P.87 Mr. V. V. Nageswara Rao was authorized and empowered to act on behalf of the partnership business in the capacity of Managing Partner in all financial matters including loans. The Current

Account No. 94 was opened on 24.02.2000 in pursuance of the said application. As seen from the record, Ex-P.90 loan application, dt.22.02.2000 was submitted in the name of M/s Coromandal Enterprises as the nature of constitution of the Firm as

Partnership Firm with registration No. 0103 11154, dt.21.02.2000 with Directorate of Industries. In this regard, the evidence of the Investigating Officer who was examined as PW.21 is that on 25.07.2005 he received copy of provisional registration certificate of M/s Coromandal Enterprises in favour of Accused No. 4 from the General Manager, District Industries Centre along with the covering letter marked under Ex-P.244.

22.The Prosecution itself brings on record two important documents relating to the existence of M/s Coromandal Enterprises. Firstly; the Partnership deed covered under Ex-P.87, dt.08.02.1999 and Registration Certificate with Directorate of

Industries covered under Ex-P.244. As seen from Ex-P.244, the General Manager,

District Industrial Centre forwarded provisional Registration Certificate,

PSJC/VSKP Page no. 24 C.C.No.08 of 2006 dt.21.02.2000 in the name of M/s Coromandal Enterprises showing its business activity as Tamarind deseeding along with the covering letter which discloses that “on verification of the Provisional SSI Registration Issue Register, the Certificate of M/s Coromandal Enterprises, HIG-26, N. E. Layout, Seethammmadhara,

Visakhapatnam – 13 was issued by this office on 21.02.2000 for the line of activity “Tamarind De-Seeding” in favour of Sri V. V. Nageswara Rao as Managing Partner and Smt. V. Laxmi as Partner on provisional basis. The Factory location of the proposed unit is Visakhapatnam. The validity of the Provisional SSI Registration

Certificate is upto 5 years from the date of issue (or) upto the date of commencement of production which ever is earlier”.

23.The Certificate under Ex-P.244 was issued by District Industrial Centre of

State Government. It is not the case of the prosecution that the Certificate issued by

District Industrial Centre is false and fabricated. The presumption is that

Government Institution issues Registration Certificate prima facie after satisfying the existence of an Enterprise or Industry. As per Sec. 114 (e) of Indian Evidence

Act, all official acts have been regularly performed and any irregularity in contra is to be proved. This evidence adduced by the prosecution is completely contradicting to the accusation that M/s Coromandal Enterprises is a non-existing firm. Unless and until, there is some evidence on record to believe that the Partnership deed covered under Ex-P.87 and Registration Certificate covered under Ex-P.244 were brought into existence dishonestly, their veracity cannot be inferred adversely.

Therefore, there is no reasonable evidence on record adduced by the Prosecution to conclude that M/s Coromandal Enterprises is a non-existing firm against which

Accused No. 4 applied for loan.

PSJC/VSKP Page no. 25 C.C.No.08 of 2006

Q.4. Whether Accused No. 4 and 5 fraudulently submitted seven documents

bearing Nos. 416/98, 2246/98, 2247/99, 2248/99, 2250/99 and 2252/99 as

collateral security and whether Accused No. 7 fraudulently overvalued

the properties described in document No.416/98?

24.As per the loan application under Ex-P.90, the stock was shown as Primary

Security and house sites in extent of 12705 sq.yds in survey No. 175 & 176, at

Thallavalasa, Bheemunipatnam Mandal and house sites in extent of 20735 sq.yds., in survey No. 209 at Gambhiram, Anandapuram Mandal worth Rs.10,000,000/- standing in the name of Accused No. 4 and 5 were shown as collateral securities.

However, as per Appraisal Note covered under Ex-P.91, house sites measuring 18198 sq.yds., in Survey No. 175 and 176 at Thallavalasa, Bheemunipatnam

Mandal worth Rs.43.68 lakhs belonging to Accused No. 4 and house sites measuring 16520 sq.yds., in Survey No 209 at Gambhiram, Anandapuram Mandal standing in the name of Accused No. 4 and 5 jointly worth Rs.66.08 lakhs were submitted as collateral securities.

25.The Appraisal Note further goes to show that after taking into consideration the stock value and adequate collateral securities by way of house sites, an SOD limit of Rs.50,00,000/- is sanctioned to the borrower. As far as the title of the property, covered under the above referred documents, no contradictory evidence breaching the ownership of Accused No. 4 & 5 was adduced by the prosecution and the only fostering point for consideration relates to the actual value of the property and purported valuation alleged to be inflated.

26.In this regard, the Manager Certificate of Valuation, dt.07.10.2000 prepared by Accused No. 1 was marked as Ex-P.142 and the value of Item No. 1 is shown as

Rs.66,08,000/- and Item No. 2 is shown as Rs.43,68,000/-. As seen from the

PSJC/VSKP Page no. 26 C.C.No.08 of 2006 record, Accused No. 1 in his Valuation Certificate covered under Ex-P.142 has taken the value of properties covered under Exs P.143 and P.144 as Rs.66,08,000/- and Rs.43,68,000/- after deducting 1/3rd of the extent in Ac.05.15cts and 40% of extent in Ac.3.76cts for layout. The certified copies of Documents No. 2248/99 to 2250/99 and 2252/99 were marked as Exs P.225 to P.231 respectively through

PW.20 Sub-Registrar, Bheemunipatnam. Similarly, the certified copy of document

No. 416/98, dt.07.03.1998 executed in favour of Accused No. 4 pertaining to property admeasuring Ac.3.76cts at Thallavalasa, Bheemunipatnam Mandal,

Visakhapatnam offered as collateral security was marked as Ex-P.225 through

PW.20.

27.The property covered under Ex-P.142 was specifically referred in corresponding RF-255 marked under Ex-P.143 and P.144. The documents pertaining to six properties offered as collateral security and the value proposed therein as per Ex-P.143 and Ex-P.144 are as follows:

Sl.Document No. Executed in favourExtent of propertyDepositor No.of at Gambheeram Village,Value of the Anandapuram Mandal,property Visakhapatnam

As per Ex-P.143 :

12246/99 : Ex-P.226Accused No. 4 & 5Ac.1.59cts Total Value of 22247/99 : Ex-P.227Accused No. 4 & 5Ac.1.46cts Item Nos. 32248/99 : Ex-P.228Accused No. 4 & 5Ac.0.51cts 1 to 6 is 42249/99 : Ex-P.229Accused No. 4 & 5Ac.0.60cts Rs.66,00,000/- 52250/99 : Ex-P.230Accused No. 4 & 5Ac.0.20cts 62252/99 : Ex-P.231Accused No. 4 & 5Ac.0.76cts

As per Ex-P.144 :

7416/98 : Ex-P.225Accused No. 4 Ac.3.76cts Rs.43,00,000

28.Pertaining to the above referred documents, the property covered under

Document No. 416/1998 was alone valued by the Bank Panel Valuer i.e., Accused

PSJC/VSKP Page no. 27 C.C.No.08 of 2006

No. 7 for Rs.43,68,000/- vide Ex-P.175 Valuation Report, dt.02.03.2000 marked through PW.18. To breach the veracity of Valuation given by Accused No. 7, prosecution examined subsequent Panel Valuer, PW.12 Mr. S. Rama Gopal. The evidence of PW.12 is that Ex-P.64 is the valuation report dated 05.01.2004 given by him in respect of land property described in document No.416/1998 in extent of 3.76 Acres situated at Tallavalasa Village of Bheemunipatnam mandal,

Visakhapatnam and that he calculated the value of the property measuring 3.76

Acre at Rs.12 lakhs per Acre for total Rs.45.12 lakhs and the distress sale value of the property is Rs.38,35,200/- i.e 85% of valuation cost.

29.Nextly with regard to property covered under Document No. 2248/99 to 2250/99 and 2252/99 covered under Exs P.226 to P.231, no valuation reports by

Panel Valuer were brought on record by the prosecution, inspite of the accusation against Accused no. 4 and 5 that they fraudulently submitted the undervalued properties as collateral securities . As per Ex-P.143, the total depositors value of six properties shown as collateral security was shown as Rs.66,00,000/-. The value assessed by Accused No.1 in Ex-P.142 Manager’s Certificate of Valuation after the inspection of the property was Rs.66,08,000/-.

30.The evidence of PW.12 subsequent Valuer with regard to these properties offered as collateral securities to M/s Coromandal Enterprises is as follows;

1.Ex-P.65 is the valuation report dated 05.01.2004 given by him in respect of land property described in document No.2247/1999 in extent of 1.46 Acres situated at Gambheeram Village of Anandapuram mandal, Visakhapatnam and he calculated the value of the property measuring 1.46 Acre at Rs.10 lakhs per Acre for total Rs.14.60 lakhs and that the distress sale value of the property is

Rs.12,41,000/- i.e., 85% of valuation cost.

PSJC/VSKP Page no. 28 C.C.No.08 of 2006

2.Ex-P.66 is the valuation report dated 05.01.2004 given by him in respect of land property described in document No.2248/1999 in extent of 0.51 Acres situated at Gambheeram Village of Anandapuram mandal, Visakhapatnam and he calculated the value of the property measuring 0.51 Acre at Rs.10 lakhs per Acre for total Rs.5.10 lakhs and that the distress sale value of the property is

Rs.4.33,500/- i.e., 85% of valuation cost.

3.Ex-P.67 is the valuation report dated 05.01.2004 given by him in respect of land property described in document No.2249/1999 in extent of 0.60 Acres situated at Gambheeram Village of Anandapuram mandal, Visakhapatnam and he calculated the value of the property measuring 0.60 Acre at Rs.10 lakhs per Acre for total Rs.6 lakhs and that the distress sale value of the property is Rs.5,10,000/- i.e., 85% of valuation cost.

4.Ex-P.68 is the valuation report dated 05.01.2004 given by him in respect of land property described in document No.2250/1999 in extent of 0.20 Acres situated at Gambheeram Village of Anandapuram mandal, Visakhapatnam and he calculated the value of the property measuring 0.20 Acre at Rs.10 lakhs per Acre for total Rs.2 lakhs and that the distress sale value of the property is Rs.1,70,000/- i.e., 85% of valuation cost.

5.Ex-P.69 is the valuation report dated 05.01.2004 given by him in respect of land property described in document No.2252/1999 in extent of 0.76 Acres situated at Gambheeram Village of Anandapuram mandal, Visakhapatnam and he calculated the value of the property measuring 0.76 Acre at Rs.10 lakhs per Acre total Rs.7.6 lakhs and that the distress sale value of the property is Rs.6,46,000/- i.e., 85% of valuation cost.

PSJC/VSKP Page no. 29 C.C.No.08 of 2006

31.However, prosecution did not elicit the valuation for property covered under

Ex-P.226 i.e., property situated in an extent of Ac.1.59cts in Survey No. 209/12, 209/13, 209/23 at Gambheeram Village, Anandapuram Mandal, Bheemunipatnam covered under Document No. 2246/1999 which was tendered as collateral security as per Ex-P.143. In the cross-examination of the Investigating Officer PW.21 at

Paragraph No. 22 of Page No. 10, he testified that he has seized all the documents and Valuation reports pertaining to the properties offered as collateral securities for the loans in this case and he has not filed the Valuation Report for the property in

Document No. 2246/99 due to oversight. PW.21 admitted that the Photostat copy of Valuation Report, dt.05.01.2004 confronted to him was issued by PW.12 pertaining to property covered under Ex-P.226 and the same was marked as Ex-

D.7. The close perusal of Ex-D.7 specifically elicit that the same was issued by

PW.12 pertaining to 5771.7 sq.yds., out of total extent of 7695.6 sq.yds., (Ac.1.59 cts) after deducting 25% of extent for layout, the value of the land was assessed as

Rs.37,51,650/- @ Rs.650/- per sq.yd. The contents of Ex-D.6 remained undisputed.

Therefore, the value of property for property covered under Ex-P.226 is taken as

Rs.37,65,650/- as per Ex-D.7.

32.The variation in the values proposed under RF-255 covered under Ex-P.143, valuation certificate by Accused No. 1 covered under Ex-P.142 and the value given by subsequent Panel Valuer are extracted hereunder for better understanding.

Sl.noDocument No. Value as per Value as per Value as per Subsequent Ex-P.143Ex-P.142Valuation Reports covered under Exs P.65 to P.70 @ Rs.10,00,000/- per acre 12247/99 : Ex-P.227Rs.14,60,000/- (Ex-P.65) Rs.66,00,000/-Rs.66,08,000/- 22248/99 : Ex-P.228Rs.5,10,000/- (Ex-P.66) (Including value for(Including value 32249/99 : Ex-P.229Rs.6,00,000/- (Ex-P.67) extent in Ac.1.59ctsfor extent in covered under SaleAc.1.59cts 42250/99 : Ex-P.230Rs.2,00,000/- (Ex-P.68)

PSJC/VSKP Page no. 30 C.C.No.08 of 2006 52252/99 : Ex-P.231deed No. 2246/99covered underRs.7,60,000/- (Ex-P.69) (Ex-P.226)Sale deed No. 2246/99 (Ex- P.226) 62246/99 : Ex-P.226Rs.37,51,650/- (Ex-D.7) TOTAL :Rs.66,00,000/-Rs.66,08,000/-Rs.72,81,650/-

Sl.Document No. Value as per Value as perValue as per Subsequent No.Ex-P.144Ex-P.142Valuation Reports covered under Ex-P.64 @ Rs.12,00,000/- per acre 7416/98 : Ex-P.225Rs.43,00,000/-Rs.43,68,000/-Rs.45,12,000/-

33.As seen from the above values, the value proposed by the borrowers for obtaining the loan and the value taken by Accused No. 1 for sanctioning of the loan as per Ex-P.142 is considerably less than the subsequent market value given by the subsequent valuer PW.12. The value mentioned by PW.12 pertaining to property covered under Document No.416/98 is Rs.45,12,000/- is more than the value given by Accused No. 7. Though the prosecution elicited the SRO Value of the property situated in Thallavalasa village Bheemunipatnam mandal is Rs.30,000/- per Acre in the year 1995 as per Ex-P.155 and in Ghambeeram village Anandapuram mandal is

Rs.1,35,000/- per Acre in the year 1999 as per Ex.P.49 Market Value Certificate, the same cannot be compared to the market value given by the Panel Valuer for two reasons, firstly; the value mentioned in Ex-P.155 and 49 are not contemporary to the date of extending loan to M/s Coromandal Enterprises and secondly; Market value is always higher than the SRO Value. The specific contention of Prosecution with regard to violation of guidelines under Ex-P.176 pertaining to valuation of collateral security will be discussed in the succeeding paragraphs at appropriate stage.

34.Accordingly, the oral and documentary evidence adduced by the prosecution did not elicit any substantial evidence to dispute with the value of the properties

PSJC/VSKP Page no. 31 C.C.No.08 of 2006 offered as collateral security. There is no evidence neither to breach with the title of the property nor the valuation of the property offered as collateral security by M/s

Coromandal Enterprises as per Ex-P.143 and P.144. Therefore, the accusation of the prosecution that Accused No. 4 and 5 submitted properties under seven documents fraudulently and that the same were over valued by Accused No. 7 &1, fails for want of merits.

Q.5.Whether Prosecution proved that Accused No. 1 dishonestly appraised

the loan requirement of M/s Coromandal Enterprises and observed in

the sanction note that 95 Metric tonnes of Tamarind stock is already

available even though no stock was available at M/s Bangaramma Cold

Storage, Vizianagaram and dishonestly sanctioned Secured Overdraft of

Rs.50,00,000/- Working Capital to tamarind processing activity on

02.03.2000 for one year?

35.In this regard, initially Prosecution examined PW.8 Mr. V. V. Satyanarayana.

The evidence of PW.8 is that he has been working as Charted Accountant and he also carry Agri Products business and his father late Sri.V.Narisinga Rao was the

Managing Director for M/s. Bangaramma Cold Storage Pvt.ltd., Vizianagaram for the period from 1999 to 2014 and that he was giving assistance to his father for looking the activities and maintaining the Cold Storage. According to P.W.8

Mr.V.V.Kameswara Rao was the one of the Director of the Cold Storage during the period 1999 to 2011 and whenever their Cold Storage received goods from the

Traders and Farmers, they will store the goods in the Cold Storage and issue acknowledgment for the goods received and that the receipt of goods will be recorded in the Cold Storage ledger and also the individual register of the parties and they issue Cold Storage Bonds to the parties. PW.8 further deposed that at the

PSJC/VSKP Page no. 32 C.C.No.08 of 2006 time of delivery of the goods, the party has to submit the cold storage bonds and on that they will collect the storage rent from the parties and thereafter they will issue gate pass and record the transactions in their records. P.W.8 also stated that in case, if the party obtains ware house loan by pledging the Cold Storage Bonds, the corresponding bank will issue letter to mark lien over the goods stored.

36.PW.8 further stated that Ex-P.41 is the photostat copy of rental agreement

dated 15.02.2000 entered between Mr.V.V.Kameswara Rao representing M/s

Bangaramma Cold Storage pvt. Ltd., and Mr.V.V.Nageswara Rao M/s.Coromondal

Enterprises for storing Agri and Horticulture Products of the later for the period from 15.02.2000 to 14.02.2001. PW.8 identified the signature of his brother

Mr.V.V.Kameswara Rao on Ex.P.41 and stated that Accused No. 4 used to store goods in the name of M/s.Coromondal Enterprises and also Farmers individually and as per the contents of Ex.P.41, Accused No.4 is permitted to store goods under the supervision of his staff.

37.PW.8 further stated that Ex-P.42 is the Rent letter dated 17.10.2000 issued by

Bangaramma Cold Storage Pvt ltd and it bears the signature of his brother

Mr.V.V.Kameswara Rao, however, he cannot confirm the contents of letter covered under Ex-P.42.

38.The Enquiry Officer PW.15 stated that he has perused Ex-P.41 photostat copy of Agreement, dt.15.02.2000 between Bangaramma Cold Storage Pvt., Ltd., and M/s Coromandal Enterprises during his enquiry and as per the contents of Ex-

P.41 the stock stored in the Cold Storage will be under hypothecation of Andhra

Bank, SSSIB Branch, Gajuwaka and Bank authorities have right to inspect the stock. Further in the cross-examination, PW.15 stated that the loan file of

Coromandal Enterprises discloses that certain stocks of Tamarind were stored in

PSJC/VSKP Page no. 33 C.C.No.08 of 2006

M/s Bangaramma Cold Storage, Vizianagaram. PW.15 nowhere in his evidence stated that Accused No. 1 appraised the loan application of M/s Coromandal

Enterprises by dishonestly mentioning that Tamarind stock was available in M/s

Bangaramma Cold Storage even though no stock was available.

39.The only evidence of prosecution on this aspect is that of PW.18 wherein he stated that “I enquired over the phone about the availability of the stock pertaining to Coromandal Enterprises with Bangaramma Cold Storage. The auditor of

Bangaramma Cold Storage one Mr. V. V. Kameswararao informed me that there is no stock pertaining to Coromandal Enterprises with Bangaramma Cold Storage and persons connected with Coromandal Enterprises never approached them”.

40.As per the evidence of PW.18, he enquired Mr. V. V. Kameswara Rao with regard to stocks pertaining to M/s Coromandal Enterprises and the information received by him is that there is no stock pertaining to M/s Coromandal Enterprises with M/s Bangaramma Cold Storage. In the cross-examination PW.18 at

Paragraph No. 43 stated that he did not visit M/s Bangaramma Cold Storage for verification of stock or called for any records/registers pertaining to above referred

Cold Storage. The information obtained by PW.18 is completely based upon the oral enquiry from a person purported to be Auditor of M/s Bangaramma Cold

Storage Mr. V. V. Kameswara Rao who is the brother of PW.8.

41.As per the evidence of PW.8 and contents of Ex-P.41 Agreement, Mr. V. V.

Kameswara Rao is one of the Directors of M/s Bangaramma Cold Storage and there is no material on record to show that Mr. V. V. Kameswara Rao is the Auditor of M/s Bangaramma Cold Storage. PW.8 in his cross-examination stated that M/s

Bangaramma Cold Storage maintained Account Books including lien Register for the period 2000 to 2004. However, the Investigating Officer neither cited Mr. V. V.

PSJC/VSKP Page no. 34 C.C.No.08 of 2006

Kameswara Rao who is the authorized signatory of Ex-P.41 as witness nor collected any record or register pertaining to M/s Bangaramma Cold Storage to prove the accusation that M/s Coromandal Enterprises never stored their stock with

M/s Bangaramma Cold Storage. Further, the evidence of PW.8 is completely contradicting to the evidence of PW.18 wherein he testified that Accused No. 4 used to store goods in the name of M/s Coromandal Enterprises and also that of farmers individually. Though PW.8 did not confirm the contents of Ex-P.42, he admits the signature of his brother on the same. As per the contents of Ex-P.42

Rent Letter which is the prosecution document, Mr. V. V. Kameswara Rao,

Director of M/s Bangaramma Cold Storage Ltd, addressed the same on 07.10.2000 to the Branch Manager, Andhra Bank acknowledging that their Cold Storage has no lien over the goods pertaining to M/s Coromandal Enterprises as to which advances already granted and advances to be granted by the Bank. Ex-P.42 also acknowledges no objection pertaining to inspection by Bank authorities pertaining to the goods of M/s Coromandal Enterprises stored in their Godown No.35,

Srinivasa Nagar, NSC Road, Vizianagaram. The contents of Ex-P.42 accedes confirmation of stock pertaining to M/s Coromandal Enterprises in M/s

Bangaramma Cold Storage and affirms that Andhra bank will have first charge over the stocks referred to above and pledged to them .

42.Further, PW.18 in his cross-examination stated that all the loans referred in his examination-in-chief, SSSIB obtained Insurance Policies and paid respective premium to the Insurance Companies by debiting the amounts from the respective loan accounts and as per Rules, Insurance Policy will be issued by the Insurance

Company only after verification of stock and that the object of insuring the stock and assets by the Bank is to protect the interest of the Bank in the loan amount. The

PSJC/VSKP Page no. 35 C.C.No.08 of 2006 deduction of an amount of Rs 19,900 for loan insurance is evident from account statement of M/s Coromandal Enterprises covered under Ex-P.92. Further, as per the prosecution document itself i.e., letter dt.31.03.2000 covered under Ex-P.97, it is evident that Accused No. 4 submitted the total quantity of Tamarind and value of stock as Rs.70,00,000/- stored in M/s Bangaramma Cold Storage as on 31.03.2000 and Accused No. 1 has endorsed the same as “visited the Cold Storage on 16.04.2000 and found the stocks as above”. The subsequent stock details statements dt: 30.4.2000, 30.6.2000 and 31.7.20001 furnished by the borrower covered under Ex.146 affirms the stock status until conversion to OCC and further trading into Shrimp Feed by M/s Coromandal Enterprises. In the like manner Ex-

P.196 managers report dt 10.3.2001 on unit visit, communicated to the Assistant

General Manager on 13.03.2001 fortifies the contention of accused as to continuation of stock with M/s Bangaramma Cold Storage. The contents of these documents remained impeached throughout.

43.Therefore, the above evidence elicited from the prosecution witnesses and documents itself, no substantial material has been brought on record to infer that

Accused No. 1 appraised the loan application of M/s Coromandal Enterprises without there being any stock which in fact, was the primary security for the Bank, stored in M/s Bangaramma Cold Storage. Further in the light of evidence of PW.8 and contents of Exs P.41 and P.42 and the testimony of PW.18 in his cross- examination completely elicit facts contrary to the accusation by the prosecution, which inclines towards reasonable belief as to the existence of stock of M/s

Coromandal Enterprises in M/s Bangaramma Cold Storage. The stray statement of

PW.18 that on oral enquiry, he came to know that there is no stock of M/s

Coromandal Enterprises was stored in M/s Bangaramma Cold Storage does not

PSJC/VSKP Page no. 36 C.C.No.08 of 2006 substantiate the case of prosecution for two reasons; firstly; Mr. V. V. Kameswara

Rao who purported to have informed PW.18 was not the auditor of the said Cold

Storage and secondly; the information received by PW.18 is only hearsay evidence which is neither corroborated by any oral or documentary evidence.

44.Lastly before concluding, the contention of prosecution that PW.8 resiled from his earlier statement marked under Ex-P.43 and P.44 is to be looked into.

Admittedly these statements are adverse to the testimony of PW.8 before the the court. However mere contradiction to earlier Statement does not vitiate the evidence of witness in the open court unless his credibility proved to be suspicious.

In this case if PW.8 intends to go against the prosecution his evidence would have been supporting the accused ceaselessly. PW.8 asserted contents of Ex-P.41 and storage of goods pertaining to M/s Coromandal Enterprises at the same time stated that he cannot confirm the contents of Rent letter marked under Ex-P.42 bearing the signature of his brother Mr.VV.Kameswara Rao. Ex-P.42 is rent letter supporting the case of Accused and if the evidence of PW.8 is blemished he would have even supported the contents of Ex-P.42. According there is no corroborative material on record to infer against the evidence of PW.8. Lastly prosecution relied on the contents of Ex-P.242 letter purported to have written by Mr.

V.V.Kameshawara Rao, denying the storage of stock of M/s Coromandal

Enterprises in M/s Bangaramma Cold Storage and any inspection by the Andhra

Bank Officials. However prosecution neither examined the author of the Ex-P.242 nor elicited its contents through PW.8. Mere marking the document with the

Investigating officer does not prove the contents of the document assertively and

Ex-P.242 do not assist the Prosecution against the accused. Therefore, in view of the above discussion and for non-examination of Mr. V. V. Kameswara Rao who is

PSJC/VSKP Page no. 37 C.C.No.08 of 2006 the appropriate person to testify the facts pertaining to M/s Bangaramma Cold

Storage, this Court concludes that the allegations claimed by the prosecution on this aspect against Accused fails, for want of merits.

Q.6 Whether the Secured Overdraft of Rs.50,00,000/- granted to M/s

Coromandal Enterprises were not utilized for the business of

Tamarind?

45.As per the case of prosecution, the Secured Overdraft of Rs.50,00,000/- was sanctioned by Accused No. 1 to M/s Coromandal Enterprises on 02.03.2000 for one year. The contention of the prosecution is that Accused No. 4 fraudulently availed the loan amount in his favour and in favour of his relatives and friends instead of purchasing Tamarind from Agency Area of Andhra Pradesh, Orissa and

Madhya Pradesh. In this regard, prosecution relied upon the evidence of PW.15 and

PW.18. According to PW.15 as per the contents of Ex-P.92 Statement of Account of

M/s Coromandal Enterprises for the period from 24.02.2000 to 11.03.2005, certain amounts were debited vide cheques, Pay Orders and Demand Drafts covered under

Ex-P.54, Ex-P.1 and Ex-P.94 are as follows;

1. An amount of Rs.25,60,200/- vide Cheque No. 189927, dt.06.03.2000 signed by Accused No. 4 covered under Ex-P.93.

2.Pay Order No. 560465 in favour of Mr. K. Srinivas for Rs.1,50,000/-

3.DD.No.146860 in favour of V. N. Mohana Rao for Rs.5,00,000/-

4.DD.No.146861 in favour of V. N. Mohana Rao for Rs.5,00,000/-

5.DD.No.146862 in favour of R. Srinivasa Rao for Rs.2,00,000/-

6.DD.No.146863 in favour of N. S. Chakravarthy for Rs.8,00,000/-

7.DD.No.146864 in favour of V.V. NageswaraRao for Rs.4,00,000/-

46.Further according to PW.15 as per the contents of Ex-P.92, M/s Coromandal Enterprises issued

1.Ex-P.95 Cheque No.189930 for Rs.20,08,000/- on 08.03.2000 signed by Accused No. 4.

2.DD.No.146872 & DD.No.146873 in favour of N. S. Chakravarthy for Rs.5,00,000/- each covered under Ex-P.2 & P.3

PSJC/VSKP Page no. 38 C.C.No.08 of 2006

3.DD.No.146874 & D.D.No.146875 in favour of Accused No. 3 for Rs.5,00,000/- each marked as Ex-P.96. (2 sheets).

4.An amount of Rs.1,000/- to G.V.K.Rao, Rs.1,00,000/- to K. Srinivas, Rs.5,000/- to A. Janaki Rao was paid on different dates.

47.Prosecution did not examine any persons except PW.1 and PW.11 to elicit the above referred transactions or purpose of transaction excluding that of Accused on record. Initially, Mr. N. S. Chakravarthy was examined as PW.1 to explain the amounts covered under Exs P.1 to P.3 Demand Drafts. The evidence of PW.1 is that presently he is doing civil works and previously he was into tamarind business during the period 1990 to 2003 and closed the business subsequently due to losses.

PW.1 further stated that about twenty years back some agents used to approach him to purchase tamarind and also enquired him about persons and companies selling prawns and that he gave them the addresses of persons who used to sell prawn, known to him. Accused No.4 of M/s. Coromandal Enterprises used to come to him to purchase tamarind and that Ex.P.1 is the certified copy of DD No.146863 dated 06.03.2000 for Rs.8,00,000/- Ex.P.2 is the certified copy of DD No.146872 dated 08.03.2000 for Rs.5,00,000/-. Ex.P.3 is the certified copy of DD No.146873 dated 08.03.2000 for Rs.5,00,000/- issued in his favour by Accused No. 4 towards sale proceeds of tamarind.

48. As per the evidence of PW.1, Accused No.1 issued Exs P.1 to P.3 for purchasing Tamarind and the total amount covered under Exs P.1 to P.3 is

Rs.18,00,000/-. The case of the prosecution is that PW.1 has re-siled from his earlier statement covered under Ex-P.4 and his evidence is not credible to rely upon. Accordingly it is important to look into the cross-examination of PW.1 by the Ld., Public Prosecutor to find out whether there are any facts elicited therein breaching the veracity of PW.1’s testimony.

PSJC/VSKP Page no. 39 C.C.No.08 of 2006

49.PW.1 reasserted that he own agriculture land in Tanuku and he was agriculturist and his turnover in tamarind business for six months used to be

Rs.15,00,000/- and that he used to run tamarind business in the name and style “Srinivasa Tamarind“ as sole proprietor. He volunteers that he used to maintain records regarding purchase and sales of Tamarind and maintained Godown for

Storage of Tamarind. The elaborate cross-examination of PW.1 did not interfere with his testimony in examination in chief that he used to carry Tamarind business during the relevant period. The issuance of DD covered under Exs P.1 to P.3 in favour of PW.1 is further elicited from the evidence of PW.15 and the contents of

Ex-P.92 statement of Account of M/s Coromandal Enterprises.

50.The monetary transaction covered under Exs P.1 to P.3 is almost 1/4th of total Secured Overdraft limit granted to M/s Coromandal Enterprises. The prosecution is denying only the purpose of transaction. When the evidence of PW.1 is clearly evident that Exs P.1 to P.3 were issued in his favour as sale proceeds of

Tamarind, it is for the prosecution to prove, anything in contra to the statement of

PW.1 and for what purpose the above referred amount of Rs.18,00,000/- was transferred to PW.1.

51.Moving further, the prosecution examined one of the purported sham beneficiary Mr. K. Srinivas as PW.11. The evidence of PW.11 is that he has been working as Part Time Accountant since 1992 and that he used to maintain SB

Account in Karur Vysya Bank, Dabagardens, Visakhapatnam during the period from March 2000 to November 2010. PW.11 admits the Account Opening form and specimen signature covered under Ex-P.52 belongs to his SB Account No. 455 in Karur Vysya Bank and that Ex-P.53 is the corresponding Account statement.

PW.11 further stated that Karur Vysya Bank issued cheque book in his name and

PSJC/VSKP Page no. 40 C.C.No.08 of 2006 that he has knowledge about the transactions covered under Ex-P.53 Statement of

Account.

52.According to PW.11 in the month of April, 2000 he got acquaintance with

Mr. Visweswara Rao who was doing business in Agri Products and that he has deposited Pay Orders and Cheques in his account during that period and at his request, he used to withdraw the amounts and handed over the same to the persons directed by him. The prosecution cross-examined PW.11 with the permission of the

Court, contending that PW.11 retracted from his earlier 161 Cr.P.C., statement. The contention of the prosecution is that PW.11 opened Savings Bank account in Karur

Vysya Bank only to facilitate Accused No. 5 and subsequently closed within short period and in order to conceal the true facts of the transactions made by Accused

No. 5, PW.11 introduced the name of Mr. Visweswara Rao who never existed.

Evidently, all the suggestions made by the prosecution in that regard to PW.11 were denied by him as false.

53.In this connection, Prosecution examined the Officer of Karur Vysya Bank as PW.10. The account opening form for SB Account No. 455 in the name of

PW.11 along with specimen signature card handed over to the Investigating

Agency vide Ex-P.51 Covering letter, dt.30.03.2005 was marked as Ex-P.53 and the corresponding Statement of Account pertaining to PW.11 for the period from 01.01.2000 to 05.11.2000 handed over to the Investigating Officer vide covering letter, dt.30.03.2005 was marked as Ex-P.52 through PW.10. PW.10 testified that as per Ex-P.53, on 07.03.2000 an amount of Rs.1,50,000/- was credited to this account by way of Pay Order 560464 covered under Ex-P.54. PW.10 further stated that on 13.03.2000 an amount of Rs.1,00,000/-, on 07.08.2000 an amount of

Rs.1,49,625/-, on 08.08.2000 an amount of Rs.4,00,000/-, on 28.08.2000 an

PSJC/VSKP Page no. 41 C.C.No.08 of 2006 amount of Rs.3,29,175/-, on 19.09.2000 an amount of Rs.1,00,000/-, on 26.09.2000 an amount of Rs.5,00,000/-, on 03.10.2000 an amount of Rs.9,97,500/- and on 06.11.2000 an amount of Rs.9,00,000/- were credited to the SB account

No.455 under Cheques and Pay Orders 8 in number covered under Ex-P.55 and that an amount of Rs.36,26,328/- was withdrawn by the Account holder in total.

Acceding to the evidence of P.W.10, it is not the case of the prosecution that the entire amount of Rs.36,26,328/- was purported to have been transferred to PW.11 from the account of M/s Coromandal Enterprises.

54.As seen from Ex-P.53 Account Statement, there are certain amounts credited into his account from the account of M/s Coromandal Enterprises. As per the evidence of PW.15, only Pay Order No. 560465 for Rs.1.5 lakhs covered under Ex-

P.54 was issued in favour of PW.11 and as per Ex-P.92 an amount of Rs.1,00,000/- was transferred to PW.11. The transaction covered under Ex-P.54 Pay Order for

Rs.1,50,000/- and transaction for Rs.1,00,000/- covered under Cheque No. 789931 were evident in Ex-P.53 statement of Account and there is another transaction, dt.06.11.2000, wherein an amount of Rs.9,00,000/- was credited to this Account from M/s Coromandal Enterprises.

55.The transactions in the account statement of PW.11 covered under Ex-P.53 were undisputed. The contention of the prosecution is that all the amounts which were self withdrawn by the account holder were in fact withdrawn by the Accused

No. 5 Mr. D. R. K. Prasad. However, the account holder i.e., PW.11 himself denies the contention of the prosecution and testifies that these transactions were related to one Mr. Visweswara Rao who was doing business pertaining to Agri products during the relevant period in question. In contra, as per the 161 Cr.P.C., statement of PW.11 marked under Ex-P.61, he stated that

PSJC/VSKP Page no. 42 C.C.No.08 of 2006 “I was having SB Account No. 455 in KVB Ltd. There was not much saving or transaction in the said account. Sri D. R. K. Prasad wanted my help. He asked me to hand over the signed cheque leaves. Accordingly, I signed the cheque book and handed over to him. As he was giving me accounting job, I could not refuse his request for fear of loosing the job.

I stated that I do not what transaction took place in my SB A/c. I have not deposited any D.D./P.O/Cheque in my SB Account. I have also not withdrawn personally any cash as I had handed over signed cheques.

I state that I closed the a/c in November, 2001 as I was in need of some money. When I asked to Sri D. R. K. Prasad about the S.B. Account No. 455, he said that his work was over and I could close it”.

56.In contra, PW.11 in his evidence before this Court specifically denies his acquaintance with Accused No. 5 and deposes that all the transactions in his SB

Account No. 455 were made by him at the request of one Mr. Visweswara Rao. As seen from the record, Cheque bearing No. 189943 was issued by Mr. V. V.

Nageswara Rao i.e., Accused No. 4 for M/s Coromandal Enterprises in the name of

Mr. K. Srinivas. This cheque was cleared and credited to the account of Mr. K.

Srinivas on 06.11.2000. This transaction was directly between Accused No. 4 and

PW.11. PW.11 did not explain the purpose of this transaction nor the transaction was disputed. Accordingly, the credibility of PW.11 is suspicious and cannot be believed to be completely true. At the same time, mere suspicion does not substantiate the place of proof. It is the burden of the prosecution to adduce some evidence on record to show that it is Accused No. 5 that has encashed the cheques connected to the cheque book issued in the name of PW.11 pertaining to Account

No. 455 in Karur Vysya Bank. However, no cheques purported to be issued in the name of Mr. K. Srinivas connected to his account No. 455 were brought on record.

At the same time, it is pertinent that cheque for Rs.9,00,000/- pertaining to Account

No. 94 of M/s Coromandal Enterprises at Andhra Bank was issued by Accused

No. 4 in the name of Mr. K. Srinivas and the same was encashed by the account

PSJC/VSKP Page no. 43 C.C.No.08 of 2006 holder. Accordingly prosecution has sufficiently proved that Accused No. 4 issued

Cheque bearing No. 189943 pertaining to Account No. 94 of M/s Coromandal

Enterprises in Andhra Bank in favour of PW.11. Now the point for consideration is whether this amount is withdrawn by PW.11 or Accused No. 5? It is the Officers of the Karur Vysya Bank, Dabagardens, Visakhapatnam who are the appropriate persons to testify about the same. In absence of examination of any corresponding employees of Karur Vysya Bank other than PW.10 whose evidence is silent on this aspect, it cannot be concluded that Accused No. 5 has withdrawn all the amounts floated into the Savings Account of PW.11. However, it is evident that considerable amounts were credited to the account of PW.11 from the account of M/s

Coromandal Enterprises and also from the account of Accused No. 2 and 8

Companies and the bearing of the said transactions on the accusation against

Accused will be discussed at the later stage along with transactions in favour of

Accused No. 3 and 6.

Q.7Whether Accused No. 4 submitted fake Inland letter of Credit in the

name of non-existing business firm i.e., M/s Balaji Feeds, Vizianagaram

and whether Accused No. 1 fraudulently sanctioned Rs.55.5 lakhs to M/s

Balaji Feeds without obtaining confidential reports?

57.On this aspect, the evidence of PW.15 is that initially as per the contents of

Ex-P.91 Appraisal Note, the borrower i.e., Coromandal Enterprises applied for

Secured Overdraft limit for Rs.50,00,000/- for carrying Tamarind business and the same was sanctioned on 02.03.2000. As per contents of Ex-P.98 Appraisal Note, dt.17.10.2000 on the request of the borrower, the Branch converted the above referred existing Secured Overdraft limit into Open Cash Credit limit (OCC in short ) of Rs.50,00,000/- with a sub limit of Rs.20,00,000/- against Good Debts of

PSJC/VSKP Page no. 44 C.C.No.08 of 2006 age not more than 90 days. The party also requested for Inland Letter of Credit (ILC in short) DA (Documents against acceptance) basis for Rs.55,00,000/- which subsist for a period of 180 days and the same was issued vide Ex-P.22. The beneficiary as per Ex-P.98 is M/s Balaji Feeds and the purpose is procurement of

Shrimp Feed. The condition stipulated by the Bank is that the borrower shall reduce the OCC liability to Rs.40,00,000/-. As per documents under Ex-P.23, the

Karur Vysya Bank forwarded bills drawn under Letter of Credit (LCin short) with relevant documents pertaining to Balaji Feeds to Andhra Bank, confirming the issuance of LC and to confirm that the documents drawn under LC are in order as per the terms of LC. The LC under Ex-P.23 was negotiated by Karur Vysya Bank.

As per the contents of Ex-P.92 Statement of Account on 21.04.2001 the

S.S.I.Branch, Andhra Bank has paid an amount of Rs.55,15,000/- to Karur Vysya

Bank. Accordingly the LC liability of the borrower has devolved, increasing the debt to Rs.91,39,243.68ps as on 30.12.2004 as per Ex-P.92.

58.On this aspect the evidence of PW.18 is that as per the contents of Ex-P.97

M/s. Coromandal Enterprises made a request for opening of Inland letter of credit for Rs.55 Lakhs with 10% margin for 180 days. Ex-P.97 also discloses that M/s.

Coromandal Enterprises intends to reduce their OCC limit to Rs.40 Lakhs with sub limit of Rs.20 Lakhs against book debts and their intention is to trade Shrimp feed by purchasing the same from M/s Balaji Feeds and he verified the particulars of M/ s Balaji Feeds from the bank records but not physically and that the outstanding debit balance in the account of M/s. Coromandal Enterprises as on 11.03.2005 is

Rs.91,39,243/-.

59.Admittedly, Accused No. 4 representing M/s Coromandal Enterprises made an application on 12.10.2000 covered under Ex-P.98 to the Manager, Andhra Bank,

PSJC/VSKP Page no. 45 C.C.No.08 of 2006

SSSIB, requesting for opening of Inland Letter of Credit. The substance of the letter dt.12.10.2000 is extracted as follows:

“It is to inform that the movement of Tamarind is slow as the availability of crop was abundant and our stocks are moving slowly. During September 2000 we have sold around Rs.22.50 lakhs worth of material on credit basis. We will deposit the same as soon as we received it.

“We want to reduce our O.C.C. Limit to Rs.40 lakhs with a sublimit of Rs.20 lakhs against book debts. Please adjust our sale proceeds for the same and we are expecting the same on or before 21.10.2000.

To achieve the sales target we want to trade in shrimp feed which is more profitable. We are purchasing the shrimp feed from M/s Balaji Feeds, Vizianagaram. They dispatch the material through their own transportation. For that purpose we want Inland letter of credit for Rs.55 lakhs with 10% margin for 180 days. We will achieve our target with this”.

60.It is apparent that M/s Coromandal Enterprises has facing slow movement of

Tamarind business and intended to trade in shrimp feed by purchasing the same from M/s Balaji Feeds, Vizianagaram. To corroborate the same, letter dt.12.10.2000 addressed by M/s Balaji Feeds disclosing their readiness to supply the required shrimp feed to M/s Coromandal Enterprises were also enclosed to the application. Considering the application and letter from M/s Balaji Feeds, Accused

No. 1 prepared Ex-P.98 Appraisal Note connected to sanction of Inland letter of credit for Rs.55,15,000/- as requested by M/s Coromandal Enterprises. The recommendations of Accused No. 1 as seen from Ex-P.98 is that the dealings are satisfactory and that the proposal to go on for trading shrimp feed is good and feasible and that they will be able to achieve the projected sales and the Bank is holding adequate collateral securities and that the limits requested may be sanctioned.

61.The contention of the prosecution is that the purported M/s Balaji Feeds is completely a fictitious firm and Accused No. 4 siphoned the funds granted under

Inland letter of credit in the guise of M/s Balaji Feeds and Accused No. 1

PSJC/VSKP Page no. 46 C.C.No.08 of 2006 sanctioned the amount without verifying the credibility of the said M/s Balaji

Feeds.

62.To substantiate its allegations in this connection, the prosecution examined

Mr. T.L.V. Padmanabham, the then Branch Manager, Karur Vysya Bank,

Vizianagaram as PW.3. The evidence of PW.3 is that he worked in Karur Vysya

Bank in different cadres till June 2022 and subsequently he took voluntary retirement, during the period from November 2003 to 2007 he worked as Branch

Manager, Karur Vysya Bank, Vizianagaram, in the year 2005, he furnished Ex-P.17 attested copy of Account Opening form, dt.29.03.2005, Ex-P.18 attested copy of specimen signature card of current account No.245 of M/s.Balaji Feeds dated 19.08.2000, Ex-P.19 attested copy of Firm Registration of M/s Balaji Feeds issued by Assistant Commercial Tax Officer, Visakhapatnam, Ex-P.20 attested copy of sole proprietorship declaration form dated 19.08.2000 of M/s.Balaji Feeds (2 sheets) and Ex-P.21 Statement of Account pertaining to Balaji Feeds and connected documents along with Ex-P.16 covering letter dt.29.03.2005 to Investigating

Officer, CBI on request.

63.The connected documents, Ex-P.22 Letter of credit dated 18.10.2000 issued by Andhra Bank, Gajuwaka Branch, Visakhapatnam (2 sheets), Ex-P.23 (Usance

Bill Discount) UBD/01/2000 dated 19.10.2000 issued by Karur Vysya Bank,

Vizianagaram along with relevant documents viz., Bill of Exchange dated 19.10.2000, letter dated 19.10.2000, Delivery Challan/Invoice dated 19.10.2000 with duplicate copy (5 sheets) were marked through PW.3.

64.The Ld., Counsel for Accused raised objection with regard to the admissibility of Ex-P.17 to P.21. In this connection, PW.3 stated that Ex-P.16 letter bears his signature and that Ex-P.17 to Ex-P.21 are the Photostat copies of original

PSJC/VSKP Page no. 47 C.C.No.08 of 2006 documents attested by him and as on date of handing over the documents to CBI, he was the custodian of Ex.P.17 to Ex-P.21. As seen from the evidence of PW.3 Exs

P.17 to P.21 are the attested copies of original documents pertaining to the loan account of M/s Balaji Feeds available with Karur Vysya Bank, Vizianagaram furnished by PW.3 himself to the Investigating Officer. Therefore, the objection raised by the Accused with regard to the admissibility of Exs P.17 to P.21 does not stands any merit. Moving further, according to PW.3 as per the contents of Ex-P.17

Account opening form, one Mr.K.V.Prasadarao opened the account as proprietor of

M/s.Balaji Feeds with initial balance of Rs.5,000/- and he was introduced by

M/s.Venkatraju & Co., Current account holder. PW.3 further stated that Ex-P.17 contains the photograph of account holder and also specimen signature of the proprietor M/S Balaji Feeds, Mr. K.V.Prasadarao and that as per Ex-P.19 the

Principal Place of Business of M/s.Balaji Feeds is situated at Door No.47-10-

13/16, 2nd lane, Dwarakanagar, Visakhapatnam and additional place of business is situated at Jyothi Complex, MR Road, Vizianagaram.

65.As per the evidence of PW.3, M/s Balaji Feeds opened Account with Karur

Vysya Bank, Vizianagaram under Ex-P.16 by furnishing all the requisite firm documents like certification of registration, proprietorship declaration etc. PW.3 is the custodian of all the documents and he furnished the relevant documents to the

CBI as referred above. The account was introduced by one M/s. Venkata Raju &

Co., and M/s Balaji Feeds had its business place at Door No. 47-10-13/16, 2nd lane,

Dwarakanagar, Visakhapatnam and additional place of business is situated at Jyothi

Complex, MR Road, Vizianagaram.

66.In this connection, it is important to look into the evidence of PW.13 Mr.

Pravakar Rao. The evidence of PW.13 is that he has been running grocery shop at

PSJC/VSKP Page no. 48 C.C.No.08 of 2006

P.W. Market, Vizianagaram since 1985 and he is having Current Account in Karur

Vysya Bank, Main Road Branch, Vizianagaram. Ex-P.17 photostat copy of Account opening form of M/s Balaji Feeds bears his signature as introducer of the account holder and that he used to visit Karur Vysya Bank, Vizianagaram to operate his current Account and at the request of the then Branch Manager, he signed on Ex-

P.17 as introducer and that he do not have any acquaintance with the person who opened M/s Balaji Feeds, he never seen him and he cannot identify the photograph of the person in Ex-P.17 and he do not know the particulars and address of the account holder mentioned in Ex-P.17 and that Manager of Karur Vysya Bank,

Vizianagaram used to stay in the house of one K. Narayana Rao, Advocate for rent adjacent to his house.

67.The substance of evidence of PW.13 is that he had no acquaintance with account holder of M/s Balaji Feeds and he signed on Ex-P.17 at the request of the then Branch Manager, Karur Vysya Bank, Vizianagaram. As seen from the record,

PW.3 is not the Branch Manager during the relevant point of time of opening account in the name of M/s Balaji Feeds under Ex-P.17 on 19.08.2000. It is the

Branch Manager, Karur Vysya Bank, Vizianagaram who opened the account of M/s

Balaji Feeds on 19.08.2000 is the appropriate person who can testify about the contradicting facts alleged by the prosecution pertaining to M/s Balaji Feeds. As far as the prosecution witness PW.3 is concerned, all the documents pertaining to the existence of M/s Balaji Feeds i.e., declaration of proprietorship and

Registration Certificate issued by Commercial Tax Department in original were in the custody of PW.3 the Branch Manager, Karur Vysya Bank, Vizianagaram. Even though the evidence of PW.13 was taken into consideration, there is no substantial flaw if he signed on Account opening form of M/s Balaji Feeds at the instance of

PSJC/VSKP Page no. 49 C.C.No.08 of 2006 the Branch Manager. The point for determination of the case is whether the said firm is non-existing and whether it has concocted the documents under Exs P.19 and P.20 etc., to float the funds allotted by SSSIB, Andhra Bank, Gajuwaka. On that aspect the evidence of PW.13 is not helpful to the prosecution.

68.Reverting to the evidence of PW.3, as per Ex.P.22 and 23 the Karur Vysya

Bank, Vizianagaram discounted bill (UBD) proceeds of Rs.51,31,738/- credited to

M/s.Balaji Feeds current account and on the same day an amount of Rs.35 lakhs and on 21.10.2000 Rs.16 lakhs were withdrawn through self cheques. On 19.06.2001 an interest of Rs.27,500/- was debited from the current account of M/s.

Balaji Feeds as there was delay in crediting LOC amount and that as per Ex.P.21 on 21.02.2002 the account holder received amount of Rs.9,063/- and closed the account. The transactions covered under Ex-P.21 Statement of Account are not disputed. As seen from the corresponding documentary evidence adduced by the prosecution, Ex-P.22 is the irrevocable documentary credit No. 1051/ILC/1/2000, dt.18.10.2000 for negotiations in favour of M/s Balaji Feeds for Rs.55,15,000/-. In pursuance of the same, the Branch Manager, Karur Vysya Bank, Vizianagaram addressed a letter, dt.19.10.2000 to the Manager, Andhra Bank, SSSIB, Gajuwaka enclosing the bills drawn under the letter of Credit (Ex-P.21) along with the relevant documents, informing that the Bank has negotiated the LC and raised a request to confirm, the documents are in order as per LC terms, the due date and signature of the acceptor who has accepted the bill and that the payment will be made on due date directly to them and further to confirm the signatories of LC have requisite authority to sign on the LC of the amount. Bill of exchange dt.19.10.2000 issued by M/s Balaji Feeds and accepted by M/s Coromandal

Enterprises, letter addressed by M/s Balaji Feeds to Manager, Karur Vysya Bank,

PSJC/VSKP Page no. 50 C.C.No.08 of 2006

Vizianagaram submitting irrevocable LC along with their bill raised on M/s

Coromandal Enterprises dt.19.10.2000 and delivery challan/invoice for

Rs.55,15,000/- were enclosed to the above said letter.

69.Subsequently it is evident from the contents of Ex-P.100 letter dt.12.04.2001 that the Manager, Karur Vysya Bank, Vizianagaram addressed letter to the Chief

Manager, Andhra Bank, SSSIB, Gajuwaka, informing that UBD for Rs.55.15 lakhs pertaining to M/s Balaji Feeds due falls on 17.04.2001 and requested to arrange, to send the DD for due amount. Original transit insurance policy was also appears to have been enclosed to the letter which is evident from the letter dt.24.01.2001 covered under Ex-P.101. Thereafter as per the case of the prosecution, the amounts were paid by SSSIB, Gajuwaka to Karur Vysya Bank, Vizianagaram. It is evident that initially Karur Vysya Bank, Vizianagaram which was the advising Bank discounted the bill under Ex-P.22 and P.23. In this regard, in the cross-examination by the counsel for Accused, PW.3 stated that “It is true that as per Ex-P.22 and

Ex.P-23 M/s. Balaji Feeds had supplied shrimp feed to Coromandal Enterprises and in connection with the said transaction, LOC was issued by the Andhra Bank in favour of M/s. Balaji Feeds. It is true that the advising bank i.e. Karur Vysya

Bank, Vizianagaram branch after satisfying with the documents furnished by M/s.

Balaji Feeds discounted the bill under Ex.P.22 and Ex.P-23. I worked in Karur

Vysya Bank in different cadres from 1995 to 2022. I dealt with transactions relating to LOCs during my tenure”.

70.In contra, prosecution got examined PW.9 the then Assistant Commercial

Tax Officer, Dwaraka Nagar to bring on record that M/s Balaji Feeds was not registered and not existed in the given address. The evidence of PW.9 is that she has been working as Project Director, District Water Management Agency

PSJC/VSKP Page no. 51 C.C.No.08 of 2006 (DWMA), Vizianagaram since 2020 and previously during the period from 2002 to 2007 she worked as Assistant Commercial Tax Officer, Dwarakanagar Circle,

Visakhapatnam and Ex-P.45 is the letter dt.13.07.2012 addressed by her to the

Investigating Officer, CBI furnishing information regarding M/s. Balaji Feeds and that as per the contents of Ex.P.45 M/s.Balaji Feeds at Door. No.47-10-B/13, II

Lane, Dwarakanagar was not registered as per the office records and the registration certificate bearing no.VSP/03/01/3331 was issued on 11.12.1998 to M/ s. Satya Sree Poly Packs at Door No.47-10-13/16, Rednam Plaza, 2nd Lane,

Dwarakanagar, Visakhapatnam and it was canceled w.e.f., 05.07.2004.

71.The learned Counsel for Accused raised objection at the time of marking Ex-

P.45 contending that the same is inadmissible in evidence. The case of the Accused is that Ex-P.45 is only correspondence between the witness and Investigating

Officer and it is neither the extract of Office Registers of Assistant Commercial

Tax Officer or certified copies of any records thereto. In view of the defence taken by the Accused, it is important to look into the cross-examination of PW.9 wherein she stated that Ex.P.45 was prepared by their office staff and she does not remember the name of the office staff who prepared Ex.P.45 and she cannot confirm whether the registration certificate number referred in Ex.P.45 relates to either CST or APGST and she does not remember whether there was the office stamp and signature of concerned official on the copy of registration certificate forwarded by the Investigating Officer, CBI. PW.9 further stated that though she was the custodian of the documents, the verification was conducted by subordinate staff and the information furnished in Ex-P.45 was prepared at the behest of CBI.

72.The above evidence of PW.9 that the information furnished in Ex-P.45 letter, dt.13.07.2012 was verified by the subordinate staff and she cannot confirm the

PSJC/VSKP Page no. 52 C.C.No.08 of 2006 registration number mentioned in Ex-P.45 whether it relates to CST or APGST completely depreciate the credibility of her testimony. Further as contended by the counsel for Accused, Ex-P.45 is only a letter communicating information to the

Investigating Officer. All the acts pertaining to the Public Office forms the part of public records as provided under Sec. 74 of Indian Evidence Act and shall be proved only either by producing the original record or certified copies of the same in the manner envisaged under Sec. 76 of Indian Evidence Act.

73.In absence of any supporting register or record, the mere information furnished by PW.9 in Ex-P.45 letter does not suffice to substantiate the case of the prosecution as to the non-existence of M/s Balaji Feeds. Further, it is evident from the testimony of PW.3 that the advising Bank i.e., Karur Vysya Bank,

Vizianagaram only after satisfying with the documents furnished by M/s Balaji

Feeds has discounted bills under Exs P.22 and P.23. As far as Karur Vysya Bank,

Vizianagaram is concerned, there is no slice of evidence incriminating towards falsity of M/s Balaji Feeds in existence. If M/s Balaji Feeds is a non-existing firm, the Karur Vysya Bank would not have discounted any bills which are considerably connected to huge amount and further it has deducted interest of Rs.27,500/- for delay in payment. In addition to the same, the documentary evidence on record includes the corresponding delivery challan/invoice and the material receipts accepted by M/s Coromandal Enterprises sufficient to infer the supply of shrimp feed between the two entities. Therefore, the evidence adduced by the prosecution on this aspect is inherently weak and did not substantiate the accusation that M/s

Balaji Feeds is a non-existing firm.

PSJC/VSKP Page no. 53 C.C.No.08 of 2006

Q.8 Whether Prosecution proved that Accused No.1fraudulently sanctioned

and disbursed the loan to M/s Coromandal Enterprises, violating the

Bank Circulars and Guidelines?

74.Lastly the contention of the prosecution is that Accused No. 1 sanctioned

Inland letter of Credit of Rs.55,00,000/- violating the Rules and Regulations of the

Bank. Relating to this aspect, in addition to the Appraisal sheet covered under Ex-

P.98, the corresponding sanction letter was marked as Ex-P.99 by the prosecution.

As seen from the above discussion, initially an application for Credit facility was made by the Accused No.4 under Ex-P.90 and the same was appraised by Accused

No. 1 vide Ex-P.91, Appraisal note, dt.02.03.2000, detailing about the primary and collateral security, antecedents of the firm and sanctioned OSD of Rs.50,00,000/-.

Ex-P.145 is the corresponding Acknowledgment, dt.02.03.2000. The prosecution documents i.e., three stock statements submitted by M/s Coromandal Enterprises for the month of April, June and July covered under Ex-P.46 categorically shows that sufficient extent of Tamarind stock was stored in M/s Bangaramma Cold

Storage. The stock statement for the month of March, 2000 was marked as part of

Ex-P.97. As seen from other documents under Ex-P.97, on 12.10.2000 M/s Balaji

Feeds addressed a letter to the Manager, SSSIB, Gajuwaka that due to slow moment of Tamarind, they intended to trade in Shrimp Feed and requested to reduce their OCC limit to Rs.40,00,000/- and to sanction Inland Letter of Credit of

Rs.55,00,000/- enclosing the proposal for supply of shrimp feed by M/s Balaji

Feeds, dt.12.10.2000 and the corresponding application, dt.16.10.2000 was marked under Ex-P.192.

75. The said application was appraised by Accused No. 1 vide Appraisal Note, dt.17.10.2000 vide Ex-P.98. Thereafter as seen under Ex-P.99 Sanction letter,

PSJC/VSKP Page no. 54 C.C.No.08 of 2006 dt.17.10.2000 was communicated to Accused No. 4, informing him about sanction of OCC limit of Rs.40,00,000/- (reducing from Rs.50,00,000/-) and granting Inland

Letter of Credit for Rs.55,00,000/-. Accused No. 1 obtained necessary promissory notes and RF 255-B i.e., list of documents pertaining to the properties offered as collateral securities submitted by the borrower covered under Ex-P.195 pertaining to the additional sanction of Rs.55,00,000/-. Ex-P.22 is the ILC, dt.18.10.2000 which was subsequently negotiated by Karur Vysya Bank as from Ex-P.23 letter along with corresponding delivery challan/invoice, dt.19.10.2000 and Bill raised by M/s Balaji Feeds. It is evident from Ex-P.196 unit visit report that subsequently on 10.03.2000 Accused No. 1 personally prepared Report on his Unit Visit of M/s

Coromandal Enterprises and recorded that stock of Tamarind which is about 313000 kgs stored in M/s Bangaramma Cold Storage, Accused No. 1 prepared list of stock from March 2000 to February, 2001 and further noted the dropping prices of Tamarind and prospective of Trade of Shrimp feed by M/s Coromandal

Enterprises and made remarks with regard to the Debtors commitment on account of LC and Trade further. As seen from Ex-P.196, Accused No. 1 clearly mentioned that M/s Coromandal Enterprises has ventured business in Shrimp feed since

October 2000 by procuring Shrimp feed on credit basis of 180 days and supplied to various Shrimp growers in Palakollu, Narsapuram, Amalapuram etc. This report was addressed to the Chief General Manager and there is no material on record negating the contents of visit report by supervising authority of Accused no.1.

76.At this stage it is pertinentthat in pursuant to LC granted, required Shrimp feed has been procured by the borrower. Thereafter, the Karur Vysya Bank,

Vizianagaram forwarded the transit insurance policy of M/s Balaji Feeds along with UBD request for Rs.55,15,000/- on 12.4.2001 as per Ex.P-101 and the same

PSJC/VSKP Page no. 55 C.C.No.08 of 2006 was sanctioned by Accused No. 1. All these documents are sufficiently assertive to show that Accused no.1 adhered to the procedure of the bank in granting ILC in favour of M/s Balaji Feeds, ensuring the required stock as well as securities. When the proof of Business activity is evident and negotiated by third party advising bank along with interest from the beneficiary, it can not be said that Accused no.1 fraudulently granted ILC, with obtaining report as to M/s Balaji Feeds, specifically when it is not the testimony of any of the prosecution witnesses.

77. It is also pertinent that as seen from Ex-D.6 Short Inspection Report of

Borrower Accounts enjoying fund based limits of Rs.50,00,000/- and above, for the period from 27.11.2000 to 10.03.2001, the Inspector of Branches inspected the

Unit of M/s Coromandal Enterprises and verified the Tamarind and other stock in

M/s Bangaramma Cold Storage. The Inspection Report also discloses as to the verification of insurance for the loan and collateral securities and no negative remarks were noted.

78.Considering the series of activities covered under all the above referred documents in the paragraphs discussed supra, this Court already concluded that the

Accused has submitted sufficient collateral securities pertaining to the loan extended to M/s Coromandal Enterprises and this Court further concluded that prosecution failed to bring on record any substantial material to prove that M/s

Coromandal Enterprise is non-existing firm and it never carried out any business.

79.This Court assertively concluded that M/s Coromandal Enterprises has done business by storing the Tamarind stock which was primary security for the loan initially extended to M/s Coromandal Enterprises and subsequently converted the business to Shrimp feed which was transfers through M/s Balaji Feeds. PW.15 or

PW.18 did not testify anything specially or generally about any violation of

PSJC/VSKP Page no. 56 C.C.No.08 of 2006

Circulars by Accused No. 1. The only document marked through Prosecution is

Ex-P.102, dt.21.05.1997 according to which while issuing Letter of Credit, the sanctioning authority shall be vigilant and have to collect the transport receipts from the recognized Transport Agencies. In this case on hand, a letter was addressed by Manager, Karur Vysya Bank covered under Ex-P.101, 21.04.2012 to

Chief Manager, Andhra Bank pertaining to payment of UBD of Rs.55.15 lakhs to

M/s Balaji Feeds enclosing original transit insurance policy. It is also evident that

Karur Vysya Bank only after verifying the authenticity of M/s Balaji Feeds negotiated the letter of Credit and transferred all the relevant documents to SSSIB,

Gajuwaka. However, the Investigating Officer filed the corresponding letter under

Ex-P.10, but did not seize the original transit insurance forwarded by the Karur

Vysya Bank. It clearly discloses that the Investigating Officer has omitted to collect certain documents which are the part of loan file. Further as seen from the proposal for supply of Shrimp feed dt.12.10.2000 covered under Ex.P-97 of M/s Baliji

Feeds it has its own transport vehicles and will deliver the goods. Acordingly the question of transit receipts do not arise when corresponding invoices are available on record .As per the evidence of P.W.15 in his cross-examination the bank has taken sufficient collateral securities for inland credit facility. Further, PW.18 in his examination-in-chief categorically stated that all the loans sanctioned in this case were as per the rules and guidelines of the Bank. Accordingly the accusation of the prosecution against Accused No. 1 that he violated Bank Circulars and Guidelines while sanctioning loan to M/s Coromandal Enterprises fails.

B. Sai Priya Nests Pvt. Ltd.,:-

PSJC/VSKP Page no. 57 C.C.No.08 of 2006

1.The case of the prosecution is that M/s Sai Priya Pvt., Ltd., authorized by

Accused No.5 applied for Packing Credit limit (working capital advance to procure shrimp) for Export Business to Andhra Bank and that Accused No.1 the then

Branch Manager, Andhra Bank, SSIB, Gajuwaka, Visakhapatnam, ignoring the circulars/guidelines issued by the bank, sanctioned 4 number of Packing Credits

Limits of Rs.1.43 Crores without verifying export orders. The further case is that

Accused No.5 withdrew the loan amount in his name and in the names of his relatives and spent the loan partly in procuring shrimp stock and in development of

M/s.Sai Priya Estates and Resorts Pvt., Ltd., the allegations against Accused no.1 in continuation are two folds, firstly, Accused no.1 by abusing his official position without proper valuation of primary and collateral security took over the existing loan from Union Bank of India and secondly released the loan fund in the name of loanee and his relatives who mis-utilized the same. The allegations against

Accused No.5 in further are that he offered collateral security that was far less than the loan amount and Accused No.3 offered property worth Rs.49.3 lakhs which he had already disposed off. It is further alleged that Accused No.6 who was the panel valuer during the relevant point of time has over valued the property violating guidelines formulated by the bank and that due to non payment loan amount the loan became non performing assets. In reference to this accusations the facts of the case are determined as follows:

2.To prove the above allegation against Accused, prosecution relied on the evidence of PW.15, PW.18 and PW.21. Initially PW.15 who was the enquiry officer pertaining to this loan account stated that Ex.P.103 is the A/c opening Form of

C.A.No.95, dt.24.02.2000 of M/s Sai Priya Nest Private Limited and as per the contents of Ex-P.103 the current account was opened in the name of M/s Sai Priya

PSJC/VSKP Page no. 58 C.C.No.08 of 2006

Nest Private Limited (Accused No.8) on 24.02.2000 by its Managing Director

Accused No.5. The connected documents to the loan application are marked as

Ex.P.104, Ex.P.105 and Ex.P.106, wherein, Ex.P.104 is the Photocopy of

Memorandum and Articles of Association of Sai Priya Nests (P) Ltd. (1 sheet), and

Ex.P.105 is the Application form for credit facilities in respect of M/s Sai Priya

Nests Pvt., Ltd., dt.20.02.2000 (14 sheets) and Ex.P.106 is the Appraisal Note, dt.05.05.2000 of M/s Sai Priya Nests P. Ltd., (8 sheets).

3.PW.18 who was the Recovery Officer in this case also corroborated the contents of Ex.P-103 to P.106 and these documents are undisputed. The only incriminating content in the evidence of PW.18 with regard to these documents is that the account covered under Ex-P.103 was introduced by Mr.Madhusudhanarao but his account number is not mentioned in the application. However, Investigating

Officer neither cited the above referred Mr. Madhusudhanarao as witness to the case nor it is not the case of prosecution that Mr. Madhusudhanarao is not having any account in SSSIB, Andhra Bank and signed on Ex-P.103 without any acquaintance with Accused No. 5.

4.Evidently as seen from the Ex.P.103, Accused No.5 made a application for opening Current Account No.95 on 24.02.2000 to Andhra Bank and an application for credit facilities of over Rs.15 Lakhs and upto Rs.1 Crore i.e., for advance of

Rs.75 Lakhs as Packing Credit Limit and Rs.20 Lakhs as Bank Guarantee was made under Ex.P.105 by Accused No.5 for export of frozen shrimp. The application also disclosed that Andhra Bank may takeover the outstanding loan liability of Rs.22,76,514/- Lakhs in the account of M/s. Sai Priya Nests Pvt.,Ltd., from Union Bank of India, SSSIB, Visakapatnam. The said application was appraised and sanctioned by Accused No.1 vide sanction reference No.

PSJC/VSKP Page no. 59 C.C.No.08 of 2006 1151/18/1101/42, dt.06.03.2000. However, the relevant sanction document was not collected by the Investigating Officer. The above sanction reference is elicited however from the contents of Ex-P.106 which is appraisal note dt.05.05.2000 covered under Ex.P.106 pertaining to enhancement of PC limit to Rs.90,00,000/- as per application on 05.05.2000. The corresponding appraisal note and sanction dt.02.03.2000 was marked as Ex-P.156.

5.The case of the prosecution is that the properties covered under document no. 2251/1999, 2253/1999, 2254/1999 and 2255/1999 were fraudulently offered as collateral securities by Accused. no 5 and 4 for the loan extended to Accused no 8 company as worth Rs.12.95 lakhs, wherein the registration value of properties described in the above documents is only Rs.2.28 Lakhs and that Accused no.6 fraudulently valued the same as worth Rs.12.95 lakhs in the year 2000 violating the bank guidelines which stipulate that 8 times of the Annual Income generated from the property or current registration value of the property to be considered for valuation and the valuation to be done by Ruler Development Officer of Andhra

Bank and Accused No.1 accepted the same. Similarly the allegation against

Accused No.3 is that he offered property in Document no.957/98 which was acquired by him for a consideration of only Rs.3.59 lakhs as collateral security for loan of Accused No.8 company and that the same was tendered as worth Rs.49.30 lakhs as dishonestly valued by Accused No.7 panel valuer wherein the registration value is only 5.9 lakhs. The further allegation is that Accused no.3 fraudulently sold the property under document no 957/98 to different persons during the period 21.05.1998 to 08.11.2002 and that he fraudulently offered property covered under documents no. 4452/99 and 4453/99 acquired by him for a consideration of only

Rs. 2.04 lakhs as collateral security for loan of Accused No. 8 company and that

PSJC/VSKP Page no. 60 C.C.No.08 of 2006 the same was tendered as worth Rs.26.96 lakhs, as dishonestly valued by Accused

No.1, wherein the registration value is only 2.54 lakhs. It is also averred that

Accused no.1 accepted the property covered under document No.781/97 fraudulently as additional collateral security for this loan .

6.Initially certified copy of Document No. 957/98, dt.20.03.1998 pertaining to property in survey No. 23/1 and 28/4 in an extent of Ac.3.12cts of Palangi Village in Undrajavaram Mandal of Tanuku was marked as Ex-P.7 and the connected

Encumbrance Certificates were marked as Ex-P.8, P.9 and P.10, certified copy of

Document No. 4452/98, dt.29.10.1999 pertaining to property in survey No. 100/7 and 100/9 in an extent of Ac.1.59 cts of Palangi Village in Undrajavaram Mandal of Tanuku was marked as Ex-P.12 and certified copy of Document No. 4453/98, dt.29.10.1999 pertaining to property in survey No. 98/1 in an extent of Ac.0.30cts of Palangi Village in Undrajavaram Mandal of Tanuku was marked as Ex-P.13 through the then Joint Sub-Registrar, Tanuku P.W.2.

7.As per the evidence of PW.15 and PW.18 properties covered underdocument No. 957/98 under Ex-P.7, document No. 4452/99 under Ex-P.12, document No. 4453/99 under Ex-P.13 and 4 documents bearing No.2251/1999, 2253/1999, 2254/1999 and 2255/1999 under Ex.P.107 and RF 255 marked as Ex-

P.153are submitted as collateral securities by the Guarantors pertaining to loan account of M/s Sai Priya Nests Private Limited. In this connection PW.18 stated that as per letter dated 07.03.2000 addressed by Union Bank of India

Visakhapatnam to SSSIB Gajuwaka covered under Ex-P.147, Andhra Bank paid an amount of Rs.22,76,514/- to Union Bank of India and has taken over the loan account of M/s. Sai Priya Nests and that the Union Bank of India also forwarded to

Andhra Bank four registers sale deeds pertaining to the properties offered as

PSJC/VSKP Page no. 61 C.C.No.08 of 2006 collateral securities. PW.18 further stated that as per Ex-P.148 is RF 255 dated 08.03.2000 disclosing the particulars of collateral securities furnished by Accused

No.3 for loan limits availed by M/s Sai Priya Nests, the total extent of land referred under item no.1 and 2 is Acres 1.89 cents, worth Rs.26.49 lakhs and the total extent under item nos. 3 to 10 is Acres 3.12 cents worth Rs.49 lakhs and the total value of properties covered under Ex.P.148 is Rs.75.49 lakhs (26.49 + 49.00).

8.As per evidence of PW.18 values of properties offered as collateral securities in this case as per market value assistance given by concerned SROs are as follows:

As per Ex.P.11, Market Value Assistance certificate, the market value of the land in extent of 3.12 acres in Survey no.29/1, 28/4 of Palangi village as on 22.06.2005 is Rs.5,89,680/- Ex-P.149 is the market value assistance certificate dated 15.06.2005 issued by Sub Registrar, Bheemunipatnam and as per Ex.P.149 the market value of land in Ghambeeram village is Rs.2,33,500/- per acre as on 15.06.2005.

 Ex.P.14 market value assistance certificate, the market value of the land in extent of acres 0.30 cents in Survey no.98/1 of Palangi village as on 22.06.2005 is Rs.72,000/-  Ex.P.15 market value assistance certificate, the market value of the land in extent of acres 1.59 cents in Survey no.100/7, 100/8 and 100/9 of Palangi village as on 22.06.2005 is Rs.2,54,400/- Ex-P.150 is the legal opinion dated 24.02.2000 issued by

Mr.G.V.Krishnarao as to the properties offered as collateral securities by

Accused no.3.

9. In reference to the evidence of PW.18, it is initially appropriate to discuss the allegations against Accused No. 3 with regard to the collateral securities offered by him pertaining to the loan account of M/s Sai Priya Nests and connected allegations against Accused No. 1 and 7.

PSJC/VSKP Page no. 62 C.C.No.08 of 2006

Q.1Whether Accused No. 3 offered property covered under Ex-P.7, P.12 and

P.13 fraudulently and whether the same was overvalued by Accused No.

7 and dishonestly accepted by Accused No. 1?

10.Before probing into this aspect, it is apparent on record that out of the total loan advance of Rs.75,00,000/- and Rs.20,00,000/- Bank guarantee, Rs.22,76,514/- was paid to Union Bank of India by SSSIB, Andhra Bank, Gajuwaka for taking over of the existing loan of Sai Priya Nests Pvt., Ltd., and the same is evident from

Ex-P.147.

11.In this connection, the Prosecution examined PW.19 Mr. Manoj Asapu. The evidence of PW.19 is that he has been working as Chief Manager, Union Bank of

India, Visakhapatnam from 27.06.2022 and he can identify the documents issued by their branch and signatures of Mr.V.Venkatarama Naidu, the then Chief

Manager, Union Bank of India, MVP Colony Branch, Visakhapatnam and that

Ex.P.147 is the letter dated 07.03.2000 addressed by Mr.V.Venkatarama Naidu, the then Branch Manager, Union Bank of India, SSI Finance Branch, Visakhapatnam to SSSIB, Andhra Bank, Gajuwaka and Ex.P.147 bears his signature. PW.19 further stated that as per the contents of Ex.P.147 SSSIB Andhra Bank Gajuwaka has taken over the loan account of M/s. Sai Priya Nests in the year 2000 and Andhra Bank paid Rs.22,76,514/- towards full and final settlement of loan availed by M/s. Sai

Priya Nests vide pay order dated 07.03.2000 covered under Ex.P.32 and that the

Union Bank of India has forwarded four registers sale deeds bearing nos.957/98, 4452/99, 4453/99 and 416/98 pertaining to the properties offered has collateral securities by M/s.Sai Priya Nests along with letter covered under Ex.P.147 to

SSSIB, Andhra Bank Gajuwaka.

PSJC/VSKP Page no. 63 C.C.No.08 of 2006

12.From the evidence of PW.18 and PW.19, it is evident that as on date of making application under Ex-P.105, M/s Sai Priya Nests Pvt., Ltd., has existing loan in Union Bank of India to an extent of Rs.22,76,514/- and properties covered under Registered Sale deeds bearing No. 957/98, 4452/99, 4453/99 and 416/98 were offered as collateral securities to Union Bank of India. It is also evident that subsequently SSSIB, Andhra Bank, Gajuwaka has taken over the existing loan account of M/s Sai Priya Nests Pvt., Ltd., having paid an amount of Rs.22,76,514/- towards full and final settlement vide Pay Order covered under Ex-P.32. The Union

Bank of India has acknowledged the same as Ex-P.147 and forwarded the connected Registered documents of properties offered as collateral securities to

SSSIB, Gajuwaka.

13. In view of the evidence of PW.18, it is important to look into the contents of Ex-P.148 ,RF 255. As per Ex-P.148, the below documents pertaining to property offered as collateral security were submitted by Accused No. 3.

Sl.Reg. Sale Deed No inDescription of the propertyExhibit Depositors Nofavour of Accused no.3situated at Palangi, TanukuValue of the . property 14452/99, dt.29.10.1999 Ac.1.59cts in Survey No.Ex-P.12 1008/, 100/9 and 100/7Rs,26,49,000/- 24453/99, dt.29.10.1999Ac.0.30cts in Survey No. 98/1Ex-P.13 3957/98 dt.19.03.1998Ac.3.12cts in Survey No. 29/1Ex-P.7Rs.49,00,000/- and 28/4

14.As per the Market Value assistance under Ex-P.11, the SRO value of land in an extent of Ac.3.12cts in Item No. 3 is Rs.5,89,650/- as on 22.06.2005. As per Ex-

P.14 Market Value assistance, the SRO value of land covered under Item No. 2 in an extent of Ac.0.30cts is Rs.72,000/- as on 22.06.2005 and as per Ex-P.15 Market

PSJC/VSKP Page no. 64 C.C.No.08 of 2006

Value assistance, the SRO Value of land in an extent of Ac.1.59 cts in Item No. 1 is

Rs.2,54,200/-.

15.Item No.1 to 3 referred above were revalued by subsequent Panel Valuer

PW.12. The relevant evidence of PW.12 is that Ex-P.72 is the valuation report

dated 06.01.2004 given by him in respect of land property described in document

No.957/1998 in extent of 1.59 Acres situated at Palangi Village, Undrajavaram

Mandal, Tanuku and he calculated the value of the property measuring 1.59 Acres at Rs.7.5 Lakhs per Acre total Rs.11,92,500/- lakhs and that the distress sale value of the property is 85% of valuation cost i.e. Rs.10,13,625/-. Ex-P.73 is the valuation report dated 06.01.2004 given by him in respect of land property described in document No.24452/1999 in extent of 3.12 Acres situated at Palangi

Village, Undrajavaram Mandal, Tanuku and he calculated the value of the property measuring 3.12 Acres at Rs.7.5 Lakhs per Acre total Rs.23,40,000/- and that the distress sale value of the property is 85% of valuation cost i.e. Rs.19,89,000/-. Ex-

P.74 is the valuation report dated 06.01.2004 given by him in respect of land property described in document No.4453/1999 in extent of 0.30 acres situated at

Palangi Village, Undrajavaram Mandal, Tanuku and he calculated the value of the property measuring 0.30 Acres at Rs.7.5 lakhs per Acre total Rs.2,25,000/-/- lakhs and that the distress sale value of the property is 85% of valuation cost i.e.

Rs.1,91,250/-. As per the evidence of PW.12 the total value of Item.no 1 to 3 of Ex-

P.148 is Rs.58,72,500/- ( Rs.11,92,500 + Rs.23,40,000 + Rs.23,40,000 ) as per Exs

P.72, P.73 &P.74.

16.In reference to the above evidence of prosecution witnesses, the contention of the accused is that, the properties covered under Ex-P.148 are house sites and lands which are layoutable and that valuation of these properties by PW.12 as

PSJC/VSKP Page no. 65 C.C.No.08 of 2006 agricultural lands is quite unreasonable and adverse to the existing facts. It is contended that there is wide difference in the value of property, if calculated as in square yards, when compared to the calculation of value in acres and cents. The

Ld., Counsel for accused submitted that SRO value of property which is basis for collecting registration charges and stamp duty can not be criteria for fixing the commercial market value of property offered as collateral security and apprised the cross examination of PW.12 where in the witness stated that above referred land can be evaluated in Sq.yds., as it is suitable for laying plots. In reference to contention of the accused it is important to look into the cross examination of

PW.12 on this aspect.

17.In cross-examination PW.12 stated that he has been practicing as a Valuer for last 35 years and he worked as Panel Valuer for about 5 Nationalized Banks in

Visakhapatnam region and that he has submitted around 40000 valuation reports approximately to various branches of Nationalized Banks during the last 35 years and that the purpose of obtaining valuation reports from Valuer is to evaluate the market value of property offered as security for the loan to be sanctioned by the bank and that he visited Palangi village where the properties referred in Ex-P.72,

P.73 and P.74 are situated. PW.12 in his cross-examination further stated that he does not remember whether the bank asked him to evaluate properties referred in his Examination-in-chief as Agriculture lands or non Agriculture and that there is vast difference of fair market value between the agriculture lands and non agriculture lands in Andhra Pradesh. PW.12 admitted that the lands referred in

Ex.P.72, P.73 and P.74 are layout able lands and the distance between these lands and main center of Tanuku is about 2 to 2.5 K.M., and there are buildings in scattered manner in the neighboring lands of lands referred in Ex.P.72, P.73 and

PSJC/VSKP Page no. 66 C.C.No.08 of 2006

P.74. Palangi village is situated about 4 to 4.5 k.m. from the National High way and he made local enquiries with regard to market value of the properties referred above and if the lands referred in Ex.P.72, P.73 and P.74 are plotted the rate per square yard will be Rs.400 to 450 per sq.yd as on date of inspection. PW.12 further deposed that Agriculture land means where the crops are raised and that by the date of his visit, the lands referred in Ex.P.72, P.73 and P.74 are not vacant lands and that these lands may fall in the category of non agricultural lands and whenever a land is suitable for plotting of residential houses, it can be valued in sq.yds and after deduction 30% of area towards roads, drains and public places in the layout able lands and remaining area is consider a salable in sq.yds and that the Valuer can evaluate the market value of remaining 70% of lands in sq.yds and that the lands referred in Ex-P.72, P.73 and P.74 are layout able lands and those can be evaluated in sq.yds and there may be a difference of 30% in fair market value of agricultural land if evaluated as layout able land in sq.yds. PW.12 further admitted in his cross- examination that as on date of his visit, the owner of lands referred in Ex-P.72, P.73 and P.74 can make layout in the lands and sell the same in plots as the same is suitable for laying plots.

18.From the above testimony of PW.12 it is evident that the land covered under

Ex-P.148 are not agricultural lands, and are suitable for laying plots. It is also evident that these lands are situated at 4 to 4.5 k.m., from the National Highway and there are residential houses in and around the property. Even as per the evidence of P.W.2, Palangi village is situated at a distance of two Kilometers from

Tanuku main center which is a Municipality. This fact is not disputed by the prosecution. As seen from Exs P.72 to P.74 Valuation Reports of PW.12, the property is situated adjacent to already existing residential layout where a colony

PSJC/VSKP Page no. 67 C.C.No.08 of 2006 has already built and is occupied and it is on the road leading to Rajahmundry from

Tanuku and within 1½ kilometer from Tanuku. Earlier as per Ex-P.151 Accused

No.7 valued the self same property at Rs 49,30,000 in sq.yds. As per PW.12, he calculated the value of property covered under Document No. 957/98 as Rs 23,40,0000 at the rate of Rs.7,50,000 per acre. In fact the value of the property under Ex-P.72 as mentioned by PW.12 is Rs.11,92,000/-, however, it pertains to property in an extent of Ac1.59 cts which is actually covered under Document

No.4452/99 and the corresponding value was mentioned under Ex-P.73 as

Rs.23,40,000/-. Considering the same as a typographical mistake, the values given by PW.12 are taken in accordance with the extent of property calculated as per acre rate.

19.As seen from Ex-P.156 Appraisal Note and Ex-P.157 Borrower Statement, the properties offered as collateral security by Accused No.3 are residential house sites. Accused No.7 evaluated the properties under Ex-P.151 Valuation Report considering the property as residential site and converting into square yards at

Rs.49,30,000/- @ Rs.600/- per sq.yd. It is evident from the contents of Ex-P.73 the property is adjacent to the residential layout where a colony has already built and is occupied. Accordingly there is no rationality in calculating the property tendered by Accused No.3 under Ex-P.7 as agricultural land when it is evidently residential vacant land. Even as per evidence PW.12 there is no wrong in calculating the value of land in squareyards after deducting 30% of total extent for roads drains and public places. According to the evidence of PW.12 in his cross-examination, the value of the lands in Palangi Village of Tanuku evaluated by him under Exs P.72,

P.73 and P.74 if plotted, the rate per sq.yd., will be Rs.400/- to Rs.450/- per sq.yd.

PSJC/VSKP Page no. 68 C.C.No.08 of 2006

There fore the value of property covered under Ex-P.7, Ex.P-12 and Ex.P-13 are calculated as follows;

20.The total extent of property covered under Document No. 957/98 i.e Ex-P.7 is Ac.3.12 cts. (One acre = 4840 sq.yds). The extent of Ac.3.12 cts is 15100.8 sq.yds after deducting 30% for roads and other public amenities, the remaining extent is (15100.8 – 30% i.e 4530 sq.yds.), = 10570.8 sq.yds., The value of 10570.8 sq.yds extent @ Rs.450/- per sq.yd., = Rs.47,56,860/-. The value calculated by Accused No.7 as per Ex-P.151 is Rs.49,30,000/-. Evidently there is difference of Rs.1,43,140/- between the two valuation reports. Valuation of immovable property is fixing the economic worth of the property. There are multiple methods of valuations accepted by the Institute of Charted Accountants and 5 to 10% of difference between the two Valuation Reports is acceptable as the methods adopted by each valuer may differ some times. Accordingly, this marginal difference of Rs.1,43,140/- which is less than 3% does not incriminate the Accused

No. 7.

21. With regard to Land in an extent of Ac.1.59cts in Survey No. 1008/, 100/9 and 100/7 under Ex-P.12 ,the extent of Ac.1.59 cts is equal to 7695.6 sq.yds, after deducting 30% for roads and other public amenities, the remaining extent is (7695.6 sq.yds – 30% i.e., 2308.6 sq.yds.,) = 5387 sq.yds. The value of 5387 sq.yds., extent @ Rs.450/- per sq.yd., = Rs. 24,24,150 /-. With regard to land in an extent of Ac.0.30 cts in Survey No. 98/1 under Ex-P.13, the extent of Ac.0.30 cts is 1452 sq.yds, after deducting 30% for roads and other public amenities, the remaining extent is (1452 sq.yds – 30% i.e, 435 sq.yds.,) = 1017 sq.yds. The value of 1017 sq.yds., extent @ Rs.450/- per sq.yd., = Rs. 4,57,650/-.

PSJC/VSKP Page no. 69 C.C.No.08 of 2006

The comparative analysis of properties values under Ex-P.7, Ex.P-12 and 13 is as follows:

Sl.NDocumenExtent inValue by Value byExtentExtentValue in otAcres Accused no.7P.W.12inaftersquare yards no Squarededucting@Rs 450 per yards 30%forsq.yd public amenities 1957/98Ac.3.12.ctsRs.49,30,000Rs.23,40,000/- 15100.8 10570.8 Rs.47,56,860/- Ex-P.7Ex-P.151 24452/99Ac.1.59.ctsRs.11,92,000/- 7695.6 5387Rs.24,24,150/- Ex-P.12Rs.26,49,000 Ex-P.152 34453/99Ac.0.30.ctsRs.2,25,000/-14521017Rs. 4,57,650/- Ex-P.13

Total Rs.75,79,000/- Rs.37,57,000 Total Rs.76,38,660/-

22.Lastly the terminal reliance is placed by the Prosecution on the sale consideration between the parties and SRO values for the documents covered under Exs-P.7, 12 and 13. As seen from the evidence of P.W.2 the sale consideration for the above documents is Rs.3,59,000/-, Rs.1,75,000/- and

Rs.49,500 respectively. The relative SRO value as per Exs-P.11, 15 and 14 is

Rs.5,89,680/,Rs.1,60,000/-and Rs.72,000/- as on 22.06.2005. The case on hand pertains to secured credit facility to a business entity, wherein primary security was stock hypothecated and the properties above referred were offered as collateral security. The nature of loan is different from loan to purchase immovable properties wherein the value of immovable property offered for sale itself, will the subject matter. In contra in case of secured credits the value of collaterals will be determined by the market value assessed by the Pannel Valuer. Therefore the evidence of P.W.2 in connection with document value and SRO values as on 2005 pertaining to properties covered under Ex-P.7,12 and 13 remains insignificant and only barrens the prosecution case. The related contention of Prosecution with

PSJC/VSKP Page no. 70 C.C.No.08 of 2006 regard to violation of guidelines under Ex-P.176 will be discussed in the succeeding paragraphs at appropriate stage

Q.2Whether the property covered under Document No. 957/98 covered

under Ex-P.7 was alienated to 45 persons by Accused No. 3 during 1998

to 2002?

23. On this aspect prosecution entirely relied on the documentary contents of two encumbrance certificates marked under Ex.P-8, Ex.P-9 and Ex.P-10, encumbrance certificates marked through Prosecution witnesses P.W.2, Sub

Registrar Tanuku . However none of the prosecution witnesses including P.W.2 deposed about any of purported alienation by Accused no.3 pertaining to property covered under Ex-P.7.As seen from contents of Ex-P.8, 9 and 10 there are certain transaction in the name of Accused no.3 and third parties pertaining to properties in

Palangi village. The contention of accused is that P.W.2 is not the competent person to furnish the relevant information under Ex-P.8, 9 &10 and that the same are inadmissible in evidence. Secondly it is contended that encumbrance certificates does not constitute substantial piece of evidence and basing on mere entries in Ex-P.9 and 10 it cannot be said that the property covered under Ex-P.7 was sold. It is further submitted that the referred encumbrance certificates relied by the prosecution were obtained by quoting only specific survey number and in that case whatever transactions under taken place in that survey number would reflect it, without relevancy to the property covered under Ex-P.7. The Ld. Counsel for accused appraised that prosecution neither filed the purported sale deeds of alleged 45 transaction nor examined any the vendees and that in absence of any significant evidence , basing on the mere contents of Ex-P.8 ,9 & 10 it can not be concluded that Accused no 3 sold away the mortgaged property to third parties.

PSJC/VSKP Page no. 71 C.C.No.08 of 2006

24. In the back drop of above contention raised by accused it is important to look into the part of cross examination of P.W.2 extracted below, wherein his competency to issue Ex-P.8 9 &10 was raised.

“ I was promoted as Sub Registrar in the month of November 2004. Mr.Reddy

Satyanarayana was appointed as Statutory Sub Registrar Tanuku and worked till

September, 2005. It is true that as per Indian Stamp Act and Registration Act only statutory Sub Registrar appointed by the government is alone competent to issue certified copies, encumbrance certificate and market value certificate.”

25.Generally, Encumbrance Certificate is not a document of title or document affecting title to a property. It is only a list of facts and encumbrances effecting on immovable property being copies of entries in Index entered in Book I of Sub-

Registrar Office. As per Sec. 57 of Registration Act, 1908 subject to payment of requisite fee, indexes relating to Book I shall be open to inspection by any person and subject to provisions of Sec. 62 copies or entries of such Book shall be given to all persons applied for said copies. Reverting back to evidence on the record, in view of the above statement of PW.2 in the cross-examination, the objection of

Accused is that PW.2 is not authorized person to issue Ex-P.8 during the relevant point of time. However, entries in Book I of Sub-Registrar Office falls under the acts pertaining to records of Public Authority and falls under the ambit of Public

Document as described under Sec. 74 of the Indian Evidence Act and secondary evidence of the same is admissible in evidence when furnished by the authority in custody of the record as per the provisions of Section 76 of the Indian Evidence

Act, 1872. Therefore, a stray statement of PW.2 does not rule out the admissibility of Ex-P.8, P.9 and P.10 in evidence in absence of any material breaching the authority of PW.2 as custodian of the documents during the relevant time.

PSJC/VSKP Page no. 72 C.C.No.08 of 2006

26.Coming to the contents of Ex-P.8 and P.9, both the documents pertains to the transactions under Survey No. 29/1. As per the evidence of PW.2, according to Ex-

P.7 Certified copy of Document No. 957/1998, dt.20.03.1998 pertains to the property in Survey No. 28/4 and 23/1 in an extent of Ac.3.12cts of Palangi Village in Undrajavaram Mandal and that a Sale deed was executed in favour of Accused

No. 3. Accordingly Ex-P.8 and 9 are not related to property covered under Ex-P.7.

Coming to Ex-P.10, a search was made pertaining to Survey No. 28/4 where apparently there are certain transactions between Accused No. 3 and third parties.

The case of the prosecution is that Accused No. 3 during the period from 21.05.1998 to 08.11.2002 sold the property covered under Ex-P.7 to 45 different persons. However, the Investigating Officer neither cited the vendees as witnesses nor attempted to file the corresponding sale deeds, at least certified copies of the same. The mere entries in the Encumbrance Certificates does not substantiate the sale transactions. Without any material on record pertaining to total extent in

Survey No. 28/4 and the corresponding alienations, the allegation of fraudulent transactions of schedule property pending mortgage in the Bank cannot be attributed to Accused No. 3. In fact as seen from the record, the document No.

957/1998 was initially deposited with Union Bank of India even prior to taking over of loan by SSSIB, Andhra Bank and this document was subsequently forwarded to SSSIB vide Letter marked under Ex-P.147. If there is any breach with regard to the title of the property under Ex-P.7, Union Bank of India would have raised objection. Similarly, as seen from Ex-P.150 Legal Opinion, dt.24.02.2000 issued by the Panel Advocate, SSSIB, Gajuwaka, the property is free from encumbrance and held to be worthy of accepting for collateral security. In the similar manner, when the contents of Ex-P.73 Valuation Report, pertaining to this

PSJC/VSKP Page no. 73 C.C.No.08 of 2006 property conducted by PW.12 on 06.01.2004, it was categorically recorded as follows:

“certified that the vacant residential layoutable land covered by Survey No.

‘S 100/7, 8 & 9 in Palangi Village, Undrajavaram Mandal, Tanuku Sub Registry,

West Godavari District belonging to Sri Dandamudi Papa Rao S/o Sri

Satyanarayana Rao is valued at Rs.23,40,000/-”.

27.As seen from the above certification, it is clearly evident that even as on date of 06.01.2004, Accused No. 3 is the owner of property covered under Ex-P.7.

Lastly; none of the prosecution witnesses including PW.15 Enquiry Officer, PW.18

Recovery Officer and PW.2 Sub-Registrar, Tanuku in their oral testimony, did not make any whisper about the purported alienation by Accused No. 3 and further

PW.18 in his cross-examination stated that during his visit to the collateral properties as part of recovery process, he found that all the properties were intact and that in all the loans in this case, there are sufficient securities to enforce bank debt. Therefore, in view of multiple assertive evidence elicited from the prosecution documents itself and for want of substantial oral and documentary evidence, the accusation against Accused No. 3 that he sold away the property covered under Ex-P.7 to 45 different people subsequent to mortgage to the Bank the same fails.

28. The next point for consideration is ;

Q.3 Whether Accused No. 4 and 5 fraudulently offered properties described

in Document Nos. 2251/99, 2253/99, 2254/99 and 2255/99 as collateral

securities for loan obtained by M/s Sai Priya Nests?

In this connection, the evidence of PW.15 is that Document No. 2251/99, dt.06.09.1999, Document No. 2253/99, dt.06.09.1999, Document No. 2254/99,

PSJC/VSKP Page no. 74 C.C.No.08 of 2006 dt.06.09.1999 and Document No. 2255/99, dt.06.09.1999 covered under Ex-P.107 were submitted by the Guarantor pertaining to the loan account of M/s Sai Priya in

Nests Pvt., Ltd., in addition to properties under Ex-P.7, Ex-P.12 and Ex-P-7. In the similar manner, PW.18 stated that Ex-P.153 is the RF 255 dated 07.03.2000 disclosing the particulars of collateral securities furnished by Accused No.5 and

Accused No.4 for loans availed by M/s Sai Priya Nests and as per Ex.P.153 the total extent of land referred under item no.1 to 4 is Acres 0.98 cents worth Rs.12.65

Lakhs and that Ex-P.154 is the valuation report dated 01.03.2000 given by Accused

No.6 pertaining to properties covered under document No.2251/99, 2253/99, 2254/99 and 2255/99 situated at Ghambeeram village, Bheemunipatnam SRO and as per Ex.P.154, the total extent of land referred under item no.1 to 4 is Acres 0.98 cents valued as Rs.12.65 Lakhs. The particulars of properties as per the contents of

Ex-P.153 is precised as follows:

Sl NoTitle Deeds standing inDescription of theDepositors the name of Accused No.propertyValueof the 4 and 5at Gambheeram,Village,property Anandapuram

1.2251/99, dt.06.09.1999Ac. 0.24 cts Value of Item

2.2253/99, dt.06.09.1999Ac. 0.30 cts Nos. 1 to 4 is Rs.12.65 lakhs

3.2254/99, dt.07.09.1999Ac. 0.20 cts

4.2255/99, dt.06.09.1999Ac. 0.24 cts

29.The evidence of PW.18 is that the above mentioned properties were evaluated by Accused No. 6 and the corresponding Valuation report was marked as

Ex-P.154. As per the contents of Ex-P.154, the valuation given by the Accused No.

6 for the above referred four properties as on 01.03.2000 is Rs.12,65,000/-. The case of the prosecution is that the borrowers and the Panel Valuer has inflated the value of the property far beyond the actual value which is less than the loan extended to the M/s Sai Priya Nests Pvt. Ltd and relied upon the evidence of

PSJC/VSKP Page no. 75 C.C.No.08 of 2006 subsequent valuer, examined as P.W.12. In this connection, the evidence of PW.12 is as follows.

Ex-P.75 is the valuation report dated 05.01.2004 given by him in respect of land property described in document No.2251/1999 in extent of 0.24 acres situated at Gambheeram Village, Anandapuram mandal, Visakhapatnam and he calculated the value of the property measuring 0.24 Acres at Rs.10 lakhs per Acre total Rs.2,40,000/- lakhs and that the distress sale value of the property is 85% of valuation cost i.e. Rs.2,04,000/-.

Ex-P.76 is the valuation report dated 05.01.2004 given by him in respect of land property described in document No.2253/1999 in extent of 0.30 acres situated at Gambheeram Village, Anandapuram mandal, Visakhapatnam and he calculated the value of the property measuring 0.30 Acres at Rs.10 lakhs per Acre total Rs.3,00,000/- lakhs and that the distress sale value of the property is 85% of valuation cost i.e. Rs.2,55,000/-.

Ex-P.77 is the valuation report dated 05.01.2004 given by him in respect of land property described in document No.2254/1999 in extent of 0.20 acres situated at Gambheeram Village, Anndapuram mandal, Visakhapatnam and he calculated the value of the property measuring 0.20 Acres at Rs.10 lakhs per Acre total Rs.2,00,000/- lakhs and that the distress sale value of the property is 85% of valuation cost i.e. Rs.1,70,000/-.

Ex-P.78 is the valuation report dated 05.01.2004 given by him in respect of land property described in document No.2255/1999 in extent of 0.24 acres situated at Gambheeram Village, Anndapuram mandal, Visakhapatnam and he calculated the value of the property measuring 0.24 Acres at Rs.10 lakhs per Acre

PSJC/VSKP Page no. 76 C.C.No.08 of 2006 total Rs.2,40,000/- lakhs and that the distress sale value of the property is 85% of valuation cost i.e. Rs.2,04,000/-.

30.As per the evidence of PW.12 Subsequent Valuer and contents of Exs P.75 to

P.78 the total value of Item Nos. 1 to 4 covered under Ex-P.153 is (2,40,000/- +

Rs.3,00,000/- + Rs.2,00,000/- + Rs.2,40,000/-) Rs.9,80,000/-. The contention of the Accused is that Gambheeram Village is situated only at a distance of 6 to 8 kilometers from the main city of Visakhapatnam and the market value of the surroundings lands in the year 2000 is approximately 450 to 500 sq.yds and that as per the evidence of PW.12 in the cross-examination there is no wrong in calculating the market value of these properties in square yards as the same are compatible for residential purpose. As seen from the contents of valuation reports given by P.W.12 under Ex-P.74, 76, 77 and 78 all the properties evaluated here in are open vacant lands which are adjacent to the estate developed by Mr. I.S.N.Raju located almost adjacent to National Highway connecting Visakapatnam to

Vijayanagaram. The same description was given to the properties evaluated by

PW.12 for lands covered under Ex-P. 226 to 221 vide valuation reports Ex-P.65 to

70. Admittedly P.W.12 in his cross examination stated that Gambheeram village is situated at about 6 to 8 km from Jagadamba center, Visakapatnam and less than 1 km from National High way and that the properties referred in Ex-P.65 to 69 are layaoutable lands for residential purpose and there is no wrong in calculating the market value of the property covered under Ex-P.65 to 69 in square yards.

Considering the particulars of property in Ex-P 75 to 78 as situated in same locality as described by P.W.12 in Ex-P 65 to 70, identical analogy is applied to the lands covered under Ex-P.107 in Gambheeram village and calculated as follows;.

PSJC/VSKP Page no. 77 C.C.No.08 of 2006

Sl.NDocument.nExtent inValue by Value byExtentExtent afterValue in oAcres AccusedP.W.12 @indeductingsquare yards o no.6 @ 400/-Rs.10 lakhSquare30%for@ 500/- per per sq.yd.,per acreyards publicsq.yd. amenities 12251/99Ac. 0.24Rs.2,40,000 1161.6 1161.6 -348Rs.4,06,800 cts =813.6 22253/99Ac. 0.30Rs.3,00,00014521452435.6Rs.5,08,500 cts =10175, Rs.12,65,000 32254/99Ac. 0.20Rs.2,00,000968968-290Rs.3,39,000 cts=678 42255/99Ac. 0.24Rs.2,40,000 1161.6 1161.6-384Rs.4,06,800 cts =813.6 Total : Rs.12,65,000/- Rs.1,96,000Total : Rs.16,61,100

31. According to the contents of Ex-P.154, the valuation given by the Accused

No. 6 for the above referred four properties as on 01.03.2000 is Rs.12,65,000/.As seen from the above calculations, it is evident that the value of above 4 properties given by Accused No.6 when calculated @ Rs.500/- per square yard is Rs.

16,61,000 @ Rs.500/- per sq.yd., which is considerably higher than the earlier value given him. In view of the above discussion, it is clearly evident that the

Valuation of the properties offered as collateral security by Accused No. 3, 4 and 5 pertaining to the loan account of M/s Sai Priya Nests Pvt., Ltd., are appropriate and not inflated and no incrimination is concluded against Accused No. 6 and 7 for valuation of the same and against Accused No. 1 for accepting the value assessed by them.

32.Lastly; the another allegation raised against the Accused is that Accused No.

4 and 5 fraudulently submitted property covered under Ex-P.83 i.e., extent in 774 sq.yds., covered under Document No. 781/1997 situated in Rushikonda. However, prosecution did not secure any Valuation Report pertaining to this property from the loan file. As per Ex-P.60 RF 255 this property was offered as collateral security for only extent of Rs.5,00,000/-. However, the entire property under Ex-P.83 was

PSJC/VSKP Page no. 78 C.C.No.08 of 2006 reevaluated by PW.12 under Ex-P.71 and its value is assessed as Rs.15,48,800/- @

Rs.2,000/- per sq.yd. However, in the cross-examination PW.12 admitted that the value of properties in Rushikonda can be assessed @ Rs.3,000/- per sq.yd., considering the development in and around Rushikonda. Accordingly the value of property under Ex-P.83 when calculated @ Rs.3,000/- per sq.yd., the total value goes to Rs.23,22,000/-. Therefore, either as per the value given by PW.12 under

Ex-P.71 Report or recalculation @ Rs.3,000/- per sq.yd., the value of the property is far beyond Rs.5,00,000 additional guarantee/collateral security for which it was offered . Further, in absence of any breach in the title or ownership of the property, no allegation can be sustained against the Accused No. 4 and 5 for offering this property as collateral security.

33.The next point is that the allegation of the prosecution against the primary security which is the Shrimp processed and stored at M/s Coastal Trawlers Ltd . It is contended that no shrimp was stored by Accused No. 8 Company and the entire funds under Package Credit – 1, 2, 5 and 6 were misused. In this context, PW.18 stated that as per Ex-P.157 borrower statement of M/s. Sai Priya Nests pvt. Ltd., (Accused no.8) dated 28.04.2000, company declared that it has stock of 20,153 kgs worth Rs.1,31,00,000/- in the cold storage of M/s.Coastal Trawlers Ltd and Ex-

P.158 is letter dated 02.05.2000 addressed by Accused No.8 company to the

Branch Manager SSSIB, Andhra Bank and that as per the contents of Ex.P.158

Accused No.8 company requested the bank to cancel Bank Guarantee (BG) of

Rs.20,00,000/- already sanctioned and further requested to grant additional

Packing Credit limit of Rs.25,00,000/-.

34.PW.18 further stated that as per Ex.P.106, Accused No.1 appraised PC limit based on the export order worth Rs.1,76,00,000/- and stock worth Rs.1,31,00,000/-

PSJC/VSKP Page no. 79 C.C.No.08 of 2006 and Ex-P.159 is the letter lr no.1051/18/161/3 dated 05.05.2000 pertaining to enhancement of PC/FDBP limit from Rs.70,00,000/- to 90,00,000/- and as per

Ex.P.159 the Bank Guarantee facility of Rs.20,00,000/- is canceled seeking

additional collateral security worth Rs.5,00,000/- before availing the enhanced

limit and that Ex-P.160 is the RF 255 dated 20.05.2000 pertaining to properties situated in Rishikonda village offered as additional collateral security and Ex-P.161 is the RF 255-B dated 05.05.2000 pertaining to properties situated in Ghambeeram village offered as additional collateral security by Accused No.4 and 5 and Ex-

P.162 is the RF 255-B dated 05.05.2000 pertaining to properties situated in Palangi village Thanuku offered as additional collateral security by Accused No.3.

35.The loan was sanctioned to Accused No. 8 Company based on two aspects.

Firstly; taking into consideration the value of stock which was considered as primary security and secondly; the value of properties offered as collateral securities. The prosecution in order to substantiate its case that no stock was stored in M/s Coastal Trawlers by Accused No.8 Company, got examined its Director Mr.

G. V. V. Satyanarayana as PW.4. The evidence of PW.4 is that he has been working as Director M/s. Coastal Trawlers ltd., Visakhapatnam since 2000 and

Mr.T.Valsaraj have been working as Managing Director of their company since its incorporation and their Company deal with processing, freezing and export of shrimp and that generally Merchant exporters approaches their company for processing, freezing and storing of shrimp for the purpose of export and whenever any exporter approaches their company, they verify whether the said exporter was registered with the Marine Products Export Development Authority (MPEDA) and ask them to enter into agreement with the company for processing of shrimp.

PSJC/VSKP Page no. 80 C.C.No.08 of 2006

36.PW.4 further stated that Ex-P.24 is the covering letter dated 21.05.2005 addressed by Mr.T.Valsaraj, Managing Director of their company to Investigating

Officer, CBI, Visakhapatnam and he is acquainted with the signature of

Mr.T.Valsaraj. PW.4 identified the signature of Mr. T. Valsaraj on Ex-P.24 and further stated that Mr.T.Valsaraj forwarded copy of agreement dated 12.12.1998 covered under Ex-P.25 between M/s. Sai Priya Nests Pvt. Ltd. and their company represented by Mr.T.Valsaraj, Managing Director.

37.PW.4 further stated that Ex-P.25 is valid for one year from 12.12.1998 and that the agreement was for processing, freezing and storing of shrimp. Ex-P.25 was not renewed subsequently but Accused No.8 Company continued to store their stock in their company cold storage at Madhurawada, Visakhapatnam and that as per Ex-P.25 the minimum shrimp quantity assured by Accused No.8 Company for processing is 200 tonnes per annum, but Accused No.8 Company could not get processed the agreed quantity.

38.PW.4 further stated that Ex-P.26 is the statement showing the production details and ledger account of M/s. Sai Priya Pvt. Ltd.,furnished by him to CBI under covering letter dated 10.09.2005 and as per Ex.P.26 Accused No.8 company paid sum of Rs.10,39,124/- towards the processing charges for shrimp for the period April, 1999 to December, 1999. Subsequent to December, 1999, Accused

No.8 Company stored their shrimp stock in their company cold storage for about 4 to 5 years and after December, 1999 their company have not processed the shrimp of the Accused No.8 Company.

39.PW.4 further stated that Ex-P.27 is the Photostat copy of stock confirmation certificate dated 24.08.2001 issued by their company and the same was signed by

Plant Manager of their company Mr.Vasu and he identified the signature of

PSJC/VSKP Page no. 81 C.C.No.08 of 2006

Mr.Vasu and stated that as per Ex-P.27 as on 24.08.2001 the available stock of

Accused No.8 company in their company cold storage is 18,392 Kgs.

40.PW.4 further stated that Ex-P.28 is the letter dated 10.03.2000 addressed by him to the Manager, Andhra Bank intimating that their company shall not claim joint possession or control over the goods stored by Accused no.8 company in their cold storage and ensuring their free access for inspection of goods at all times and concluded that their company maintains records pertaining to stocks position in their cold storage and that the corresponding records pertaining to Accused No.8

Company for the year 2000 were destroyed and he cannot specify the quantity of shrimp stored by Accused No.8 company in the cold storage during the relevant period. The contention of the Accused is that Ex-P.25 and P.26 are inadmissible in evidence as they are photostat copies. However, as per the material on record, it is not the case of Accused that they were not storing any shrimp with M/s Coastal

Trawlers Ltd., and none of the transactions pertaining to the payments to M/s

Coastal Trawlers Ltd., were denied by the Accused. In this context, the objection of the Accused that Exs P.25 and P.26 cannot be looked into evidence is not sustainable as the same were forwarded by their counterpart in business with whom they entered into agreement for business.

41.Reverting back, as seen from the evidence of PW.4, Accused No. 8

Company entered into agreement with M/s Coastal Trawlers Ltd., for processing and storage of shrimp in the year 1998 itself which is much prior to the application for Package Credits in this case. As per the evidence of PW.4 and contents of Ex-

P.26, there is a continuous business transactions between M/s Coastal Trawlers

Cold Storage Pvt., Ltd., and Accused No. 8 Company in the year 1999 and 2000 and an amount of Rs.10,39,124/- has been collected by M/s Coastal Trawlers

PSJC/VSKP Page no. 82 C.C.No.08 of 2006 towards processing charges from Accused No. 8 Company till December 1999.

The only adverse part of P.W.4s evidence is that the agreement under Ex-P.25 was not renewed subsequently. However as seen from Ex-P.27 there is existing stock of 18,392 Kgs persisting PC-I and II. Nowhere it is the evidence of P.W.4 that

Accused no. 8 Company did not store any shrimp in their cold storage persisting

PC.I, II, V and VI. It is evident from the contents of Ex-P.27 that Accused No. 8

Company continued to store their stock even as on 24.02.2001 with M/s Coastal

Trawlers Ltd. The contents of Ex-P.28 are also assertive confirming absence of any claim by M/s Coastal Trawlers Ltd., against the stock of Accused No. 8

Company which is the primary security hypothecated to bank. P.W.4 assertively stated in his cross-examination that “it is true subsequent to December, 1999 the

Accused No.8 Company used to bring frozen stock of shrimp to their cold storage and admitted that the bankers also used to inspect the stock of Accused No.8

Company in our their storage during the relevant period.” Similarly, in addition to the above documents, the stock statement dt.28.04.2000 marked under Ex-P.157, letter addressed by Raj Udyog, Pune referring to purchase Contract No. D020, dt.07.03.2000, covered under Ex-P.108 and letter, dt.12.04.2001 covered under Ex-

P.163, letter dt.23.08.2000 pertaining to transfer of LC 407, dt.22.08.2000 addressed by Inda Qua Exports categorically discloses that Accused No. 8

Company was continuously involved in exportation of shrimp throughout Package

I, II, V and VI. Therefore deficiency in target/meeting terms or storing only processed shrimp in M/s Coastal Trawlers by Accused No.8 Company does not substantiate the case of prosecution unless there is acceptable evidence to reason, that no shrimp was stored and exported as per export terms. Further as seen from

Ex-P.109, 112,116 and 120 there are continuous monetary transactions in the

PSJC/VSKP Page no. 83 C.C.No.08 of 2006

Statement of Accounts pertaining to deduction of amounts to third party insurance and Export Credit Guarantee Corporation, wherein the former affirms the stock and the later export payments. This transaction seamlessly adds to the inference pertaining to existence of stock and business conducted by Accused No.8

Company. Lastly the mere non renewal of lease deed is not detrimental to the lessee’s interest as long as the lessor continuous to permit the lessee, as implied contracts are accepted by law. Therefore, merely because of unavailability of records and registers pertaining to the period covering the PCs under discussion, the allegations against accused can be concluded as proved, as such P.W.4 is witness to Prosecution and his evidence remained non inculpative through out.

Accordingly the allegation that no stock is procured by Accused no. 8 Company fails.

42.Moving further the next crucial contention of the prosecution is that all the four Package Credit Limits granted to M/s Sai Priya Nests Pvt., Ltd., were sanctioned by Accused No. 1 dishonestly and the loan fund was released in the name of the borrower and his relatives who has diverted the same. In view of these contentions, the accusation against the Accused with regard to sanction and end use of the loan fund under 4 package credit limits sanctioned to Accused No. 8

Company is discussed separately as follows:

Package Credit 1 & 2 :

43.As seen from the Charge Sheet, an amount of Rs.70,00,000/- was sanctioned under PC-1 through Accused No. 8 Company.

The evidence of PW.15 is that Ex-P.108 is the Purchase Contract No. D020 dt.07.03.2000 from Raja Udyog, 33-A, Ganesh Krupa Society, 13th lane,

Ramkrushna Paramhand Nagar, Near Vanaz, Kothrud, Pune and Ex-P.109 is the

PSJC/VSKP Page no. 84 C.C.No.08 of 2006

Statement of Account of Sai Priya Nests private Limited for PC (Packing Credit) -1 and that on 25.08.2000 an amount of Rs.34,32,582/- was received in the account of

PC-1 under Ex-P.109 from Andhra Bank, Visakhapatnam and as per the contents of

Ex-P.109, S.S.I.B., Gajuwaka disbursed by way of Pay Order, an amount of

Rs.22,76,514/- to Union Bank of India, to take over the loan standing in the name of Sai Priya Nests Private Limited. PW.15 further stated that an amount of

Rs.14,00,000/- was debited to the Packing Credit Account of Accused. no 8

Company on 11.03.2000 and transferred to Current Account No. 95 of the

Company and that the same is reflected in statement of Account covered under Ex-

P.110 for the period from 20.04.2000 to 17.03.2004 and that Ex-P.33 is the Cheque presented by Accused No.5 for Rs.14,00,000/- through clearing by Akkayyapalem

Branch and the amount was debited to the Current Account in the name of Sai

Priya Nests Pvt. Ltd and that as per Ex-P.110 on 22.05.2000 an amount of

Rs.3,73,000/- is credited to the Current Account No. 95 of Company and a cash of

Rs.3,00,000/- was withdrawn vide Cheque No. 189964 covered under Ex-P.111 on the same day.

44. In this connection, the evidence of PW.18 is that Ex-P.156 is the office appraisal note and sanction letter pertaining to PC-1 and that as per Ex.P.156 the packing credit limit is Rs.70 Lakhs with 10% margin and bank guarantee of Rs.20

Lakhs with 25% cash margin was sanctioned in favour of M/s.Avanthi Feeds Ltd.

PW.18 further stated that the statement of Account of Accused no 8 for PC (Packing Credit) -1 covered under Ex-P.109 reflects all the transactions pertaining to the packing credit limit-1 and that according to Ex-P.109, Accused No.1 has released an amount of Rs.22,76,514/- to Union Bank of India towards takeover of loan account of M/s.Sai Priya Nests Pvt. Ltd on 07.03.2000 and that Accused No.1

PSJC/VSKP Page no. 85 C.C.No.08 of 2006 has issued pay orders for Rs.30,00,000/- dated 08.03.2000 and Rs.14,00,000/-

dated 10.03.2000. Similarly on 13.03.2000 an amount of Rs.1.5 Lakhs was

released to M/s.Sriram Enterprises and allowed cash withdrawal of Rs.1,73,000/- on 22.05.2000. The debit balance along with interest and service charges as on 28.06.2000 is Rs.71,71,605/- and that as on 02.06.2003 the debit balance in this account is Rs.6,32,074/-.

45. As per the evidence of PW.15 and 18 the total loan amount of Rs.70,00,000/- under PC-I was disbursed as follows:

Rs.22,76,514/- Transferred to Union BankFor taking over existing loan of India Rs.30,00,000/-Pay Order dt.08.03.2000 Rs.14,00,000/-Transferred to CurrentWithdrawn by Accused No.5 by Account No. 95 onpresenting Ex-P.33 Cheque through 11.03.2000clearing at Akkayyapalem Branch Rs.1,50,000/-To M/s Sri Ram Enterprises13.03.2000 Rs.1,73,000/-Cash Withdrawalon 22.05.2000 Rs.3,73,000/-Transferred to CurrentWithdrawn on the same day vide Account No. 95 onCheque No.189964 covered under 22.05.2000Ex-P.111

46.With regard to the above transactions, amount of Rs.22,76,514/- paid to

Union Bank of India is undisputed and corroborated by the evidence of PW.19

Chief Manager, Union Bank of India. The corresponding documents marked under

Ex-P.147 letter, dt.07.03.2000 and Ex-P.32 Pay Order, dt.07.03.2000 corroborates the same. In the cross-examination by the counsel for Accused, PW.19 stated that whenever any nationalized bank intends to take over loan from any other nationalized bank, the branch which proposes to take over the loan shall verify the credentials of the borrower with the branch from where the loan account proposed to be taken over and that by the time of forwarding the registered documents referred above the property offered as collateral security under those documents a valid mortgage has been created.

PSJC/VSKP Page no. 86 C.C.No.08 of 2006

47.As seen from the evidence of PW.19, it is evident that as on date of taking over of loan by SSSIB, Gajuwaka, there is existing loan account for M/s Sai Priya

Nests Pvt., Ltd., in Union Bank of India along with valid mortgage over the properties covered under Registered Sale deeds bearing No. 957/98, 4452/99, 4453/99 and 416/98 offered as collateral securities. The Registered documents were forwarded to the SSSIB vide Letter covered under Ex-P.147 and subsequently accepted by SSSIB as collateral security for the loan extended to Accused No. 8’s

Company. It is not the case of the prosecution that the existing loan of Accused no.8 Company in Union Bank of India is unsecured, bad or defaulted. There is no material on record interfering with the genuineness of the transaction pertaining to the taking over of loan by SSSIB from Union Bank of India and the payment of

Rs.22,76,514/- to Union Bank of India cannot be concluded as misuse of funds.

48.As seen from the above evidence of PW.18 and Ex-P.56 Sanction letter

Packing Credit limit of Rs.70,00,000/- with 10% margin and Bank Guarantee of

Rs.20,00,000/- with 25% cash margin in favour of M/s Avanthi Feeds Ltd., was sanctioned based on Ex-P.108 Purchase Contract No. D020 dt.07.03.2000 from

Raja Udyog, Pune. However prosecution did not choose to examine any person from either M/s Avanthi Feeds Ltd or Raj Udyog, in spite of specific documents available in their favour in the bank. Apparently either P.W.15 or P.W.18 did not testify that the amounts sanctioned under P.C.1 were misused. As seen from the contents of Ex-P.109 Statement of Account of Accused No. 8 Company for PC-1, an amount of Rs.22,76,514/- was released to Union Bank of India and this Court already concluded the same against the prosecution. There is no fraud brought on record for transfer of Rs.22,76,514/- to Union Bank of India for taking over existing loan of Accused No. 8 Company.

PSJC/VSKP Page no. 87 C.C.No.08 of 2006

49.Further as per the contents of Ex-P.109, Accused No. 1 has issued Pay

Orders for Rs.30,00,000/- dt.08.03.2000 and Rs.14,00,000/- dt.10.03.2000. This

Rs.14,00,000/- was presented by Accused No. 5 through Ex-P.33 Cheque for clearance in Akkayyapalem Branch and the same was debited from the Current

Account of Sai Priya Nests Company Pvt., Ltd. In addition to the same as per the evidence of PW.15, an amount of Rs.3,50,000/- was credited to the Current

Account of Accused No. 8 Company and an amount of Rs.1,50,000/- was released to Sri Ram Enterprises and an amount of Rs.1,73,000/- was withdrawn. It is evident that apart from Rs.22,76,514 credited to Union Bank of India and

Rs.1,50,000/- and Rs.1,73,000/- directly deducted from PC Account, the balance amount of (Rs.30,00,000/- + Rs.14,00,000/-) = Rs.44,00,000/- was credited to the

Current Account of M/s Sai Priya Nests Pvt., Ltd. The contention of the Accused is that the total amount was used for procuring shrimp by withdrawing from the current account. The debit balance along with interest and service charges as on 28.06.2000 is Rs.71,70,605/- and as on 02.06.2003 is only Rs.6,32,074/-.That means as on date of registration of FIR on 18.03.2004, the debit balance is only

Rs.6,32,074/- and major portion of the loan amount was repaid by the borrowers.

Package Credit – 2

50.As per the Charge Sheet, Accused No. 1 enhanced the Packing Credit Limit from Rs.70,00,000/- to Rs.90,00,000/- on 05.05.2000 by canceling the existing

Bank Guarantee upto Rs.20,00,000/- and that Accused No. 1 though obtained

additional security i.e., landed property described in Document No. 781/97 as

worth Rs.5,00,000/- did not value it dishonestly and further dishonestly did not ask for fresh export order before releasing Packing Credit II to ensure proper end utilization of fund. It is further alleged that Accused No. 1 dishonestly released

PSJC/VSKP Page no. 88 C.C.No.08 of 2006

Rs.18,00,000/- on 06.05.2000 and credited the same to the CD Account No. 95 of

Accused No. 8 Company and that the same was withdrawn by Accused No. 5 favouring Smt. D. V. S. S. Lakshmi Mani and Accused No. 3.

51.In this connection, PW.15 stated that Ex-P.112 is the Statement of Account of Sai Priya Nests Private Limited for PC-2 (2 Sheets) and as per the contents of

Ex-P.112, an amount of Rs.18,00,000/- was released on 06.05.2000 and was credited to the Current Account No. 95 of Accused no.8 Company and that the same was reflected in Ex-P.110. PW.15 further stated that three Cheques dt.05.05.2000 bearing No. 1899960 for Rs.4,01,200/-, Cheque No. 1899961 for

Rs.4,01,200/- and Cheque No. 1899962 for Rs.10,03,000/- covered under Ex-P.113 were issued by the Company for taking Pay Orders and that the cheques under Ex-

P.113 were debited in the Current Account of Accused no. 8 Company as per Ex-

P.110 and subsequently Pay Orders covered under Ex-P.32 and Ex-P.114 Pay Order

No. 332107 dt.06.05.2000 for Rs.10,00,000/- payable to Smt. D.V.S.S.Lakshmi

Mani were issued. According to PW.15 Ex-P.115 is the Application for Demand

Draft dt.06.05.2000 for Rs.4,00,000/- in favour of Accused no.3 .

52.It is apparent from the above oral and documentary evidence that the amount granted under PC – II were initially credited to the Current Deposit Account No. 95 of Accused No. 8 Company and thereafter withdrawn in favour of Accused No. 5, 3 and Smt. D.V.S.S.Lakshmi Mani W/o Accused No. 5. As per the evidence of

PW.18, Ex-P.112 statement of A/c of M/s.Sai Priya Nest Pvt. ltd for PC-2, on 05.05.2000 an amount of Rs.18,00,000/- was debited from this account and credited to Current Deposit (CD) A/c No.95 and the outstanding debit balance in this account as on 23.02.2004 is Rs.21,17,275/-.

PSJC/VSKP Page no. 89 C.C.No.08 of 2006

53. As seen from the above evidence, Accused no.1 subsequent to enhancement of PC limit under Ex-P.106 from Rs.70,00,000/- to Rs.90,00,000/- after securing

additional collateral securities under Ex-P.160, P.161 and P.162 RF 255 and RF

255-B and taking into consideration letter addressed by Raja Udyog under Ex-P.63 and letter addressed by M/s Coastal Trawlers under Ex-P.67, certifying shrimp stock of 18392 kgs in their processing plant, granted Package Credit – 2 to

Accused No. 8 Company. As per the evidence of PW.15 and PW.18 and contents of

Exs P.112 statement of account an amount of Rs.18,00,000/- was debited to

Current Deposit Account No. 95 of Accused No. 8 Company vide Cheques covered under Ex-P.113 for Rs.4,01,200/- + Rs.4,01,200/- + Rs.10,03,000/- respectively and subsequently Pay Orders of Rs.10,00,000/- and Rs.4,00,000/- under Exs P.113 and P.114 were issued in favour of Smt. D.V. S. S. Lakshmi Mani and Accused

No.3.

54.In this connection, the availability of primary security i.e., shrimp stock is evident from Ex-P.127 issued by M/s Coastal Trawlers and the transaction is supported by the letter addressed by Raja Udyog. However, the prosecution did not examine any person related to Raja Udyog to negate the defence of Accused. As far as the Pay Orders issued in favour of Smt. D.V. S. S. Lakshmi Mani who is the wife of Accused no 5 and Accused No. 3, any transaction in their favour to meet the end use cannot be considered as misuse by the Accused unless prosecution proves that relevant shrimp for export was not procured no business was done by the company during the relevant point of time by Accused company with that funds. The appreciation on this aspect is reserved for succeeding discussion.

However, as on date the outstanding debit balance in this account of Rs.21,17,275/- is evident.

PSJC/VSKP Page no. 90 C.C.No.08 of 2006

PACKING CREDIT 5 & 6 :

55.The case of the prosecution is that Accused No. 1 dishonestly released

Packing Credit 5 for Rs.34,00,000/- on 25.08.2000 and that Accused No. 5 fraudulently availed the said amount instead of availing it in favour of Prawn

Suppliers and that Accused No. 1 dishonestly did not ascertain the stock position after release of PC of Rs.34,00,000/-.

56.As far as PC.6 is concerned, it is alleged that Accused No. 1 dishonestly allowed fresh Packing Credit of Rs.29,00,000/- on 03.10.2000 without asking for any proof of fresh export order and that Accused No. 5 fraudulently availed the loan by disbursing Rs.10,00,000/- in favour of Mr. K. Srinivas and Rs.15,00,000/- in favour of Mr. Uday Shrimp Pvt., Ltd., and that Accused No. 1 did not submit any post sanction supervision report confirming the proper end use of the firm.

57.To substantiate its case, the prosecution exclusively relied upon the evidence of PW.15. PW.15 stated that Ex-P.120 is the Statement of Account of Sai Priya

Nests Private Limited for PC-5 (Packing Credit) and that on 25.08.2000 an amount of Rs.34,00,000/- was transferred from PC account under Ex-P.120 to Current

Account of Sai Priya Nest Pvt. Ltd., under Ex-P.110 and that the Pay Order bearing

No. 332388 dt.03.10.2000 covered under Ex-P.55 for Rs.10,00,000/- was issued in favour of Mr. K. Srinivas.

58.With regard to Packing Credit No. 6, PW.15 stated that Ex-P.116 is the

Statement of Account of Sai Priya Nests Private Limited for PC-6 (Packing Credit) and that on 03.10.2000 an amount of Rs.29,00,000/- was transferred from PC account under Ex-P.116 to Current Account of Sai Priya Nest Pvt. Ltd., under Ex-

P.110.PW.15 further stated that Ex-P.55 is the Pay Order No. 332320 28.08.2000 for Rs.3,30,000/- payable to Sri Mr. K. Srinivas and that Ex-P.117 is the Cheque

PSJC/VSKP Page no. 91 C.C.No.08 of 2006

No. 189971 dt.29.08.2000 for Rs.4,00,000/- payable to Mr. Srinivas Exports and that Ex-P.60 is the Cheque No. 189974 dt.11.09.2000 for Rs.6,50,000/- in favour of

Sri J. Srinivasa Rao and that Ex-P.118 is the Cheque No. 189975 dt.11.09.2000 for

Rs.4,00,000/- and Ex-P.55 is the Cheque No. 180103, dt.18.09.2000 for

Rs.1,00,000/- in favour of K. Srinivas and Ex-P.119 is the Cheque No.180105 dt.19.09.2000 for Rs.50,000/- issued by Accused No.8 Company for self withdrawal and Ex-P.55 (LD.169 already marked) is the Cheque No. 180108 dt.25.09.2000 for Rs.5,00,000/- in favour of K. Srinivas and that all the transactions were reflected in Current Account transaction covered under Ex-P.110

59.In the same lines, PW.15 stated that as per Ex.P.116, account statement of

M/s. Sai Priya Nest pvt. Ltd. for PC-6 ( mentioned as 5 in the deposition contrary to document), on 03.10.2000 an amount of Rs.29,00,000/- was debited from this account and credited to CD A/c.No.95 and the outstanding debit balance in this account as on 23.02.2004 is Rs.29,40,423/- and he further stated that as per

Ex.P.120, account statement of M/s.Sai Priya Nest pvt. Ltd. for PC-5, ( mentioned

as 6 in the deposition contrary to document) on 25.08.2000 an amount of

Rs.34,00,000/- was debited from this account and credited to CD A/c.No.95 and the outstanding debit balance in this account as on 23.02.2004 is Rs.34,50,447/-

60. As far as PC-5 is considered, an amount of Rs.34,00,000/- was debited to the current account of Accused No. 8 Company. Out of the total amount of

Rs.34,00,000/-, the prosecution produced only documentary evidence pertaining to issuance of Pay order covered under Ex-P.55 for Rs.10,00,000/- in favour of Mr. K.

Srinivas. There is no evidence adduced by the prosecution for the remaining amount of Rs.24,00,000/- and a safe inference can be taken that prosecution admits

PSJC/VSKP Page no. 92 C.C.No.08 of 2006 the appropriate use of the said amount. With regard to the amount transferred to

Mr. K. Srinivas will be discussed at later stage.

61.With regard to PC-6, an amount of Rs.29,00,000/- as per Ex-P.116 Statement of Account for PC-6 was transferred to Current account of Accused No. 8

Company under Ex-P.110. From the Current Account of Accused No. 8 company, an amount of Rs.3,30,000/- Rs.4,00,000/- + Rs.6,50,000/- + Rs.4,00,000/- +

Rs.1,00,000/- + Rs.50,000/- + Rs.5,00,000/- were transferred to different persons and one Mr. K. Srinivas under Exs P.17, P.18, P.19 and P.110 Cheques and Pay

Orders. However, prosecution did not examine any person to bring on record the purpose of the amounts transferred, except one Mr. K. Srinivas to whom an amount of Rs.9,30,000/- was conveyed. Pertaining to other transactions, in absence of any evidence by prosecution, inference of appropriate usability can be taken. The credibility of the amount transferred to Mr. K. Srinivas however will be discussed at later stage.

62. In view of above discussion, it is evident that the credit facility granted to

Accused No.8 Company under PC-1, 2, 5 and 6 was supported by sufficient collateral securities. It is the evidence of PW.18 itself that there are sufficient collateral securities for all the loans in this case and that if all the properties offered as collateral securities are sold, the Bank can recover the loans taken Accused No.

8 Company. The procurement of shrimp and stock in M/s Coastal Trawlers is assertive from the evidence of P.W.4. As far as export of Shrimp is considered Ex-

P.108 is purchase contract for 200 MTS of shrimp to Japan throughout. As discussed supra at paragraph No.41, all the PC accounts were deducted with necessary amounts for insurance and to Export Credit Guarantee Corporation which provides open coverage to export credit. Without there being any business

PSJC/VSKP Page no. 93 C.C.No.08 of 2006 activity, these transaction cant not happened. As seen from evidence of P.W.4 in the cross examination pertaining to export procedure he stated that “Letter of Credit (LC) will be issued by the importers bank. Basing on the LC the exporter will procure shrimp from the farmers and process, freeze, stores in the cold storage and exports as per the LC terms. After shipment of shrimp was completed, the shipper will issue the bill of lading. The exporter thereafter submits all the connected documents like Invoice, Packing list, Certificate of Origin, Test certificate of product along with bill of lading to the bank for negotiation against LC.” Therefore documents relied on by the prosecution, which are confined to application for credit, appraisal note sanction order, statement of accounts and instruments of transfer of amounts are insufficient to speak on this aspect.

63.Therefore, it can be concluded that the prosecution did not adduce rational evidence to show that the funds under PC- 1, 2, 5 and 6 granted to Accused No. 8

Company were misutilized by the Accused No. 8 Company for purposes other than procuring shrimp and that the collateral securities offered by the guarantors were less than the loan sanction amount and that accused no.1 fraudulently sanctioned the Packing Credits PC-1, 2, 5 and 6. Further as per the evidence of D.W.2 the entire loan obtained by M/s Coromandal Enterprises and Accused No. 8 Company were discharged under one time settlement to the branch on 26.06.2006 and the original credit voucher and the relevant documents were marked under Exs D.8 to

D.19. Therefore, it can be safely concluded that the accusation made by the prosecution against Accused in respect of credit facilities sanctioned to Accused no. 8 Company fails for want of merits.

PSJC/VSKP Page no. 94 C.C.No.08 of 2006

C. Sai Priya Estates & Resorts Ltd.

1.The case of the prosecution is that Accused No. 4, 5 and Smt. D. V. S. S.

Lakshmi Mani formed a limited Company in the name of M/s Sai Priya Estates &

Resorts Ltd., (Accused No. 2) in the year 1994 and that Accused No. 5 who are authorized by the Board of Directors to represent Company to avail loan, have applied to Andhra Bank for Term Loan of Rs.87,00,000/- and OCC limit of

Rs.7,00,000/- for development of the business. The crux of the case is that the value of the collateral securities submitted by Accused No. 5 was far less than the actual value and that Accused No. 6 Panel Valuer has given the Valuation Reports with inflated value violating the Bank Guidelines.

2.It is the further case of the prosecution that in pursuance of conspiracy among the Accused, Accused No. 1 sanctioned Term Loan and OCC Limit to

Accused No. 2’s company, abusing his official position and has taken over the existing loan of Rs.21,00,000/- from State Bank of Hyderabad. The case of the prosecution specifically revolves on two aspects in addition to the above accusations. Firstly; Accused No. 1 dishonestly transferred the Term Loan Account to the Current Account of the Company from which Accused No. 5 obtained Pay orders and Demand Drafts in favour of his relatives and secondly; Rs.33,00,000./- ear marked for the purpose of purchasing Amusement equipment from M/s Arihant

Industrial Corporation, Pune were not purchased, but encashed in a fictitious account opened in the name of M/s Arihant Industrial Corporation.

3.As per the evidence of PW.15 and PW.18, Ex-P.125 is the application dt.28.06.2000 for opening current account No.110 in the name of Saipriya Estates & Resorts Ltd., and as per the contents of Ex.P.125 Accused No. 5 opened the account as Managing Director of M/s Sai Priya Estates & Resorts ltd and that the

PSJC/VSKP Page no. 95 C.C.No.08 of 2006 persons authorized to operate the account along with Accused No. 5 are

Mr.V.C.Babu Executive Director, Mr.D.Paparao Director and Smt.D.V.S.S.

Lakshmi Mani. Ex-P.125 bears the signature of Accused No. 1 and the same is undisputed.

4.According to PW.15, Ex-P.126 is the certified copy of application dated 15.06.2000 for credit facilities in respect of M/s Sai Priya Estates & Resorts Ltd and as per the contents of Ex.P.126 the company applied for working capital of

Rs.7 Lakhs and term loan of Rs.93 Lakhs on 15.06.2000 and that Ex-P.127 is the extract of Board of Resolution dt.15.06.2000 in respect of M/s Sai Priya Estates &

Resorts Ltd and as per the contents of Ex.P.127 the company resolved to borrow term loan of Rs.93 Lakhs and Cash credit of Rs.7 Lakhs from SSIB Andhra Bank,

Gajuwaka by taking over the existing term loan and cash credit from State Bank of

Hyderabad and that Accused No.5, Director of the company was authorized to execute all the necessary documents and affix seal of the company as required by the bank.

5. As per the evidence of PW.15 and contents of Ex.P.126 Application dt.15.06.2000 for credit facilities in respect of M/s Sai Priya Estates & Resorts

Ltd.i.e Accused No.2, company offered land and buildings, plant and machinery and stocks as primary security and landed property in extent of 9283 Sq.yds in survey no.175/1 and 2 of Thallavalasa, Visakhapatnam worth Rs.60.34 Lakhs and landed property an extent of 484 Sq.yds in survey no.59/2 of Rushikonda,

Visakhapatnam worth Rs.9.68 Lakhs covered under Ex-P.128 and Ex.P.84 certified copies of sale deeds.

6.PW.15 further stated that Ex-P.129 is the sanction Letter NO.1051/18/174/21

dated 31.07.2000 with enclosures and as per the Ex.P.129 term loan of Rs.87 lakhs

PSJC/VSKP Page no. 96 C.C.No.08 of 2006 and OCC limit of Rs.7 lakhs was sanctioned to the Accused No. 2 Company and the securities proposed for these loans are fixed assets costing Rs.97.26 lakhs with 25% margin and the existing fixed assets worth Rs.27 lakhs with 48% margin. It is also evident from Ex-P.129 that out of this term loan, Rs.14 lakhs will be remitted to SBH directly and the term loan is to be repaid in 20 quarterly installments with initial holiday of six months.

7.It is further evident from the evidence of PW.15 that with regard to OCC limits of Rs.7 lakhs towards working capital there was hypothecation of food items (raw inputs) i.e. cereals, pulses, grains etc., cutlery, linen material, bed sheets, towels, curtains etc., with 30% margin and as per the Ex.P.129 out of the total term loan of Rs.87 lakhs, the company proposed to utilize Rs.38.95 lakhs for civil works, Rs.43 lakhs for equipment (Amusement), Rs.7.36 lakhs for other equipment, Rs.6.45 lakhs for furniture and Rs.1.50 Lakhs for Kitchen equipment and that the list of assets financed by the State Bank of Hyderabad enclosed to

Ex.P.129 includes water slide, swimming pool and conference hall worth Rs.27 lakhs and the said hypothecated assets were taken over by SSIB, Andhra Bank along with the loan. It is also evident from the evidence of PW.15 and contents of

Ex-P.130 General form of Guarantee dt.01.08.2000 that Accused No. 5,

Mr.C.S.Vattikuti, Accused No. 3 and Smt.D.V.S.S.Lakshmi Mani stood as guarantors for the loan obtained by the Accused No. 2 Company to extent of

Rs.94,00,000/-

8.At this point it is clearly evident that based upon the Ex-P.126 application made by the Accused No. 2 Company, the term loan of Rs.87,00,000/- and OCC limit of Rs.7,00,000/- granted to Accused No. 2 Company wherein the fixed assets and existing fixed assets with requisite margin were offered as primary security

PSJC/VSKP Page no. 97 C.C.No.08 of 2006 and the properties covered under documents standing in the name of Accused No.

5 was offered as collateral security for the loan. Out of the total loan amount granted Rs.21,00,000/- was proposed for payment to State Bank of Hyderabad for taking over the existing loan account of Accused No. 2 Company and the balance amount was allotted for civil work, purchasing of amusement and other equipment, furniture, kitchen etc. The water slide swimming pool and conference hall existing fixed assets which were already hypothecated to State Bank of Hyderabad were also considered as existing fixed assets.

Q.1. Whether the value of collateral securities submitted by Accused No. 5

are far less than the actual value of the loan sanctioned and whether

Accused No. 6 has given valuation reports with inflated value and

whether the same was fraudulently accepted by Accused No. 1?

9.The first contention of the prosecution is that the value of collateral securities offered for the loan sanctioned to Accused No. 2 Company was inflated and far less than the loan actually sanctioned to the Accused No. 2 Company. On this aspect, the evidence of PW.18 is relevant. P.W.18 stated that Ex-P.164 is the

RF 255 dt.02.08.2000 pertaining to properties situated in Rishikonda and

Thallavalasa villages offered as collateral security by Accused No.5 and as per

Ex.P.164 the property mentioned under item no.1 is an extent of 484 Sq.yds of

Rishikonda village worth Rs.9,68,000/- and item no.2 is an extent of Acres 2.74 cents i.e. 9283.12 Sq.yds of Thallavalasa village worth Rs.60,34,000/- and that Ex-

P.165 is the RF 255 dt.03.08.2000 pertaining to above mentioned properties situated in Rishikonda and Thallavalasa villages offered as collateral security by

Accused No.5.

PSJC/VSKP Page no. 98 C.C.No.08 of 2006

10.As seen from Ex-P.164 and P.165, the two properties offered as collateral securities are standing in the name of Accused No. 5 wherein Item No. 1 pertains to 484 sq.yds., in Rishikonda, certified copy of which was marked under Ex-P.84 and Item No. 2 is Ac.2.74cts in Thallavalasa Village covered under certified copy of Sale deed marked as Ex-P.128. The depositors value of Item No. 1 is shown as

Rs.9,68,000/- and Item No. 2 as Rs.60,34,000/-. These properties were valued by

Accused No. 6 vide Valuation Report covered under Exs P.66 and P.67. The relevant evidence of PW.18 is that Ex-P.166 is the Valuation Report dt.01.07.2000 issued by Accused No.6 pertaining to property covered under Document

No.409/99 situated at Rishikonda Village and as per Ex.P.166, the total extent of land referred is Acres 484 Sq.yds and same is valued as Rs.9,68,000/- @

Rs.2,000/- per sq.yd and that Ex-P.167 is the Valuation report dt.01.07.2000 issued by Accused No.6 pertaining to property covered under document No.417/98 situated at Thallavalasa village, Bheemunipatnam and as per Ex.P.167 the total extent of land referred is Acres 9283.12 Sq.yds and same is valued as

Rs.60,34,000/- @ Rs.650/- per sq.yd.

11.To breach the value proposed by the depositor as well as the value given by

Accused No. 6, which are almost akin, prosecution tendered the SRO Value of Item

Nos. 1 and 2 covered under Exs P.164 and P.165. The corresponding Market Value

Assessment Certificate issued by Sub-Registrar, Bheemunipatnam was marked as

Ex-P.168 through PW.18 and PW.18 stated that as per Ex.P.168, the market value of lands in survey no.175/2, 176/3, 176/6, 176/5 of Thallavalsa village

Bheemunipatnam as on 15.06.2005 is Rs.1,92,500/- per Acre and as per Ex.P.85

Market Value Assistance certificate the market value of lands in Survey No.59/2 of

Rushikonda village as on 15.06.2005 is Rs.825/- per Sq.yd.

PSJC/VSKP Page no. 99 C.C.No.08 of 2006

12.In this regard, PW.14 Sub-Registrar, Madhurawada was examined to identify

Exs P.81 and P.82 letters, dt.04.04.2005 addressed by the then Sub-Registrar,

Madhurawada Mr. Venkata Shivarao forwarding certified copies of sale deed bearing No. 781/97 along with corresponding Encumbrance Certificate and certified copy of Sale deed No. 409/99 along with corresponding Encumbrance

Certificates were forwarded to the Inspector of Police, CBI. The Certified copy of

Sale deed bearing No. 781/97, dt.24.03.2005 pertaining to an extent of 290.4 sq.yds., in Survey No. 57/35 of Rushikonda Village executed in favour of Accused

No. 2 Company represented by its Managing Director Accused No. 5 for sale consideration of Rs.46,500/- which is offered as collateral security for Accused

No.8 Company as discussed earlier along with corresponding Encumbrance

Certificate was marked as Ex-P.83 and certified copy of Sale deed bearing No.

409/99, dt.23.03.1999 pertaining to an extent of 484 sq.yds., in Survey No. 59/2 of

Rushikonda Village executed in favour of Accused No. 5 for sale consideration of

Rs.96,80,000/- along with corresponding Encumbrance Certificate was marked as

Ex-P.84.

13.PW.14 further stated that Ex-P.85 is the Market Value Assistance, dt.15.06.2005 issued by Sub-Registrar, Madhurawada and that as per the contents of Ex.P.85 the market value of property in extent of 484 sq.yds in survey No.59/2 at Rushikonda Village is Rs.3,99,300/- and that the market value is fixed annually by the committee consisting of Joint Collector, Municipal Commissioner, VUDA

VC, GVMC Commissioner, ZPCEO etc and the Stamp Duty and Registration Fee will be collected from the party based on the market value fixed by the committee.

14.Generally, SRO Value is always less than the Market value and it is undisputed and as per the evidence of PW.14 in his cross-examination that the

PSJC/VSKP Page no. 100 C.C.No.08 of 2006

Market value fixed by the committee is only for the purpose of getting revenue for government and that the open market value of a property is higher than the market value fixed by the committee and that Market Value Assistance Certificate is issued only for the purpose of calculating stamp duty and registration duty and that the property covered under Ex.P.85 is commercialized subsequently and the present

SRO value of property covered under Ex.P.85 is Rs.45,000/- per sq.yd approximately.

15.In view of the above evidence as already discussed supra, the SRO Value during the relevant point of time cannot be considered as parameter to breach the market value given by Accused No. 6. Accordingly, it is only the valuation given by the subsequent valuer which can be taken into assistance to interfere with the genuineness of the valuation given by the Accused No. 6, but however, no valuation report given by subsequent valuer much less given by PW.12 was brought on record. PW.12 did not testify anything about valuation of property situated in an extent of 484 sq.yds., covered under Document No. 409/99 (Ex-P.84) and accordingly the value proposed by the depositor under Ex-P.164 and given by

Accused No. 6 under Ex-P.166 Valuation report i.e., Rs.9,68,000/- @ Rs.2,000/- per sq.yds., with regard to this item holds good. Adding to it in the cross- examination PW.12, admitted that the value of properties in Rushikonda can be assessed @ Rs.3,000/- per sq.yd., considering the development in and around

Rushikonda applying the said calculations the value of property under Ex-P.84 when calculated @ Rs.3,000/- per sq.yd., the total value goes to Rs.14,52,000/- which is also on higher side than the value given by Accused No.6.

16.With regard to Item No. 2, PW.12 stated that Ex-P.79 Valuation report dt.05.01.2004 given by him in respect of land property described in document

PSJC/VSKP Page no. 101 C.C.No.08 of 2006

No.417/1998 in extent of 2.74 acres situated at Thallavalasa Village,

Bheemunipatnam mandal, Visakhapatnam and he calculated the value of the property measuring 2.74 Acres in Survey No. 175/1 and 175/2 in Thallavalasa

Village, Bheemunipatnam Mandal at Rs.12 lakhs per Acre total Rs.32,88,000/- lakhs and that the distress sale value of the property is 85% of valuation cost i.e.

Rs.27,94,800/-. The value submitted by the depositor for this item is

Rs.60,34,000/- under Ex-P.164 and the value given by Accused No. 6 under Ex-

P.167 is also Rs.60,34,000/-.

17.The contention of the counsel for Accused is that Thallavalasa Village is situated 8 to 10 kilometers from Centre of Visakhapatnam and less than one kilometer from the National Highway and is layoutable land for residential plots and that the market value has to be assessed as per square yards and not as agricultural land and appraised the cross-examination of PW.12 on that aspect which was extracted hereunder for better appreciation.

“The Thallavalasa Village is situated at about 8 to kms distance from

Jagadamba Junction, Visakhapatnam and less than 1 km from National Highway.

The property referred in Ex-P.64 Valuation report is layoutable land for residential plots. It is true that I stated before Inspector, CBI that the land in extent of

Ac.3.76cts in Survey No. 175/2, 176/3, 4, and 5 at Thallavalasa Village,

Bheemunipatnam Mandal, Visakhapatnam covered under Document No. 416/98 is house site. I evaluated surrounding plots to the land referred in Ex-P.64 to other banks during the period from 2002 to 2004. To my remembrance, the market value of surrounding lands of land referred in Ex-P.64 is Rs.400/- to 420/- per sq.yd., approximately in the year 2000. In the year 2004 the market value is about

Rs.650/- per sq.yds. On enquiry during my visit to property covered under Ex-P.64

PSJC/VSKP Page no. 102 C.C.No.08 of 2006 for inspection, I came to know that the prevailing market value per sq.yd., for the property is Rs.650/-. There is no wrong in calculating the market value of the property covered under Ex-P.64 in sq.yds., as the same was house site”.

18.It is evident from the testimony of PW.12 that the property covered under

Survey No. 175/2, 176/3, 4, and 5 at Thallavalasa Village, Bheemunipatnam

Mandal, Visakhapatnam covered under Document No. 416/98 is house site and that the market value can be calculated in square yards. As admitted by P.W.12

Thallavalasa Village is very close to the main city of Visakhapatnam and

Prosecution did not dispute the statement of P.W.12 that there is no wrong in calculating the value of property situated in Tallavalasa in square yards. As seen from the Document No.417/98, the part of property covered under, is in survey

No.175/2 of Thallavalasa, where the properties referred in Document No. 416/98 are also situated. Accordingly the same analogy of assessment can be applied to property under Document no. No.417/98. Taking into consideration the evidence of

PW.12, that the market value of the surrounding lands in Thallavalasa Village in the year 2000 is between Rs.400/- to Rs.420/- per sq.yd and Rs.600 as on date of his inspection the value of Ac.2.74 cts is as follows;

Ac.1.00 cts = Rs.4840 sq.yds.,

Ac.2.74 cts = Rs.13261.6 sq.yds.,

As the property is layoutable deducting 30% i.e 3978.48 sq.yds of total extent for roads, drains and public amenities, the extent considered for valuation is 13261.69283.12 sq.yds.

Accordingly the market value of the property is if calculated at the rate Rs. 420 per sq.yd is 420 x 9283.12 sq.yds., = Rs.38,98,910/-.

at the rate Rs.650 per sq.yd is 650 x 9283.12 sq.yds., = Rs.60,34,028 /-

PSJC/VSKP Page no. 103 C.C.No.08 of 2006

19. In view of above calculation the point for determination is; whether veracity of valuation given by Accused no. 6 is to be appropriated either by calculating the square yard value at the rate Rs.420 per sq.yd or at Rs.650 per sq.yd. It is pertinent on record that all the valuation reports given by PW.12 in this case were evaluated as per rates as on date of his visit. There is no whisper as to the rate of properties as in the year 2000 evidently in his valuation reports. In the technical sense

Prosecution did not adduce any evidence to bring on record the value of properties as on date of inspection by Accused No.6. The value of properties during the questioned period was elicited only in the cross examination. The fluctuations in the market rates cannot be ruled out. In this aspect when we see the evidence of

P.W.12 in his cross examination, the value mentioned by him as Rs.400 to 420 is only as to his remembrance and not based on any records or documents. There may be a marginal difference in the valuation conducted by the valuers depending upon the method of evaluation adopted by them, fluctuations in the market in course of time etc. Therefore considering above mentioned circumstances, this Court is of the opinion that it is rational to value of property covered under document no.

417/98 @ Rs.650/- per sq.yd to evaluate the veracity of Ex-P.167. The value of properties offered as collateral security for Accused No.2 Company accordingly is concluded as follows;

Sl.Doc.Description of theDepositorValuationValuationValuation in noNo.property/Value as pergiven bygiven bySq.yds., Ex-P.164Acused No.6PW.12 1 409/99484 sq.yds.,Rs.9,68,000Rs.9,68,000Not valued@ Rs.3,000/- (Ex-P.166)per sq.yd., is Ex.P.84in Survey No. 59/2 Rs.14,52,000 of Rushikonda (V) 2 417/98Ac.2.74cts Rs.60,34,000 Rs.60,34,000Rs.32,88,000@ Rs.650/- per sq.yd., is Ex.P.12in Survey No.(Ex-P.167) Rs.60,34,028 8175/1 and 175/2 of Thallavalasa (V) Bheemunipatnam

PSJC/VSKP Page no. 104 C.C.No.08 of 2006

20.Even considering the value of the property otherwise the mere difference in valuation does not incriminate against the valuer criminally and the same should be grounded by dishonest and fraudulent intention. In this case on hand Accused No.6 evaluated around 6 properties pertaining to Accused No. 2 and 8 Companies. Two properties covered under Ex-P.84 situated at Rushikonda, two 4 properties situated at Gambeeram and one property situated at Tallavalasa. Except the property under

Ex-P128 there is no variation with regard to the value given by him under Exs-

P.154 and 166 for other 5 properties. Pertinently in the valuation report given by

Accused No.6 under E.x-P.167 for the property covered under Ex-P.128 situated in

Thallavalasa Village, under discussion, he calculated the same at the rate Rs.650/- per sq.yd., which is affirmative rate by P.W.12. Accordingly from the evidence adduced by the prosecution no inference can be drawn against Accused No. 6 that he dishonestly inflated the value of collateral security under Ex-P.128. Therfore, the allegations against Accused No. 5, 6 and 1 pertaining to the valuation and acceptance of collateral securities furnished to Accused No. 2 Company fails.

Q.2. Whether the sanctioned Term loan of Rs.87,00,000/- and OCC limited of

Rs.7,00,000/- sanctioned to Accused No. 2 Company was diverted by

Accused No. 5 for other purposes?

21.Coming to the aspect of mis-utilization of the funds, the prosecution relied on the evidence of PW.15 and PW.18. As per the evidence of PW.15 Ex-P.131 is the attested copy of Statement of accounts of M/s. Sai Priya Estates & Resorts Ltd and that the first sheet of Ex.P.131 is the Master Sheet disclosing all the particulars of term loan and the same is marked as Ex.P.131-A, the second sheet disclosing the term loan disbursement statement of Accused No.2 company is marked as

Ex.P.131-B, the third sheet of Ex.P.131 is the Master Sheet of OCC limit of Rs.7

PSJC/VSKP Page no. 105 C.C.No.08 of 2006 lakhs sanctioned to Accused no.2 Company and is marked as Ex.P.131-C and The

OCC limit disbursement statement of Accused no.2 Company in fourth sheet of

Ex.P.131 is marked as Ex.P.131-D through PW.15. As per the evidence of PW.15 and contents of Ex.P.131-B on 02.08.2000 an amount of Rs.21 lakhs was transferred by way of three pay orders covered under E.-P.132 for Rs.9 lakhs, Rs.9 lakhs and Rs.3 lakhs to SBH, Visakhapatnam for taking over the existing loan from

SBH.

22.As per the contents of Ex-P.131-D on 04.08.2000 an amount of Rs.13.83 lakhs was transferred to the OCC account of the Accused no.2 Company. The said amount was withdrawn vide cheque no.232903 for Rs.3 lakhs covered under Ex-

P.133,. By issuing Pay order No.332291 dated 07.08.2000 for Rs.9 Lakhs in favour of Smt.D.V.S.S. Lakshmi Mani copy of which was marked as Ex-P.134 and Ex-

P.55 Pay order no.332292 dated 07.08.2000 for Rs.1.5 lakhs in favour of

K.Srinivas. As per Ex-P.131-B on 07.08.2000 an amount of Rs.37,12,500/- was debited from the term loan account and on 07.08.2000 an amount of Rs.4,12,500/- was credited to OCC account under Ex-P.131-D.

23. P.W.15 further stated that Ex-P.55 is the pay order dated 07.08.2000 for Rs.4 lakhs in favour of K.Srinivas, Ex-P.135 is the Copy of Pay order No.332329 dt.06.09.2000 for Rs.5 lakhs in favour of Spear & Co., Ex-P.136 is the Copy of Pay order NO.332396 dated 04.10.2000 for Rs.2 in favour of Spear & Co., and that from the above transactions we may assume the term loan disbursement under Ex-

P.131-B utilize towards purchasing machinery or any other item related to the sanction limits.

24. In this connection, the Recovery Officer PW.18 also stated that as per Ex-

P.131-B term loan disbursement statement of Accused No.2 company on

PSJC/VSKP Page no. 106 C.C.No.08 of 2006 02.08.2000 an amount of Rs.14,00,000/- has been disbursed to State Bank of

Hyderabad for taking over the existing loan account of the company. As per Ex-

P.131-D OCC limit disbursement statement of the Company on 02.08.2000 an amount of Rs.7,00,000/- has been transferred to State bank of Hyderabad from

OCC limit to take over the loan and that similarly an amount of Rs.13.83 Lakhs has been credited to this account from term loan account and on 04.08.2000 an amount of Rs.3,00,000/- was credited. PW.18 further stated that Ex-P.169 are the invoice No.89, 90 and 91 dt.03.08.2000 for Rs.12 Lakhs, Rs.11 Lakhs and Rs.20

Lakhs, Ex-P.170 are the receipts dt.07.08.2000 for Rs.9,00,000/-, Rs.9,00,000/-,

Rs.9,00,000/- and Rs.6,00,000/-, Ex-P.171 is the letter dated 07.08.2000 issued by

Accused No.2 company and as per contents of Ex-P.171, Accused No.2 company requested SSSIB Gajuwaka to issue demand drafts in favour of the equipment suppliers M/s. Arihant Industrial Corporation, Hyderabad and that Ex-P.172 is the letter dt.06.09.2000 issued by Accused No.2 company and as per contents of Ex-

P.172, Accused No.2 company requested SSSIB Gajuwaka to issue pay orders for

Rs.1,05,000/- in favour of SK Engineering for installation of Air Conditioners and for Rs.5,00,000/- in favour of Spear & Co., towards flooring in new block.

25.PW.18 further stated that Ex-P.173 is the letter dated 04.10.2000 issued by

Accused No.2 company and as per contents of Ex-P.173, Accused No.2 company requested SSSIB Gajuwaka to issue pay orders for Rs.40,000/- in favour of Ahlad

Granites towards flooring and for Rs.2,00,000/- in favour of Spear & Co., towards furniture, Ex-P.174 is the letter dated 05.08.2000 issued by Accused No.2 company and as per contents of Ex-P.174, Accused No.2 company requested SSSIB

Gajuwaka to issue demand drafts in favour of M/s. Arihant Industrial Corporation and that Exs P.171 to P.174 contains endorsement made by Accused No.1 to issue

PSJC/VSKP Page no. 107 C.C.No.08 of 2006 pay orders and demand drafts as requested by the Accused No.2 Company. PW.18 further stated that Ex-P.182 is the letter dt.02.08.2000 addressed by M/s. Sai Priya

Resorts & Estates to Branch Manager, Andhra Bank requesting to issue of DD for

Rs.21 Lakhs. In continuation, letter dt.24.04.2001 addressed by M/s. Sai Priya

Estates & Resorts to Branch Manager Andhra Bank requesting enhancement of term loan and the letter dt.06.08.2001 addressed by M/s. Sai Priya Estates &

Resorts to Branch Manager Andhra Bank requesting to renew their OCC limit were marked as Ex.P.183, letter dt.02.08.2000 addressed by Branch Manager Andhra

Bank to M/s.Sai Priya Estates & Resorts pertaining to release of term loan of Rs.14

Lakhs and OCC limit of Rs.7 Lakhs and letter dt.14.08.2000 addressed by Branch

Manager Andhra Bank to M/s. Sai Priya Estates & Resorts regarding disbursal of loan amount were marked as Ex.P.184, the quotation dt.20.03.2000 submitted by

Bharani Enterprises, quotation dt.20.03.2000 submitted by Spear & Co. and quotation dt.20.03.2000 submitted by Spear & Co were marked as Ex.P.185 and the receipt dated 20.06.2000 issued by Spear & Co was marked as Ex-P.186 through P.W.18.

26.As per the evidence of PW.15 and PW.18, the disbursement of the total term loan account and OCC limit account granted to Accused No. 2 Company is as follows:

Sl.DateAmountMode ofExhibitBeneficiary No.Transfer

1.02.08.2000Rs.21,00,000/-Pay Orders 3 inEx-P.131-B &SBH, Dwarakanagar numberEx-P.131-Dfor taking over the covered under(Rs.14,00,000 +existing loan by Ex-P.132Rs.7,00,000/-)SSSIB, Andhra Bank

2.07.08.2000Rs.37,12,500/-Debited fromEx-P.131-BAn amount of Term LoanRs.4,12,500/- credited covered under to OCC A/c under Ex- P.131-D

3.07.08.2000Rs.4,00,000/-Pay Order Ex-P.55Mr. K. Srinivas 332294

PSJC/VSKP Page no. 108 C.C.No.08 of 2006

4.06.09.2000Rs.5,00,000/-Pay Order No.Ex-P.135In favour of Spear & 332329Co.,

5.04.10.2000Rs.2,00,000/-Pay Order No.Ex-P.136In favour of Spear & 332396Co.,

6.04.08.2000Rs.13,83,000/-TransferEx-P.131-DOCC Account of Accused No. 2 Company

The amount of Rs.13,83,000/- transferred to OCC Account of Accused No. 2

Company was withdrawn as follows;

Sl.DateAmountMode ofExhibitBeneficiary No.Transfer

1.04.08.2000Rs.3,00,000/-Cheque No.Ex-P.133Self Withdrawal 232903

2.07.08.2000Rs.9,00,000/-Pay Order No.Ex-P.134Smt. DVSS. Lakshmi 332299Mani

3.07.08.2000Rs.1,50,000/-Pay Order No.Ex-P.55Mr. K. Srinivas 332292

27.As per the evidence of PW.15 and PW.18, initially considerable sum of Rs.

21,00,000 i.e., Rs. 14,00,000 lakhs from Term loan Account and Rs.7,00,000 lakhs sanctioned under OCC, were transferred to State Bank of Hyderabad for taking over the existing loan account of the company. On this aspect it is not the case of prosecution that the loan taken over from State Bank of Hyderabad is bad or defaulted. There is no evidence adduced by the prosecution to incriminate this transaction as illegal and fraudulent. Secondly the much disputed aspect is disbursal amount to M/s Arihant Industrial Corporation, Hyderabad. The case of the prosecution is that M/s Arihant Industrial Corporation Ltd., never had any branch at Hyderabad and that Accused No. 5 withdrawn an amount of

Rs.33,00,000/- by creating fake document through fictitious account in the name of

M/s Arihant Industrial Corporation Ltd., at Lakshmi Vilas Bank, Hyderabad.

Prosecution did not examine any authorized person of M/s Arihant Industrial

Corporation. However, attempted to substantiate its case by examining PW.6. The

PSJC/VSKP Page no. 109 C.C.No.08 of 2006 evidence of PW.6 the then Assistant Manager, Lakshmi Vilas Bank, Hyderabad stated that during the period 2004 to 2005 he worked as Assistant Manager ,

Lakshmi Vilas Bank Ltd., Koti Branch, Hyderabad and used to supervise loans and advances and in the year 2000 Mr.K.Koteswararo was functioning as Branch

Manager of the Lakshmi Vilas Bank Ltd., Koti Branch and that in the year 2005 on the instructions of the then Chief Manager of their Bank Mr.K.Jagadeesh, he handed over certain documents connected with Current Account No.17967 of

Arihant Industrial Corporation Ltd., Hyderabad to Investigating Officer, CBI,

Visakhapatnam. Ex-P.34 Voucher dated 09.08.2000, Ex-P.35 cheque dated 10.08.2000, Ex-P.36 DD Challan dated 10.08.2000, Ex-P.37 DD challan dated 10.08.2000 and Ex-P.38 statement of current account no.17967 of Arihant

Industrial Corporation Ltd., Hyderabad for the period from 08.08.2000 to 02.09.2002 are the documents handed over by him to Inspector of Police, CBI,

Visakhapatnam under covering letter dated 04.04.2005 addressed by Chief

Manager covered under Ex-P.33. Further PW.6 stated that the documents covered under LD.219 Account opening form dated 08.08.2000 in the name of Arihant

Industrial Corporation Ltd., Hyderabad, LD.220 specimen signature card dated 08.08.2000, LD.221 attested copy of certificate commencement of Business dated 04.02.2000, LD.222 attested copy of certificate incorporation dated 01.02.2000 were forwarded by their bank to the Investigating Officer, CBI, Visakhapatnam vide covering letter dated 20.04.2005. The referred LD.219 account opening form along with connected documents under LD.220, 221 and LD.222 covering letter

dated 20.04.2005 are marked under Ex-P.39 through PW.6.

28.According to PW.6, as per the contents of Ex-P.38 Statement of Account an amount of Rs.9,00,000/-, Rs.9,00,000/-, Rs.9,00,000/- and Rs.6,00,000/- has been

PSJC/VSKP Page no. 110 C.C.No.08 of 2006 credited vide cheques nos.147292 to 147295 and on 10.08.2000 Rs.5,00,000/- was withdrawn by the account holder and that on 10.08.2000 and a cheque bearing

No.115851 was issued for Rs.25,06,250/- for issuing two demand drafts for

Rs.10,00,000/- drawn on Sriram Enterprises and for Rs.15,00,000/- drawn on

Coromandal Enterprises and that on 12.08.2000 an amount of Rs.2,90,000/- was paid through cheque no.115853 to Seven Hills and on 05.09.2000 an amount of

Rs.3,500/- was paid through cheque no.115854 to Classic Travels and that the rest of the debit entries in Ex-P.38 pertains to various bank charges and that the account was closed on 02.09.2002 due to non operation.

29.PW.6 in his cross-examination stated that the Current Account No. 1796 was opened in the name of M/s Arihant Industrial Corporation represented by Mr.E.

Srinivas and the account was opened by the said E.Srinivas. In addition to the evidence of PW.6, the prosecution got marked the relevant documents pertaining to

M/s Arihant Industrial Corporation through Investigating Officer PW.21.

30. In this connection PW.21 stated that, Ex-P.251 is the extract of board resolution of Arihant Industrial Corporation dt.02.08.2000, On 20.06.2005 he received from Mr.Anand Pallacha of Arihant Industrial Corporation vide covering letter dated 16.06.2005, a copy of letter dated 22.10.2001 addressed by Arihant

Industrial Corporation to Branch Manager, SSSIB Andhra Bank and copy of letter

dated 28.09.2001 addressed by Branch Manager SSSIB to Arihant Industrial

Corporation which were together marked under Ex-P.254. Ex-P.255.

correspondence made by Arihant Industrial Corporation as to queries regarding Sai

Priya Estates & Resorts was also marked through P.W.21.

31.PW.21 further stated that on 10.08.2005 and 01.02.2000 he received a copy of list of companies registered with Registrar of companies Andhra Pradesh,

PSJC/VSKP Page no. 111 C.C.No.08 of 2006

Hyderabad along with connected documents and information pertaining to Arihant

Industrial Corporation ltd marked under Ex-P.256 (8 sheets) and stated that as per

Ex-P.256 the Registrar Companies of Andhra Pradesh informed that M/s. Arihant

Industrial Corporation is not registered at Hyderabad.

32.As seen from the documentary evidence, as per Ex-P.251 photostat copy of extract of Board Resolution of M/s Arihant Industrial Corporation Ltd., one Mr. E.

Srinivas was authorized to open the Bank Account with Lakshmi Vilas Bank and to authorize the negotiable instruments on behalf of the Company and to negotiate the same, Ex-P.251 was certified by the Chief Manager, Lakshmi Vilas Bank and Exs

P.254 and P.255 are the letters addressed by M/s Arihant Industrial Corporation

Ltd., Thane, Mumbai. As per Exs-P. 254 and P.255, M/s Arihant Industrial

Corporation Ltd., denies issuance of any invoices in the name of M/s Sai Priya

Estates & Resorts and receipt of an amount of Rs.33,00,000/- from SSSIB, Andhra

Bank, Gajuwaka and any account with Lakshmi Vilas Bank, Hyderabad. Ex-P.255 is the letter addressed by Registrar of Company, Andhra Pradesh, Hyderabad, informing the Investigating Officer that no Company in the name of M/s Arihant

Industrial Corporation Ltd., was registered in their office and Certificate No. 33417 was issued in the name of M/s Lancer Drugs Ltd.,

33.It is evident from the contents of Ex-P.256 that M/s Arihant Industrial

Corporation Ltd., was not registered under Registrar of Companies, Andhra

Pradesh, Hyderabad during the relevant point of time and purported Certificate No.

33417 seen on the documents annexed to account opening form was issued in the name of M/s Lancer Drugs Ltd. The contents of Ex-P.256 cannot be denied as the

Certificate of Incorporation in the name of M/s Lancer Drug Ltd., was certified by

Registrar of Companies and suffices the ingredients of sec 76 of the Indian

PSJC/VSKP Page no. 112 C.C.No.08 of 2006

Evidence Act. In this connection, the evidence of PW.6 and documentary contents of exhibits marked through him on this aspect elicits some additional facts. As per the evidence of PW.6, the account in the name of M/s Arihant Industrial

Corporation Ltd., was opened and operated by its authorized representative

Mr.E.Srinivas. This was corroborated by the contents of Ex-P.251. As seen from the contents of Ex-P.39, the account opening form for Current Account No.17967 was enclosed with Certificate of Incorporation bearing No. 33417 and its commencement of business is on 1st February 2000. Evidently, these documents are sufficient to believe that the account bearing No.17967 with Lakshmi Vilas Bank in the name of M/s Arihant Industrial Corporation Ltd., with its address at F-18,

Moturi Apartments, AC Guards, Hyderabad was opened on the basis of fake

Certificate of Incorporation. However, the particulars of purported list of members covered under Ex-P.251 extract of Board Resolution or Mr. E. Srinivas who opened the account were not secured by the Investigating Officer inspite of detailed addresses mentioned therein and photograph of Mr. E. Srinivas specifically available on Ex-P.39 Account Opening Form.

34.Admittedly, in this case on hand M/s Sai Priya Estates submitted invoices 3 in number for Rs.9,00,000/-, Rs.8,50,000/- and Rs.15,50,000/- purported to have issued by M/s Arihant Industrial Corporation Ltd., Mumbai covered under Ex-

P.169. Accused No. 2 Company also requested the Manager, SSSIB, Andhra Bank,

Gajuwaka to issue Demand Drafts in favour of M/s Arihant Industrial Corporation.

As per the contents of Ex-P.174 letter, dt.05.08.2000 Accused No.2 Company, requested the Manager, SSSIB to release term loan enclosing Invoices and

Receipts for advance paid for purchasing of Amusement articles, Air Conditioners and Wood works to various companies In Ex-P.174, there is specific averment that

PSJC/VSKP Page no. 113 C.C.No.08 of 2006

Amusement equipment like Crazy Cruise, dry splash, racing cars and Bumty cars were to be supplied from M/s Arihant Industrial Corporation and that after payment of advance of Rs.10,00,000/- the balance amount of Rs.33,00,000/- was to be paid to M/s Arihant Industrial Corporation for supply of the material. Accused

No. 1 after endorsing in detail, eligibility of the borrower company and the margin advance amount paid by them, prepared a note for disbursement of Rs.33,00,000/-

DDs in favour of Arihant Industrial Corporation and an amount of Rs.4,12,500/- to be credit to OCC Account of the borrower Company to meet the expenditure to S.

K. Engineering for purchase of Air Conditioner and M/s Spear and Co; for purchase of furniture items. Subsequently DDs issued in favour of M/s Arihant

Industrial Corporation were credited to the account No. 17967 of M/s Arihant

Industrial Corporation Ltd., Hyderabad with Lakshmi Vilas Bank at Hyderabad and the same is evident from Ex-P.38 Statement of Current Account.

35. In reference to the above evidence, it is important to determine whether any fraud was committed pertains to two issues. Firstly; fact of disbursement of amount for purchasing Amusement Equipment to Accused No. 2 Company by SSSIB and secondly; fact of Purchasing Equipment by Accused No. 2 Company. As seen from the evidence of PW.18 in his cross-examination, he categorically admitted that he visited M/s Sai Priya Resorts as Recovery Officer during his period for inspection of fixed and movable assets for which loan was sanctioned and that there are two

Restaurants, around 40 living rooms, amusement equipment, two function halls and swimming pool in the resort and that he verified the purchase of movable assets as per the sanction note and bills submitted by Accused No. 2 Company to the Bank at the time of disbursal of loan amounts and the same was found correct.

The prosecution did not dispute this statement of PW.18 in his cross-examination

PSJC/VSKP Page no. 114 C.C.No.08 of 2006 nor adduced any evidence to show that Accused No. 2 Company did not purchase the proposed amusement equipment as shown under Ex-P.174. Moving to the amounts credited to Account No. 17967, it is either Mr. E. Srinivas who is the appropriate person to testify his credibility or the authorized persons of M/s

Arihant Industrial Corporation to deny the credibility of the said transactions and also as to the issuance of invoices covered under Ex-P.169. Unfortunately, the prosecution neither secured Mr. E. Srinivas nor any other authorized persons of M/ s Arihant Industrial Corporation to prove the accusation against Accused No. 2

Company pertaining to the amounts paid under DDs and contents of Exs P.251,

P.254 and P.255 received by P.W.21.

36.Even presuming the falsity of Account bearing No.17967 with Lakshmi

Vilas Bank, Hyderabad, it may raise a suspicion against Mr. E.Srinivas alone. As such, prosecution failed to prove that the amusement equipment tendered under

Ex-P.174 was not purchased by Accused No. 2 Company. Unless until prosecution established that Accused No. 2 Company and Accused No. 5 in his individual capacity colluded with Mr. E. Srinivas, opened the account with Lakshmi Vilas

Bank and siphoned the funds for his own use with substantial evidence beyond reasonable proof, discrepancies with regard to M/s Arihant Industrial Corporation

Ltd., at Hyderabad cannot be tagged to the Accused.

37.Further in this connection, prosecution exclusively relied on the transactions in the Account no 17967 to substantiate its case against accused as to diversion of funds when we look into the evidence of PW.6 and contents of Ex-P.38 Statement of Account of M/s Arihant Industrial Corporation Ltd., Hyderabad, on 10.08.2000 a cheque bearing no.115851 was issued for Rs.25,06,250/- for issuing two demand drafts for Rs.10,00,000/- drawn on Sriram Enterprises and for Rs.15,00,000/-

PSJC/VSKP Page no. 115 C.C.No.08 of 2006 drawn on Coromandal Enterprises and on 12.08.2000 an amount of Rs.2,90,000/- was paid through cheque no.115853 to Seven Hills, on 05.09.2000 an amount of

Rs.3,500/- was paid through cheque no.115854 to Classic Travels and the rest of the debit entries in Ex.P.38 pertains to various bank charges and that the account was closed on 02.09.2002 due to non operation.

38.The above evidence of PW.6 categorically shows the manner in which an amount of Rs.33,00,000/- which was credited into the account of M/s Arihant

Industrial Corporation Ltd., Hyderabad. On this aspect the prosecution did not adduce any evidence with regard to amount disbursed to Seven Hills, Classic

Travels and Sri Ram Enterprises. The only incriminating content appears is to transfer of an amount of Rs.15,00,000/- to M/s Coromandal Enterprises. It prima facie appears to be M/s Coromandal Enterprises represented by Accused No. 4 i.e

Mr. V. V. Nageswara Rao. However, the evidence of PW.10 Senior Manager, Karur

Vysya Bank discloses a different fact. As per the evidence of PW.10, Ex-P.47 is the account opening form in the name of Coromandal Enterprises along with sole proprietorship declaration form dated 11.08.2000 given by proprietor M/s.

Coromandal Enterprises Mr.K.J.PrasadaRao and Ex-P.48 is the statement of account of M/s. Coromandal Enterprises for the period from 01.01.2000 to 01.01.2003. As per the contents of Ex-P.48, DD No.374936 for Rs.15,00,000/- covered under Ex-P.37 was credited to the account of Coromandal Enterprises and on 12.08.2000 an amount of Rs.10,00,000/- was credited to this account from C/A no.92 of Sriram Enterprises and on the same day an amount of Rs.10,00,000/- was withdrawn by the account holder and another Rs.15,03,100/- was transferred to

Ongole MT and further on 18.08.2000 an amount of Rs.4,00,000/- cash was deposited in this account and on the same day an amount of Rs.4,00,900/- was

PSJC/VSKP Page no. 116 C.C.No.08 of 2006 transferred from this account. This M/s Coromandal Enterprises having account in

Karur Vysya Bank represented by Mr. K. J. Prasada Rao is not one and the same as the M/s Coromandal Enterprises represented by Accused no.4 as discussed supra.

Accordingly the transaction of Rs.15,00,000/- vide Ex-P.37 Demand Draft from the purported account of M/s Arihant Industrial Corporation Ltd., Hyderabad has nothing to do with the Accused. Similarly though the prosecution got marked

Account Opening Form along with statement of Account and connected documents of M/s Sri Ram Enterprises with Karur Vysya Bank, Visakapatnam under Exs P.56,

P.57 and P.58, the transactions under this account if any from M/s Arihant

Industrial Corporation Ltd., Hyderabad has no bearing on the allegations of

Accused in absence of sufficient proof and non-examination of concerned person of M/s Sri Ram Enterprises.

39.The further case of the prosecution is that there are certain transactions from the term loan account of Accused No.2 Company to M/s Spear & Co; It is contended that M/s Spear & Co; never existed and the amounts transacted to it, were diverted to Accused No. 3 for other purposes. Evidently, there are two quotations and receipts submitted by Spear & Co; pertaining to supply of furniture to Accused No. 2 Company under Ex-P.186. However, prosecution did not adduce any evidence to prove that M/s Spear & Co; do not exist and the receipts and invoices provided thereunder are false and fabricated. Mere accusation that M/s

Spear & Co; never existed is inchoate to conclude that M/s Spear & Co; is a fake company. Particularly, the evidence of prosecution is assertive that the furniture to be purchased as earmarked under Sanction letter was evidently present in the

Accused No. 2 Company. On this aspect PW.18 specifically stated that “I also verified movable assets purchased by Accused No.2 company from Spear & Co.,

PSJC/VSKP Page no. 117 C.C.No.08 of 2006 ltd. at Resorts of Sai Priya Resorts and Estates and found the same to be in accordance with the bills submitted by the company”. Therefore, the allegation pertaining to diversion of fund to M/s Spear & Co fails for want of merits.

Q.3Whether there is any fraud in disbursing of loan amounts by Accused

No. 1 to Current Deposit Accounts of the borrowers Companies and

utilization of the loan funds by the borrowers companies through their

Current Deposit Accounts?

40.On this aspect, the contents of Ex-P.176 Manual Instructions Volume – 5 pertaining to Advances – General Aspects defines Cash credits and Overdrafts in the Banking terms. As per Point No. 5.7 of Chapter-I, Cash Credits are sanctioned against the security of inventories such as stock, finished goods for Industrial borrowers for a period of two years. The cash credit against the hypothecation of goods is called Open Cash Credit (OCC in short) . This facility is allowed as an operative account to the borrower and that the borrower is allowed to draw money from the account by drawing cheques up to sanctioned limit subject to availability of drawing power and that the borrower can pay money to the credit of the account without any limitations. The amounts so credited into the account, can again be drawn by the borrower subject to the limit and drawing power. The account may run in credit balance also.

41.As per Point No. 5.7 of Chapter- I, Secured Overdraft are sanctioned against securities like Real Estates, Bank Term Deposits, GP notes, Shares and securities,

Life Insurance Policies etc., for a period of 1 or 2 years. This facility is allowed to borrowers as an operative account in the same manner as Cash Credit Account subject to drawing power.

PSJC/VSKP Page no. 118 C.C.No.08 of 2006

42.It can be understood from the above instructions of the above Bank Manual, it is clearly evident that the overdraft and open cash credit facilities can be run as an operative accounts and the amount can be drawn by the borrower from the account by drawing cheques and other instruments, simultaneously making credits into the account and again withdrawing the same subject to the limit and drawing power. In this case, the entire accusation of the prosecution stands on a pivotal allegation that the sanctioned loan amounts were released to the borrowers through

Pay orders and DDs which were subsequently credited to their Current Deposit

Account for utilization. As per record all the transaction vide Pay orders, Dds, and cheques reflected in the loan account Statements and Current Deposit Account

Statements of M/s Coromandal Enterprises, Accused no 2 and 8 entities are not disputed by the Accused. The contention of the Accused is that all the loan funds sanctioned are utilized only for the earmarked purpose. It is submitted that in transactions with rustic farmer, small traders, vendors, villagers and daily labour who do not have bank account, the companies has no other option other than meeting the requirement by drawing cash from the loan accounts or amounts transferred into their Current Deposit accounts. In this reference, firstly, it is important to look into evidence of prosecution witnesses pertaining to M/s

Coromandal Enterprises and Accused no.8 company.

43. On this aspect PW.15 in his cross-examination stated that “The loans referred in my examination in chief pertaining to Coromandal Enterprises is relating to business of Tamarind and Shrimp Feed. The Tamarind and Shrimp Feed are purchased from farmers/traders. It is the discretion of the borrower to pay the farmers/traders by way of cash, DD or pay order from the proceeds of loan

PSJC/VSKP Page no. 119 C.C.No.08 of 2006 amount. The bank is primarily concerned with procurement of stock through loan amount but not the particulars of the supplier”.

Similarly P.W.21, investigating officer in his cross-examination stated “It is true that generally farmers who sell tamarind, shrimp and shrimp feed demand cash for sale proceeds...

The agriculture produces like Tamarind, Shrimp and Shrimp Feed are to be procured from the farmers. These produces are sourced from the villages and forests.”

At this point it is evident from the above evidence of Prosecution witnesses that raw stock like Tamarind, Shrimp and Shrimp Feed are to be procured from farmers, who generally prefer monetary transaction by way of cash. Moving further to withdrawal aspect it is the evidence of PW.18 in his cross-examination that the sanction of loan and disbursement of sanctioned loan amount relating to

PC limit and OCC limit is the discretion of the Branch Manager. P.W.18 made certain assertive statements in further yielding toward the defence of the accused, which are extracted in exact terms as under for appreciation.

“The products dealt by M/s. Coromandal Enterprises are to be procured from the farmers by paying cash. The borrower can with draw cash from OCC limit to deal with above expenditure”. “The sanctioned amount in OCC limit can be transferred to existing current account (CD account) for withdrawal by the borrower”.

“Term loan is meant for acquiring fixed assets and Open Cash Credit is meant for procuring raw material and payments towards services.” “There was no loss sustained by the SSSIB Gajuwaka due to issuing of

Demand Drafts, Pay orders and permitting cash withdrawals in loan accounts

PSJC/VSKP Page no. 120 C.C.No.08 of 2006 pertaining to the M/s. Coromandal Enterprises, M/s. Sai Priya Nests pvt. Ltd., and

M/s. Sai Priya Resorts and Estates”.

44.It is observable from the above evidence of PW.15, P.W18 and PW.21 in their cross-examination that that the conservative stock like Tamarind, Shrimp and

Shrimp feedare to be procured from the small farmers which requires payments through the cash and that there is no flaw in disbursing the loan amount through

DDs, Pay Orders and permitting cash withdrawals and by transferring into the existing current account for withdrawal by the borrowers to meet the loan purpose.

Even with regard to M/s Accused No. 2 Company, PW.15 stated that the borrower is entitled to withdraw the loan amount in cash for day to day labour payments.

Lastly with regard to transfer of funds to individual like P.W.12 , D.V. S Lakshmi

Mani and Accused No.3, these amounts were transferred from the current deposit account of the companies. As discussed earlier this court ruled out the innocence of

P.W.12 with regard to his acquaintance with accused. There are multiple transactions in his account including that of Accused no 2 and 8 companies which are sister concerns as per their application for credit. Mrs. D.V.S.S. Lakshmi Mani is the wife of Accused no.5 and Accused no. 3 is related too and transactions in their name are not in dispute.

45. However as already discussed supra, Cash credits and Overdrafts including secured overdraft facilities are allowed as operative accounts to the borrower and that the borrower is allowed to draw money from the account, up to sanctioned limit subject to availability of drawing power and that the borrower can pay money to the credit of the account without any limitations. The amounts so credited into the account, can again be drawn by the borrower subject to the limit and drawing power. Therefore, an operative account as under includes both the sanctioned

PSJC/VSKP Page no. 121 C.C.No.08 of 2006 credits as well as amounts credited by the borrower from time to time . The funds available constitute a common pool of operation which is difficult to segregate. In spite of the same the customer is entitled to use the same for the business purpose making debit subject to his drawing power. Accordingly issuance of cheques, DDs and Pay order in the individual names as claimed to meet the business need does not attract any fraud unless elicited otherwise. Therefore, unless until, prosecution proved contrarily the utilization of the funds under the loans and credit limits sanctioned to the M/s Coromandal Enterprises, Accused No. 2 and 8 Companies these transactions cannot be incriminated criminally.

Q.4Whether there is any loss sustained by the Bank pertaining to the loans

extended to M/s Coromandal Enterprise, Accused No 2 and 8

Companies?

46.On this aspect when we look into the evidence of PW.15, with regard to M/s

Coromandal Enterprises, he stated that “As per the contents of Ex-P.92 Statement of Account of Coromandal Enterprises, the total interest debited in the account for the period from 28.03.2000 to 30.12.2000 is Rs.15,75,095/- (7 entries)”. PW.15 further stated that “as per the contents of Statement of Account (PC-1) of Sai Priya

Nests covered under Ex-P.109, the total credits during the period from 30.03.2000 to 23.02.2004 is Rs.70,44,813/-. The said Account was closed on 23.02.2004. As per Ex-P.109, the total interest debited in the account for the period from 08.03.2000 to October 2000 is Rs.3,63,258/-. By seeing Ex-P.109, I cannot say whether the Account was declared as Non Performing Asset (NPA) or not. As per the contents of Statement of Account (PC-2) of Sai Priya Nests covered under Ex-

P.112, the total credits during the period from 05.05.2000 to 31.12.2001 is

Rs.4,17,472/-. As per Ex-P.112, the total interest debited in the account for the

PSJC/VSKP Page no. 122 C.C.No.08 of 2006 period from 10.07.2000 to 23.02.2004 is Rs.4,80,787/-. As per the contents of

Statement of Account (PC-5) of Sai Priya Nests covered under Ex-P.116, the total interest debited in the account for the period from 29.12.2000 to 27.09.2001 is

Rs.5,80,336/-. As per the contents of Statement of Account (PC-6) of Sai Priya

Nests covered under Ex-P.120, the total credits during the period from 29.09.2000 to 06.05.2002 is Rs.34,466/-. As per Ex-P.120, the total interest debited in the account for the period from 29.09.2000 to 27.09.2001 is Rs.7,34,771/-”.

47.PW.15 further stated that “as per the contents of Statement of Account of Sai

Priya Estates and Resorts Pvt. Ltd., under Ex-P.131-B, the total credits during the period from 04.10.2000 to 28.09.2001 is Rs.7,40,121/-. As per Ex-P.131-B, the total interest debited in the account for the period from 28.09.2000 to 27.09.2001 is

Rs.13,42,557/-. As per the contents of Statement of Account of Sai Priya Estates and Resorts Pvt. Ltd., under Ex-P.131-D, the total credits during the period from 29.06.2000 to 20.10.2000 is Rs.26,06,035/-”.

“I verified all the accounts statements relating to the loans in this case. It is true that in all the loan accounts in this case bank profited in the form of interest.

There is no loss to the SSSIB due to sanctioning of all the loans in this case. There is no financial loss to the bank if the loan amount of the term loan is disbursed through OCC account”.

48.As seen from above evidence in all the above loan accounts which were granted as credit facilities, there is a continuous credits along with interest from time to time debited to the Bank. Further, as seen from the evidence of DW.1 Chief

Manager, Union Bank of India previously Manager, Andhra Bank and subsequently merged with Union Bank of India, as per the books of accounts of their branch, there was no outstanding loan amount pertaining to M/s Coromandal

PSJC/VSKP Page no. 123 C.C.No.08 of 2006

Enterprises, Accused No.2 and 8 Companies and that the loans obtained by M/s

Coromandal Enterprises and Accused No.8 Company were discharged under One

Time Settlement Scheme (OTS) to their branch on 26.06.2006 under Ex-D.16

Vouchers. Further, as per the evidence of DW.2 and as per the contents of Ex-D.20 i.e., certified copies of correspondence made by Andhra Pradesh State Finance

Corporation with SSSIB, Gajuwaka, APSFC has taken over the loan account of

Accused No. 2 Company from SSSIB, Andhra Bank, Gajuwaka in the year 2003 by issuing Pay Orders for Rs.65,35,000/-.

49.The repayment of loan perse do not desaturate the charges against the

Accused. The rule precedent is that in order to prove the offence of Cheating under

Sec.420 IPC and related offences, the alleged dishonest and fraudulent intention from the very initiation of the loan should be brought on record. However, in this case on hand, fraudulent or dishonest intention or acts of the Accused as alleged are not proved beyond reasonable doubt by the prosecution.

Q.5 Whether prosecution proved that Accused No. 1 sanctioned and

disbursed the loans pertaining to M/s Coromandal Enterprises and

Accused No. 8 and 2 Companies in violation of Bank Circulars and

Guidelines?

50. In this aspect, either PW.15 the Enquiry Officer, PW.18 the Recovery

Officer pertaining to the three loan accounts in this case or the Investigating

Officer testified about violation of Bank Circulars and Guidelines by Accused no.1

However, certain documents under Exs-P.102, P.137, P.176, P.177, P.187, P.252 and

P.270 were marked through PW.15, PW.18 and PW.22. Initially relying on the

Manual Instructions Volume–5 pertaining to Advances–General Aspects pertaining to processing and sanction of credit proposals covered under Ex-P.176, the

PSJC/VSKP Page no. 124 C.C.No.08 of 2006 contention of the prosecution is that the application for credit facilities by M/s

Coromandal Enterprises Ex-P.86 was not signed by the Co-obligant. However, as per the Partnership deed under Ex-P.87, which is undisputed prosecution document, Accused No. 4 was authorized to deal with all the monetary transactions of the company including obtaining loans from the Bank and to sign on all the required documents. Further as per the Appraisal note, the properties standing in the name of Accused No.4 were alone submitted as collateral securities.

Accordingly no incrimination can be attributed to the Accused No.1 for not obtaining the signature of another Partner of M/s Coromandal Enterprises Smt. V.

Lakshmi.

51.Nextly, the allegation is that the properties which were valued by the Panel

Valuers were accepted by Accused No. 1 and in fact the property should be valued by Rural Development Officer. In this connection, the manual instructions pertaining to the valuation of property offered as collateral security were seen at

Page No. 286 of Ex-P.176. As per the said guidelines whenever the property offered as collateral security is an agricultural land, it is mandatory for valuation of the same by Rural Development Officer in addition to the independent enquiry by the Branch Manager. However, in view of the discussion supra, this Court already concluded that all the properties offered as collateral securities in the three loans are residential vacant house sites and not agricultural lands and that their value suffices sufficient security to the loans availed in this case . Accordingly the said guidelines covered under Ex-P.176. does not apply to the facts of the case and no accusation is proved against Accused No. 1 and as well as Accused no. 6 and 7.

52.Moving further Ex-P.137 exclusive refers to Letter of Credit and the only direction to the Controlling Officers is to assess the LC transactions basing on the

PSJC/VSKP Page no. 125 C.C.No.08 of 2006 cost of capital goods and the ability of constituent to meet the commitment on presentation of bills. However, no contradictory evidence with regard to guidelines mentioned in Ex-P.137 against Accused No.1 was brought on record in the oral or documentary prosecution evidence. Similarly with regard to Ex-P.102 mandating the transit documents it is directed that LCs should not be opened without calling for transport documents of approved transporters. However, pertaining to Letter of

Credit issued to M/s Balaji Feeds as already discussed the transportation of shrimp feed was arranged by own transport vehicles of M/s Balaji Feeds and the corresponding transit insurance was forwarded by Karur Vysya Bank along with covering letter to SSSIB Gajuwaka under Ex-P101. This Court already concluded this point against the Prosecution.

53.With regard to loan extended to Accused No. 8 Company the prosecution relied upon Ex-P.177 which deals with Guidelines pertaining to Export Finance.

However, none of the prosecution witness testified about any of the terms under

Ex-P.177 violated by Accused No. 1. Similarly with regard to Accused No. 2

Company, prosecution got marked Ex-P.252 which discloses that Credit facilities to Real Estate Builders, Hotels and Restaurants as low priority advances. Ex-P.252 cannot be looked into for two reasons, firstly, it is only photocopy of single page and not a complete document signed by PW.18 and secondly; it does not bar credit advances to Hotels and Restaurants but only directs the sanctioning authority to be more vigilant.

54. Ex-P.187 deals with empannelment of Chartered Engineers and issuing

Certificate. However, as per the discussion supra, no evidence was brought on record by the prosecution to prove that valuation reports issued by Accused No. 6 and 7 were not in accordance with the guidelines under Ex-P.187. Lastly, there is

PSJC/VSKP Page no. 126 C.C.No.08 of 2006 specific allegation against Accused No.1 that he dishonestly sanctioned

Rs.15,547/- as Engineer’s fee to Accused No. 7 for valuation of property covered under Ex-P.225. In this connection, prosecution got marked Ex-P.253 bill for valuation report submitted by Accused No.7 pertaining to M/s Sai Priya resorts

Pvt., Ltd which is for total amount of Rs.15,547. In contra prosecution is relying on the statement of Account of M/s Coromandal Enterprises where in an amount

Rs.15,547 was deducted as valuation fee.

55. In this connection as per Ex-P.187, the Engineer’s fee for loans pertaining to vacant house sites is ¼ % on the value of the property or maximum of

Rs.2,000/- which is less per borrower, along with 1st class fare/AC II tier andcost of boarding/lodging. The the bill given by Accused No. 7 is @ 1/8% of the value of property which is less than 1/4th. The bill includes valuation charges for properties in Palangi as well as Tallavalasa in different survey numbers and descriptions including properties related to Accused no.8 company also. In fact there are 7 properties tendered as collateral securities for M/s Coromandal Enterprises as per record . But no valuation reports for 6 properties covered under Ex-P.226 to 231 documents were seized by the Investigating officer. Even considering maximum limit of Rs.2000 for each property under separate documents, the valuation fee for collateral securities offered by Coromandal Enterprises will be Rs.12000/- (i.e 2000*6) excluding the transportation and boarding charges. Further there is no mentioning of name of valuer in Ex-P.92 statement of account and the deduction is noted only as “ for valuation fee”. Accordingly it cannot be said that the amount deducted in the Account of M/s. Coromandal Enterprises for valuation pertains to bill submitted by Accused no.7. Lastly there is no endorsement or office note or approval order on Ex-P.253 to presume that the accused no.1 sanction the amount

PSJC/VSKP Page no. 127 C.C.No.08 of 2006 mentioned in Ex-P.253 as claimed by Accused no.7 no.1 for valuing only property covered under document no.416/98. Therefore the said accusation pertaining to engineers fee fail want of merits. Further, as per Ex-P.187 all charges pertaining to the Engineer’s fee are to be recovered from the borrower and accordingly deduction of fee to the valuers from the account of Accused Companies cannot be considered against Accused positively including payments to Accused No.6.

56.The competency of Accused No. 1 to sanction and disburse all the three loans in this case is neither disputed nor proved contrarily by the prosecution.

Further, in the cross- examination PW.18 stated that the Scale III Officer posted at

SSSIB can exercise financial powers of Scale IV Officer for granting loans and that

Accused is competent to sanction loans to M/s Coromandal Enterprises, Accused

No. 2 and 8 Companies in this case. PW.15 also admitted that Accused No. 1 was working as Scale – III Officer in SSIB, Gajuwaka at the time of sanctioning these loans and that as per the guidelines of Andhra Bank vide Circular No. 165 in

Ref.No.26/8, dt.18.08.2000, all the Branch Managers of Specialized Branches like

SSI can exercise the powers one level higher than their powers to SSI loans. PW.18 in his evidence specifically stated that all the loans in this case were sanctioned as per Rules and Circulars of the Bank. Moving to disbursal of amounts from OCC and PC Limits, PW.18 at Paragraph No.38 stated that the sanction of loan and disbursement of sanctioned amount relating to PC limits and OCC limits is the discretion of the Manager.

57.In the backdrop of above evidence, it is important to look into internal enquiry report in this case relied upon by the prosecution. Exs P.137, P.138 and

P.139 are the photostat copies of Enquiry Reports, dt.15.05.2005 pertaining to the three loan files marked through P.W.15. Subsequently during the examination of

PSJC/VSKP Page no. 128 C.C.No.08 of 2006

PW.21 Investigating Officer, Prosecution got marked the consolidate enquiry reports dt.15.05.2003 pertaining all the three loans under Ex-P.259. The contention of the Accused is that the above enquiry reports are completely false and the same were concocted subsequently tosuit the prosecution case and that no authenticity can be given to the contents of enquiry report as the same is not a substantial piece of evidence as held by the Hon’ble High Court of Andhra Pradesh in the Judgment reported in 2002 (2) ALT (Crl) 272 between D. Venkata Rao And Anr. vs State 2000 (2) ALD Cri 458.

58.Under the above circumstances, the evidentiary value and veracity of Ex-

P.138 to P.140 and P.259 are to be looked into. Admittedly, Ex-P.138 to P.140 and

P.259 were not filed along with the Charge Sheet and the same were brought on record subsequently. Apparently, all the documents under Ex-P.138 to P.140 are photostat copies and marked subject to objection raised by the counsel for

Accused. Ex-P.259 which was purported to be original Enquiry Report was marked through Investigating Officer PW.21. The Hon’ble High Court of Andhra Pradesh in the case law reported in 2002 (2) ALT (Crl) 272 reiterated the evidentiary value of an enquiry report during the course of apprising allegations against an employee basing on the contents of Equiry report . The relevant paragraph is extracted as follows for better understanding:

“ In Ex.P.2 it is stated that both the accused said to have confessed before the Enquiry Officer and pleaded for time for repayment of the amount in instalments. When Ex.P.2 itself is not a substantive piece of evidence, the recitals therein cannot be relied upon. Further more, the statements said to have been made by both the Revision Petitioners before the Enquiry officer cannot also be relied upon since they are in the nature of extra-judicial confession and such statements can be relied upon after having appreciated the same with reference to other attendant circumstances. The finding of guilt against both the Revision Petitioners has been arrived at basing upon a document which is not a substantive piece of evidence. As discussed above, in the absence of relevant accounts of the Society, the evidence of

PSJC/VSKP Page no. 129 C.C.No.08 of 2006

P.W.2 alone is not sufficient to bring home the guilt of the charge under Sec. 409 of IPC. Exs.D1 and D2 cannot precisely be connected to the amounts mentioned in the charge.”

59. In the light of above case law , Ex-P.259 does not itself substantiate any proof of evidence, so as to consider its contents incriminating against the Accused, firstly at least the findings therein are to be testified specifically by PW.15 and secondly; corroborated by the other evidence on record. In this connection, PW.15 except marking these documents, did not speak anything about the alleged deviations in the three loans and further, the other oral and documentary evidence on record also, did not proved to be incriminating against the Accused. In addition, as seen from the cross-examination of PW.15, there are specific statements which are breaching the case of the prosecution and they were extracted in the same terms as follows:

“ I did not physically inspect the immovable properties offered as collateral security for these loans. I cannot say the prevailing market value of these properties by the date of my report. During my enquiry I have seen only Pay

Orders referred in examination in chief in the Branch records and I have not seen the DDs and vouchers referred in my examination in chief. I did not examine the person in whose favour the Pay Orders and DDs referred in my examination in chief were issued. I have no personal interaction with the borrowers. I do not know for what purpose the amounts covered under Pay Orders, DDs referred in my examination in chief were utilized. I did not inspect the Sai Priya Estates and

Resorts at Rushikonda, Visakhapatnam to know whether the works referred in

Appraisal Note were executed or not by availing Term Loan referred in my examination in chief during my enquiry”.

PSJC/VSKP Page no. 130 C.C.No.08 of 2006 “I did not personally enquire about end use of the loan proceeds for the loans referred in my examination in chief except about the Demand Draft issued in the name of Arihanth Industrial Corporation Ltd., Hyderabad”.

I did not physically verify the installation of above referred amusement equipment at Sai Priya Estates and Resorts. I do not know whether the said equipment was supplied to Sai Priya Estates and Resorts and the same was erected in their premises. It is the duty of the Branch Manager to verify whether the said equipment was supplied and erected. The Branch Manager need not verify the source from where the equipment was supplied”.

“As per the records of the Bank, the loan amount was disbursed to various persons and entities and the cash was withdrawn by the respective persons and entities. I did not personally enquire about where these amounts have gone and for what purpose they have been used”.

60.As seen from the above evidence of PW.15, he did not verify the documents like vouchers .DDs relating to the loan, did not physically verify the stock and fixed assets which were offered as primary security and also did not verify the collateral securities as well as not inquired into the end use of the loan funds disbursed to the borrowers. Excluding the prime ingredients of loan transaction any enquiry even conducted by PW.15 will be only assumptive and does not take the place of proof. Lastly; as seen from the covering letter, dt.22.09.2022 addressed by

Union Bank of India to Investigating Officer annexed to Enquiry report marked under Ex-P.259, it is evident that Enquiry report under discussion was forwarded on the request of CBI/Visakhapatnam in the month of September, 2022. The

Seizure Memos on record does not disclose the collection of enquiry report by the

Investigating Officer during the course of investigation from the bank. The

PSJC/VSKP Page no. 131 C.C.No.08 of 2006 subsequent obtaining of Ex-P.259 from the Bank authorities almost after 18 years after the investigation adds against the case of the prosecution with regard to the veracity of Ex-P.259.

61. Before concluding on this aspect it is important to discuss the version of the accused specifically Accused No.1 that all the loans were sanctioned in accordance with the banking procedure, guidelines, circulars and that neither the

Regional office, zonal office nor any other supervising authority including inspecting and auditing personnel during the relevant point of time never disapproved, dissented or found fault with entire loan transactions and that the investigating agency unfairly involved him in the case without any complaint or grievance reported by the Bank authorities. On this aspect P.W.15 was cross examined specially and his evidence is as follows :

“The Zonal office and the Regional office are the controlling authorities of the SSI branches. The manager of SSI Branch will contact Zonal office or Regional office in writing in case of any clarification. The Zonal office or Regional office after receipt of monthly report from the branch if it found any deficiencies in sanction of loan, it will seek clarification from the branch. There will be inspection of loans and other advances in SSI Branch by Inspectors of Branches deputed by the head office every year. The SSIB Andhra Bank Gajuwaka will reports to Zonal office, Visakhapatnam. The Inspectors of branches are deputed by head offices.

The inspection of SSIB Andhra Bank, Gajuwaka might have been taken place in the year 2002. During the inspection by Inspector of branches if any irregularities, illegalities etc., are found by them in any loan account they will prepare a report to that effect. The Inspector of branches submits reports to inspection department of head office. The head office in turn seek clarification from the branch with regard

PSJC/VSKP Page no. 132 C.C.No.08 of 2006 to remarks addressed by Inspector of Branches. The Inspector of branches do not mention their observations in the loan file. The report submitted by Inspector of branches does not contain any remarks with regard to loans which are in order. The

Zonal office, Regional office or head office can order full enquiry with regard to irregularities pertaining to sanction and disbursement of any loan brought to its notice. The Zonal office or Head office is the final authority to conclude whether there are any irregularities or illegalities pertaining to sanction and disbursement of loan. I did not visit the Head office or Zonal office to examine the correspondence and reports pertaining to Coromandal Enterprises, Accused no.2 and 8 companies”.

62.PW.15 further stated that “during the course of inspection of the three loan accounts from the documents of the bank I found that the manager has inspected the stocks relating to the said loans. I do not remember who is the manager of

SSIB Gajuwaka on the date of my enquiry. The appraisal notes pertaining to these three loans are accessible to Inspector of Branches. Apart from the Inspector of

Branches the Statutory Auditors might have inspected the bank. The Statutory

Auditors are 3rd party Chartered Accountants. If the Statutory Auditors found any irregularities they will prepare specific note. I did not examine any reports prepared by the Statutory Auditors relating to SSIB Gajuwaka during that period.

The duty of the statutory Auditors is to inspect the various bank branches transactions including loans throughout the year”.

63.Adding to this P.W.18 in his cross examination deposed that “the Andhra

Bank Zonal officer Visakhapatnam is situated at the distance of 8 to 9 km from

SSSIB Gajuwaka. It is true that SSSIB forward monthly report including the details of loans sanctioned in that particular month to Zonal office. The monthly report discloses description of the loans, sanctioned amount, loan activity including

PSJC/VSKP Page no. 133 C.C.No.08 of 2006 disbursement details. The office copy of monthlyreport will be retained in SSSIB. I verified monthly reports sent by SSSIB pertaining to the loan accounts in this case.

The particulars of the loans above referred pertaining to all the three loan accounts in this case were mentioned in the monthly reports. In case if the zonal office identifies any discrepancy with regard to the loan particular mentioned in the monthly report, it will raise quarries.”Imperatively Ex-D.6 is the copy report by

Inspector of Branches during the relevant period admitted through P.W.18.

64. From the above evidence, it can be understood that if there are any deviations in sanction and disbursal of loan, initially the Zonal and Regional Office will point out the same and that the branches offices shall be inspected by Inspector of

Branches and also third party statutory auditors regularly. Non pointing of any deviations by the supervising authority or by auditing agency does not itself give any reservation to the defense of accused. But the non verification of the same by the P.W.15, non examination of any Superior officer of the bank with regard to contents of Ex.-P.259 and other evidence adduced by the prosecution supporting the version of accused acts affirmative towards the existence of circumstances in favour of the accused.

65. Lastly the contention of the prosecution is that PW.18 retracted from his earlier statements marked under Exs P.197, P.202, P.204, P.206, P.211, P.216, P.217,

P.219, P.222 and P.223 before the Investigating Officer. It is submitted that the part of evidence of PW.18 is contradicting to his earlier statements marked under above exhibits, is hostile to the prosecution and that portion of his evidence may be rejected. Admittedly, PW.18 at some occasions during his examination-in-chief already discussed, testified contradicting to his earlier statements, however, a witness cannot be treated as hostile merely because his statement before the Court

PSJC/VSKP Page no. 134 C.C.No.08 of 2006 is different from his earlier statement. As a point of rule, the statements under Sec.

161 Cr.P.C., does not have any substantial evidentiary value and they can be used only for limited purpose of corroborating or contradicting the subsequent statements of a witness as provided under Sec. 145 and 157 of Indian Evidence

Act.

66.To define, hostile witness is one who from the manner in which he gives his evidence shows that he is not intended to speak truth. The inference of hostility is to be drawn from the answers given by the witness when tender for cross- examination by the party calling him. There should be some corroborative facts adoptable from existing other evidence on record to presume that the witness is speaking false. In this case on hand, the evidence of PW.18 is assertive to the prosecution to much extent and some retractions persisted in connection with attributions of deviation in sanction and disbursement of loans in this case.

However, irrespective of the evidence of PW.18, there is no other evidence on record to corroborate with purported contradictory statements marked under Exs

P.197, P.202, P.204, P.206, P.211, P.216, P.217, P.219, P.222 and P.223. The evidence of PW.18 when read as whole, there is no justification to reject specific part of his evidence as unreliable. Accordingly, this Court is of the opinion that there is no substantial material in order to draw adverse inference against the part of evidence of PW.18, contradicting his earlier statements.

Conclusion :

67.In view of the above discussion pertaining to Point No. 1 to 5 consolidately, this Court is of opinion, that the evidence adduced by the prosecution failed to substantiate the allegations against Accused No. 4 that he obtained loan of

Rs.75,00,000/- in the name of non-existing firm i.e., M/s Coromandal Enterprises

PSJC/VSKP Page no. 135 C.C.No.08 of 2006 and Accused No. 7 in conspiracy with Accused No. 1 fraudulently valued the property in Document No. 416/1998 and Accused No. 1 dishonestly granted the loan to M/s Coromandal Enterprises without verifying the stock and credibility of the collateral securities. Accordingly the Charges against Accused No. 1, 7 and 4 pertaining to loan extended to M/s Coromandal Enterprises are not proved.

68.Prosecution failed to adduce sufficient evidence to prove the accusation against Accused No. 3, 4, 5 and Accused No. 1 pertaining loan sanctioned to PC-1, 2, 5 and 6 of M/s Sai Priya Nests Pvt., Ltd. Similarly prosecution failed to adduce sufficient evidence to prove the accusation against Accused No. 1, 5, 3 and 7 pertaining to loan extended to Accused No.8 Company. Prosecution similarly failed to adduce any evidence of fraud against Accused No. 1, 5 pertaining to loan extended to Accused No. 2 Company. Similarly, prosecution did not prove beyond reasonable doubt the ingredients of conspiracy, forgery, cheating, dishonest or fraudulent intention preceding and subsisting the loan transactions against Accused

No. 1, 3, 4, 5, 6 and 7 & Accused No. 2 and 8 Companies. The case against

Accused No. 7 was abated. As far as other Accused are concerned, to sum up

Accused No. 1, 3, 4, 5 and 6 are not found guilty for the offence under Sec. 120-B, 420, 465 and 471 of IPC. Consequently Accused No. 1 is also not found guilty for the offence under Sec. 13 (2) r/w 13 (1) (d) of P.C., Act, 1988. Accused No. 3, 4 and 5 are not found guilty for the offence under Sec. 468 of IPC. Accused No. 2 and 8 entities were not found guilty for the offences under Sec. 120-B and 420 of

IPC.

69.In the result, Accused No. 1 Found Not Guilty for the offence under Sec.

120-B, 420, 465 and 471 of IPC and Sec. 13 (2) r/w 13 (1) (d) of P.C., Act, 1988 and he is acquitted under Sec. 248 (1) Cr.P.C.

PSJC/VSKP Page no. 136 C.C.No.08 of 2006

Accused No. 3, 4 and 5 are Found Not Guilty for the offence under Sec.

120-B, 420, 465, 468 and 471 of IPC and Accused No. 6 is Found Not Guilty for the offence under Sec. 120-B, 420, 465 and 471 of IPC and they are acquitted under Sec. 248 (1) Cr.P.C.

Accused No. 2 and 8 entities are Found Not Guilty for the offence under

Sec. 120-B and 420 of IPC and are acquitted under Sec. 248 (1) Cr.P.C.

The existing bail bonds of Accused No. 1, 3, 4 to 6, if any, shall stand canceled. Accused No. 1 to 8 are directed to execute self bond for Rs.10,000/- with single surety for like sum each as contemplated under Sec. 437-A of Cr.P.C., for a period of six months to ensure their appearance before the Appellate Court.

Directly typed to my dictation by the Stenographer – Gr.I, corrected and

pronounced by me in Open Court on this the 10th day of March, 2023.

Sd/- Smt. B. S. V. HIMA BINDU

Principal Special Judge for C.B.I., Cases,

Visakhapatnam

APPENDIX OF EVIDENCE

LIST OF WITNESSES EXAMINED ON BEHALF OF PROSECUTION

PW.1/20.06.2022 Mr.N.S.Chakravarthy (L.W.1), Civil Works PW.2/21.06.2022 Mr.Abdul Raheem (L.W.2), Retired as Sub Registrar PW.3/02.08.202Mr.T.L.V.Padmanabham (L.W.9), Retired as Branch Manager in Karur Vysya Bank. PW.4/02.08.2022 Mr.G.V.V.Satyanarayana (L.W.7), Director M/s.Costal Trawlers Ltd., PW.5/04.08.2022 Mr.V.Harshavardhan Reddy (L.W.13), Assistant General Manager PW.6/04.08.2022 Mr.D.Ramachandra Rao (L.W.14), Senior Manager DBS PW.7/08.08.2022 Mrs.Sunitha Rani (L.W.17), Deputy Assistant Commissioner, State Tax PW.8/08.08.2022 Mr.V.V.Satyanarayana (L.W.8), chartered Accountant/Business PW.9/10.08.2022 Mrs.G.Uma Parameswari (L.W.19),Project Director, DWMA PW.10/10.08.2022 Mr.V.Vidyanath (L.W.12), Senior manager, Karur Vysya Bank PW.11/10.08.2022 Mr.K.Srinivas (L.W.20), Accountant PW.12/11.08.2022 Mr.S.Rama Gopal (L.W.21), Panel Valuer PW.13/16.08.2022 Mr.K.Pravakar Rao (L.W.11),Business(Grocery Shop) PW.14/17.08.2022 Mr.S.Mohan Rao (L.W.27), Joint Sub Registrar, Madhurawada PW.15/22.08.2022 Mr.I.Pattabhi rama Sastry (L.W.15),Chief Manager, Andhra Bank

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PW.16/23.08.2022 Mr.P.Vijaya Shankar (L.W.25), Director and Scientist PW.17/23.08.2022 Mr.D.rajasekhara Rao (L.W.24), Inspector of IT PW.18/02.09.2022 Mr.N.Anand (L.W.6) Deputy Manager, Andhra Bank PW.19/12.09.2022 Mr.Manoj Asapu Chief Manager, Union Bank of India, Visakhapatnam. PW.20/13.09.2022 Mr.Tulsidas, Sub Registrar, Bheemunipatnam. PW.21/27.09.2022 Mr.Dibakar Mishra (L.W.26),Deputy Superintendent of Police, CBI.

LIST OF DOCUMENTS MARKED ON BEHALF OF PROSECUTION.

Ex.P.1/P.W.1Certified copy of DD No.146863 dated 06.03.2000 for Rs.8,00,000/-. Ex.P.2/P.W.1 Certified copy of DD No.146872 dated 08.03.2000 for Rs.5,00,000/-. Ex.P.3/P.W.1 Certified copy of DD No.146873 dated 08.03.2000 for Rs.5,00,000/-. Ex.P.4 /P.W.1 Portion of 161 Cr.P.C statement of L.W.1 Ex.P.5/P.W.5Portion of 161 Cr.P.C statement of L.W.1 Ex.P.6/P.W.5 Portion of 161 Cr.P.C statement of L.W.1 Ex.P.7 /P.W.2 Certified copy of document No.957/1998 sale deed, 20.03.1998 Ex.P.8 /P.W.2 EC.No.3424/2005 dt.21.06.2005 for the period from 01.01.1983 to 31.12.1997. Ex.P.9 /P.W.2 EC.No.1702/2005 dt.18.03.2005 for the period from 01.01.1998 to 17.03.2005. Ex.P.10/P.W.2 EC.No.3427/2005 dt.21.06.2005 for the period from 01.01.1983 to 22.06.2005. Ex.P.11/P.W.2 Market value assistance request no.800 dated 22.06.2005. Ex.P.12/P.W.2Document No.4452/99 certified copy of sale deed dt.29.10.1999. Ex.P.13/P.W.2 Document No.4453/1999 certified copy of sale deed

dt. 29.10.1999.

Ex.P.14/P.W.2 Market value assistance request no.801 dated 22.06.2005. Ex.P.15/P.W.2 Market value assistance request no.802 dated 22.06.2005. Ex.P.16/P.W.3 Covering letter dt.29.03.2005. Ex.P.17/P.W.3 Attested copy of account opening form dt.19.08.2000 in the name of Balaji Feeds. Ex.P.18/P.W.3 Attested copy of specimen signature card of Current Account No.245 of M/s.Balaji Feeds dated 19.08.2000. Ex.P.19/P.W.3 Attested copy of certificate of Registration of M/s. Balaji Feeds issued by Assistant Commercial Tax Officer, Visakhapatnam. Ex.P.20/P.W.3 Attested copy of sole proprietorship declaration form dt.19.08.2000 of M/s.Balaji Feeds (2 sheets). Ex.P.21/P.W.3 Attested copy of statement of accounts of M/s.Balaji Feeds Ex.P.22/P.W.3 Letter of Credit dt.18.10.2000 issued by Andhra Bank, Gajuwaka Branch, Visakhapatnam. Ex.P.23/P.W.3 (Usance Bill Discount) UBD/01/2000 dt.19.10.2000 issued by Karur Vysya Bank, Vizianagaram along with relevant documents viz., Bill of Exchange dt.19.10.2000, letter dt.19.10.2000, Delivery Challan/Invoice dt.19.10.2000 with duplicate copy.

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Ex.P.24/P.W.4 Covering letter dt.21.05.2005 addressed by Mr.T.Valsaraj, Managing Director Ex.P.25/P.W.4 Copy of agreement dt.12.12.1998 Ex.P.26/P.W.4 Statement showing the production details and ledger Account of M/s.Sai Priya Pvt. Ltd., (A8) under covering letter dt.10.09.2005. Ex.P.27/ P.W.4 Photostat copy of Stock Confirmation Certificate dt. 24.08.2001 Ex.P.28/P.W.4 Letter dt.10.03.2000 addressed by PW.4 to the Manager, Andhra Bank Ex.P.29/P.W.5Account opening form and LD.143 statement of SB Account No.52421 in the name of Mr.D.R.K.Prasad (A5) along with covering letter dt.21.05.2005 Ex.P.30/P.W.5 Photostat copy account opening form dt.31.08.1998 in the name of Mr.D.R.K.Prasad (A5) Ex.P.31/P.W.5Photostat copy of statement of SB A/C No.52421 for the period from February, 2000 to July, 2000. Ex.P.32/P.W.5Attested copies of Pay Orders dt.07.03.2000, 08.03.2000 and 06.05.2000. Ex.P.33/P.W.5Cheque dt.10.03.2000 bearing No.189956 for Rs.14,00,000/ Ex.P.33-A/Covering letter dt.04.04.2005 addressed by chief manager Ex.P.34/P.W.6Voucher dated 09.08.2000. Ex.P.35/P.W.6Cheque dated 10.08.2000. Ex.P.36/P.W.6DD Challan dated 10.08.2000. Ex.P.37/P.W.6DD challan dated 10.08.2000. Ex.P.38/P.W.6Statement of Current Account no.17967 of Arihant Industrial Corporation Ltd., Hyderabad. Ex.P.39/P.W.6Account opening form along with connected documents under LD.220, 221 and LD.222 covering letter dt.20.04.2005. Ex.P.40/P.W.7Letter dt.13.07.2005 Ex.P.41/P.W.8Photostat copy of Rental Agreement dt.15.02.2000. Ex.P.42/P.W.8 Rent letter dt.17.10.2000 issued by Bangaramma Cold Storage Pvt., Ltd., to the Manager, Andhra Bank. Ex.P.43/P.W.8Portion of 161 Cr.P.C Statement of LW.8(PW.8). Ex.P.44/P.W.8Portion of 161 Cr.P.C Statement of LW.8(PW.8). Ex.P.45/P.W.9Letter dt.13.07.2012 addressed by PW.9 to the Investigating Officer, CBI Ex.P.46/P.W.10Letter dt.30.03.2005 issued by Mr.S.Ravi, the then Chief Manager of Karur Vysya Bank, Dabagardens Branch. Ex.P.47/P.W.10Account opening form in the name of Coromandal Enterprises along with Sole Proprietorship Declaration Form dt. 11.08.2000 given by proprietor M/s.Coromandal Enterprises Ex.P.48/P.W.10Statement of account of M/s.Coromandal Enterprises for the period from 01.01.2000 to 01.01.2003. Ex.P.49/P.W.10statement of account pertaining to M/s.Speare and Co. LD.241 Photostat copy of account opening form dated 06.09.2000 in the name of Spear and Co., along with Photostat copy of Sole Proprietorship declaration form issued by D.Paparao covered under LD.243 and LD.244 (one sheet) statement of account pertaining to C/A No.118 in the name of M/S.Spear and Co., for the period from 01.09.2000 to 10.09.2000.

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Ex.P.50/P.W.10Attested copy of statement of S/B Account No.619 in the name of D.V.S.S.Lakshmi Mani for the period from 01.01.1999 to 01.01.2003. Ex.P.51/P.W.10Letter dt.01.12.2005 addressed by the then Chief Manager, Karur Vysya Bank, Dabagardens branch, Visakhapatnam to the Inspector of CBI Ex.P.52/P.W.10Letter dt.05.11.2000 addressed by Mr.K.Srainvas. Ex.P.53/P.W.10 Statement of account in the name of Mr.K.Srinvas for the period from 01.01.2000 to 05.11.2000 Ex.P.54/P.W.10Pay Order dt.06.03.2000 bearing no.560465 in favour of PW.11. Ex.P.55/P.W.10Cheque bearing no.180103 dt.18.09.2000 and LD.169 cheque no.180108 dt.25.09.2000. Ex.P.56/P.W.10Letter addressed by 02.02.2000 addressed by Mr.E.Pentarao to the Manager, Karur Vysya Bank. Ex.P.57/P.W.10Statement of account pertaining to current account no.92 in the name of M/s.Sriram Enterprises for the period from 01.01.2000 to 01.01.2003 Ex.P.58/P.W.10The credit voucher dated 13.03.2000. Ex.P.59/P.W.10The statement of account pertaining to S/B account no.2982 in the name of Mr.J.Srinivasarao for the period from 01.01.2000 to 27.01.2004. Ex.P.60/P.W.10Cheque bearing no.189974 dated 11.09.2000. Ex.P.61/P.W.11Portion of 161 Cr.P.C Statement of PW.11. Ex.P.62/P.W.11Portion of 161 Cr.P.C Statement of PW.11 Ex.P.63/P.W.11Portion of 161 Cr.P.C Statement of PW.11 Ex.P.64/P.W.12Valuation Report dt.05.01.2004 given by PW.12 in respect of landed property described in document No.416/1998 in extent of Ac.3.76cts situated at Tallavalasa Village of Bheemunipatnam Mandal, Visakhapatnam. Ex.P.65/P.W.12Valuation Report dt.05.01.2004 given by PW.12 in respect of landed property described in document No.2247/1999 in extent of Ac.1.46cts situated at Gambheeram Village of Anandapuram Mandal, Visakhapatnam. Ex.P.66/P.W.12Valuation Report dt.05.01.2004 given by PW.12 in respect of landed property described in document No.2248/1999 in extent of Ac.0.51cts situated at Gambheeram Village of Anandapuram Mandal, Visakhapatnam. Ex.P.67/P.W.12Valuation Report dt.05.01.2004 given by PW.12 in respect of landed property described in document No.2249/1999 in extent of Ac.0.60cts situated at Gambheeram Village of Anandapuram Mandal, Visakhapatnam. Ex.P.68/P.W.12Valuation Report dt.05.01.2004 given by PW.12 in respect of landed property described in document No.2250/1999 in extent of Ac.0.20cts situated at Gambheeram Village of Anandapuram Mandal, Visakhapatnam. Ex.P.69/P.W.12Valuation Report dt.05.01.2004 given by PW.12 in respect of landed property described in document No.2252/1999 in extent of Ac.0.76cts situated at Gambheeram Village of Anandapuram Mandal, Visakhapatnam.

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Ex.P.70/P.W.12Valuation Report dt.06.01.2004 given by PW.12 in respect of landed property described in document No.3408/1999 in extent of Ac.1.17cts situated at Thimmapuram Village of Samrlakota Mandal, Kakinada. Ex.P.71/P.W.12Valuation Report dt.05.01.2004 given by PW.12 in respect of landed property described in document No.781/1997 in extent of 774.4 sq.yds., situated at Rishikonda Village, Yenadada Panchayat, Viskahapatnam. Ex.P.72/P.W.12Valuation Report dt.06.01.2004 given by PW.12 in respect of landed property described in document No.957/1998 in extent of Ac.1.59cts situated at Palangi Village, Undrajavaram Mandal, Tanuku. Ex.P.73/P.W.12Valuation Report dt.06.01.2004 given by PW.12 in respect of landed property described in document No.24452/1999 in extent of Ac.3.12cts situated at Palangi Village, Undrajavaram Mandal, Tanuku. Ex.P.74/P.W.12Valuation Report dt.06.01.2004 given by PW.12 in respect of landed property described in document No.4453/1999 in extent of Ac.0.30cts situated at Palangi Village, Undrajavaram Mandal, Tanuku. Ex.P.75/P.W.12Valuation Report dt.05.01.2004 given by PW.12 in respect of landed property described in document No.2251/1999 in extent of Ac.0.24cts situated at Gambheeram Village, Anandapuram Mandal, Visakhapatnam. Ex.P.76/P.W.12Valuation Report dt.05.01.2004 given by PW.12 in respect of landed property described in document No.2253/1999 in extent of Ac.0.30cts acres situated at Gambheeram Village, Anandapuram Mandal, Visakhapatnam. Ex.P.77/P.W.12Valuation Report dt.05.01.2004 given by PW.12 in respect of landed property described in document No.2254/1999 in extent of Ac.0.20cts situated at Gambheeram Village, Anandapuram Mandal, Visakhapatnam. Ex.P.78/P.W.12Valuation Report dt.05.01.2004 given by PW.12 in respect of landed property described in document No.2255/1999 in extent of Ac.0.24cts situated at Gambheeram Village, Anandapuram Mandal,Visakhapatnam. Ex.P.79/P.W.12Valuation Report dt.05.01.2004 given by PW.12 in respect of landed property described in document No.417/1998 in extent of Ac.2.74cts situated at Thallavalasa Village, Bheemunipatnam Mandal, Visakhapatnam. Ex.P.80/P.W.12Portion of 161 Cr.P.C Statement of PW.12. Ex.P.81/P.W.14Letter dt.04.04.2005 and LD.236 letter dt.30.09.2004 addressed by Mr.M.Venkata Shivarao to the Inspector of Police, CBI along with enclosures. Ex.P.82/P.W.14Letter dated 30.09.2004. Ex.P.83/P.W.14Certified copy of sale deed dated 24.06.1997. Ex.P.84/P.W.14Certified copy of sale deed dated 24.06.1997 bearing document No.409/99 along with corresponding encumbrance certificate forwarded to the Inspector of Police, CBI.

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Ex.P.85/P.W.14Market Value Assistance certificate dt.15.06.2005 issued by the then Sub Registrar Madhurawada. Ex.P.86/P.W.15 Application for opening Current Account No.94, dt.24.02.2000 in the name of M/s Coromandal Enterprises. Ex.P.87/P.W.15Photocopy of Partnership Deed dt.08.02.1999 pertaining to M/s Coromondal Enterprisers Ex.P.88/P.W.15Photocopy of Certificate of Registration with (CST) No. VSP/02/1/2092/97-98 in the name of M/s Coromondal Enterprises, dt.09.12.1997 Ex.P.89/P.W.15Photocopy of Certificate of Registration APGST No. VSP/02/1/3164/97-98 in the name of M/s Coromondal Enterprises, dt.09.12.1997 Ex.P.90/P.W.15Application for Credit Facilities in respect of M/s Coromandal Enterprises, Andhra Bank, dt.20.02.2000 Ex.P.91/P.W.15Appraisal Note dt.02.03.2000 of pertaining to M/s Coromandal Enterprises in Andhra Bank Ex.P.92/P.W.15Certified copy of Statement of Account No.94 pertaining to M/s Coromondal Enterprises for the period from 24.02.2000 to 11.03.2005. Ex.P.93/P.W.15Cheque No.189927 for Rs.25,60,200/- signed by Mr. D.V.Nageswara Rao (A4). Ex.P.94/P.W.15Original DDs under LD. 58, 59 and 62 and Certified copy in LD.60 Ex.P.95/P.W.15Cheque No.189930 for Rs.20,08,000/- i.e., LD.63 on 08.03.2000 signed by Mr. D.V. Nageswara Rao (A4). Ex.P.96/P.W.15DD.No.146872 in favour of N. S.Chakravarthy for Rs.5,00,000/- covered under Ex-P.2, DD.No.146873 in favour of N. S. Chakravarthy for Rs.5,00,000/- covered under Ex-P.3, DD.no.146874 in favour of D. Papa Rao for Rs.5,00,000/- covered under LD.66 and DD.No.146875 in favour of D. Papa Rao for Rs.5,00,000/- covered under LD.67. Ex.P.97/P.W.15Letters dt.31.03.2000 and 12.10.2000 addressed by Y.V. Nageswara Rao, Managing Partner Coromandal Enterprises to Branch Manager, Andhra Bank. Ex.P.98/P.W.15Appraisal Note, dt.17.10.2000. Ex.P.99/P.W.15Sanction Letter dt.17.10.2000. Ex.P.100/P.W.15Letter dt.12.04.2000 addressed by Manager, Karur Vysya Bank tothe Chief Manager, Andhra Bank. Ex.P.101/P.W.15Letter dt.21.04.2012 addressed to the Chief Manager, Andhra Bank. Ex.P.102/P.W.15Photostat copy of Circular, dt.21.05.1997. Ex.P.103/P.W.15A/c opening Form of C.A.No.95, dt.24.02.2000 of M/s Sai Priya Nest Private Limited. Ex.P.104/P.W.15Photocopy of Memorandum and Articles of Association of M/s Sai Priya Nests (P) Ltd. Ex.P.105/P.W.15Application form for credit facilities in respect of M/s Sai Priya Nests P. Ltd., dt.20.02.2000 (14 sheets). Ex.P.106/P.W.15Appraisal Note, dt.05.05.2000 M/s Sai Priya Nests P. Ltd.,

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Ex.P.107/P.W.15Attested copies of 6 Sale deeds submitted by the Guarantor pertaining to loan account of M/s Sai Priya Nests Private Limited. Ex.P.108/P.W.15Purchase Contract No. D020 dt.07.03.2000 from Raja Udyog, 33-A, Ganesh Krupa Society, 13th lane, Ramkrushna Paramhand Nagar, Near Vanaz, Kothrud, Pune. Ex.P.109/P.W.15Statement of Account of Sai Priya Nests private Limited (A8) for PC (Packing Credit) -1. Ex.P.110/P.W.15Certified copy of Statement of Account in the name of M/s Sai Priya Nests Pvt Ltd., for the period from 20.04.2000 to 17.03.2004. Ex.P.111/P.W.15Cheque bearing No.189964. Ex.P.112/P.W.15Statement of Account of Sai Priya Nests Private Limited (A8) for PC-2 Ex.P.113/P.W.15Three Cheques dt.05.05.2000 bearing No. 1899960 for Rs.4,01,200/-, Cheque No. 1899961 for Rs.4,01,200/- and Cheque No. 1899962 for Rs.10,03,000/- issued by A8 Company. Ex.P.114/P.W.15Pay Order No. 332107 dt.06.05.2000 for Rs.10,00,000/- payable to Smt. D.V.S.S.Lakshmi Mani. Ex.P.115/P.W.15Application for Demand Draft dt.06.05.2000 for Rs.4,00,000/- in favour of Mr. D. Papa Rao (A3). Ex.P.116/P.W.15Statement of Account of Sai Priya Nests Private Limited for PC- 5 (Packing Credit) Ex.P.117/P.W.15Cheque No. 189971 dt.29.08.2000 for Rs.4,00,000/- payable to Srinivas Exports. Ex.P.118/P.W.15Cheque No. 189975 dt.11.09.2000 for Rs.4,00,000/-. Ex.P.119/P.W.15Cheque No.180105 dt.19.09.2000 for Rs.50,000/- issued by A8 Company. Ex.P.120/P.W.15Statement of Account of Sai Priya Nests Private Limited for PC- 6 (Packing Credit) Ex.P.121/P.W.16GEQD Opinion dt.20.10.2005 along with reasons. Ex.P.122/P.W.16Letter dt.08.11.2005. Ex.P.123/P.W.17Specimen signatures. Ex.P.124/P.W.17Specimen signatures. Ex.P.125/P.W.15Application dated 28.06.2000 for opening Current Account No. 110 in the name of Saipriya Estates & Resorts ltd. Ex.P.126/P.W.15Certified copy of application dt.15.06.2000 for credit facilities in respect of M/s Sai Priya Estates & Resorts Ltd. Ex.P.127/P.W.15Extract of Board of Resolution dt.15.06.2000 in respect of M/s Sai Priya Estates & Resorts Ltd. Ex.P.128/P.W.15Certified copy of Document No. 417/1998 Ex.P.129/P.W.15Sanction Letter NO.1051/18/174/21 dt.31.07.2000 with enclosures. Ex.P.130/P.W.15General form of Guarantee dt.01.08.2000. Ex.P.131/P.W.15Attested copy of Statement of accounts of M/s. Sai Priya Estates & Resorts Ltd.,(A2). Ex.P.131A/PW15 First sheet of Ex.P.131 Master Sheet disclosing all the particulars of term loan.

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Ex.P.131-B/PW15Second sheet disclosing the term loan disbursement statement of A2 company. Ex.P.131-C/PW15The third sheet of Ex.P.131 Master Sheet of OCC limit of Rs.7 lakhs sanctioned to A2 Company. Ex.P.131-D/PW15The OCC limit disbursement statement of A2 Company in fourth sheet of Ex.P.131. Ex.P.132/P.W.15Attested copy of Pay order NO.147281 dt.02.08.2000 for Rs.9 Lakhs, LD.208 Attested copy of Pay order NO.147282 dt.08.2000 for Rs.9 Lakhs and LD.209 Attested copy of Pay order No.147283 dt.02.08.2000 for Rs.3 Lakhs. Ex.P.133/P.W.15Copy of Cheque No.232903 dt. 04.08.2000 for Rs.3 lakhs. Ex.P.134/P.W.15Copy of Pay order No.332291 dt.07.08.2000 for Rs.9 Lakhs in favour of Smt.D.V.S.S.Lakshmi Mani. Ex.P.135/P.W.15Copy of Pay order No.332329 dt.06.09.2000 for Rs.5 lakhs in favour of Spear & Co. Ex.P.136/P.W.15Copy of Pay order NO.332396 dt.04.10.2000 for Rs.2 in favour of Spear & Co. Ex.P.137/P.W.15Attested copy of circular no.083 dt.26.06.1995 issued by Head Office Andhra Bank. Ex.P.138/P.W.15Photostat copy of enquiry report dt.15.05.2003 in 10 pages submitted by PW.15 to Chief Vigilance officer Head office Andhra Bank, Hyderabad Ex.P.139/P.W.15Photostat copy of Enquiry Report dt.15.05.2003 in 12 pages submitted by PW.15 to Chief Vigilance officer Head office Andhra Bank, Hyderabad pertaining to loan account of M/s.Sai Priya Nest Pvt. Ltd. Ex.P.140/P.W.15Photostat copy of Enquiry Report dt.15.05.2003 in 14 pages submitted by PW.15 to Chief Vigilance officer Head office Andhra Bank, Hyderabad pertaining to loan account of Sai Priya Estates and Resorts ltd. Ex.P.141/P.W.18Corresponding seizure memos dt.11.04.2005, 15.04.2005, 10.05.2005 and 26.05.2005. Ex.P.142/P.W.18Managers Certificate of Valuation dt.07.10.2000. Ex.P.143/P.W.18RF 255 dt.03.03.2000. Ex.P.144/P.W.18RF 255 dt.08.03.2000. Ex.P.145/P.W.18Sanction letter no.1051/18/158/41 dt.02.03.2000. Ex.P.146/P.W.18Letters dt.30.04.2000, 30.06.2000 and 31.07.2000 covered under LDs.21 to 23 addressed by M/s Coromondal Enterprises to SSSIB, Gajuwaka. Ex.P.147/P.W.18Letter dt.07.03.2000 addressed by Union Bank of India Visakhapatnam to SSSIB Gajuwaka. Ex.P.148/P.W.18RF 255 dt.08.03.2000 disclosing the particulars of collateral securities furnished by Mr.D.Paparao (Accused No.3) for loan limits availed by M/s Sai Priya Nests. Ex.P.149/P.W.18Market value assistance certificate dt.15.06.2005 issued by Sub Registrar, Bheemunipatnam. Ex.P.150/P.W.18Legal opinion dt.24.02.2000 issued by Mr.G.V.Krishnarao Ex.P.151/P.W.18Valuation Report dt.02.03.2000 issued by Mr.T.V.B.Harinath (Accused No.7) pertaining to property covered under document no.957/98 (Ex.P.7) situated at Palangi village, Thanuku.

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Ex.P.152/P.W.18Valuation Report dt.02.03.2000 issued by Mr.T.V.B.Harinath (Accused No.7) pertaining to property covered under document No.1077/98 and 1078/98 situated at Palangi village, Thanuku. Ex.P.153/P.W.18RF 255 dated 07.03.2000 disclosing the particulars of collateral securities furnished by Mr.D.R.K.Prasad (Accused No.5) and Mr.V.V.Nageswararao(Accused No.4) for loans availed by M/s Sai Priya Nests. Ex.P.154/P.W.18Valuation Report dt.01.03.2000 issued by Mr.A.Janakirao (Accused No.6) pertaining to property covered under document No.2251/99, 2253/99, 2254/99 and 2255/99 situated at Ghambeeram village, Bheemunipatnam SRO. Ex.P.155/P.W.18Market value certificate dt.15.06.2005. Ex.P.156/P.W.18Office appraisal note and sanction letter. Ex.P.157/P.W.18Borrower statement of M/s.Sai Priya Nests pvt. Ltd., (Accused no.8) dt.28.04.2000. Ex.P.158/P.W.18Letter dt.02.05.2000 addressed by Accused No.8 company to the Branch Manager SSSIB, Andhra Bank. Ex.P.159/P.W.18Letter no.1051/18/161/3 dt.05.05.2000 pertaining to enhancement of PC/FDBP limit from Rs.70,00,000/- to 90,00,000/-. Ex.P.160/P.W.18RF 255 dt.20.05.2000 pertaining to properties situated in Rishikonda village offered as additional collateral security. Ex.P.161/P.W.18RF 255-B dt.05.05.2000 pertaining to properties situated in Ghambeeram village offered as additional collateral security by Mr.D.R.K.Prasad (Accused No.5) and Mr.V.V.Nageswararao (Accused No.4.). Ex.P.162/P.W.18RF 255-B dt.05.05.2000 pertaining to properties situated in Palangi village Thanuku offered as additional collateral security by Mr.D.Paparao (Accused No.3). Ex.P.163/P.W.18Photo copy of letter dt.12.04.2001 addressed by Raj Udyog disclosing amendment pertaining to shipping validity date as 20.08.2001. Ex.P.164/P.W.18RF 255 dt.02.08.2000 pertaining to properties situated in Rishikonda and Thallavalasa villages offered as collateral security by Accused No.5. Ex.P.165/P.W.18RF 255 dt.03.08.2000 pertaining to above mentioned properties situated in Rishikonda and Thallavalasa villages offered as collateral security by Accused No.5. Ex.P.166/P.W.18Valuation Report dt.01.07.2000 issued by Mr.A.Janakirao (Accused No.6) pertaining to property covered under document No.409/99 situated at Rishikonda Village. Ex.P.167/P.W.18Valuation Report dt.01.07.2000 issued by Mr.A.Janakirao (Accused No.6) pertaining to property covered under document No.417/98 situated at Thallavalasa village, Bheemunipatnam. Ex.P.168/P.W.18Market Value Assistance certificate dt.15.06.2005 issued by Sub Registrar, Bheemunipatnam. Ex.P.169/P.W.18Invoice No.89, 90 and 91 dated 03.08.2000 for Rs.9 Lakhs, Rs.8.50 Lakhs and Rs.15.80 Lakhs. Ex.P.170/P.W.18Receipts dated 07.08.2000 for Rs.9,00,000/-, Rs.9,00,000/-, Rs.9,00,000/- and Rs.6,00,000/-.

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Ex.P.171/P.W.18Letter dt.07.08.2000 issued by Accused No.2 company. Ex.P.172/P.W.18Letter dt.06.09.2000 issued by Accused No.2 company. Ex.P.173/P.W.18Letter dt.04.10.2000 issued by Accused No.2 company. Ex.P.174/P.W.18Letter dt.05.08.2000 issued by Accused No.2 company. Ex.P.175/P.W.18Valuation Report dt.02.03.2000 submitted by Mr.Harinath (Accused No.7) pertaining to properties offered as collateral securities for the loan availed by M/s. Coromandal Enterprises. Ex.P.176/P.W.18Attested copy of Manual of Instructions Volume 5 pertaining to Advance – General Aspects Ex.P.177/P.W.18Attested copy of export finance guidelines. Ex.P.178/P.W.18Letter dt.24.08.2000 received from M/s Sai Priya Nests Pvt., Ltd., Ex.P.179/P.W.18 Property statements submitted by Mrs.V.Lakshmi and Mr. V.V. Nageswararao (Accused No.4) pertaining to loan account of M/s Coromondal enterprises. Ex.P.180/P.W.18Properties statements submitted by Mr.V.Chintababu, Mr.D.Ramakrishna Prasad (Accused No.5), Mr.D.Paparao (Accused No.3) pertaining to loan account of M/s.Saipriya Nests pvt ltd., (Accused no.8). Ex.P.181/P.W.18Properties statements submitted by Mr.D.Ramakrishna Prasad (Accused No.5), Mr.D.Paparao (Accused No.3), Mrs.D.V.V.S.Lakshmi Mani and Mr.V.Chintababu. Ex.P.182/P.W.18Letter dt.02.08.2000 addressed by M/s.Sai Priya Resorts & Estates to Branch Manager, Andhra Bank Ex.P.183/P.W.18Letter dt.06.08.2001 addressed by M/s.Sai Priya Estates & Resorts to Branch Manager, Andhra Bank requesting to renew their OCC limit. Ex.P.184/P.W.18Letters dt.02.08.2000 and 14.08.2000 addressed by Branch Manager, Andhra Bank to M/s.Sai Priya Estates & Resorts pertaining to release of term loan of Rs.14 Lakhs and OCC limit of Rs.7 Lakhs. Letter dt.14.08.2000 addressed by Branch Manager, Andhra Bank to M/s.Sai Priya Estates & Resorts regarding disbursal of loan amount. Ex.P.15/P.W.18Quotations dt.20.03.2000 submitted by Bharani Enterprises, Spear & Co. Ex.P.186/P.W.18Receipt dt.20.06.2000 issued by Spear & Co. Ex.P.187/P.W.18Attested copies of Circulars No.352 ref.no.16/14 dt.29.01.1997. Circular No.169 ref.no.26/18 dt.17.10.1998 and Attested copy of page No.101 of hand book of instructions regarding engineers fee. Ex.P.188/P.W.18Acknowledgement from CBI dt.07.07.2004 and 08.07.2004. Ex.P.189/P.W.18Photo copy of letter dt.23.08.2000 received from Indaqua Exports pertaining to M/s. Saipriya Nest Pvt. Ltd. Ex.P.190/P.W.18Communication sanction and acceptance dt.07.08.2000 pertaining to Coromondal Enterprises. Ex.P.191/P.W.18RF 255-B dt.17.10.2005 pertaining to loan granted to M/s Coromondal Enterprises. Ex.P.192/P.W.18Application to open IDC dt.16.10.2000. Ex.P.193/P.W.18Borrower stock statement dt.17.10.2000.

PSJC/VSKP Page no. 146 C.C.No.08 of 2006

Ex.P.194/P.W.18RF in OCC 538 dt.17.10.2000. Ex.P.195/P.W.18RF 242 dt.07.10.2000 along with demand promissory note and acceptance. Ex.P.196/P.W.18Unit Inspection Report dt.11.03.2001 of properties and stocks of M/s Coromondal Enterprises by Accused No.1 Ex.P.197/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.198/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.199/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.200/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.201/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.202/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.203/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.204/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.205/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.206/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.207/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.208/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.209/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.210/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.211/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.212/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.213/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.214/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.215/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.216/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.217/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.218/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.219/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.220/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.221/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.222/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.223/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.224/P.W.18Portion of 161 Cr.P.C Statement of PW.18. Ex.P.225/P.W.20Certified copy of sale deed No.416/1998 dt.27.09.2004. Ex.P.226/P.W.20Certified copy of sale deed No.2246/1999 dt.29.09.2004. Ex.P.227/P.W.20Certified copy of dale deed No.2247/1999 dt.29.09.2004. Ex.P.228/P.W.20Certified copy of sale deed No.2248/1999 dt.29.09.2004. Ex.P.229/P.W.20Certified copy of sale deed No.2249/1999 dt.29.09.2004. Ex.P.230/P.W.20Certified copy of sale deed No.2250/1999 dt.29.09.2004. Ex.P.231/P.W.20Certified copy of sale deed No.2252/1999 dt.29.09.2004. Ex.P.232/P.W.20Encumbrance Certificate No. 3314 & 33145dt.15.06.2005. Ex.P.233/P.W.20Encumbrance Certificates No.3215, dt.15.06.2005. Ex.P.234/P.W.20Encumbrance certificates No.3217, dt.15.06.2005. Ex.P.235/P.W.20Encumbrance certificates No.3219, dt.15.06.2005. Ex.P.236/P.W.20Encumbrance certificates No.3221, dt.13.06.2005. Ex.P.237/P.W.20Encumbrance certificates no.3314, dt.15.06.2005. Ex.P.238/P.W.20Encumbrance certificates no.3315, dated 15.06.2005. Ex.P.239/P.W.21Original FIR dt.18.03.2004. Ex.P.240/P.W.21Specimen signatures of Accused No.4 Mr.V.V.Nageswararao. Ex.P.241/P.W.21Letter dt.02.09.2004.

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Ex.P.242/P.W.21Letter dt.18.08.2005 of Bangaramma Cold Storage Pvt. Ltd. Ex.P.243/P.W.21Deposit Slip, dt.11.03.2000 from Manager, Canara Bank, MVP Colony Branch, Visakhapatnam along with covering letter. Ex.P.244/P..21Provisional Registration Certificate dt.25.07.2005 of M/s. Coromandal Enterprises in favour of Accused No. 4 Ex.P.245/P.W.21Statement of account along with LD.86 covering letter. Ex.P.246/P.W.21Seizure memo dt.31.03.2005 covered under LD.96 Ex.P.247/P.W.21Account opening form, certificate of incorporation and connected documents pertaining to Sai Priya Estates & Resorts Ltd., from Karur Vysya Bank, Dabagardens, Visakhapatnam vide seizure memo dt.04.04.2005. Ex.P.248/P.W.21Certified copies of sale deeds no.1078/1998, 957/1998 and 1077/1998 along with corresponding Encumbrance Certificates from the Sub Registrar, Tanuku vide covering letter dt.31.03.2005. Ex.P.249/P.W.21Receipt memo dt.30.12.2004 Ex.P.250/P.W.21Copy of Purchase Contract dt.07.03.2000 Ex.P.251/P.W.21Extract of board resolution of Arihant Industrial Corporation dt.02.08.2000. Ex.P.252/P.W.21Copy of Circular Extract from paragraph no.3 to 6 in LD.272. Ex.P.253/P.W.21Bill for Valuation Report of M/s.Sai Priya Nests Pvt. Ltd.,

dt. 02.03.2000.

Ex.P.254/P.W.21Copy of letter dt.22.10.2001 addressed by Arihant Industrial Corporation to Branch Manager, SSSIB Andhra Bank and copy of letter dt. 28.09.2001 addressed by Branch Manager SSSIB to Arihant Industrial Corporation from Mr.Anand Pallacha of Arihant Industrial Corporation vide covering letter dt.16.06.2005 covered under LD.230. Ex.P.255/P.W.21Correspondence made by Arihant Industrial Corporation queries regarding M/s Sai Priya Estates & Resorts. Ex.P.256/P.W.21Copy of list of companies registered with Registrar of companies Andhra Pradesh, Hyderabad on 01.02.2000 along with connected documents and information pertaining to Arihant Industrial Corporation ltd. Ex.P.257/P.W.21Information pertaining to incorporation of A2 and A5 companies from Registrar of companies vide covering letter dt.09.09.2005 covered under LD.257. Ex.P.258/P.W.21Covering letter along with questionnaire and list of documents containing question signatures. Ex.P.259/P.W.21Enquiry Report dt.15.05.2003.

LIST OF DOCUMENTS MARKED ON BEHALF OF DEFENCE

Ex.D.1/PW.2The encumbrance certificate dated 20.06.2022 for the period from 01.01.1983 to 16.06.2022(Subject to objection). Ex.D.2/PW.12Market Value Assistance 9 in number.

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Ex.D.3/ PW.15Statement of Account of Sai Priya Estates and REsors Pvt. Ltd., with C.A.No. 01/00000160 for the period from 03.04.2003 to 17.10.2006. Ex.D.4/ PW.18Letter dt.19.10.2004 vide LR.No.151/18/174/486. Ex.D.5/ PW.18Letters dt. 26.06.2006 vide LR.No.1051/45/161/125 and LR.No.1051/45/161/126. Ex.D.6/ PW.18Photocopy of Short Inspection Report. Ex.D.7/ PW.21Photocopy of Valuation Report dt.05.01.2004. Ex-D.8Statement of Current Account No. C/1/95 from 24.02.2000 to 23.02.2004 pertaining to Accused No. 8 Company Ex-D.9Current Account bearing No. CA/01/95 pertaining to Accused No. 8 Company Ex-D.10Statement of Loan Account pertaining to Accused No. 8 Company with A/c No. EPC/01/20000006 from 03.06.2002 to 13.02.2004 Ex-D.11Statement of Loan Account pertaining to Accused No. 8 Company with A/c No. EPC/01/20000005 from 03.06.2002 to 23.02.2004. Ex-D.12Statement of loan account pertaining to Accused No. 8 with A/c No. EPC/01/20000002 from 03.06.2002 to 03.02.2004 Ex-D.13Statement of Cash Credit A/c No. OCC/01/00000536 pertaining to Accused No. 2 Company from 12.11.2001 to 10.08.2002 Ex-D.14Statement of Current Account No. CA/01/00000160 pertaining to Accused No. 2 Company from 10.08.2002 to 03.04.2004. Ex-D.15Statement of Cash Credit A/c No. CC/01/00000806 pertaining to M/s Coromandal Enterprises from 22.12.2001 to 11.03.2005 Ex-D.16Certified copy of Cash Deposit Vouchers dt.26.06.2006 for Rs.1,02,62,500/- each of Accused No. 8 Company and M/s Coromandal Enterprises Ex-D.17Statement of Term loan A/c No. 5S1/0120000042 pertaining to Accused No. 2 Company from 28.12.2001 to 19.01.2004 Ex-D.18Original Letter dt.26.06.2006 pertaining to M/s Coromandal Enterprises Ex-D.19Original Credit Voucher dt.26.06.2006 pertaining to M/s Coromandal Enterprises Ex-D.20Certified copies of correspondence made by APSFC with Andhra Bank SSI Branch, Gajuwaka relating to taking over of loan of Accused No. 2 Company.

Sd/- Smt. B. S. V. HIMA BINDU

Principal Special Judge for C.B.I., Cases,

Visakhapatnam // TRUE COPY //

PRINCIPAL SPECIAL JUDGE FOR CBI CASES,

PSJC/VSKP Page no. 149 C.C.No.08 of 2006

VISAKHAPATNAM

PSJC/VSKP Page no. 150 C.C.No.08 of 2006

CALENDAR

IN THE COURT OF THE PRINCIPAL SPECIAL JUDGE FOR C.B.I.

CASES, VISAKHAPATNAM.

Present: Smt. B. Satya Venkata Hima Bindu

Principal Special Judge for C.B.I. Cases,

Visakhapatnam.

Friday, this the 10 th day of March, 2023

C.C.No. 8/2006

1Serial Number of the CaseCC. 8/2006 2Name of the Police StationState Represented by the Inspector of & Crime Number Police, Central Bureau of Investigation, SPE :Visakhapatnam. 3Name of the Accused

1. Mr. Perandurai Vasudeva Srinivas S/o P. Vasudeva Rao, aged 49 years, Ex-Branch Manager, Andhra Bank, 12-11-1519, Boudha Nagar, Secunderabad

2. M/s Sai Priya Estates & Resorts Ltd., Represented by its Managing Director Sri Satyanarayana Rao, D.No.405,Mahalakshmi Apartments, Balaji Nagar, Siripuram, Visakhapatnam.

3. Mr. Dandamudi Papa Rao S/o late Satyanarayana Rao Aged 37 years, D. No. 402, Visalakshi Nagar, Visakhapatnam.

4. Mr. Valluripalli Venkata Nageswar Rao S/o Sri Papa Rao, aged 40 years, D. No. 9-42, Siripuram, Balaji Nagar, Visakhapatnam.

5. Mr. Dandamudi Rama Krishna Prasad S/o Late Satyanarayana Rao Aged 43 years, D. No. 405, Mahalakshmi Apartments, Balaji Nagar, Siripuram, Visakhapatnam.

6. Mr. Ayyagari Janaki Rao S/o late A. L. Narayana Rao, Aged 67 years, Flat No. 22, HIG, Lawsons Bay Colony, Visakhapatnam.

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7. Mr. Tanikella Venkata Bhaskara Harnath S/o late Mr. Subba Rao, Aged 66 years, D. No. 4-71-2, Lawsons Bay Colony, Visakhapatnam. (The case against Accused No. 7 was abated as per Docket Order, dt.07.10.2022).

8. M/s Sai Priya Nests Pvt., Ltd., Represented by its Managing Director Mr. Bandi Suryanarayana, D. No. 405, Mahalakshmi Apartments, Balaji Nagar, Siripuram, Visakhapatnam. 4Date of Offence During the period from 1999-2000 5Date of Apprehension-- 6Date of Commencement of 20.06.2022 trial 7Date of closure of Trial20.10.2022 8Date of Judgment10.03.2023 9Whether the accused are on On Bail bail/in Jail 10Plea of the accused and hisAccused No. 1 to 6 and 8 Pleaded not examination if any:guilty 11Finding of the CourtIn the result, Accused No.1 Found Not Guilty for the offence under Sec. 120-B, 420, 465 and 471 of IPC and Sec. 13 (2) r/w 13 (1) (d) of P.C., Act, 1988 and he is acquitted under Sec. 248 (1) Cr.P.C. Accused No. 3, 4 and 5 are Found Not Guilty for the offence under Sec. 120-B, 420, 465, 468 and 471 of IPC and Accused No. 6 is Found Not Guilty for the offence under Sec. 120-B, 420, 465 and 471 of IPC and they are acquitted under Sec. 248 (1) Cr.P.C. Accused No. 2 and 8 entities are Found Not Guilty for the offence under Sec. 120-B and 420 of IPC and are acquitted under Sec. 248 (1) Cr.P.C. The existing bail bonds of Accused No. 1, 3, 4 to 6, if any, shall stand cancelled. Accused No. 1 to 8 are directed to execute self bond for Rs.10,000/- with single surety for like sum each as contemplated under Sec. 437-A of Cr.P.C., for a period of six months to ensure their appearance before the Appellate Court.

12. Explanation for the delay, if any, in the Prl. CBI Court, Visakhapatnam:

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On filing the Charge sheet, the Principal Special Judge for CBI Cases,

Visakhapatnam, had taken the case on file on 13.02.2006 against Accused No. 1 under

U/sec 120-B, 420, 468, 471 r/w 465 IPC and for the offence punishable 13 (1) (d) r/w 13 (2) of P.C. Act, and under Sec. 120-B, 420, 468, 471 r/w 465 IPC against Accused

No. 2 to 8.. On 24.07.2006 charges under sections 120-B, 420, 465 and 471 of IPC and

Sec. 13 (2) r/w 13 (1) (d) of P.C., Act, 1988 were framed against Accused No. 1 and

Charges under Sec. 120-B, 420, 465, 468 and 471 of IPC against Accused No. 3, 4 and 5, Charges under Sec. 120-B, 420, 465 and 471 of IPC against Accused No. 6 and 7 and

Charges under Sec. 120-B and 420 of IPC against Accused No. 2 and 8 entities and the same were read over to the Accused in vernacular language and they pleaded not guilty and claimed the case to be tried. Thereafter on 21.10.2009 the learned counsel for

Accused No. 2 to 5 and 8 filed Crl.Petition No. 8460/2008 and the same is allowed by

Hon’ble High Court on 08.06.2009 by granting interim stay from 04.08.2009 and

thereafter extended the same till 22.01.2010. On 22.01.2010 Ld., Advocate for Accused represented that he came to know that stay order of Hon’ble High Court is vacated and awaited for orders from Hon’ble High Court and hence adjourned to 03.03.2010. On 03.03.2010 as per the stay matters list furnished by the Hon’ble High Court of AP., dt.18.01.2010, the Crl.Petition No. 8460/2008 shown as disposed off on 17.12.2009, therefore, there is no stay pending in this case, hence, posted the case for trial on 21.04.2010. From 21.04.2010 the matter is being adjourned from time to time from 21.04.2010 to 30.08.2011 and posted to 13.10.2011. On 13.10.2011 as the Presiding

Officer is transferred, the matter is posted from 03.11.2011 to 20.04.2012. On 20.04.2012 to Memo filed stating about the stay proceedings granted by Hon’ble High

Court vide Crl.RC.3474/2011, dt.21.12.2011 and posted to 06.06.2012 and thereafter filed various petitions before Hon’ble High Court for granting stay in this matter and lastly on 20.05.2022, interim stay against Accused No. 6 was granted by the Hon’ble

High Court of A.P., vide Orders in Crl.Petition No. 367/2019 dt. 30.01.2019 earlier.

Crl.Petition No.367/2019 was disposed of by the Hon’ble High Court on 13.04.2022 with a direction to dispose the case expeditiously within six months and issued trail schedule from 20.06.2022 to 23.06.2022.

The trial in this case was commenced from 20.06.2022 to 27.09.2022 and the

Prosecution examined PWs 1 to 21 and got marked Exs P.1 to P.259 and the counsel for

Accused No. 7 filed memo along with death certificate dt.04.09.2022 reporting the death of Accused No. 7 Mr. T. V. B. Haranadh on 21.09.2022 and prosecution evidence was

PSJC/VSKP Page no. 153 C.C.No.08 of 2006 closed and the matter is posted for 313 Cr.P.C., examination of Accused and for verification of Death Certificate of Accused No. 7. On 07.10.2022 the death of Accused

No. 7 is recorded and the case against Accused No. 7 in this case is abated and posted to 11.10.2022. On 11.10.2022 A1 to A3, A5, A6 and A8 examined under Sec. 313 Cr.P.C., explaining the incriminating evidence of prosecution witnesses against them, they denied the same and reported defence evidence and requested time for filing written statements and defence. On 20.10.2022 DWs 1 and 2 were examined and Exs D.8 to D.20 were marked and defence side evidence is closed and the matter is posted for arguments from 27.10.2022 to 26.12.2022 and on 30.12.2022 the matter is posted to judgment on 27.01.2023. On 27.01.2023 in view of pronouncing judgments in C.C.19/2014,

CC.21/2014, CC.22/2014 and CC 23/2014, the matter is posted for Judgment to

20.02.2023. On 20.02.2023 in view of preparation of pronouncement of judgments in batches of 11 cases i.e., from CC.16/2014 to CC.26/2014 till 16.02.2023, Judgment not ready and hence posted for judgment to 03.03.2023. On 03.03.2023 in view of voluminous documentary evidence for consideration, judgment not ready and hence, posted to 10.03.2023. On 10.03.2023 Judgment pronounced (Vide separate one).

In the result, Accused No.1 Found Not Guilty for the offence under Sec. 120-B, 420, 465 and 471 of IPC and Sec. 13 (2) r/w 13 (1) (d) of P.C., Act, 1988 and he is acquitted under Sec. 248 (1) Cr.P.C. Accused No. 3, 4 and 5 are Found Not Guilty for the offence under Sec. 120-B, 420, 465, 468 and 471 of IPC and Accused No. 6 is Found

Not Guilty for the offence under Sec. 120-B, 420, 465 and 471 of IPC and they are acquitted under Sec. 248 (1) Cr.P.C. Accused No. 2 and 8 entities are Found Not Guilty for the offence under Sec. 120-B and 420 of IPC and are acquitted under Sec. 248 (1)

Cr.P.C. The existing bail bonds of Accused No. 1, 3, 4 to 6, if any, shall stand cancelled.

Accused No. 1 to 8 are directed to execute self bond for Rs.10,000/- with single surety for like sum each as contemplated under Sec. 437-A of Cr.P.C., for a period of six months to ensure their appearance before the Appellate Court.

Sd/- Smt. B. S. V. HIMA BINDU

PRINCIPAL SPECIAL JUDGE FOR CBI CASES,

VISAKHAPATNAM

Copy to:

1. The Registrar (Judl.,), High Court of A.P., Amaravathi. (through CD)

2. The Inspector of Police, CBI, Visakhapatnam.

// TRUE COPY //

1 C.C. 13/2008/I CBI COURT/VSP

IN THE COURT OF THE I ADDL. SPECIAL JUDGE FOR C.B.I. CASES,

VISAKHAPATNAM.

Present:Smt.B.Satya Venkata Hima Bindu Prl. Spl. Judge for C.B.I. Cases, FAC I Addl. Spl. Judge for CBI Cases, Visakhapatnam.

Friday , this the 4 th day of March, 2022

C.C.No.13/2008

Between:

State represented by CBI, Visakhapatnam. …Complainant And:

1.Sri Tankala Bhanoji Rao, S/o late Bhaskar Rao, aged 56 years, General Manager(Planning & Statistics), Cotton Corporation of India, Navi Mumbai, R/o D.No.4-5-29/74/A, this door number was Changed during 2012 as 17-7-470, Ward No.4, Guntur. (A1)

2.Smt.Tankala Aruna, W/o Bhanoji Rao, Aged 42 years, Housemaker, R/o D.No.4-5-29/74A, this door number was Changed during 2012 as 17-7-470, Ward No.4, Guntur. (A2)

….. Accused Nos.1 and 2

This case came on 31.12.2021 for final hearing before me in the presence of

Sri K.Suryanarayana, Ld.Sr.Public Prosecutor for the Complainant and of

Sri N.V.V.Prasad, Advocate for Accused No.1 and of Sri P.Satya Srinivas, Advocate for

Accused No.2 and the matter having stood over for consideration till this day, this

Court doth the following:

J U D G M E N T

I.The accused Sri Tankala Bhanoji Rao and his wife Smt. Tankala Aruna herein after referred as A1 and A2 are prosecuted before this Court for the offences punishable under 13(1)(e) r/w 13(1)(2) of Prevention of Corruption Act, 1988 (herein after referred as PC Act) and Sec.109 of Indian Penal Code (herein after referred as IPC) 2 C.C. 13/2008/I CBI COURT/VSP

2.THE OVER VIEW OF THE PROSEUCTION CASE.

On 28.12.2005 FIR was registered against A1 and A2 in RC 27(A)/2005-

CBI/Visakhapatnam for the offence under Section 109IPC and Sec.13(1)(e) r/w 13(1)(2)

PC Act on the basis of source information that A1 while working as public servant with

Cotton Corporation of India acquired huge movable and immovable assets in his name and the name of his family members during the period December, 1993 to 26.01.2006.

He was alleged to have acquired assets to the tune of Rs.1,31,70,418/- against his total known source of income, which he could not able to satisfactorily account for.

3.As per the charge sheet A1 hailed from middle class family at Sompeta village

Srikakulam District of Andhra Pradesh and his wife A2 is a homemaker and her father was a jewellery merchant. They were blessed with two sons namely Deepak born in 1981 and Sandeep born in 1984. The elder son of the accused after completing MBA from North-west University London, UK returned to Indian and is employed with HSBC,

Hyderabad. Second son completed B.Com from TJPS College, Guntur in the year 2007. It is alleged that A1 acquired huge movable and immovable properties in his name and in the name of his wife A2, though his wife was not an earning member, however she had filed income tax returns with retrospective dates to prove fictitious income in her name and also had declared large amount of gold and silver articles in

Voluntary Disclosure of Income Scheme 1997 and laundered the illegal income by showing sale of gold ornaments at New Delhi even though there is family with business in gold and could have easily sold the same locally. They were accordingly alleged for committing the offence under Section 109 IPC and Sec.13(2) r/w 13(1)(e) of

PC Act.

4.As per the calculation in the initial charge sheet the assets of the accused at the beginning of the check period as under Statement-A is Rs.82,244/-. Assets at the end of the check period as under Statement-B is Rs.1,34,61,997/-. Income during the check period as under Statement-C is Rs.1,13,65,933/- and the Expenditure of the accused during the check period as under Statement-D is Rs.1,10,07,053/-. The total 3 C.C. 13/2008/I CBI COURT/VSP disproportionate assets was calculated as {(B-A)+D-C} Rs.1,30,20,873/- of his total income.

5.After commencement of the trial supplementary charge sheet was filed by the investigating officer in pursuance of the permission obtained from this Court vide orders in Crl.M.P.1487/2019 dated 29.10.2019. As per the averments of the supplementary charge sheet which was clubbed with the main charge sheet vide

Order dated 08.10.2021, Item No.57 i.e., cash of Rs.1,49,545/- which was seized from the house of A1 on 25.01.2006 was added to the Statement –B i.e., Assets at the end of the check period and the disproportionate assets were recalculated as follows:

AAssets at the beginning of theRs.82,244/- check period Statement –A

BAssets at the end of the checkRs.1,36,11,542/- period Statement-B

CAssets acquired at the end of theRs.1,35,29,298/- check period B-A

DIncome during the check periodRs.1,13,65,933/- Statement –C

EExpenditure during the checkRs.1,10,07,053/- period Statement –D

FLikely savings (Statement D-C)Rs.3,58,880/-

GDisproportionate assets Rs.1,31,70,418 {(B-A)+D-C}

HPercentage of disproportionate115.87% assets {(B-A)+D-C} / Cx100

6.Therefore the brief accusation against the A1 is that he committed the offence punishable under Section 13(2) r/w 13(1)(e) of PC Act having acquired disproportionate assets to the extent of Rs.1,31,70,418/- during the check period December, 1993 to 26.01.2006 in his name and in the name of his family members and that his wife A2 abetted the commission of said offence and thereby committed the offence under

Section 109 IPC.

Framing charges against the accused :

4 C.C. 13/2008/I CBI COURT/VSP

7. The case taken on file against A1 for the offence under Section 13(2) r/w 13(1)

(e) of PC Act against A1 and for the offence punishable under Section 109 IPC against A2 by this court and directed summons to the accused. The accused appeared

before this Court on 17.10.2008 and they were furnished with the case documents as

provided under Section 207 of Cr.P.C. and were examined under Section 239 Cr.P.C.

Thereafter on29.06.2009 after hearing learned Sr.Public Prosecutor for CBI and learned counsel for accused, charges were framed against A1 for the offence under

Section 13(2) r/w Sec.13(1)(e) of the PC Act and against A2 for the offence under

Section 109 IPC r/w 13(2) punishable under Section 13(1)(e) of PC Act, read over and explained to them in Telugu for which they pleaded not guilty and claimed to be tried.

Evidence on record:

8.Recording of evidence in this case was commenced on 04.03.2013 and the prosecution examined PW.1 to PW.43 and closed its side evidence. After the initial closure of the prosecution side evidence, the accused were examined under Sec.313

Cr.P.C on 29.10.2014 explaining them the incriminating material in the prosecution side evidence, for which the accused admitted part of the evidence as true and denied the rest. The defence side evidence was commenced on 05.01.2015 examining DW.1 to DW.15. Subsequently the matter was posted for arguments PW.31 was recalled and additional witnesses PW.44 to PW.51 examined by the prosecution. The accused was further examined under 313 Cr.P.C on 05.01.2017 and thereafter DW.16 was examined in defence. When the matter was closed for arguments the prosecution once again recalled PW.48 for further chief examination and the accused were further examined under Section 313 Cr.P.C. on 21.09.2017. Thereafter the prosecution once again recalled PW.25 and thereafter supplementary charge sheet was filed by the investigating officer, in pursuance of which the prosecution further examined PW.52 to

PW.55. The accused once again on 01.12.2021 were examined under Section 313

Cr.P.C explaining the incriminating material against them in the additional evidence adduced by the prosecution. The accused denied the same and reported no further 5 C.C. 13/2008/I CBI COURT/VSP defence evidence. Comprehensively the prosecution in total examined PW.1 to PW.55 and got marked Ex.P1 to Ex.P.130 including Ex.P62-A to Ex.P62-J, Ex.123-A to

Ex.123-E along with M.O.1 cash of Rs.1,49,545/- . DW.1 to DW.16 were examined on defence side along with Ex.D1 to D7, Ex.X1 to Ex.X14 of which Ex.D1, Ex.D2, Ex.D3,

Ex.X1 to Ex.X7 were marked through PW.23, PW.32, PW.43 and Ex.P12. Ex.P58 to

Ex.P61 were marked with consent of both sides.

Arguments:

9.The learned Sr.Public Prosecutor of CBI and the learned counsels for A1 and

A2 extending their elaborated arguments in addition to the written argument filed on record. The learned Sr.Public Prosecutor emphasized on the evidence of PW.1 to

PW.55 relating to the documentary contents under Ex.P1 to Ex.P130, specifically pressing upon the requirement of sanction under Ex.P71 and summed up his arguments stating that the entire evidence of the prosecution sufficiently proved beyond reasonable doubt that A1 acquired disproportionate assets to the tune of Rs.

Rs.1,31,70,418/- for which he could not satisfactorily account for and thereby committed the offence under Section 13(1)(e) punishable under Section 13(2) and that

A2 being the wife of A1 abetted the same. The prosecution relied upon the following

Judgments with regard to determination of check period, calculation of domestic expenditure, burden of proof etc.,

1.Mahesh Chandra Vs. State of U.P and another 1993 Crl. L.J page No.1151 dt.24.08.1992

2.Sajjan Singh Vs. State of Punjab AIR 1964 (SC) 464

3.Krishnanand Vs. The State of Madhya Pradesh

4.State of Madhya Pradesh Vs. Aswadh Kishore Gupta

5.State of Vs. Bharat Chandra Roul 1995 Crl.L.J.Page No.2417

6.CSD Swamy Vs. The State 1960 AIR 1960(1) 461

7.P.Nallammal Vs. State 1999(6) SCC 559

8. State of Bihar Vs. Lalu Prasada 2008 Crl.L.J.2433 6 C.C. 13/2008/I CBI COURT/VSP

9.R.Janakiraman Vs. State rep, Inspector of Police 2006(1) Crl.L.J.1232

10.K.Poonnusamy Vs. State of Tamil Nadu CA 760 of 2001, 2001(5) Supreme 484

11.State of Tamilnadu Vs. N.Suresh Rajan 2014 CRl. L.J.1444 (SC)

12.State of Karnataka Vs. Selvi J.Jayalalitha & Others Surpreme Court

Defence side arguments:

10.The accused in defence straightly challenged the legality of issuing sanction order under Ex.P71 by PW.31 which was a primary ingredients for prosecuting a public servant. The counsel for the accused disputed with the competency of PW.31 and also the legality Ex.P71 sanction order and pleaded in view of invalid sanction the entire trial is nonest and that the accused is liable to the acquitted. The counsel for the accused relied upon the following set of Judgment on this aspect:

1. Gokulchand Dwarkadas Morarka V/s King, AIR 1949 PC 82

2. Jaswant Singh V/s State of Punjab , AIR 1958 SC 124

3. Mohd.Iqbal Ahmed V/s State of A.P AIR 1979 SC 677

4. State through Anti-Corruption Bureau, Govt. of Maharastra V/s Krishanchand Khushalchand Jagtiani, AIR 1996 SC 1910

5. State of Punjab V/s Mohd.Iqbal Bhatti (2009) 17 SCC 92

6. Satyavir Singh Rathy ACP V/s State, AIR 2011 SC 1748

7. State of Maharastra V/s Mahesh G.Jain, (2013) 8 SCC 119

8. 2008(1) SCC (Crl) 130 17, Crl.AP No.933C/w 835 of 2010 dated 01-03-2010 of

Hon’ble High Court of Karnataka

9. Hon’ble Supreme Court of India in Crl.AP No.1872 and 1873 of 2014 10.2015 SCC [crl] 344 Central Bureau of Investigation v. Ashok Kumar Agarwal 11.Nanjappa v State of Karnataka [2016] 2 [SCC] CRL 360 12.2016[2] ALT [Crl] 1478 SC 13.AIR 2005 (SC) Babu Thomas vs. State of Goa.

14.Central Bureau of Investigation Vs. Ashok Kumar Agarwal 2015 SCC [Crl]344 15.Anwar P.V Vs. P.K.Basheer and others 2015 [SCC] Crl 354 7 C.C. 13/2008/I CBI COURT/VSP

11.The learned counsel for defence elaborately dealt with the each individual item shown in Statements B, C and D wherein the items in Statement- A are undisputed. All the items pertaining to the income, expenditure, assets and pecuniary resources attributed to A1 and A2 are explained on the aspect of law and fact in an attempt to show that the properties held by the accused are acquired out of his legitimate source of income. The counsel for accused placed reliance and large number of authorities listed as follows on question of validity of sanction referred above and also relating to valuation of building and application of State Government rates and also pertaining to 10% benefit from the total income received:

1. Commissioner of Income Tax Vs. Raya R.Govindarajan, in the Honble High Court of Judicature at Madras (Tax case (Appeal) No.255 of 2014).

2. Pozir Uddin Ahemed Vs. Union of India (Represented by CBI) in the Hon’ble Gauhati High Court(Criminal Appeal No.09/2010) Date of Judgment 05.11.2013.

3. Dy.Commissioner of Income Tax Vs. C.S.Daniel in the Hon’ble High Court of Kerala (IT Appeal No.251 of 2012/11th November, 2013)

4. Commissioner of Income Tax Vs. K.Jayakumar, in the Hon’ble High Court of Judicature at Madras (Tax Case (Appeal) No.185 of 2010)

5. The Income Tax Officer Vs. S.Ganesan in the Income Tax Appellate Tribunal ‘A’ Bench :Chennai(IT Appeal No.71/Mds/2004)

6. Asst. Commissioner of Income Tax Vs. Sujir Prakash Nayak in the Hon’ble High Court of Karnataka, Bangalore (IT Appeal No.477 of 2003)

12.The learned counsel for accused disputed with clubbing of property standing in the name of A2 and other family members to that of the assets of the A1 and contended the same to be without any evidence and bad in law. It is submitted that the investigating agency willfully suppressed the income of A2 and other family members of A1 with an endeavor to misrepresent the items in Statements A to D to persuade the Court to believe the same was disproportionate assets. It is further argued that the entire income opposed by the prosecution was accounted satisfactorily and duly declared with the income tax authorities as required under the law and was accepted by his statutory authority and the prosecution intentionally suppressed the real facts by maliciously inflating the value of assets and fabricating 8 C.C. 13/2008/I CBI COURT/VSP the valuation reports. The credibility of witnesses and their testimony was arrived as unreliable and suspectable to doubt and the much of the documentary evidence was argued to be in admissible and irrelevant as per law. Dealing with the charge of abatement by A2 the learned counsel for A2 empathically argued that the prosecution failed to provide any evidence on record to prove the alleged abatement and only to cover up the lapse in the investigation and to magnify the assets A2 was dragged into the prosecution. Therefore the defence arguments were concluded pleading that inspite of the defective prosecution evidence, the oral and documentary evidence adduced by the accused was sufficient to discharge the burden caste on the accused with the standard of preponderance of probability under the said circumstances and pleaded that they are entitled for acquittal of charges leveled against them.

13. This Court resortedcareful attention to the oral and written arguments advanced by both sides, after perusal of oral and documentary evidence adduced on record, the following points were framed for consideration:

1) Whether the sanction for prosecution of A1 is in accordance with law?

2) Whether the prosecution proves beyond all reasonable doubt that A1 being a public servant acquired and possessed in his name, in the name of

A2 and family members, assets, pecuniary resources to the tune of

Rs.1,31,70,418/- disproportionate to his known source of income, for which he could not satisfactorily account for during the check period from

December, 1993 to 26.01.2006?

3) Whether the prosecution proved the guilt of A1 beyond all reasonable doubt for the offences punishable under Section 13(2) r/w 13(1)(e) of P.C Act ?

4) Whether the prosecution proves beyond all reasonable doubt that A2 abetted the commission of above offence by intentionally aiding A1 in acquisition and possession of pecuniary resources and assets disproportionate to his known source of income?

5) Whether the prosecution proved the guilt of A2 beyond all reasonable doubt for the offences punishable under Section 109 IPC r/w 13(2) r/w 13(1)(e) of

P.C Act ?

POINT No.1:

9 C.C. 13/2008/I CBI COURT/VSP

1) Whether the sanction for prosecution of A1 is in accordance with law?

14. The accused No.1 worked as General Manager(Planning and Statistics) in

Cotton Corporation of India and is a public servant. Accordingly sanction under Section 19 of P.C Act is pre-requisite to launch the prosecution against A1. The prosecution in order to substantiate valid sanction examined the Chairman-cum-Managing Director,

Cotton Corporation of Mumbai as PW.31 and got marked the sanction order as

Ex.P71. During chief examination PW.31 deposed that in the year 2007 the

Chairman-cum-Managing Director was the competent authority to remove the General

Manager of Cotton Corporation of India and reiterated his acquaintance with A1 who worked in the capacity of General Manager, Cotton Corporation of India. According to him during the year 2007 he received FIR, investigation report of the CBI along with the enclosures disclosing the assets acquired, expenditure incurred etc., from the CBI,

Visakhapatnam with request to accord sanction for the prosecution of A1. He stated that he have carefully gone through the document and enclosures received by him and applied his mind, having found prima facie case of disproportionate assets accorded sanction for prosecution of A1 on 31.12.2007. The sanction order was marked as

Ex.P71 was referred supra.

15.The accused No.1 seriously disputed the validity of Ex.P71 on various grounds including the competency of PW.31 and application of his mind and independent decision in deciding to accord sanction for the prosecution. Placing reliance on case law between Babu Thomson vs. State of Goa AIR 2005 (SC) submitted that there was no valid sanction order under the law as per Ex.P71 and very cognizance by this court was without jurisdiction.

16. It is argued that the Cotton Corporation of India is a Government company registered under Section 685 of Companies Act and it is having Board of Directors and all action including appointment and removal of employees in the Cadre of General

Manager is solely rested with the Board of Directors. The fact that the Cotton

Corporation of India is a Government companyhaving Board of Directors is admitted 10 C.C. 13/2008/I CBI COURT/VSP by PW.31 in his cross examination. The counsel for A1 emphasized the admission made by PW.1 in his cross examination that “ It is true that in absence of delegating power of removal on a particular authority by the Board of Directors such authority is not competent to remove the officers. It is contended that the admission made by

PW.31 sufficiently proves that Board of Directors are alone competent to remove A1 from the role of service and no delegation of powers to PW.31 by the Board of

Directors was filed by the prosecution and that PW.31 is not competent to accord sanction. The further contention of the defence is that PW.31 has not received any material from CBI and received only a draft sanction order from the CBI and he simply reproduced the contents of model sanction in verbatim into Ex.P71, signed and sent the same to CBI. The counsel for A1 drawn the attention of this Court to the draft sanction order sent by CBI available in Ex.X11 sanction file and argued that Ex.P71 is exact replica of the draft order forwarded by CBI and it clearly established that

PW.31 did not receive any material and did not examine any material pertaining to this case before issuing Ex.P71 and that inclines the non application of mind by

PW.31. The relevant case laws were submitted emphasising the principle that the non application of mind by the competent authority while according sanction for prosecution would make it invalid. The final objection raised by the A1 is that Ex.P71 sanction order was prepared at Mumbai on 31.12.2007 and PW.43 i.e., the investigating officer signed the charge sheet on 31.12.2007 and that the initial charge sheet does not disclose either PW.31 as witness or Ex.P71 in the list of document.

The counsel for A1 attempted to show that the charge sheet was prepared by investigating officer even without receiving the sanction order against A1 which is nothing but the complete violation of fundamental principles of criminal justice

17.Referring to the contentions raised by the learned counsel for the accused that the initial argument is that PW.31 is not the competent authority to issue Ex.P71 sanction order. Admittedly PW.31 Subash Chander Grover is the then Chairman-cum-

Managing Director of Cotton Corporation of India, Mumbai. As per the version of the accused it is only the Board of Directors competent under CCA Rules to remove A1.

11 C.C. 13/2008/I CBI COURT/VSP

This specific denial was not suggested to PW.31 in his cross examination. Further there is an admission by PW31 “It is true that in the year 2007 I was the competent authority under CCA Rules Ex.D1 to initiate disciplinary action against the General

Managers who violated the said rules. In this context the contents of Ex.D1 Conduct

Discipline and Appeal Rules pertaining Cotton Corporation of India Ltd, marked through PW.31 attracts much relevance. Before going into the merits of ExD1 it is warranting to reconsider the provisions of As per Section 19 of PC Act , extracted below for better appreciation :

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, of that Government;

(b) in the case of a person who is employed in connection with the affairs of a State and is not removable from his office save by or with the sanction of the State Government, of that Government;

(c) in the case of any other person, of the authority competent to remove him from his office. (2) Where for any reason whatsoever any doubt arises as to whether the previous sanction as required under sub-section (1) should be given by the Central Government or the State Government or any other authority, such sanction shall be given by that Government or authority which would have been competent to remove the public servant from his office at the time when the offence was alleged to have been committed. (3) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),—

(a) no finding, sentence or order passed by a special Judge shall be reversed or altered by a court in appeal, confirmation or revision on the ground of the absence of, or any error, omission or irregularity in, the sanction required under sub-section (1), unless in the opinion of that court, a failure of justice has in fact been occasioned thereby;

(b) no court shall stay the proceedings under this Act on the ground of any error, omission or irregularity in the sanction granted by the authority, unless it is satisfied that such error, omission or irregularity has resulted in a failure of justice;

(c) no court shall stay the proceedings under this Act on any other ground and no court shall exercise the powers of revision in relation to any interlocutory order passed in any inquiry, trial, appeal or other proceedings. (4) In determining under sub-section (3) whether the absence of, or any error, omission or irregularity in, such sanction has occasioned or resulted in a failure of justice the court shall have regard to the fact whether the objection could and 12 C.C. 13/2008/I CBI COURT/VSP should have been raised at any earlier stage in the proceedings. Explanation.— For the purposes of this section,—

(a) error includes competency of the authority to grant sanction;

(b) a sanction required for prosecution includes reference to any requirement that the prosecution shall be at the instance of a specified authority or with the sanction of a specified person or any requirement of a similar nature.

18.The above section of law postulate that the authority competent to remove the person employed is entitled to issue sanction for prosecuting him for offences under PC Act. As per the schedule annexed to Ex.D1 the Managing Director is the

Disciplinary Authority entitled toextend power against Chief General Manager and equivalent ranks for imposing major/minor penalties. The Board of Directors is the

Statutory Appellate Authority/ Reviewing Authority against the proceedings or orders of disciplinary authority. Further Rule 24 envisages that competent authority will also the be called the disciplinary authority for the purpose of this rule and it may impose any penalties specified in Rule 23 on any employee. Accordingly the close perusal of

Rule 23 elicit that the employees are subjected to major and minor penalties for misconduct committed by them or for any other good and sufficient reasons wherein the major penalty includes removal from service and dismissal from service.

Accordingly PW.31 being the competent disciplinary authority is entitled to remove

A1 from services as per the contents of Ex.D1 and therefore his competency cannot be disputed otherwise . Further the Board of Directors being only Appellate/Reviewing

Authority cannot be substituted to the status of disciplinary authority or sanctioning authority as required under Section 19 of PC Act. Further the office proceedings with regard to issuance of sanction for prosecuting A1 issued by General Manager (Vigilance/HRD)under Ex.X11 categorically discloses that “As per the schedule appended to CCI(CDA Rules, 1975) the Managing Director or any one duly authorized to look of his duties as Disciplinary Authority shall be the Disciplinary Authority upto and including CGM andequivalent rank for minor and major penalties. Accordingly the CMD, CCI is the competent authority for issuing sanction order in this case.

Therefore PW.31 is held has competent authority under law to issue sanction against 13 C.C. 13/2008/I CBI COURT/VSP

A1. and the contention of the accused on this aspect is answered in favour of prosecution.

19.The next contention of the accused is about validity of ExP71 . The assertion is that Ex.P71 is in same verbatim with draft sanction order and PW.31 did not apply his mind while according sanction to prosecute A1. The case law between Mohd.Iqbal

Ahmed V/s State of A.P AIR 1979 SC 677 was cited wherein the Hon’ble Apex Court while disposing an appeal against conviction and sentence passed against the

Appellant, allowed the appeal with a finding that the prosecution launched in that specific case was without valid sanction and therefore the cognizance taken by the

Special Judge was completely without jurisdiction. The principle upheld in the relevant

case is that the grant of sanction is not an idle formality but a solemn and sacrosanct act which affords protection to government servants against frivolous prosecutions and must therefore be strictly complied with before any prosecution could be launched against public servants. It is further held that any case instituted without proper sanction must fail because this being a manifest defect in the prosecution, the entire proceedings are rendered void ab initio. In Nanjappa v State of Karnataka [2016] 2 [SCC] CRL 360. referred in defence Hon’ble Apex Court held that “ the absence of a sanction order implies that the court was not competent to take cognizance or try the accused. Resultantly, the trial by an incompetent Court was bound to be invalid and non-est in law”.

20. In the same context it is incumbent to refer the another important case law reported in (2013) 8 SCC 119 referred by learned defence counsel. In State of

Maharastra V/s Mahesh G.Jain the Hon’ble Apex Court referring to series of

Authorities held in between Jaswanth Singh Vs. State of Punjab; Basdeo Agarwala vs.

Emperor; Gokulchand Dwarkadas Morarka V/s The King; Mohd.Iqbal Ahmed V/s State of A.P; C.S.Krishna Murthy Vs. State of Karnataka; R.Sundararajan Vs. State; and

Kootha Peramal Vs.State culled out the following principles:

14 C.C. 13/2008/I CBI COURT/VSP

a) It is incumbent on the prosecution to prove that the valid sanction has been granted by the sanctioning authority after being satisfied that a case for sanction has been made out.

b) The sanction order may expressly show that the sanctioning authority has perused the material placed before him and, after consideration of the circumstances, has granted sanction for prosecution.

c) The prosecution may prove by adducing the evidence that the material was placed before the sanctioning authority and his satisfaction was arrived at upon perusal of the material placed before him.

d) Grant of sanction is only an administrative function and the sanctioning authority is required to prima facie reach the satisfaction that relevant facts would constitute the offence.

e) The adequacy of material placed before the sanctioning authority cannot be gone into by the court as it does not sit in appeal over the sanction order.

f) If the sanctioning authority has perused all the materials placed before him and some of them have not been proved that would not vitiate the order of sanction.

g) The order of sanction is a pre-requisite as it is intended to provide a safeguard to public servant against frivolous and vexatious litigants, but simultaneously an order of sanction should not be construed in a pedantic manner and there should not be a hyper-technical approach to test its validity.

21.Rendering due consideration to primordial rules guiding the scope of valid sanction for prosecution of public servant it is to be looked into whether the sanction obtained by prosecution under Ex.P71 was valid or not . Accordingly the close perusal of Ex.X11 discloses that after appraising the office note seeking sanction, PW.31 specifically endorsed the file in his own handwriting holding that he has carefully gone through the relevant papers, record placed in files on subject in case in RC 27(A)/2005- 15 C.C. 13/2008/I CBI COURT/VSP

CBI/VSP dated 11.12.2007 and he was of considered opinion they were sufficient grounds for launching prosecution against A1 under 13(1)(e) r/w 13(2) of Prevention of

Corruption Act and accordingly issued sanction order. The office note and also corresponding made by General Manager(Vigilance) categorically discloses that each and every aspect with regard to disproportionate assets, evidence allegations against

A2 for intentionally aiding her husband etc were apprised ., The brief endorsement by PW.31 in the office file with regard to the entire allegations against A1 specifically elicit that he verified the material forwarded by the investigating officer and having applied his mind satisfy with the prima facie record incriminating against the accused and issued sanction. The next question for determination that follows is what should be the material that to be forwarded to the sanctioning authority . In catena of cases the

honorable apex court prescribed the reasonable parameters to suffice this requirement.

In Satyavir Singh Rathy ACP V/s State, AIR 2011 SC 1748. the Hon’ble Apex Court held that the sanction order issued by Lt.Governor based upon the investigation report and draft sanction order, had enough material for issuing valid sanction as they refers to entire evidence collected in the matter. Accordingly the material forwarded to sanction authority shall be substantiated qualitatively and the criminal acts attributed to the accused are to be taken for considering the question whether sanction for prosecution was or was not necessary. The contents of ExP71 in this case on hand discloses that all necessary documents like FIR, Statement of witnesses and relevant documents were forwarded to PW.31 and that PW.31 after studying the material adequately applied his mind to conclude reasonable substance to proceed against the accused A1. Therefore though there may be some resemblance with regard to the material facts and calculation averred in the charge sheet that does not itself establish basis to conclude that the sanction order issued against A1 is in same verbatim as that of draft sanction.

22.In State through Anti-Corruption Bureau, Govt. of Maharastra V/s

Krishanchand Khushalchand Jagtiani, AIR 1996 SC 1910, the Hon’ble Apex Court held that “it must be remembered that the object of Section 6(1)(C) or for that 16 C.C. 13/2008/I CBI COURT/VSP matter Section 197 of the Criminal Procedure Code is that there should be no unnecessary harassment of public servant; the idea is to save the public servant from the harassment which may be caused to him if each and every aggrieved or disgruntled person is allowed to institute a criminal complaint against him. The protection is extended against prosecution even by a State agency but the protection is not absolute or unqualified. If the authority competent to remove such public servant accords previous sanction, such prosecution can be instituted and proceeded with. The law presumes - and the Court must also presume until the contrary is established - that such authority will act fairly and objectively and will accord sanction only where he is satisfied that the charge(s) against the public servant requires to be enquired into by a

Court. The authority is presumed to, and expected to, act consistent with public interest and the interest of law - both of which demand that while a public servant be not subjected to harassment, genuine charges and allegations should be allowed to be examined by the Courts”. The precedent laid by the Honble Apex Courts extends a presumption rebuttable, in favour of authority issuing sanction and the sanction order cannot be construed in a pedantic manner unlike some efficient material is ellicited to rule out its veracity and validity., which remained scarce in this case .Therefore as held by Hon’ble Apex Court in Mohd.Iqbal Ahmed V/s State of A.P referred supra , the prosecution convincingly proved that a valid sanction had been granted by the sanctioning authority i.e., PW31 after it was satisfied that a case had been made out against A1 constituting the offence under Sec.13(1)(e) r/w 13(2) of P.C Act (i) by producing the original sanction under ExP71 which itself contains the facts constituting the offence and the tracts of satisfaction (ii) by adducing evidence showing the facts placed before the authority and the satisfaction arrived at by it. Therefore both the contentions raised by the accused on the above aspect are rejected.

23.The final objection raised by the accused is that charge sheet was initially filed without sanctioning and issuing of sanction is subsequent to filing of charge sheet and it reasonably arises presumption the investigating officer filed charge sheet with premise that sanction would be automatically obtained. As verified from Ex.X11 the 17 C.C. 13/2008/I CBI COURT/VSP correspondence requesting sanction was communicated to PW31 through Vigilance

Department, CCI even prior to 31.12.2007. The fact that Pw.31 issued sanction on the day when the charge sheet was filed before this Court initially does not vitiated the sanctity of Ex.P71, wherein the return objection was complied subsequently before taking cognizance by this court . Hence in view of discussion above this court of reasonable opinion that the sanction for prosecution of A1 is in accordance with law.

24.POINT No.2:

2)Whether the prosecution proves beyond all reasonable doubt that A1

being a public servant acquired and possessed in his name, in the name of

A2 and family members assets, pecuniary resources to the tune of

Rs.1,31,70,418/- disproportionate to his known source of income during

the check period from December, 1993 to 26.01.2006, for which he could

not s satisfactorily account for?

Evidently the charges against the accused are under 13(1)(e) punishable under section 13(2) of P.C Act stands as follows:

13. Criminal misconduct by a public servant.— (1) A public servant is said to commit the offence of criminal misconduct,—

a) Xxxxx

b) Xxxxx

c) Xxxxx

d) Xxxxx

e) if he or any person on his behalf, is in possession or has, at any time during the period of his office, been in possession for which the public servant cannot satisfactorily account, of pecuniary resources or property disproportionate to his known sources of income.

Explanation.—For the purposes of this section, “known sources of income” means income received from any lawful source and such receipt has been intimated in accordance with the provisions of any law, rules or orders for the time being applicable to a public servant.

25.In the light of above provision of law in case of disproportionate assets it is for the prosecution to establish that the pecuniary assets acquired by the public servant or any person on his behalf during the period of his office are disproportionately larger than his known sources of income. The accepted formulae for calculating disproportionate assets is [(B-A)+D]-C wherein Statement-A reflects the assets in the possession of the accused before the check period, Statement -B is assets in the 18 C.C. 13/2008/I CBI COURT/VSP possession of the accused after the check period, Statement -C reflects income of the accused during the check period and Statement -D is the expenditure of the accused during the check period. The essential difference between Statement-A and

Statement-B reflects the assets acquired by the accused during the check period.

The same is added to his expenditure and the total is subtracted from his total income.

The consolidate difference is ascertained as disproportionate assets, which the accused has to account for.

26. In application of the above formula initially it is to ascertain exact assets of the accused before and at the end of the check period as per Statements A and B so as to calculate the assets acquired during the check period. Thereafter the exact income and expenditure of the accused is required to be determined. Accordingly for brevity the

Point No.1 is divided into following sub points.

Sub points (i to iv) i.Whether the accused possessed assets worth Rs.82,244/- as shown in Statement-A at the beginning of the check period? ii.Whether the accused possessed assets worth Rs.1,36,11,542/- as shown in Statement-B at the end of the check period? iii. Whether the income of the accused is Rs.1,13,65,933/- as shown in Statement-C during the check period? iv.Whether the expenditure of the accused is Rs.1,10,07,053/- as shown in Statement-D during the check period?

27.Sub Point-(i) i. Whether the accused possessed assets worth Rs.82,244/- as shown

in Statement-A at the beginning of the check period?

According to the prosecution the total value of the assets in the name of the accused at the beginning of the check period from December, 1993 to 26.01.2006 is

Rs.82,244/- . The description of the items which were Nine in number were reproduced under Statement – A of the charge sheet as follows:

STATEMENT - A

Date/year ofAmount S.No.Name of the AssetAcquisitionin Rs. 1Share in The Cotton Corporation of India Ltd., 1985530 19 C.C. 13/2008/I CBI COURT/VSP

Employees Co-op. Credit Society Ltd. Vide Certificate No.3151 2Share in The Cotton Corporation of India Ltd., 1987480 Employees Co-op. Credit Society Ltd. Vide Certificate No.2641 3Share in The Cotton Corporation of India Ltd., 1985280 Employees Co-op. Credit Society Ltd. Vide Certificate No.2191 4Share in The Cotton Corporation of India Ltd., 1983240 Employees Co-op. Credit Society Ltd. Vide Certificate No.1775 5Share in The Cotton Corporation of India Ltd., 1981230 Employees Co-op. Credit Society Ltd. Vide Certificate No.2422 6Share in The Cotton Corporation of India Ltd., 1979240 Employees Co-op. Credit Society Ltd. Vide Certificate No.1096 7100 shares of UTI Master Shares face value of Rs.10 19911000 each purchased by T.Bhanoji Rao 8Balance in SB A/c No.52099594468 prior to check 49544 period 9List of articles / house hold items purchased prior to Before 199429700 check period which were found during searches at the residence of Sri T.Bhanoji Rao at Guntur

TOTAL:82,244

There is no dispute by the accused with regard to value of assets under

Statement-A. Accordingly the assets of the accused at the beginning of the check period was concluded as Rs.82,244/-

28.Sub Point-(ii) :

ii) Whether the accused possessed assets worth Rs.1,36,11,542/- as

shown in Statement-B at the end of the check period?

The version of the prosecution is that the accused during the check period from

December, 1993 to 26.01.2006 acquired assets worth Rs.1,36,11,542/-. There are as many as 57 items under Statement-B as per the charge sheet of value

Rs.1,36,11,542/- . Before thriving into the merits of the case on fact as well as law it is important to discuss certain aspects relating to burden of proof specifically dealing with cases of disproportionate assets. In the case of V.D.Jhingan Vs. State of Utter

Pradesh AIR 1966 SC 1762 the Hon’ble Supreme Court has held that it is the cardinal rule of our criminal jurisprudence that the burden in the web of proof of an 20 C.C. 13/2008/I CBI COURT/VSP offence always lies upon the prosecution to prove all the facts constituting the ingredients beyond reasonable doubt. The expression “burden of proof” technically has two distant meanings 1) the legal burden i.e., the burden of establishing the guilt and 2) the evidential burden i.e., the burden of leading evidence. In a criminal crime burden of proving everything essential to establish the charge against the accused which rest upon the prosecution never shifts. Contradicting this general rule the offences like under 13(1)(e) of P.C Act, the burden of proving a particular fact in issue may be laid by law upon the accused. Particularly speaking of those matters specifically within the knowledge of the accused who is the public servant as derived under Section 106 of Indian Evidence Act. However the extent and nature of this burden of proof to establish his case is restricted to preponderance of probability unlike the prosecution. At the same time the prosecution cannot be placed with impossible burden in discharging its burden of leading evidence which is differs from burden of establishing the guilt.

29. In the cases under Section 13(1) (e) of P.C. Act dealing with allegations of disproportionate assets the prosecution leads the evidence to ascertain the assets of the accused based upon the plausible evidence collected including those collected/seized from the custody of the accused. These documents at times include income tax returns, annual property returns, receipts, bills etc., In this case on hand the much of evidence of the prosecution is revolved from the income tax returns and annual property returns of the accused. The income tax returns of A1 under Ex.P32 to

Ex.P35 marked through PW.13 the then Assistant Commissioner of Income Tax,

Guntur, income tax returns of A2 under Ex.P20 to Ex.P28 marked through Ex.P10 the then Income Tax Officer, Guntur and annual property returns of the accused marked under Ex.P62 to Ex.P62-J through PW.23 the then General Manager, HRD, Cotton

Corporation of India, Mumbai are not in dispute by the accused. However these income tax returns, annual property returns etc., would not constitute conclusive proof themselves.Particularly with regard to income tax returns in D.S.P., Chennai Vs 21 C.C. 13/2008/I CBI COURT/VSP

K.Inbasagaran reported in 2006 (1) SCC 420, M.Krishna Reddy Vs State reported

in AIR 1993 SC 313 and Kedarilal Vs State of MP reported in 2015 (14) SCC 505

the Hon’ble Apex Court asserted the inclusion of income assessed by the income tax department while determining the disproportionate assets considering the documents as unassailable. The probative value of income tax returns was once again reevaluated in State of Karnataka Vs. Selvi.J.Jayalalitha and others the Hon’ble Apex Court made a clear averment that income tax returns does not ipsofacto connote that the assets averred therein had been acquired from the known lawful sources of assessee.

However earlier proposition laid in Krishna Reddy Vs. State, D.S.P.Chennai Vs.

K.Inbasagaran, Krishanand Vs. State of MP, State of A.P vs J.Satyanarayana was not ruled out, further the Hon’ble Apex Court stressed that the income tax returns filed in evidence are rebuttable and the prosecution could successfully discredit them by adducing reasonable evidence Therefore the precedent says that the income tax returns are prima facie acceptable in evidence with a liberty to the contesting party to rebut the same. The similar principle was applied to documents like annual property returns and other documents collected during investigation in case of disproportionate assets. However their evidentiary value is highly determined, accelerated or deteriorated based upon the proof of facts corroborated with direct or circumstantial evidence including facts admitted and undisputed by the accused. Therefore in the above back drop of law relating to burden of proof, probative value of documentary evidence the disproportionate assets of the accused are calculated. Coming back to the facts on hand the value of each assets under Statement-B based upon the oral and documentary evidence led by the prosecution and accused is discussed as follows:

30.Before entering into the specific discussion with regard to assets under

Statement-B it is appropriate to appraise the another contention raised by counsel

for accused with regard to admissibility and proof of documents marked by the

prosecution. It is pertinent that Item No1(a) to 13 deals with immovable assets 22 C.C. 13/2008/I CBI COURT/VSP alleged to have been acquired by the accused during the check period. The prosecution with regard to proof of this items got examined concerned Sub Registrar and marked the certified copies of registered sale deeds. The counsel for accused objected for marking of these documents contending that certified copies of registered deeds cannot be admitted in evidence as they were not public documents and for want of certification under Section 65(B) of Indian Evidence Act and Section 2 of

Information Technology Act. However the Hon’ble High Court of Judicature for

Rajasthan dealing with Writ Petition No.5019/2017 on 21.01.2018 held that registered sale deed or lease deed is a private document, but once it is registered and entered in Book I by registering officer under Section 51 of Registration Act, the record thereof maintain by the Registering Officer become a public document as defined under

Section 74 of Evidence Act and therefore certified copy of the same can be given as secondary evidence. Similar opinion was held by Hon’ble High Court of Andhra

Pradesh in Datti Kameswari Vs. Singam Rao Sarath Chandra CR.P.No.3031/2015

dated 11.12.2015 wherein the Hon’ble High Court referring to the proposition held in

Rekha Rana and another Vs. Ratna Sri Jain AIR 2006 MP 107 held that certified copy as secondary evidence of private document is permissible subjected to proof of execution and corroboration. Therefore, it is evident that the certified copies of registered document can be taken on record as secondary evidence. However cannot be a conclusive proof of transaction and certainly requires corroboration. Pertinently it is in case of disproportionate assets the extent of proof is limited to proof of transaction much lesser to the execution which was not disputed

Item No.1(a) :

31.The item No.1 is Flat No.2, D.No.11-2-1/2, Sea Shells Apartments, Waltair Main

Road, Visakhapatnam in which the undivided share of land measuring 441Sft.

Purchased by A1 for Rs.2,43,767/- vide sale deed No.62/1994, dt:15-01-1994 and the amount incurred for the construction of flat of 866 Sft. at Rs.400/- per Sft is mentioned as Rs.3,66,400/-. The total value of assets as per Statement-B is Rs.6,29,000/-. The 23 C.C. 13/2008/I CBI COURT/VSP prosecution to prove the acquisition of this assets by A1 examined Pw.4 and corresponding document is marked as Ex.P1. PW.4 is the then Joint Sub Registrar(II),

Old Post Office, Visakhapatnam and testified his acquaintance with the then Joint Sub

Registrar–I, R.Dhamodaram. Accordingly to him the said Dhamodaram furnished certified copy of document No.62/1994 dated 15.01.1994 executed by D.V.Ramu in favour of A1 and A2 to the investigating officer. The certified copy of document

No.62/1994 was marked as Ex.P1. The contention of the accused is that the contents of Ex.P1 only discloses the value of acquisition of property as Rs.2,14,000/- and no evidence led by the prosecution to elicit the construction cost as Rs.3,66,400/-. It is further submitted that the value of the property under this item is to be taken as

Rs.2,14,000/- and that in absence of any evidence the value of assets cannot be determined as Rs.6,29,000/-. Inspite of the specific argument the counsel for accused did not choose to cross examine the witness. However the same does not discharge this Court from the obligation to determine the fact in issue based upon the available, reasonable and admissible evidence on record. In this context certain relative facts undisputed by the accused are to be looked into. Firstly the accused admitted the income under Item No.2(a)of Statement–C i.e., Housing loan from Vysya Bank to purchase Flat at Sea Shells Apartments at Visakhapatnam for Rs.3,00,000/-. The accused further disclosed the property under this item in his annual property returns for subsequent years from 1994 and also claimed the rent received over this flat as

additional income relying upon the contents of income tax returns filed by A2 under

Ex.P20 to Ex.P28. Accordingly the close perusal the property returns of A1 as on 31.12.1994 marked under Ex.P62 shows that he purchased flat No.2 Seashells apartment for Rs.4,25,000/- from M/s Ugesh Madhav Builders Pvt., Ltd. Visakhapatnam and the source of expenditure is includes Rs.1,25,000/- CCI/NRL/CPF Housing Loan and Rs.3,00,000/- Finance from Vijaya Bank referred under Statement-C. The intimation about purchasing this flat was given to his superior authority vide correspondence dated 28.03.1994 at page No.62 of Ex.P62. The original letter dated 28.03.1994 confirm the sanction of housing loan for Rs.1,25,000/- vide HO sanction 24 C.C. 13/2008/I CBI COURT/VSP letter CCI/NRL/CPF/4299 dated 20.12.1993. The accused enclosed agreement entered with /s Ugesh and Madhav Buildings Pvt., Ltd. Visakhapatnam and photocopy of sanction order dated 20.12.1993 for CPF amount of Rs.1,25,000/- and certificate regarding receipt of Rs.3,00,000/- of loan amount from Vysya Bank to the referred letter. The correspondence thereto was evident at Page No.52 to 61 of Ex.P62. As per the contents of Tripartite agreement dated 11.12.1993 the accused entered into agreement with P.Ch.V Ramanayya Raja power of attorney holder of Poornima

Constructions Pvt., Ltd., and Ugesh Madav Builders Pvt., Ltd., for the Construction of the flat in A- Block, Seashell Apartments, Visakhapatnam. As per the agreement the cost of undivided share and cost of construction is held as Rs.4,00,000/-. The entire expenditure along with incurring CPF withdrawal and housing finance as the value of the asset as Rs.4,00,000/- and Rs.25,000/- for purchasing the stamps was intimated to the General Manager, CCI vide correspondence dated 28.02.1994 at Page No.53 of

Ex.P62. All the correspondence including annual property returns under Ex.P62 referred above are the original documents containing the signature of A1 which were not denied throughout. Therefore the conflicting evidence under Ex.P1 is considered reconciled with the admitted facts of the accused and also the facts elicited under

Ex.P62. Therefore the value of the assets is considered as only Rs.4,00,000/- as admitted by the accused on record.

Item No.1(b):

32. The assets under Item No.1(b) of Statement –B is land measuring 500 Sq.yards at Survey No.19/6, W-B: 4-5, nearby House No.4-5-18/2 in Koretipadu, Guntur Urban which was registered in the name of Sri T.Bhanoji Rao/A1 on 26-04-2001 vide

Doc.No.3726/2001 of SRO, Guntur (RO). To discharge his burden with regard to this

Item the prosecution examined PW.14 and got marked Ex.P81 which is the certified 25 C.C. 13/2008/I CBI COURT/VSP copy of sale deed No.3726/2001 dated 26.04.2001 for consideration of Rs.2,20,000/- and stamp duty of Rs.54,550/- and registration fee of Rs.3545/-.

33.The version of the accused is that it is the burden of the prosecution to prove that the accused purchased the property covered under Ex.P81 and paid Rs.2,20,000/- to his vendor. It is contended that the prosecution did not examine the vendor of the document and no original sale was produced before this Court. According to the accused contention Ex.P81 is only a certified copy and no presumption either under

Registration Act or Evidence Act can be taken against the contents of the registered sale deed without any evidence. Ex.P81 is argued to be inadmissible in evidence by virtue of Section 61, 62 and 65(B) of Indian Evidence Act and Section 2 of

Information Technology Act. Inspite of the material argument made with regard to the admissible of document under Ex.A1 the counsel or accused did not made any objection at the time of marking the document nor choosed to cross examine the witness on this point. However this objection was decided in the previous paragraphs relying on the proposition held by the Hon’ble High Court of Judicature for Rajasthan and Andhra Pradesh wherein it was held that registered sale deed or lease deed is a private document, but once it is registered and entered in Book I by registering officer under Section 51 of Registration Act, the record thereof maintain by the Registering

Officer become a public document as defined under Section 74 of Evidence Act and therefore certified copy of the same can be given as secondary evidence. The document under Ex.P1 is validly certified by the Joint Sub Registrar as copy required from scanning of original document. However considering the Ex.P81 only as secondary evidence as it is argued by the counsel for accused it cannot be a conclusive proof of transaction averred by the prosecution and certainly requires corroboration. On this aspect when we look into the annual property returns filed by the accused for the year 2001 under Ex.P62-D he categorically admitted that he purchased residential vacant site admeasuring 500sq.yards in Vidyanagar, 4th line

Guntur on 26.04.2001 by incurring Rs.2,20,000/- from Ch.Sambasiva Rao. Therefore

Ex.P81 suffices the requisite the proof of transaction wherein the execution was not 26 C.C. 13/2008/I CBI COURT/VSP held disputed. Accordingly the transaction under Ex.P81 for Rs.2,20,000/- was concluded as proved taking into consideration the corroborative evidence from

Ex.P62-D

Item No.2:

34.Item No.2 isPlot measuring Ac.0.97cents in Patta No.0133 and Survey No.46/1 at Lagisettypalem village, Sabbavaram Mandal, Visakhapatnam District, AP, registered on 28-09-1996 vide Doc.No.2476/1996 of SRO, Sabbavaram in the name of

Smt.T.Aruna/A2. The value of assets is mentioned as Rs.60,000/- as per the prosecution. The prosecution examined PW.7 Sub Registrar, Sabbavaram,

Visakhapatnam. According to PW.7 the certified copy of the above document i.e.,

Ex.P16 was executed by Poleti Tirumala in favour of A2 for consideration of

Rs.60,000/- and stamp duty is Rs.6,600/- and the registration fee of the said transaction is Rs.591/-. The counsel for accused did not choose to cross examine the witness nor disputed with the contents of Ex.P16. The evidence of PW.7 and the contents of Ex.P16 which was corroborated with the annual property returns of the accused from 1998 to 2005 under Ex.P62. The acquisition of the property was also reflected in the income tax returns of the A2 under Ex.P20. In view of the above evidence, the value of property is concluded as Rs.60,000/-.

Item No.3

35.Item No.3 is tiled house of 408 Sft. in Chinna Komati street, Sompeta village in a plot of 156 Sq.yards and one tiled house of 264 sft., at door No.3-1-16 at Srikakulam

District, A.P., registered on 29-01-1998 vide Doc.No.92/1998 of SRO, Sompeta in the name of Smt T.Aruna/A2. The value of assets is mentioned as Rs.1,25,000/- as per the prosecution. The prosecution examined PW.8 the then Sub Registrar, Sompeta who furnished the certified copy of the document relating to the above property i.e.,

Ex.P17. According to PW.8 Ex.P17 document No.92/1998 dated 29.01.1998 was executed by K.Suseela in favour of A2 for consideration of Rs.1,25,000/- in respect of 27 C.C. 13/2008/I CBI COURT/VSP property of house bearing No.3-1-16 and Dr.No.3-1-17 situated at Sompeta,

Srikakulam. PW.8 further stated that as per basic value register the value of the property is Rs.2,49,000/- and stamp duty is Rs.27,500/- and the registration fee is

Rs.1,556/- paid by A2 on document. During the entire cross examination of PW.8 the accused did not dispute with the transaction and only disputed with the valuation of the house property. The acquisition of the property was not in dispute by A2 wherein A2 reflected the same in her income tax returns along with the house tax receipts.

Accordingly taking into consideration the evidence of PW.8 in corroboration with the income tax returns of the A2 the value of the property as fixed as Rs.1,25,000/- .

Item No.4:

36.Item No.4 is Agriculture land of Ac.2.65 cents in Sy.No.327/A,B at Perecherla village, Guntur District, registered on 22.08.2002 vide Doc.No.3281/2002 of SRO,

Nallapadu, Guntur District in the name of Smt T.Aruna/A2. The value of assets is mentioned as Rs.1,86,000/- as per the prosecution. The prosecution examined PW.41 the then Sub Registrar, Guntur who furnished the certified copy of above document under Ex.P89. According to PW.41 Ex.P89 is the certified copy of document

No.3281/2002 dated 22.08.2002 executed by Nandipati China Punna Rao and others in favour of A2 in respect of 2.65cents in S.No.327/A-B, Perecherala village, Guntur for consideration of Rs.1,86,000/-. The evidence of PW.41 and the contents of Ex.P89 are not disputed by the accused during the cross examination. Further the acquisition of this property was reflected in the income tax returns of A2 under Ex.P25 to Ex.P28.

therefore considering the evidence of PW.41 and contents of Ex.P89 and Ex.P25 to

Ex.P28 the value of the assets is fixed as Rs.1,86,000/-.

Item No.5

37.Item No.5 is An undivided as well as unspecified share measuring 70 sq.yards of site D.No.8/7 and 8/8 along with ownership of floor area located in group floor bearing 28 C.C. 13/2008/I CBI COURT/VSP

No.001 i.e., upon cellar floor of shopping complex “Ananda Nilayam” at D.No.5-87-40 with a plinth area of 1103 sft., which was registered on 20-06-02 vide Doc.No.4241/02 of Joint Sub-Registrar, Guntur in the name of Smt T.Aruna/A2. The value of assets is mentioned as Rs.2,90,000/- as per the prosecution. The relevant document was marked through PW.14 under Ex.P88 executed by Ch.Pitchamma and others in favour of A2, wherein the total consideration was ascertained as Rs.2,90,000/-, stamp duty as

Rs.26,575/- and registration fee of Rs.1,825/-. The accused did not dispute with the content of the document under Ex.P88 except denying the competency of the witness.

PW.14 the then Joint Sub Registrar-II being the custodian of Book-I is the competent person to issue the certified copy of the document and testify its contents. The acquisition of this property was also disclosed by A2 in her income returns Ex.P25 to

Ex.P28. A2 also claimed the rent received on this building annually during the assessment year 2003-2004 to 2006-2007. Accordingly taking into consideration the evidence of PW.14 and the contents of Ex.P88 and Ex.P25 to Ex.P28 the value of the assets is fixed as Rs.2,90,000/- .

Item Nos.6 and 7:

38.Item No.6 is Plot No.10 measuring 284 Sq.yards in D.No.416 at Gorantla village,

Guntur District, AP which was registered as Doc.No.7560/04 of SRO, Guntur in the name of Smt T.Aruna/A2. The value of assets is mentioned as Rs.57, 000/- as per prosecution. The relevant for Item No.6 document under Ex.P86 dated 02.07.2004 executed by K.Seetharamayya in favour of A2 was marked through PW.14, wherein the total consideration was ascertained as Rs.57,000/-, stamp duty as Rs.10,345/- and registration fee of Rs.600/-.

39.Item No.7 is Plot No.11 measuring 365.4 Sq.yards in D.No.416 at Gorantla village, Guntur District, AP which was registered on 25-06-04 vide Doc.No.7561/04 of

SRO, Guntur in the name of Smt T.Aruna/A2. The value of assets is mentioned as

Rs.57, 000/- as per prosecution. The relevant document dated 25.06.2004 executed by

K.Seetharamayya in favour of A2 was marked under Ex.P84 through PW.14, wherein 29 C.C. 13/2008/I CBI COURT/VSP the total consideration was ascertained as Rs.57,000/-, stamp duty as Rs.10,345/- and registration fee of Rs.600/-.

40.The accused did not dispute with the contents of documents under Ex.P84 and

Ex.P86 except disputing the competency of PW.14. As held supra, PW.14 the then

Joint Sub Registrar-II being the custodian of Book-I is the competent person to issue the certified copy of the document and testify its contents. The acquisition of these properties was also disclosed by A2 in her income returns Ex.P25 to Ex.P28.

Accordingly the value of assets under Item Nos.6 and 7 is fixed as Rs.57,000/- and

Rs.57,000/- .

Item Nos.8 and 9:

41.Item No.8 is Plot No.12 measuring 365.4 Sq.yards in D.No.416 at Gorantla village, Guntur District, AP which was registered on 25.06.04 vide Doc.No.7562/04 of

SRO, Guntur in the name of Smt T.Aruna/A2. The value of assets is mentioned as

Rs.75, 000/- as per the prosecution. The relevant document was marked through PW.14 under Ex.P85 dated 25.06.2004 executed by K.Seetharamayya in favour of A2, wherein the total consideration was ascertained as Rs.75,000/-, stamp duty as Rs.13,480/- and registration fee of Rs.750/-.

42.Item No.9 is Plot No.9 measuring 284 Sq.yards in D.No.412 at Gorantla Village,

Guntur District, AP which was registered on 02.07.04 vide Doc.No.7542/04 of Joint Sub-

Registrar, Guntur in the name of Smt T.Aruna/A2. The value of assets is mentioned as

Rs.57, 000/- as per the prosecution. The relevant document was marked through PW.14 under Ex.P83 dated 28.06.2004 executed by Tirupati Raidu in favour of A2, wherein the total consideration was ascertained as Rs.57,000/-, stamp duty as Rs.10,345/- and registration fee of Rs.600/-.

43.The accused did not dispute with the contents of documents under Ex.P85 and

Ex.P83 except disputing the competency of PW.14. As discussed supra, PW.14 the then Joint Sub Registrar-II being the custodian of Book-I is the competent person to 30 C.C. 13/2008/I CBI COURT/VSP issue the certified copy of the document and testify its contents. The acquisition of these properties was also disclosed by A2 in her income returns Ex.P25 to Ex.P28.

Accordingly the value of assets under Item Nos.8 and 9 is fixed as Rs.75,000/- and

Rs.57,000/-.

Item No.10:

44.Item No.10 is Plot Nos.29, 30, 31 &32 measuring 1278.77 Sq.yards in

D.No.364/C,D at Gorantla village, Guntur District, AP which was registered on 19-10-05 vide Doc.No.14233/05 of SRO, Guntur in the name of Smt T.Aruna/A2. The value of assets is mentioned as Rs.6,39,500/- as per the prosecution. The relevant document was marked through PW.14 under Ex.P84 dated 19.10.2005 executed by D.Prasad in favour of A2, wherein the total consideration was ascertained as Rs.6,39,500/-, stamp duty as Rs.57,535/- and registration fee of Rs.3,240/-. The accused did not dispute with the contents of document under Ex.P84 except disputing the competency of

PW.14. The competency of PW.14 the then Joint Sub Registrar-II being the custodian of Book-I is the competent person to issue the certified copy of the document and testify its contents was already held in favour of prosecution in the previous paragraphs. Therefore, the acquisition of these properties was also disclosed by A2 in her income returns Ex..P28. Accordingly the value of assets under Item No.10 is fixed as Rs.6,39,500/-.

Item No.11:

45.Item No.11 is Flat at Putaparthi purchased in 1999-2000 in the name of Smt

T.Aruna, as per I.T. returns for 2006-07. The value of assets is mentioned as

Rs.1,00,000/- as per the prosecution. The relevant document was marked through

PW.26 Joint Sub Registrar, Bukkapatnam, Ananthapuram under Ex.P66 dated 29.03.2000 executed by V.Somasekhara Reddy and another in favour of A2, wherein the total consideration was ascertained as Rs.1,00,000/-, stamp duty as Rs.11,000/- 31 C.C. 13/2008/I CBI COURT/VSP and registration fee of Rs.801/-. However according to PW.26 the property under

Ex.P66 is house Plot situated in Enumulapalli, Puttaparthi Mandal, Anantapur District,

46.The accused even on this point did not dispute with the contents of document under Ex.P84 except disputing the competency of PW.26. The competency of PW.26 the then Sub Registrar to issue the certified copy of the document and testify its contents is already held in favour of prosecution. Further corroborating the acquisition of these properties was also disclosed by A2 in her income returns Ex..P23 to Ex.P28.

Accordingly the value of assets under Item No.11 is fixed as Rs.1,00,000/-.

Item Nos.12 & 13:

47.Item No.12 is 200 Sq.yards site at Ranga Reddy District purchased during 2003- 04 in the name of Smt T.Aruna (As per I.T. returns). The value of assets is mentioned as Rs.68,105/- as per the prosecution. Item No.13 is Ac.1.57 cents of agriculture land at

Marripalem village, Edlapadu Mandal, Guntur District declared IT return for AY 2006-07 (FY 2005-06) in the name of Smt T.Aruna. The value of assets is mentioned as

Rs.1,38,470/- as per the prosecution. The prosecution neither examined any witness nor marked any document to prove the item Nos.12 and 13. The prosecution did not adduce any evidence on this aspect the value of assets under Item Nos.12 and 13 are excluded from Statement-B.

Item No.14:

48.Item No.14 is Cost of construction of a house in 500 Sq.yards in Sy.No.19/6, vide Doc.No.3726/2001 of SRO, Guntur property constructed during the period April, 2001 to February, 2002 vide the house D.No.4-5-29/74A and further this door number was changed as 17-7-470, Ward No.4, Guntur, during 2012.

The immovable property under this item as per the prosecution is with exclusively Dr.No.4-5-29/74A in Ward No.4, Guntur wherein the corresponding vacant land was purchased by the accused under Item No.1(b) of statement-B which was discussed supra. The cost of construction as per the prosecution is Rs.57,38,000/-. To 32 C.C. 13/2008/I CBI COURT/VSP prove the cost of construction the prosecution exclusively relied upon the evidence of

PW.25 SK.Jhani Bash, the then Executive Engineer, CPWD, Vijayawada. His evidence goes to show that on the request of chief Engineer Chennai he valued the building of A1 at Guntur. According to him, he measured the house property which is a pucca building with ground plus four floors and taking into consideration the rate arrived on the basis of plinth area rate approved by the Central Board of Direct Taxes dated 13.12.1998 and cost index prevailing during the period of construction approved for

Guntur, he valued the property. The corresponding valuation report was marked as

Ex.P64. The contents of Ex.P64 are exclusively defined specifically explaining the rate of tiles, marbles and fittings like bath tub, chandelier. The total plinth area was calculated for ground plus four floors at the rate of Rs.603.83sq.mts for total

Rs.6,497sq.feet. The total value is assessed as Rs.57,38,000/-. The value of the property was calculated floor wise including temporary structures in the fourth floor.

The cost of sanitary, electrical, external service connections, superior items and other specification was calculated separately by adopting CBDT rates including costs for other items like compound wall, tile flooring, pump room, ornamental lamps, earth filling, CC ramp, ornamental grills, stair case, cupboards false ceiling, teakwood railing with extra costs. There is voluminous cross examination with regard to the every aspect mentioned by PW.25 in Ex.P64. However the contents of Ex.P64 and the evidence of PW.25 fails on root level for that the house valued by PW.25 is Dr.No.

bearing 6-1-222/1, 4/4 Vidyanagar, Guntur which is constructed in ground plus four floors. Though the prosecution in the further chief examination rectified the oral evidence by PW.25 as the building is ground plus three floors the description of the property did not in any manner matched with the alleged property under Item No.14 where the property in the alleged charge sheet is with dr.No.4-5-29/74A. Contrarily the accused is not denying the cost of construction for the house mentioned under Item

No.14 at Dr.No. D.No.4-5-29/74A. In this connection the accused got DW.1 and got marked the valuation report under Ex.X8 furnished by him even prior to the registration of the crime. DW.1 on this aspect stated that in the year 2004 at the 33 C.C. 13/2008/I CBI COURT/VSP request of A1 he evaluated the building of A1 in 4th line Vidyanagar, Guntur with nearest door No.4-5-48/2, by physically inspecting the property which is building consisting ground plus two floors. As per the contents of Ex.X8 the cost of construction of building is Rs.21,88,000/-. This valuation report and cost of construction was communicated by A1 to General Manager(Vigilance), Mumbai vide correspondence dated 26.8.2000 at page No.257 of Ex.P62 and also reflected in his tax returns undisputedly. Therefore in view of abnormal disparity with regard to the particulars of property assessed under Ex.P64 the same was not considered as reliable to conclude the cost of construction as averred by the prosecution. The prosecution did not adduce any reasonable evidence to convince the Court that the property assessed by PW.25 was the one mentioned under Item No.14 wherein the

Dr.No.4-5-29/74A. Even as per the evidence of PW.52 and contents of Ex.P123-E the accused is having only one property in his name with Dr.No.4-5-29/74A in Guntur.

In view of above facts the contradictory evidence of prosecution fails and the cost of construction of the building for Item No.14 was concluded as per the evidence led by the accused under Ex.X8 as Rs.2,88,000/-.

Item No.15 :

49.Item No.15 is value of Construction agreement for a shop located in the ground floor i.e., above cellar floor of shopping complex “Anand Nilayam” at D.No.5-87-40 with a plinth area of 1103 Sq.Ft vide Doc.No.4244/04. The value of assets is mentioned as

Rs.3,99,000/- as per the prosecution. To prove this asset the prosecution examined

PW.46 G.Padmaja the Managing Director, Sai Balaji Housing Pvt., Ltd., According to the evidence of PW.46 she entered into agreement on behalf of company with A2 with regard to 70sq.yards purchased from company for Rs.2,90,000/-, wherein the construction cost was Rs.3,99,000/- for total 1103sq.ft. She further stated that the construction was completed in the year 2004 and possession was handed over to A2 and the corresponding amount was paid by cash under the agreement and the building name is Anand Nilyayam situated at Laxmipuram, Guntur. The relevant copy of sale 34 C.C. 13/2008/I CBI COURT/VSP deed bearing registered No.4241/2002 dated 20.06.2002 and copy of registered agreement dated 20.06.2002 issued by the Joint Sub Registrar, Guntur are marked as

Ex.P110 and Ex.P111. Both these documents were marked subject to the objection raised by the counsel for the accused that they are only the photocopy. Contradictingly these two documents are certified copies issued by the Joint Sub Registrar, Guntur containing his initials. This fact was corroborated from the evidence of the then Joint

Sub Registrar-II, Guntur, UVV Ratna Sagar who was examined as PW.14. PW.14 specifically stated that he furnished the certified copy of sale deed No.4241 dated 20.06.2002 consideration of which is Rs.2,90,000/- and the stamp duty Rs.26,575/- and registration fee Rs.1825/- and also furnished certified copy of document

No.4244/2002 dated 20.06.2002 the consideration of which is Rs.3,99,000/-, stamp duty Rs.19950/- and registration fee is Rs.1000/- paid in respect of flat in Balaji Housing

Pvt., Ltd., bearing Dr.No.5-87-40 of Guntur executed by MD.Padmaja in favour of A2.

The purchase of the property under document No. 4241/2002 and subsequent cost of construction under document No.4244 was disclosed by A2 in her in income tax for the assessment year 2003-2004 under Ex.P25. A2 also claimed rent over this property in the subsequent income tax returns. Accordingly there is no material to discredit the evidence of PW.14 and PW.46 on this aspect. Taking into consideration the consolidate evidence adduced by the prosecution under Ex.P110 and Ex.P111 and Ex.P25, this

Court concluded the value of the asset as Rs.3,99,000/-

Item No.16:

50. According to the Statement-B Item No.16 is Cost of construction of house at

D.No.3-1-16, China Komati street, Sompeta village, Srikakulam District during the period 1998-1999. The value of assets is mentioned as Rs.9,30,135/- as per the prosecution. With regard to this item the prosecution examined the valuer as PW.48 and marked his valuation report as Ex.P113. PW.48 is the then A.E, CPWD,

Visakhapatnam, he testified that there are three methods of valuation of building 1)

Accounting the purchase bills; 2) detailed estimate based on building plan and 35 C.C. 13/2008/I CBI COURT/VSP sanctions which need detailed drawings; 3) plinth area rate method. According to him the first method is not possible in absence of purchase bill and second method is not possible in absence of detailed drawings and also due to concealed items in foundation and third method is accurate because rates arrived for plinth area are based on actual construction cost of building. He stated that CPWD rates are 50% less than the State

PWD rates, they collect local rates from six months, prepare cost index and submit the same to the concerned chief Engineer and he will approve the cost index for different terms and based on the cost index plinth area rate will be arrived.

51.With regard to Item No.16 Pw.48 stated that the said building of A2 bearing

D.No.3-1-16 was situated at China Komati Street, Sompeta village, Srikakulam District, the said building was inspected by him along with Junior Engineer B.Satish in the presence of T.Bapuji brother of A1 Sri N.Raja Rao, Inspector, CBI and V.V.Swamy, Sub

Inspector CBI on 13.11.2007. He further stated that they have inspected the building, taken measurements of the building, plinth area and noted down the amenities provided in the building, specification of flooring, doors, windows, toilet rooms and wall finishing etc., for arriving the cost of the building. He further stated that based on the these details the cost of the building was worked based on the plinth area method of

Delhi plinth area as on 01.01.1992 with base 100 and enhancing the cost index of

Itchapuram provided by the Chief Engineer, CPWD, South Zone-II, Hyderabad as on 01.01.1998, since the construction period of the building spread over from July, 1998 to 1999. According to him the property is a single storied building having three portions and each portion is having two bed rooms and one kitchen and one hall and two toilet rooms. They have worked out in detailed the plinth area of the entire building and arrived at cost around Rs.9,77,515/- and added Rs.14,414/- towards superior specification on comparing with 1-1-92 plinth area specification and deducted

Rs.97,752/- (10% of the building cost) towards inferior specification and comparing with 1-1-92 plinth area specification and finally arrived the cost of building at

Rs.8,94,200/- and further worked out on the cost of bulk service items like compound wall, MS gates, bore well, pump, and motor as Rs.32,935/- and the total cost as 36 C.C. 13/2008/I CBI COURT/VSP

Rs.9,30,135/- round off to Rs.9,30,000/-. Ex.P112 is the letter addressed by Executive

Engineer to SP, CBI enclosing his letter addressed to Executive Engineer along with the valuation report. Ex.P113 is the valuation report.

52.The contention of the accused is that A2 has only renovated the house and not constructed the same as alleged by the prosecution. According to A2 she inherited old building and renovated the same. On this aspect the accused got examined DW.3,

DW.4 and DW.16 got marked Ex.X11 and Ex.X12. DW.3 is the mother of A2, she stated that her husband was owning 15 residential houses, 20 house plots and one gold shop in Sompeta village by the time of her marriage and that her husband received nearly 25acres of agriculture land to his share in partition with his brothers.

She further stated that they had four sons and one daughter who is the second accused and about 35 years their daughter was married to A1. She further stated that at the time of marriage they have given 250tulas of gold ornaments and some of them studded with diamonds and 45kg silver to their daughter and that they belonged to Vysya community. According to DW.3 her husband died 23 years back and all the properties were partitioned among her sons about 16 years back and at the time of partition they constructed a slabbed house in Sompeta by removing existing tiled house in that place and gave the house to A2. She further added that at the time of partition her first son promised to give Rs.3,00,000/- and second son promised to give Rs.2,00,000/- in cash to A2.

53.DW.4 is the brother of A2 and he deposed that he was doing gold business at

Amudalavalasa and about 20 years back their joint family movable and immovable properties were partitioned between himself and his three brothers. According to him they partitioned 15 residential houses, 10 house plots situated at Sompeta and also 25acres of agricultural lands situated at Kollivalasa village. He further stated that at the time of partition they gave a tiled house in Sompeta to A2 and the elders advised them to dismantle the tiled house and constructed a slabbed house and accordingly they constructed a slabbed house and they gave the same to A2. He also stated that he 37 C.C. 13/2008/I CBI COURT/VSP gave Rs.3,00,000/- and his brother Tirumala Rao gave Rs.30,000/- to his sister in the year 2005 as agreed.

54.However the contents of Ex.P17 extract of sale deed dated 29.01.1998 categorically shows that the said tiled house were acquired by A2 by way of sale from

DW.3 for Rs.1,25,000/-. The contents of document under Ex.P17 were contradicting with the evidence of DW.3 and DW.4. Further there is no documentary or independent evidence to show that DW.4 and his brothers constructed the slabbed house under

Item No.16 and gave the same to A2. It is also evident that as on date of Ex.P17 the property is consisting of two tiled houses and the construction was made only subsequent to the date of Ex.P17 by A2. Now the point for determination is the cost of construction. As per the evidence of PW.48 the cost of construction is Rs.9,30,135/-.

The value as per the accused is Rs.4,60,701/-. To ascertain the same, contradicting the version of the prosecution the accused examined Registered Property Valuer

Sri Adbul Rawof Naushad as DW.16. The evidence of DW.16 is that on 09.03.2017 he inspected the house bearing Dr.No.3-1-16 of A2 situated at China Komati Street,

Sompeta, Srikakulam District and assessed the value of house and prepared the report at the request of A2. As per his assessment the cost of construction of the building was around RS.4,60,701/- since it was constructed in March, 1999. Ex.X13 is report of assessment of cost of construction and Ex.X14 Report of variations of assessment costs of the construction of the building made by DW.16 and CPWD. The difference between the assessment made by PW.48 and DW.16 is Rs.4,69,434 which is almost more than fifty percentage. The learned counsel for accused submitted that the I.O ought to have considered the plinth area rate of PWD instead of CPWD rates which differs abnormally from the local rates and relied upon the opinion of Hon’ble High

Court of Kerala in Criminal Appeal no.251/2012 dated 11.11.2013 between C.S.Danial

Vs. Dy. Commissioner of Income Tax, Central circle wherein it is held that “ We place reliance on earlier decision of this Court in ITA No.109/2008 dated 21.10.2008 wherein their Lordship at paragraph no.5 onwards opined that “the valuation of property has to be made keeping in view the Kerala PWD rate and not Central PWD rates. It is also 38 C.C. 13/2008/I CBI COURT/VSP pertinent to mention that in each State depending upon the scarcity of material available as well as the cost of labour, cost of construction may vary from State to

State, therefore it is just and proper to place reliance on the local PWD rates rather than the Central PWD rates in order to arrive at valuation of property. Ultimately the

Assessing Officer will have the other materials supplied by the assessee to know what exactly was the material used and what was the prevailing rate of such material apart from ascertaining the rates from PWD Department, which rate varies from time to time. Ultimately the assessing officer would take into consideration what was the prevailing rates of PWD in the State of Kerala adopted for particular assessment year in order to arrive at the cost of renovation and construction claimed by the assessee for the assessment year” . Further reliance was placed on the opinion held by the Hon’ble

Gauhati High Court in criminal Appeal No.9/2010 dated 05.11.2013 between Pozir

Uddin Ahemed Vs. Union of India represented by CBI, wherein the Hon’ble High

Court while allowing the appeal preferred by the appellant /accused emphasized on the factors as to why valuation was made on the basis of CPDW Manual and not on the basis APWD schedule of rates. However in this case certain registers containing day to day expenses incurred by the accused during the construction of the building were not taken into consideration by the investigation agency.

55.In this case on hand evidently A2 did not furnish any registers, receipts or documents pertaining to the cost of construction of the building under discussion. As stated by PW.48 in absence of any purchase bills, detailed drawings, the accurate method for calculating the cost of construction is based on plinth area method. PW.48 in the cross examination he stated that “ I valued the cost of building based on Delhi plinth area rate as on 01.01.1992 and enhanced cost indexed of Itchapuram issued by

Chief Engineer, South Zone-II, Central Public work Department, Hyderabad. The basic rate was 2810 per sq.mts for the buildings which were constructed that the height of 2.90mts as on 01.01.1992. The subject building of A2 was constructed at the height of 3.14mts and the applicable basic rate is 2870 per sq.mts or 267 per sq.feet as on 01.01.1992 as per the norms of Government of India. The basic rates for the buildings 39 C.C. 13/2008/I CBI COURT/VSP constructed at a height of 3.14metres in the area of Itchapuram are enhanced to

Rs.429/- per sq.feet after enhancement with the cost index for Itchapuram dt.01.06.1998 given by Chief Engineer, Sough Zone-II, Central Public Works

Department, Hyderabad. The basic rate for the buildings constructed at a height of 3.14 metres in the area of Itchapuram with internal electrical, water supply, sanitary installations and external service connections is comes to Rs.477/- per sq.feet of plinth area”.

56.PW.48 is Executive Engineer, CPWD, Vijayawada his evaluation of cost of construction is based upon technical specification and details of expenditure worked out based upon the plinth area rates determined by CPWD. Evidently the construction of the building and discussion was carried in the year 1998 -1999. The cost of evaluation under Ex.P112 was made by PW.48 in the year 2007 wherein the accused got evaluated the same through DW.16 in the year 2017. The report under

Ex.P112 categorically discloses the possible measurements, area, fixtures, nature of construction including the building plan. The report issued by DW.16 was completely based upon the plinth area rates mentioned under Ex.X14 which is only a Xerox copy.

Further DW.16 in his cross examination admitted that he did not enclose any structural grounds to his report under Ex.X11 and Ex.X12 and he prepared the same directly without preparing any rough work and he excluded the path way in the plinth area of the building. He further stated that he did not enclose any drawings to his report or mentioned the number of doors and windows of the building assessed. His admission further disclose that his report was not supported by any document with regard to the nature of construction of walls i.e., full brick wall and half brick wall and he specifically stated he did not pursue any bills in the name of A2. The oral analysis of evidence of

DW.16 categorically shows there no convincing reasons for concession given by him in Ex.X14 comparatively with Ex.P113 issued by PW.48. PW.48 admittedly excluded rebated towards self supervision in his report. However based up on the material evidence on record and corresponding documents certain facts cannot be ignored. It is pertinent that the brothers of A2 were residing in Sompeta, it is natural for A2 and his 40 C.C. 13/2008/I CBI COURT/VSP family members to prefer to supervise the construction themselves instead of engaging the services of salaried engineer or some other person. In a minor construction like residential house concession for self supervision of construction is not extraneous.

Therefore ten percentage of the total cost as rebate for self supervision concluded by

DW.16 can be reasonably extended to the accused. Accordingly benefit of

Rs.93,000/- is given to accused. Further in the light of the opinion of Hon’ble High Court of Kerala in C.S.Danial Vs. Dy. Commissioner of Income Tax, Central circle it is evidence the cost of construction material, labour cost defers from State to State and from major Cities to minor Towns. Therefore considering huge difference in assuming cost of construction in a Town like Sompeta with that of the higher rates at new Delhi 17.27% i.e., Rs.1,60,585/- of difference in cost index of construction was as mentioned in Ex.X14 is benefited to the accused. Accordingly excluding the amount of (Rs.1,60,585+93000)Rs.2,53,585/- from Rs.9,30,000 the cost of construction of building at Dr.No.3-1-16 in the name of A2 at Sompeta is held as Rs.6,76,415/-.

Item No.17:

57.Item No.17 is Opel Corsa 1.4 GLS purchased in 2002 in the name of Sri

T.Bhanoji Rao vide invoice No.952, dt:12-6-2002. The value of assets is mentioned as

Rs.7,00,996/- as per the prosecution. To prove the transaction the prosecution examined PW.11 and got marked Ex.P29. The version of the accused is that Item

No.17 was purchased on exchange of his old Santro Car for value Rs.3,95,996/- only an amount of Rs.3,10,000/- was paid for the new car. In this context when we look into the evidence PW.11 he stated that as per the contents of Ex.P29 “A1 exchanged

Santro car and purchased new Opel Corsa and the value of car was Rs.6,05,744/-.

The exchange of old Santro was Rs.3,90,996/-. The rest of the amount of

Rs.3,10,000/- for the new car paid by A1”.

58.In this regard in addition to the evidence of PW.11 it is important to look into the contents of Ex.P62(A) Annual property return for the year 2004 filed by A1. Ex.P62(A) pertaining to a movable properties categorically shows the acquisition of Opel Corsa 41 C.C. 13/2008/I CBI COURT/VSP

Car for Rs.6,05,744/- by A1 and has informed to the HO vide letter dated 19.06.2002.

The corresponding letter dated 19.06.2002 discloses that A1 has purchased the above said car for Rs.6,05,744/- from Sumitra Motors and meet the expenditure by availing loan of Rs.4,00,000/- from the Associates Indian Financial Service Ltd., and

Rs.1,94,635/- from the sale proceeds of Old Santro Car at Rs.3,40,000/- out of which the remaining Rs.1,45,365/- was repaid to the earlier finance taken from State Bank of

Hyderabad for purchase of the said car vide cheque No.300215 drawn on State Bank of Hyderabad. The balance amount of Rs.11,109/- was shown from his salary savings. The benefit of Rs.4,00,000/- loan from the Associates Indian Financial Service

Ltd., and Rs.1,94,635/- from the sale proceeds of Old Santro Car were given benefit to the accused in his income under Statement-C. It is also pertinent that the purchase and sale of the Old Santro car was also look into the check period and dealt at the appropriate column in Statements C and D. Accordingly the contention of the accused that he incurred only Rs.3,10,000/- for the new car cannot be admitted. Therefore taking into consideration the evidence of PW.11, the contents of Ex.P62(A) and Ex.P29 the value of item No.17 is fixed at Rs.6,05,744 only.

Item No.18(a):

59.Item No.18(a) is Hero Honda CBZ Disc.self Black purchased by Sri T.Bhanoji

Rao on 22-09-04 from Annapurna Auto Agencies, Guntur vide Invoice No.4503026

dt:22-09-04. The value of assets is mentioned as Rs.66,197/- as per the prosecution.

As per the written arguments the prosecution relied upon the evidence of PW.27 and

PW.45 and contents of Ex.P57 and Ex.P105. Wherein Ex.P57 pay particulars of A1 from

April, 1992 to January, 2006 along with a covering letter dated 16-02-2006 and ex.P105 is the search list. The contention of the accused is that no specific evidence led by the prosecution on this aspect. However the contents of Ex.P62(A) categorically shows the accusation of Hero Honda CBZ for consideration Rs.59,050/- and the same was informed to the HO vide letter dated 11.10.2004. The close perusal of the letter dated 11.10.2004 at page No.265 of Ex.P62 shows that the accused purchased the said 42 C.C. 13/2008/I CBI COURT/VSP vehicle from M/s Annapoorna Auto Agencies , Guntur for total value Rs.66,194/- including taxes and registration charges. The expenditure incurred was explained as follows : Sale of old vehicle i.e., CBZ Hero Honda purchased in the year 1999 to Sri

Kalyan Chakravathi for Rs.40,000/- on 17.9.2004 and the rest of the amount of

Rs.26,194/- was accumulated from the salary savings. The accused cannot deviate from his own admissions under Ex.P62. Further the sale proceeds of old CBZ Hero

Honda was given benefit to the accused under Statement-C at column No.28. It is

also pertinent that the purchase and sale of this old vehicle was during the check period and no benefit can be given to the accused specifically. Therefore the value of item

No.18(a) is fixed at Rs.66,194/-

Item No.18(b):

60.Item No.18(b) is Special Term Deposit vide Account No.0129 200 9367/ 52099631195 taken on 18-10-2002 by Sri T.Bhanoji Rao from State Bank of Hyderabad,

Arundelpeta, Guntur. The value of assets is mentioned as Rs.20,000/- as per the prosecution. The prosecution got examined PW.5 on this aspect and got marked

Ex.P10. Ex.P10 is Term Deposit Account No. 0129 200 9367 with outstanding amount

Rs.23,935.41ps as on 18.04.2005. The contention of the accused is that the documents under Ex.P10 is not certified in accordance Section 2(A) of Bankers Book of

Evidence Act and 65(B) of Indian Evidence Act and are inadmissible in evidence.

However on close perusal of the document Ex.P10 is validly certified under Bankers

Book Evidence and Information Technology Act, 2000 by the Systems Manager and also the Branch Manager. Accordingly the objection raised by the defence does not holds good. Further as per the contents of Ex.P10 the Term Deposit under Item No.18 was opened by the accused on 18.10.2002 by depositing an amount of Rs.20,000/- and the total amount with accrued interest as on 18.04.2005 is Rs.23,935.41ps. As the term deposit was made during the check period the value of the asset excluding the interest is concluded as 20,000/-.

Item No.19:

43 C.C. 13/2008/I CBI COURT/VSP

61.Item No.19 is Special Term Deposit vide Account No.0129 2011 08300/ 52099636079 taken on 28-09-2010 by Sri T.Deepak S/o. Bhanoji Rao from State Bank of Hyderabad, Arundelpeta, Guntur. The value of assets is mentioned as Rs.20,000/- as per the prosecution. The prosecution got examined PW.5 on this aspect and got marked Ex.P15. Ex.P15 is statement of Special Term Deposit Account No. 0129 2011 08300 in the name of son of the accused Sri T.Deepak with outstanding amount

Rs.71,550.78ps as on 09.06.2005. The contention of the accused is that the documents under Ex.P15 is not certified in accordance Section 2(A) of Bankers Book of

Evidence Act and 65(B) of Indian Evidence Act and are inadmissible in evidence.

Contrarily Ex.P15 is validly certified under Bankers Book Evidence and Information

Technology Act, 2000 by the Systems Manager and also the Branch Manager.

Accordingly the objection raised by the defence does not holds good. Further as per the contents of Ex.P15 the Term Deposit under Item No.19 was opened by the accused on 31.07.2002 by depositing an amount of Rs.44,757/- and the total amount with accrued interest as on 09.06.2005 is Rs.71,550.78ps. As the term deposit was made during the check period the value of the asset excluding the interest is concluded as 44,757/-.

Item No.20:

62.Item No.20 is Special Term Deposit Account No.01292011083 / 52099636068 taken on 28-09-2010 by Sri T.Deepak S/o Bhanoji Rao from State Bank of Hyderabad,

Arundelpeta, Guntur which was matured on 09-06-2000. The value of assets is mentioned as Rs.20,000/- as per the prosecution. No evidence either oral or documentary was led by the prosecution on this aspect. Accordingly this item is excluded from Statement-B.

Item No.21:

63.Item No.21 is Special Term Deposit Account No.0129 2011 08301/ 52099636080 taken by Sri T.Deepak S/o.Bhanoji Rao from State Bank of Hyderabad, Arundelpeta, 44 C.C. 13/2008/I CBI COURT/VSP

Guntur which was matured on 28-09-2000. The value of asset is mentioned as

Rs.20,000/- as per the prosecution. The prosecution on this aspect got marked Ex.P14 through PW.5. As per Ex.P14 the opening balance of the account as on 31.07.2000 is

Rs.29,838/-and closing balance along with accrued interest as on 28.06.2005 is

Rs.47,700/-. However as per the prosecution the initial deposit was only Rs.20,000/- deposited earlier and the same was matured on 28.09.2000 and subsequently reinvested as under Ex.P14. There is no dispute with regard to the initial deposit of

Rs.20,000/- . Accordingly the value of the assets under Item No.21 is concluded as

Rs.20,000/-.

Item Nos.22 to 25:

64.The common contention of the counsel for the accused with regard to item

No.22 to 24 the exhibits marked under Ex.39, Ex.P46, Ex.P44 through PW.15 are inadmissible for want of certification. However as there is valid certification on the back side of the document which was explained supra. The question of admissibility was answered positively in favour of the prosecution. There is no dispute with regard to the initial deposits which were evidently made during the check period. Therefore excluding the rate of interest the initial deposit under Item Nos.22 to 24 is concluded as mentioned under Statement-B as follows:

65.Item No.22 is FDR A/c No.396091009294 in ING Vysya Bank, Arundelpeta

Branch, Guntur in the name of Smt T.Aruna. The value of asset is mentioned as

Rs.10,000/- as per the prosecution. The prosecution examined PW.15 Sri

B.V.Chalamayya the then Branch Manager, ING Vysya Bank, Arundelpeta Branch,

Guntur and got marked Ex.P39. Ex.P39 is the statement of account No.

396091009294 standing in the name of A2 opened on 11.08.2001 with initial deposit of

Rs.10,000/-. The interest accrued till January, 2006 is Rs.5,277/-. . However there is no evidence that this FD amount was withdrawn by A2 during the check period.

Accordingly the value of this investment is fixed as per initial deposit of Rs.10,000/-.

45 C.C. 13/2008/I CBI COURT/VSP

66.Item No.23 is FDR A/c No.396092133611 in ING Vysya Bank, Arundelpeta

Branch, Guntur in the name of Smt T.Aruna The value of asset is mentioned as

Rs.2,50,000/- as per the prosecution.The prosecution examined PW.15 Sri

B.V.Chalamayya the then Branch Manager, ING Vysya Bank, Arundelpeta Branch,

Guntur and got marked Ex.P46. Ex.P46 is the statement of account No.

396092133611 standing in the name of A2 opened on 18.07.2005 with initial deposit of

Rs.2,50,000/-. The interest accrued till January, 2006 is Rs.16,188/-. However there is no evidence that this FD amount was withdrawn by A2 during the check period.

Accordingly the value of this investment is fixed as per initial deposit of Rs.2,50,000/-.

67.Item No.24 is FDR A/c No.396092078580 in ING Vysya Bank, Arundelpeta

Branch, Guntur in the name of Smt T.Aruna . The value of asset is mentioned as

Rs.11,042/- as per the prosecution. On this aspect the prosecution examined PW.15

Sri B.V.Chalamayya the then Branch Manager, ING Vysya Bank, Arundelpeta Branch,

Guntur and got marked Ex.P44. Ex.P44 is the statement of account No.

396092078580 standing in the name of A2 opened on 23.08.2004 with initial deposit of

Rs.11,042/-. The interest accrued till January, 2006 is Rs.4057/-. However there is no evidence that this FD amount was withdrawn by A2 during the check period.

Accordingly the value of this investment is fixed as per initial deposit of Rs.11,042/-.

68.Item No.25 is Term Deposit Account No.52099630849 taken by Smt T.Aruna/A2 for Sandeep from State Bank of Hyderabad, Arundelpeta, Guntur which was matured on 09-06-2000. The value of assets is mentioned as Rs.30,000/- as per the prosecution.

The prosecution examined PW.5 and got marked Ex.P12. Ex.P12 is the statement of account No.52099630849 standing in the name of A2 and her son Sandeep opened on 21.10.2000 with Rs.46,507/-. However as per the prosecution the initial deposit was only Rs.30,000/- deposited 09.06.1997 and the same was matured on 09.06.2000 and subsequently reinvested as under Ex.P12. There is no dispute with regard to the initial deposit of Rs.30,000/- and the same was concluded as value of this item .

Item No.26 46 C.C. 13/2008/I CBI COURT/VSP

69.Item No.26 is Term Deposit Account No.52099630838 taken on 09-06-97 by Smt

T.Aruna/A2 for Sandeep from State Bank of Hyderabad, Arundelpeta, Guntur which was matured on 09-06-2000. The value of assets is mentioned as Rs.20,000/- as per the prosecution. The prosecution did not adduce any evidence either oral or documentary as proof of asset under this item, accordingly Item no.26 is excluded from the assets of accused under Statement-B.

Item No.27(a):

70.Item No.27(a) is Term Deposit Account No.52099630827 taken on 09-06-1997 by

Smt T.Aruna/A2 from State bank of Hyderabad, Arundelpeta, Guntur. The value of assets is mentioned as Rs.40,000/- as per the prosecution.The prosecution did not adduce any evidence either oral or documentary as proof of asset under this item, accordingly Item No.27(a) is excluded from the assets of accused under Statement-B.

Item No.27(b) to (g):

71.Item No.27(b) is Term Deposit Account No.754092046320 in the name of Sri

T.Deepak taken on 27-05-05 at ING Vysya Bank, Vidyanagar Branch Guntur. The value of assets is mentioned as Rs.83,024/- as per the prosecution. Item No.27(c) is Term

Deposit Account No.754092046331 in the name of Sri T.Deepak taken on 27-05-05 at

ING Vysya Bank, Vidyanagar Branch, Guntur. The value of assets is mentioned as

Rs.83,024/- as per the prosecution. Item No.27(d) is Term Deposit Account

No.754092046342 in the name of Sri T.Deepak taken on 27-05-05 at ING Vysya Bank,

Vidyanagar Branch, Guntur. The value of assets is mentioned as Rs.83,024/- as per the prosecution.Item No.27(e) is Term Deposit account No.754092046353 in the name of

Sri T.Deepak taken on 27-05-05 at ING Vysya Bank, Vidyanagar Branch, Guntur. The value of assets is mentioned as Rs.83,024/- as per the prosecution.Item No.27(f) is

Term Deposit Account No.754092046364 in the name of Sri T.Deepak taken on 27-05- 05 at ING Vysya Bank, Vidyanagar Branch, Guntur. The value of assets is mentioned 47 C.C. 13/2008/I CBI COURT/VSP as Rs.83,024/- as per the prosecution. Item No.27(g) is Term Deposit Account

No.754092046375 in the name of Sri T.Deepak taken on 27-05-05 at ING Vysya Bank,

Vidyanagar Branch, Guntur. The value of assets is mentioned as Rs.83,024/- as per the prosecution.

72. The above referred Term deposits 6 in number were taken in the name of

T.Deepak son of accused on 27.05.2005 at ING Vysya Bank, Vidyanagar Branch,

Guntur for an amount of Rs.83,024/- and were withdrawn along with accrued interest in different dates in the year 2006. The total amount deposited is Rs.4,98,144/- and the interest accrued by the time of withdrawing the deposit is Rs.28,912/-. The main contention of the accused is that all these term deposits were made by his son

T.Deepak who was having independent source of income by the year 2005 and cannot be added to the accused. However whether the son of accused T.Deepak has independent source of income or not shall be determined subsequently at appropriate stage. At this point with regard to the value of investment the prosecution examined

PW.24 and got marked Ex.P63. As per the contents of Ex.P63 all the SB accounts in the name of T.Deepak were opened on 27.05.2005 by depositing initial amount of

Rs.83,024/- and the said TDRs six in number were closed by withdrawing the amount in the year 2006. There is no specific denial with regard to this amounts in the cross examination and the evidence led by the prosecution sufficiently proves the transactions. Therefore the value of these investments was taken as mentioned under statement-B.

Item No.28:

73.Item No.28 is Kisan Vikas Patras in the name of Smt T.Aruna purchased during 2000-2001. The value of assets is mentioned as Rs.30,000/- as per the prosecution. To prove the assets the prosecution examined PW.37 who worked as Head postmaster,

Arundelpeta, Guntur from 2007 to 2011. According to PW.37 A2 was having Kisan

Vikas Patras for Rs.30,000/- dated 02.11.2000 and got matured on 09.05.2007 for

Rs.60,000/-. The copy of KVP application dated 02.11.2000 is marked as Ex.P77.

48 C.C. 13/2008/I CBI COURT/VSP

The argument of the defence is that this document inadmissible in evidence as it is not the original document. Evidently Ex.P77 is the Photostat copy certified by the PW.7.

However with regard to this investment by A2 in addition to the evidence of PW.7 , the evidence of PW.10 also contributes. PW.10 is the Income Tax Officer and he testified about the income tax returns filed by A2 for the assessment year 1998 to 2007.

According to the contents of Ex.P28 IT returns filed by A2 for the assessment year 2006-2007 she disclosesthe value of Kisan Vikas Patras purchased during year 2000-2001 as Rs.30,000/-. These IT returns were not in dispute by the accused.

Accordingly the contents of Ex.P77 are considered corroborated to the contents of

Ex.P28 which is not in dispute. Accordingly the value of asset under Item no.28 of

Statement –B is concluded as Rs.30,000/-

Item Nos.29 to 39:

74.Item No.29 is 100 Units of UTI Rights 1994 face value of Rs.10 each purchased by Sri T.Bhanoji Rao vide Certificate No.03393807 on 01-07-1994 worth Rs.1,000/-.

Item No.30 is 100 units of UTI Rights 1994 face value of Rs.10 each purchased by Sri

T.Bhanoji Rao vide certificate No.03393808 on 01-07-1994 worth Rs.1,000/-. Item

No.31 is 100 units of UTI Rights 1994 face value of Rs.10 each purchased by Sri

T.Bhanoji Rao vide certificate No.03393809 on 01-07-1994 worth Rs.1,000/- Item

No.32 is 100 units of UTI Rights 1994 face value of Rs.10 each purchased by Sri

T.Bhanoji Rao vide certificate No.03393810 on 01-07-1994 worth Rs.1,000/-. Item

No.33 is 66 units of UTI Rights 1994 face value of Rs.10 each purchased by Sri

T.Bhanoji Rao vide certificate No.03393808 on 01-07-1994 worth Rs.660/-. Item No.35 is 16 units of UTI Master Shares face value of Rs.10 each purchased by Sri T.Bhanoji

Rao vide certificate No.00077781 worth Rs.160/-. Item No.36 is 20 units of UTI Master shares face value of Rs.10 each purchased by Sri T.Bhanoji Rao vide certificate

No.00144892. The value of assets is mentioned as Rs.200/- as per the prosecution.

Item No.37 is 10 units of UTI Master shares face value of Rs.10 each purchased by Sri

T.Bhanoji Rao vide certificate no.00144893. The value of asset is mentioned as 49 C.C. 13/2008/I CBI COURT/VSP

Rs.100/- as per the prosecution. Item No.38 is 05 units of UTI Master shares face value of Rs.10/- each purchased by Sri T.Bhanoji Rao vide certificate no.00144894. The value of asset is mentioned as Rs.50/- as per the prosecution. Item No.39 is 01 unit of UTI

Master share face value of Rs.10/- each purchased by Sri T.Bhanoji Rao vide certificate

No.00144895. The value of asset is mentioned as Rs.10/- as per the prosecution.

75.All the items under Items Nos.29 to 39 of Statement-B are UTI Rights purchased by A1 during the different periods of the check period. In order to prove this investment the prosecution examined PW.44 and PW.45. PW.45 is mediator who was present along with the investigating officer during the course of search made in the house of A1 at Nalanda Co-operative Housing Society, Mumbai on 25.01.2006.

Ex.P105 file containing 12 sheets of Unit Trust of India, Mutual Funds shares seized from the house of A1 was marked through PW.45. The total value of these shares is

Rs.5,180/-. The contention of the accused is that no specific witness was examined to prove the document under Ex.P105. It is not the version of the accused that Ex.P105 documents were not seized from his residence or the said shares were not standing in his name. Such denial was not suggested during the entire examination of the witnesses. Therefore, the contents of Ex.P105 holds good in the name of A1 and the total investment of Rs.5,180/- under Item Nos.29 to 39 was considered for calculating the assets of A1 under Statement-B.

Item Nos.40 to 43 :

76.Item No.40 is IDBI Bonds purchased during AY 2001-02 for Rs.20,000/-.. Item

No.41 is IDBI Flexi Bonds 6 nos. @ Rs.5,000/- purchased during AY 2003-04 through

SBH cheque No.831022, dt:15-02-03 for Rs.30,000/-.. Item No.42 is IDBI Flexi Bonds 6 nos. @ Rs.5000/- purchased during AY 2004-05 through SBH cheque No.213833,

dt:06-02-04 for Rs.30,000/-. Item No.43 is IDBI Infrastructure Bonds 6 nos. @

Rs.5,000/- purchased during AY 2005-06 for Rs.30,000/-.

50 C.C. 13/2008/I CBI COURT/VSP

77.With regard to this investment the prosecution relied upon the Income tax returns of the A1 and examined PW.13. Ex.P30 to Ex.P35 are Income tax returns of A1 for the assessment year 2001-2002 to assessment year 2006-2007. As per the contents of

Ex.P32 to Ex.P35 IDBI Flexi Bonds under Item No. .40 to 43 are purchased by A1 during the years 2001, 2003, 2004 and 2005. The total value of the assets is

Rs.1,10,000/-. The income tax returns of A1 for the corresponding assessment year 2001-2002 under Ex.P.30, for assessment year 2003-2004 under Ex.P32, for assessment year 2004-2005 under Ex.P33 and for assessment year 2005-2006 under

Ex.P34 categorically discloses that the accused claimed tax rebate under Section 88 for the investment made under Ex.P40 to Ex.P43. These Income Tax returns of the accused are not in dispute and the relevant investment receipts were enclosed to the returns in copy. Further the purchase of these IDBI flex Bonds was intimated to

General Manager, CCI vide original letter 06.02.2004 by A1 at page No.235 of Ex.P62.

Accordingly further evidence with regard to the admitted contents is not warranted and the Court therefore concludes the investment under Item Nos.40 to 43 as per

Statement-B.

Item No.44:

78.Item No.44 is ICICI Bonds purchased during AY 2002-03 for Rs.20,000/-. The.

With regard to this investment the prosecution relied upon the Income tax returns of the

A1 under Ex.P31 for the assessment year 2002-2003 marked through PW.13. As per the contents of Ex.P31 the accused claimed rebate under Section 88 in view of purchase of ICICI Bonds for Rs.20,000/- during the said assessment year. The income tax returns are not in dispute. Accordingly the value of investment under Item No.44 is concluded as Rs.20,000/- as per Statement-B.

Item No.45:

51 C.C. 13/2008/I CBI COURT/VSP

79.Item No.45 is ICICI Bond purchased vide receipt No.322783, dt.:24-03-2000. The value of assets is mentioned as Rs.10,000/- as per the prosecution. Prosecution relied upon the evidence of PW.44 on this aspect . PW.44 is the mediator for conducting search in the house of A1 at Vidyanagar, Guntur on 25.01.2006. Ex.P99 Income tax file of T.Bhanoji Rao which contains 386 sheets seized from the house of accused was marked through PW.44. The page No.54 of Ex.P99 is the receipt of ICICI Bonds with numbers 322783-322784. Further the income tax returns of A1 for assessment year 2000-2001 at page No.44 to 46 of Ex.P99 also corroborate the fact that the accused claimed rebate under Section 88(A) for purchase of ICICI Bond of Rs.10,000/- during the financial year 1999-2000. Accordingly the value of the investment is ascertained as

Rs.10,000/-.

Item No.46:

80.Item No.46 is Investment by Smt Tankala Aruna in ING Vysya Select Debt Fund growth. The value of assets is mentioned as Rs.30,000/- as per the prosecution.

PW.45 is mediator who was present along with the investigating officer during the course of search made in the house of A1 at Nalanda Co-operative Housing Society,

Mumbai on 25.01.2006. Ex.P104 bunch of documents seized from the house of A1 containing 199 sheets was marked through PW.45. On this aspect the prosecution relied upon the contents of PW.45 and contents of Ex.P104. Page No.74 of Ex.P104 is the original Annual Account statement from 01.04.2004 to 31.03.2005 with regard to

ING Vysya Mutual Fund in the name of A2 for an amount of Rs.30,000/- purchased 12.09.2004. The documents under Ex.P104 were seized from the custody of accused and there is no specific denial on this aspect. The contents of original document are self-subsistent for the proof of investment under Item No.46 and the value of the investment was concluded as Rs.30,000/- as mentioned under Statement-B.

Item No.47:

52 C.C. 13/2008/I CBI COURT/VSP

81.Item No.47 is Investment in ING Life Insurance in the name of Smt T.Aruna/A2 payment through cheques No.800263, dt:06-12-05; 800265, dt.:16-12-2005; 800266,

dt.:19-12-2005, 800267, dt.:19-12-2005; 800268, dt.: 19-12-05 for a total Rs.2,00,000/-

The value of asset is mentioned as Rs.2,00,000/- as per the prosecution. With regard to this item the prosecution examined PW.53, Operation Lead Customer Services,

Excide Life Insurance, Vijayawada formerly known as ING Vysya Life Insurance,

Vijayawada. According to him ING Vysya Life Insurance issued acknowledgments under Page Nos.91 to 95 of Ex.P104 in favour of A2 on 19.12.2005 for cheques worth

Rs.48,000/-, Rs.48,000/-, Rs.48,000/-, Rs.48,000/- and Rs.80,000/-. The contention of the accused is that PW.53 has no personal knowledge about the transaction.

However the contents of original documents under Ex.P104 which were seized from the custody of accused cannot be negated. Therefore in absence of any contradicting evidence, the investment under Item no.47 of Statement-B is concluded as Rs.2,00,000/-.

Item No.48 and Item No.49:

82.Item No.48 is Bonds purchased Vyswam Agro Generics Pvt. Ltd., in the name of

Sri T.Deepak. The value of assets is mentioned as Rs.620/- as per the prosecution.

Item No.49 is Bonds purchased Vyswam Agro Generics Pvt. Ltd., in the name of Sri

T.Sandeep The value of assets is mentioned as Rs.620/- as per the prosecution. The prosecution except marking File contains loose sheets numbering 1 to 168 under

Ex.P120 through PW.43 did not led any specific evidence on this aspect. The two unspecified receipts without any determined terms at page No.64 and 65 of the file are insufficient to prove the investment under Item Nos.48 and 49. Accordingly these items were deleted from the assets of the accused under Statement-B.

Item No.50:

83.Item No.50 is cash of Rs.1,27,470/- was found from the Almirah during the house search of Sri T.Bhanoji Rao. The said amount was incorporated in the inventory. The 53 C.C. 13/2008/I CBI COURT/VSP above said amount has been included in Statement-B i.e., assets at the end of check period. With regard to this item the prosecution relied upon the evidence of PW.44

Smt.V.Lakshmi, the then Income Tax Inspector, Grade-I, Vijayawada . PW.44 acted as mediator for search of house of accused at Vidyanagar, Guntur. According to PW.44 documents and cash of Rs.1,25,000/- along with the other items were seized from the house of the accused. In fact PW.43 the then Inspector of Police Sri N.Raja Rao initially investigated the case against the accused after registering the crime under

Ex.P93 FIR. According to PW.43 he conducted search of the house of A1 at Guntur bearing Door No.4-29/74(A), 4/4 Vidyanagar in presence of mediator Sri G.Azmathulla and Smt.V.Lakshmi PW.44. He prepared inventory of articles found in the house. He further stated that they found cash of Rs.1,27,470/- and out of the said amount

Rs.1,20,000/- was seized as recited in the inventory list. Though this amount was reflected in Ex.P96 Inventory memo the same was not produced before this Court by the investigating officer. Accordingly the mere averment in Ex.P96 and oral evidence of

PW.43 and PW.44 does not substantiated the proof of this item under Statements and accordingly deleted from the assets of the accused under Statement-B.

Item No.51:

84.Item No.51 is Balance in SB A/c 52099594468 in the name of Sri T.Bhanoji

Rao/A1 in State Bank of Hyderabad, Arundelpeta Branch, Guntur. The value of assets is mentioned as Rs.1,33,804/- as per the prosecution. The prosecution got marked the corresponding statement of account standing in the name of T.Bhanoji Rao/A1 as

Ex.P126 through PW.51 Smt.Vasantha Malini Investigating officer who conducted further investigation. As per the contents of Ex.P126 the balance amount in the account as on 16.01.2006 is Rs.1,33,804/-. However the close perusal of Ex.P126 categorically discloses the deposits including the salary of the accused which was claimed as income under Statement-C. The prosecution did not examine any concerned bank officials to determine the breakup between the deposits, interest credited and other particulars. Accordingly for want of sufficient evidence for proof of 54 C.C. 13/2008/I CBI COURT/VSP content under Ex.P116 the asset under item No.51 of Statement-B is held as not proved.

Item No.52:

85.Item No.52 is Balance in SB A/c No.36248 in ING Vysya Bank, Arundelpeta

Branch, Guntur in the name of Smt T.Aruna. The value of asset is mentioned as

Rs.65,109/- as per the prosecution. The prosecution examined the then Branch

Manager, ING Vysya Bank, Arundelpeta Branch, Guntur as PW.15. According to Pw.15 he furnished statement of account of SB A/c no.396010036248 of A2 under Ex.P36 at the request of CBI. However PW.15 did not state anything about the transactions under this account except stating that this account was opened on 24.10.2002. Even as per the contents of Ex.P36 there are multiple transactions under this statement including the interest part, which without any specific evidence cannot be tagged to the assets of the accused. Accordingly this item deleted from the assets of the accused for want of sufficient evidence.

Item No.53:

86.Item No.53 is House hold articles in the inventory during the check period. The value of assets is mentioned as Rs.6,94,586/- as per the prosecution.The prosecution relied upon the contents of Ex.P96 Inventory memo for calculating the value of household articles which was marked through PW.44. According to PW.44 articles found in the house were also prepared as Inventory list, wife of Bhanoji Rao explained about the acquisition and value of some of the items also mentioned that some items were gifted and somewhere acquired. She also testified about inventory of gold items found in the house of accused which was marked under Ex.P98. PW.44 identified her signatures on Ex.P96 and Ex.P98 and stated that A2 Aruna and her son signed on the inventory list. The counsel for accused raised objection for marking

Ex.P96 and Ex.P98 as they were xerox copies. It is further argued that the investigating officer did not depose anything about these articles under Ex.P96 and 55 C.C. 13/2008/I CBI COURT/VSP

Ex.P98 and in absence of substantial evidence the value household articles is to be deducted. Evidently Xerox copies of inventories were marked under Ex.P96 and

Ex.P98 wherein the originals were found missing at the time of trial. It is admitted that Photostat copies does not take place of primary evidence. However under

Section 63 of Indian Evidence Act one of the category of secondary evidence is mechanical reproduction of the original. There cannot be a better mechanical reproduction of original document than a Xerox copy or Photostat copy. Therefore the

Photostat copy can certainly be received as secondary evidence subject to the condition laid down under Section 65 of the Act. Pertinently Section 65(c ) deals with cases under which secondary evidence relating to documents may be given and it includes the circumstances wherein the original has been destroyed or lost or when the party offering the evidence of its contents cannot for any other reason not arising from his own default or neglect or produce it reasonable time. The case in this hand sufficiently falls into ambit of Section 65(c) and the merits of investigation cannot be prejudiced for missing of original. Further contradicting to the contention raised by the counsel PW.43 the investigating officer in his evidence categorically testified about the search of house of accused at Guntur in presence of independent mediator Sri

Azmathulla and V.Laxmi(PW.44) and he prepared the inventory list of the articles found in the house. Therefore the contents of Ex.P96 and Ex.P98 are relied upon to calculate the value of household items possessed by the accused. It is evident on record that the value of the household articles was furnished by A2 as per the contents of Ex.P96 and Ex.P98 and the evidence of PW.43. This fact was not denied throughout. Therefore the excluding items acquired by the accused prior to the check period the value of household articles under Item No.53 were held at Rs. 5,94,483/-.

The corresponding list was extracted below

INVENTORY

Ground floor :Atrum Sl.No.Item No.Year of Value Acquisition 1Pedestal Fan, Crompton 20002000

2.Steel Corner Stand 20031200 56 C.C. 13/2008/I CBI COURT/VSP

3. Ceramic Flower wase 2003600

4.Carpet 20001000

5.Ganesh Idol 20002000

6.Venetian blinds 20049000 Total 15800 Hall behind Atrum: Sl.No.Item No.Year of Value Acquisition

1.Kitechen Wooden 20042000 cupboard with marble top

2.Damro Wooden Cupboard20031500

3.Ceiling Fan, Watchman 2003500 room Total 4000 Store room :

Sl.No.Item No.Year of Value Acquisition

1.TV Stand 19961000

2.Construction Iron stand 20002000 4 in No.

3.Cup, saucers and bowls 19971000 30sets Total 4000 Parking area: Sl.No.Item No.Year of Value Acquisition 1Kumar 1 HP Motor pump 20002000 set

2.Cement flower pots with 2001625 iron stand (kundies) 25 Nos.

3.Cement flower pots 2001500 (empty) (35 Nos) Total 3125

Dinning space : Sl.No.Item No.Year of Value Acquisition

1.Wooden dining table (Teak 199818000 with 6 chairs

2.One Nova Pedestal fan 20022000

3.Bath Room mirror at wash 2000300 basin

4.Glass tumblers (3 2000450 sets)@Rs150/-

5.Ice cream bowls(1 set )2001100 6One glass tumbler 2000160 7One set whisky glass 2000200 8One set small ice cream 2000100 9 One set dessert bowl 2000100 10La-opala desset set 2002300 113 sets fruit forks 2004300 Total 22,010 57 C.C. 13/2008/I CBI COURT/VSP

b) Master Bed Room S.No.Description of the articleYear of Value acquisition(Approx) in Rs. 1Daikin Spilt AC200314,000 2Teak wood double cot 19958,000 with mattresses 3Sony sound system19992,000 4Crompton Greaves 2000850 Ceiling fan 5Wooden side rack20021,000 6Wooden corner table with20021,500 brass designing 7Wooden stand20001,000 8Wooden flower vase1999500 9Wooden stool with 2002250 decorated brass sheet 10Gun metal Radhakrishna 2005800 idol 11Wrist watches of assorted2000-052,000 companies 12Samsong Model:SGH 20035000 X640. Air Tel 9866320951 13One wooden cot199913,000 14One Mattress Kurl on 19992,000 15Pillows (2 Nos.)1999400 16One wooden decorative 2005600 stool 17Two blankits19991500 18Yashica M-6161995800 19Digital diary1995600 20One splash bed sheet20051099 21One splash bed sheet2005699 Total 57,598

C) Connecting room between Master Bed Room and Bath Room: S.No.Description of the articleYear of Value Acquisition(Approx) in Rs. 1Orient Ceiling Fan2002500 2Shirts and trousers (175 1995-0587,500 pairs) @ Rs.500/- 3Quartz arrees Wrist watch20051,200 4Wall Mirror2002200 5Wooden tool with marble 2002500 top 6Asian small ceiling fan2002300 7Mirror at wash basin2002150 90,350

d) Bathroom of Master Bedroom 58 C.C. 13/2008/I CBI COURT/VSP

S.No.Description of the articleYear of Value(App Acquisitionrox) in Rs. 1Plastic bucket with Mug200580 Total 80

e) Puja Room S.No.Description of the articleYear of Value acquisition(Approx) in Rs. 1Wooden Puja 200115,000/- Mandiram(Teak) 2Silk Sarees (Pattu 3 20031,800 NOs.@ Rs.600/-) 3Silver peetakam(500 19904,000 Gms) 4One Small ceiling fan2003500 Total 21,300

f) Study: S.No.Description of the articleYear of Value acquisition(Approx) in Rs. 13 Piece leather Damro 200425,000 Sofa set 2Wooden corner 20031,500 stands(3) 3Small wooden stands(2)20031,000 4Flower vase Ceramic(2)20031,000 5Flower vase wooden(2)1998300 6Stools wooden 1998300 decorated(2) 7BPL 21’’TV199816,000 8V.Guard Voltage 1998300 stabilizer 9Decorative figurine19991500 10Big Bobby doll2004600 11One statue of laughing 20025000 Buddha 12Bunch of plastic flowers2003300 13One Crompton Greaves 2003500 ceiling fan 14DVDs(7)@Rs.150/-19991,050 15VCDs(20)@Rs.80/-19991,600 55,950

g) Kitchen S.No.Description of the articleYear of Value acquisition(Approx) in Rs. 1BPL double door 150 Ltr.199610,000 2National Microvave over20024,000 3National Rice Cooker20021,500 4Philips Electric toaster2002700 5Sumeet Mixer Grinder20002,000 6Kaff Gas Stove200410,000 7Kaff Electric Chimney20048,000 59 C.C. 13/2008/I CBI COURT/VSP 8Altra Wet Grinder20022,500 9Aqua Guard Eureka19982,000 10Preeti Chefpro Plus2002500 41,200

h) Rear Verandah: S.No.Description of the articleYear of Value acquisition(Approx) in Rs. 1Plastic Tea Poy with 2 19981,000 Chairs 2Khaitan Ceiling fan1990700 3Wooden Kitchen table20021,500 4One hanging kain chair 2001700 with mattress 5Steel cloth stand2000500 6Ceramic Plant pots (2 200350 Nos.) Total 4450

III. Second Floor Hall S.No.Description of the Year of Value articleacquisition(Approx) in Rs. 1Thread mill (Physque 20039,000 make) 2Ceramic flower wase2003600 3Corner table with 2000350 glass to 4Glass flower wase2004500 5Mini refrigerator20044,000 6Mini Oriental ceiling 2003350 fan 7Damro sofa set (One 20026,000 piece) 8Nova tower fan with 20041,200 remote 9Wooden chairs (2)1997500 10Plastic flower wase2002400 11Plaster of Paris statue1998350 12Curtains2003800 Total 24050

Guest Bed Room S.No.Description of the articleYear of Value acquisition(Approx) in Rs. 1Usha Ceiling Fan2003500 2Aristocrate big size brief 2004500 case 3Steel cloth stand20041,000 4Gun metal statue1998500 5Shoes (6 Pairs)2000-052,400 60 C.C. 13/2008/I CBI COURT/VSP 6Shoes stand2001200 7Cloth bag ( big size)1997500 8Gold ornaments Shown in 99000 separate inventory 8Hand Bag (1)2003400 9Window curtains (2)2003300 10Body building dumbles 2000200 (2) 11Plastic flowers (2Nos.)1997360 Total 6860

Bath Room attached to Guest Bed Room S.No.Description of the articleYear of Value acquisition(Approx) in Rs. 1Racold make Gyeser 20032,000 (Small size) 2Mirror (small)2003200 3Asial Small ceiling fan2003350 4Bath room eminities2004700 Total 3250

Bed Room of Eldest Son (T Deepak) S.No.Description of the articleYear of Value acquisition(Approx) in Rs.

1Style-spa double cot with 200318,000 mattresses and pillows 2Style-spa cup board20037,000 3Decorative items and toys 2000-052,000 (20 Nos) 4Wooden stool with marble 2002500 top 6Damro corner table2001600 7Window curtains2003800 8Ceiling fan(Crompton 2003500 Greives) 12Baloon type plastic seated 2003350 chair Total 29750

D) Dressing room adjacent to bed room of T.Deepak S.No.Description of the articleYear of Value acquisition(Approx) in Rs. 1One Plastic bath room 200380 set 2One closk Tumet make 2000500 (Quartz) 3Akai woofer box2000300 4Flower wases two Nos.1999300 Total 1180

Bed Room of Second Son (T Sandeep) 61 C.C. 13/2008/I CBI COURT/VSP

S.No.Description of the articleYear of Value (Approx) acquisitionin Rs. 1Style-spa 6x6 cot with 200316,000 side tables, mattresses and pillows 2Style-spa cup board20037,000 3LG Split AC200314,000 4Damro corner table2003600 5Wooden stool with 2002400 marble top 6Compac personal 200045,000 computer with revolving chair 7Gautier computer table20001,200 8Video CDs (80) @ 2000-054,800 Rs.60/- 9Audio CDs (70)@ Rs.252000-051,750 10Cross country creative 20042000 speakers 11Curtains2004800 12Decorative toys and 2000-052,000 items (15 Nos.) 13Corner flower wase2003300 14MP3 Player (Car model)20031,000 Total96850

Dressing room adjacent to bed room of T.Sandeep S.No.Description of the articleYear of Value acquisition(Approx) in Rs. 1American tourister brief 2000800 case (1 No.) 2Travel bags (4 Nos.) @ 1995600 Rs.150 3Ganesh idol made with 1997 300 plaster of Paris (2 Nos.) Total 1700

Bath Rom attached to Bed Room of Second Son (T Sandeep) S.No.Description of the Year of Value articleacquisition(Approx) in Rs. 1Cosmetics2005500 2Plastic bath room set200480 Total 580

IV) Roof: Pent house with attached bath room (Store) S.No.Description of the articleYear of Value (Approx) acquisitionin Rs. 1Mattresses (10 Nos.) @ 1995-054,000 Rs.400/- 2Aristorocrat brief cse2000800 3Racold geyser (20Ltrs.)20042,000 62 C.C. 13/2008/I CBI COURT/VSP 4(Black and Decker) Dust 1997250 cleaner 53 window curtains2004300 6AB Kingpro exercise 20023,000 equipment 7Cement Flower pots 2003-051,050 (Kundies) 42 Nos.@ Rs.25/- Total 11400

Total amount of Rs.5,94,483/-

Item No.54:

87.Item No.54 is Balance in SB A/c No.in Andhra Bank, Sompeta Branch, in the name of Smt T.Aruna. The value of asset is mentioned as Rs.1,39,337/- as per the prosecution. To prove this item the prosecution examined PW.39 the then Branch

Manager, Andhra Bank, Sompeta. Statement of SB A/c No.0173 standings in the joint names of A1 and A2 was marked as Ex.P79. As per the contents of Ex.P79 the outstanding amount as on 25.01.2006 in the account is Rs.1,39,337/-. There is no specific objection raised by the accused in the cross examination except about the specification of total interest from 24.11.1992 to 25.01.2006 which is Rs.11,426/- .

This was also corroborated by the evidence of PW.54 Smt.Vasantha Malini

Investigating officer who conducted further investigation Accordingly deducting the interest value , the value of item No.54 is taken as Rs.1,27,911/-.

Item No.55:

88.Item No.55 is Balance in SB A/c No.2471 in Costal Local Area bank, Sompeta

Branch, In the name of Smt T.Aruna. The value of asset is mentioned as Rs.2,560/- as per the prosecution. The prosecution did not adduce any oral or documentary evidence on this aspect. Accordingly this item is deleted from the assets of accused under statement-B.

Item No.56(a):

63 C.C. 13/2008/I CBI COURT/VSP

89.Item No.56(a) is Balance in ING Vysya Bank A/c No.33010003443 at

Visakhapatnam in the name of Smt T.Bhanoji Rao. The value of asset is mentioned as

Rs.31,332/- as per the prosecution. The prosecution examined PW.30 and marked the

Statement of account pertaining to the SB A/c No. 33010003443 as Ex.P70. As per the contents Ex.P70 the balance at the end of the check period is Rs.31,332/-. The total interest accrued from 13.06.2002 to 26.01.2006 is Rs.6873/- (80+386+857+1189.84+1497+ 1755.72+1107.82). There is no dispute by the accused with regard to this item. Therefore excluding the interest accrued the value of this item is fixed as Rs.24,459/-.

Item No.56(b):

90.Item No.56(b) is Balance in A/c No.317010011292, ING Vysya Bank, Patnam

Bazar, Guntur in the name of Smt T.Aruna. The value of asset is mentioned as

Rs.23,898/- as per the prosecution. To prove this item the prosecution examined PW.50 the then Branch Manager, ING Vysya Bank, Patnam Bazar, Guntur and got marked the statement of account of SB A/c No. 317010011292 standing in the name of A2 as

Ex.P116. As per the contents of Ex.P116 the balance amount as on 26.01.2006 is

Rs.23,898.30ps. The contention of the accused is that Ex.P116 is not properly certified and PW.50 had no personal knowledge about the transaction. Contrarily Ex.P116 is validly certified under Bankers Book Evidence Act and Information Technology Act and the transaction under Ex.P116 being carried in the regular course of business, no personal knowledge of the witness is warranted. Accordingly as per the contents of

Ex.P16 deducting the total interest of Rs.2,416/-(430+385+390+397+ 403.96+411) accrued from 21.11.2002 to 26.01.2006 the value of this item is fixed as Rs.21,482/-.

Item No.56(c):

91.Item No.56(c) is Balance in A/c No.754010029076, ING Vysya Bank, Vidyanagar,

Guntur in the name of Smt T.Aruna. The value of asset is mentioned as Rs.3,16,772/- as per the prosecution. The prosecution did not adduce any oral or documentary 64 C.C. 13/2008/I CBI COURT/VSP evidence on this aspect. Accordingly this item is deleted from the assets of accused under statement-B.

Item No.56(d) and Item No.56(e):

92.Item No.56(d) is Balance in A/c No.754010026368, ING Vysya Bank, Vidyanagar,

Guntur in the name of Sri T.Sandeep. The value of asset is mentioned as Rs.3,701/- as per the prosecution. Item No.56(e) is Balance in A/c No.754010027553, ING Vysya

Bank, Vidyanagar, Guntur in the name of Sri T.Deepak. The value of asset is mentioned as Rs.8,722/- as per the prosecution. There is no dispute with regard to these items by the accused. However the prosecution examined PW.24 and got marked the statement of account with regard to the SB accounts in the name of T.Sandeep and

T.Deepak under Ex.P63. These accounts were opened on 01.05.2005 and 27.05.2005 with closing balance as on 26.01.2006 for Rs.3,701/- and Rs.8,722/-. The total interest accrued in these accounts during the check period is Rs.79.78ps(80) ,

Rs.2491.69(2492) deducting the interest the value of these assets was concluded as

Rs.3,621/- and Rs.6,230/-.

Item No.57:

93.Cash of Rs.1,49,545/- was seized by the searching officer Sri K.Praveen Kumar, the then Inspector of Police, CBI, ACB, Visakhapatnam on 25-01-06 during the house search of Sri T.Bhanoji Rao, located in Mumbai. To prove this item the prosecution relied upon the evidence of investigation officer K.Praveen Kumar who was examined as

PW.47. Testified that on 25.1.2006 he conducted the search at the residential premises of A1 at Vashi , Mumbai in presence of independent witness PW.45 and S.S.Mohite he stated that during the search certain documents and amount of Rs.1,49,545/- was found and same was seized under Ex.P103 Search list dated 25.01.2006. The currency notes seized during the search was marked as M.O.1. The contention of the accused is that the amount under M.O.1 was never seized from the residence of A1 and the contents of Ex.P103 does not suffice the proof of alleged seizure. However 65 C.C. 13/2008/I CBI COURT/VSP

PW.45 Sri S.S.Kumbher who acted as independent mediator for the search conducted in the house of A1 at Mumbai corroborated with the evidence of PW.47 with regard to the seizure of cash under M.O.1. Though the counsel for accused cross examined

PW.45 and PW.47 at length nothing was elicited to discredit their testimony.

Accordingly this Court is of the opinion, the prosecution successfully proved Item

No.57.

94. In view of the above discussion the value of assets under Statement-B

averred in the charges sheet, claimed by the accused and arrived by the Court

based on the evidence is concluded as follows:

STATEMENT – B

Description of the AssetDate/yearAmount in Rs.AmountAmount ofAs per chargeas perarrived S.No.Acquisitionsheet accused by the Court 32,700-00 Assets prior to check period (excluding the bank balance)

Properties in the name of Shri T.Bhanoji Rao 1(a)Flat No.2, D.No.11-2-1/2, Sea Shells19946,29,000-00NIL400000 Apartments, Waltair Main Road, Visakhapatnam in which the undivided share of land measuring 441 Sft. for Rs.2,43,767/- vide sale deed No.62/1994, dt:15-01-1994 andRs.3,66,400/-forthe construction of flat of 866 Sft. at Rs.400/- per Sft. The said property is in the name of Sri T.Bhanoji Rao/A1 1(b)Land measuring 500 Sq.yards at20012,20,000-00NIL220000 Survey No.19/6, W-B: 4-5, nearby House No.4-5-18/2 in Koretipadu, Guntur Urban which was registered in the name of Sri T.Bhanoji Rao/A1 on26-04-2001vide Doc.No.3726/2001 of SRO, Guntur (RO) Properties in the name of Smt T.Aruna W/o Shri T.Bhanoji Rao 2Plot measuring Ac.0.97 cents in199660,000-00NIL60000 Patta No.0133 and Survey No.46/1 atLagisettypalemvillage, SabbavaramMandal, VisakhapatnamDistrict,AP, registered on 28-09-1996 vide Doc.No.2476/1996ofSRO, Sabbavaram. The said property is in 66 C.C. 13/2008/I CBI COURT/VSP the name of Smt.T.Aruna/A2 3One tiled house of 408 Sft. in19981,25,000-00NIL125000 Chinna Komati street, Sompeta village in a plot of 156 Sq.yards and one tiled house of 264 sft., at door No.3-1-16 of Srikakulam District, A.P., registered on 29-01-1998 vide Doc.No.92/1998 of SRO, Sompeta. The said property is in the name of Smt T.Aruna/A2 4Agriculture land of Ac.2.65 cents in20021,86,000-00186000 Sy.No.327/A,B at Perecherla village, Guntur District, registered on 22.08.2002 vide Doc.No.3281/2002 of SRO, Nallapadu, Guntur District. The said property is in the name of Smt T.Aruna / A2 5An undivided as well as unspecified20022,90,000-00290000 share measuring 70 sq.yards of site D.No.8/7 and 8/8 along with ownership of floor area located in group floor bearing No.001 i.e., upon cellar floor of shopping complex “Ananda Nilayam” at D.No.5-87-40 with a plinth area of 1103 sft., which was registered on 20-06-02 vide Doc.No.4241/02 of Joint Sub-Registrar, Guntur. The said property is in the name of Smt T.Aruna/A2 6Plot No.10 measuring 284 Sq.yards200457,000-0057000 in D.No.416 at Gorantla village, Guntur District, AP which was registered as Doc.No.7560/04 of SRO, Guntur. The said property is in the name of Smt T.Aruna/A2 7Plot No.11 measuring 365.4200457,000-0057000 Sq.yards in D.No.416 at Gorantla village, Guntur District, AP which was registered on 25-06-04 vide Doc.No.7561/04 of SRO, Guntur. The said property is in the name of Smt T.Aruna/A2 8Plot No.12 measuring 365.4200475,000-0075000 Sq.yards in D.No.416 at Gorantla village, Guntur District, AP which was registered on 25.06.04 vide Doc.No.7562/04 of SRO, Guntur. The said property is in the name of Smt T.Aruna/A2 9Plot No.9 measuring 284 Sq.yards200457,000-0057000 in D.No.412 at Gorantla Village, Guntur District, AP which was registered on 02.07.04 vide Doc.No.7542/04 of Joint Sub- Registrar, Guntur. The said property is in the name of Smt T.Aruna/A2 10Plot Nos.29, 30, 31 &32 measuring20056,39,500-00639500 1278.77 Sq.yards in D.No.364/C,D at Gorantla village, Guntur District, AP which was registered on 19-10- 05 vide Doc.No.14233/05 of SRO, 67 C.C. 13/2008/I CBI COURT/VSP

Guntur. The said property is in the name of Smt T.Aruna/A2 11Flat at Putaparthi purchased in20071,00,000-00100000 1999-2000 in the name of Smt T.Aruna, as per I.T. returns for 2006- 07 12200 Sq.yards site at Ranga Reddy200368,105-00NILNIL District purchased during 2003-04 in the name of Smt T.Aruna (As per I.T. returns). 13Ac.1.57 cents of agriculture land at20051,38,470-00NILNIL Marripalemvillage,Edlapadu mandal, Guntur District declared IT return for AY 2006-07 (FY 2005-06) in the name of Smt T.Aruna 14Cost of construction of a house in200257,38,000-002188000 500 Sq.yards in Sy.No.19/6, vide Doc.No.3726/2001 of SRO, Guntur property constructed during the period April, 2001 to February, 2002 vide the house D.No.4-5-29/74A and further this door number was changed as 17-7-470, Ward No.4, Guntur, during 2012 15Construction agreement for a shop20043,99,000-00NIL399000 located in the ground floor i.e., above cellar floor of shopping complex “Anand Nilayam” at D.No.5-87-40 with a plinth area of 1103 Sq.Ft vide Doc.No.4244/04 16 Cost of construction of house at19999,30,135-006,76,415 D.No.3-1-16, China Komti street, Sompeta village, Srikakulam District during the period 1998-1999 17Opel Corsa 1.4 GLS purchased in20027,00,996-003,10,0006,05,744 2002 in the name of Sri T.Bhanoji Rao vide invoice No.952, dt:12-6- 2002 18(a) Hero Honda CBZ Disc.self Black200466,194-00NIL 66,194 purchased by Sri T.Bhanoji Rao on 22-09-04 from Annapurna Auto Agencies, Guntur vide Invoice No.4503026 dt:22-09-04 18(b) Sri T.Bhanoji Rao: Special Term08-10-1220,000-00NIL20,000 Deposit Account No.0129 200 9367 / 52099631195 taken on 18- 10-2002 by Sri T.Bhanoji Rao from State Bank of Hyderabad, Arundelpeta,Guntur (M.No.07/312/4). 19Sri T.Deepak: Special Term Deposit28-06-9720,000-00NIL44,757 Account No.0129 2011 08300 / 52099636079 taken on 28-09-2010 by Sri T.Deepak S/o. Bhanoji Rao from State Bank of Hyderabad, Arundelpeta, Guntur and thereafter the amount was reinvested for a period of 7 years and 9 months (M.No.07/312/8). 20Special Term Deposit Account09-06-9720,000-00NILNIL No.0129 2011 083 / 52099636068 taken on 28-09-2010 by Sri 68 C.C. 13/2008/I CBI COURT/VSP

T.Deepak S/o Bhanoji Rao from State Bank of Hyderabad, Arundelpeta, Guntur which was matured on 09-06-2000 and thereafter the amount was reinvested for a period of 7 years and 9 months (M.No.07/312/7) 21Special Term Deposit Account28-06-9720,000-00NIL20000 No.0129201108301/ 52099636080 taken by Sri T.Deepak S/o.Bhanoji Rao from State Bank of Hyderabad, Arundelpeta, Guntur which was matured on 28-09-2000 and thereafter the amount was reinvested for a period of 7 years and 9 months (M.No.07/312/9). 22FDR A/c No.396091009294 in ING11-08-1110,000-00NIL10,000 Vysya Bank, Arundelpeta Branch, Guntur in the name of Smt T.Aruna (M.No.07/315/4, LD No.53) 23FDR A/c No.396092133611 in ING18-07-052,50,000-00NIL2,50,000 Vysya Bank, Arundelpeta Branch, Guntur in the name of Smt T.Aruna (M.No.07/315/11, LD No.60) 24FDR A/c No.396092078580 in ING23-08-0211,042-00NIL11,042 Vysya Bank, Arundelpeta Branch, Guntur in the name of Smt T.Aruna (M.No.07/315/9, LD No.58) 25TermDepositAccount09-06-9730,000-00NIL30000 No.52099630849 taken by Smt T.Aruna/A2 for Sandeep from State Bank of Hyderabad, Arundelpeta, Guntur which was matured on 09- 06-2000 and thereafter the amount was reinvested for a period of 7 yearsand9months (M.No.07/312/10 LD-47) 26TermDepositAccount09-06-9720,000-00NILNIL No.52099630838 taken on 09-06-97 by Smt T.Aruna/A2 for Sandeep from State Bank of Hyderabad, Arundelpeta, Guntur which was matured on 09-06-2000 and thereafter the amount was reinvested for a period of 7 years and 9 months (M.No.07/312/10 LD.49) 27TermDepositAccount09-06-9740,000-00NILNIL aNo.52099630827 taken on 09-06- 1997 by Smt T.Aruna/A2 from State bank of Hyderabad, Arundelpeta, Guntur which was matured on 09- 06-2000 and thereafter the amount was reinvested for a period of 7 yearsand9months (M.No.07/312/10 LD-49) bTermDepositAccount27-05-0583,024-00NIL83,024 No.754092046320 in the name of Sri T.Deepak taken on 27-05-05 at ING Vysya Bank, Vidyanagar Branch Guntur cTermDepositAccount27-5-0583,024-00NIL83,024 69 C.C. 13/2008/I CBI COURT/VSP

No.754092046331 in the name of Sri T.Deepak taken on 27-05-05 at ING Vysya Bank, Vidyanagar Branch, Guntur dTermDepositAccount27-05-0583,024-00NIL83,024 No.754092046342 in the name of Sri T.Deepak taken on 27-05-05 at ING Vysya Bank, Vidyanagar Branch, Guntur eTermDepositaccount27-05-0583,024-00`NIL83,024 No.754092046353 in the name of Sri T.Deepak taken on 27-05-05 at ING Vysya Bank, Vidyanagar Branch, Guntur fTermDepositAccount27-05-0583,024-00NIL83,024 No.754092046364 in the name of Sri T.Deepak taken on 27-05-05 at ING Vysya Bank, Vidyanagar Branch, Guntur gTermDepositAccount27-05-0583,024-00NIL83,024 No.754092046375 in the name of Sri T.Deepak taken on 27-05-05 at ING Vysya Bank, Vidyanagar Branch, Guntur 28Kisan Vikas Patras in the name of02-11-2k30,000-00NIL30,000 Smt T.Aruna purchased during 2000-2001 (IT Return – 2006), page 9 of LD-25 (M No.07/278/1) 29Sri T.Bhanoji Rao: 100 Units of UTI01-07-941,000-00NIL1,000-00 Rights 1994 face value of Rs.10 each purchased by Sri T.Bhanoji Rao vide Certificate No.03393807 on 01-07-1994 worth Rs.1,000/- (M.No.06/47/6 page No.1) 30100 units of UTI Rights 1994 face01-07-941,000-00NIL1,000-00 value of Rs.10 each purchased by Sri T.Bhanoji Rao vide certificate No.03393808 on 01-07-1994 worth Rs.1,000/- (M.No.06/47/6 page No.2) 31100 units of UTI Rights 1994 face01-07-941,000-00NIL1,000-00 value of Rs.10 each purchased by Sri t.Bhanoji Rao vide certificate No.03393809 on 01-07-1994 worth Rs.1,000/- (M.No.06/47/6 page No.3) 32100 units of UTI Rights 1994 face01-07-941,000-00NIL1,000-00 value of Rs.10 each purchased by Sri T.Bhanoji Rao vide certificate No.03393810 on 01-07-1994 worth Rs.1,000/- (M.No.06/47/6 page No.4) 3366 units of UTI Rights 1994 face01-07-94660-00NIL660-00 value of Rs.10 each purchased by Sri T.Bhanoji Rao vide certificate No.03393808 on 01-07-1994 worth Rs.660/- (M.No.06/47/6 page No.6) 3516 units of UTI Master Shares face21-03-94160-00NIL160-00 (34)value of Rs.10 each purchased by Sri T.Bhanoji Rao vide certificate No.00077781worthRs.160/- (M.No.06/47/6 page No.7) 70 C.C. 13/2008/I CBI COURT/VSP 3620 units of UTI Master shares face06-10-95200-00NIL200-00 (35)value of Rs.10 each purchased by Sri T.Bhanoji Rao vide certificate No.00144892on(Bonus) (M.No.06/47/6 page No.8) 3710 units of UTI Master shares face06-10-95100-00NIL100-00 (36)value of Rs.10 each purchased by Sri T.Bhanoji Rao vide certificate no.00144893on(Bonus) (M.No.06/47/6 page No.9) 3805 units of UTI Master shares face06-10-9550-00NIL50-00 (37)value of Rs.10/- each purchased by Sri T.Bhanoji Rao vide certificate no.00144894on(Bonus) (M.No.06/47/6 page No.10) 3901 unit of UTI Master share face06-10-9510-00NIL10-00 (38)value of Rs.10/- each purchased by Sri T.Bhanoji Rao vide certificate No.00144895on(Bonus) (M.No.06/47/6 page No.11) 40IDBI Bonds purchased during AY200120,000-00NIL20,000 (39)2001-02 as per IT Return (M.No.07/218/5 page No.1) for Rs.20,000/- 41IDBI Flexi Bonds 6 nos. @200330,000-00NIL30,000 (40)Rs.5,000/- purchased during AY 2003-04 through SBH cheque No.831022,dt:15-02-03 (M.No.07/281/2, page No.1) for Rs.30,000/- 42IDBI Flexi Bonds 6 nos. @200430,000-00NIL30,000 (41)Rs.5000/- purchased during AY 2004-05 through SBH cheque No.213833,dt:06-02-04 (M.No.07/281/3, page No.1) for Rs.30,000/- 43IDBI Infrastructure Bonds 6 nos. @200530,000-00NIL30,000 (42)Rs.5,000/- purchased during AY 2005-06 (M.No.07/281/4, page no.1) for Rs.30,000/- 44ICICI Bonds purchased during AY200220,000-00NIL20,000 (43)2002-03 as per IT Return (M.No.07/293/3, page No.4) for Rs.20,000/- 45ICICI Bond purchased vide receipt24-03-2k10,000-00NIL10,000 (44)no.322783,dt.:24-03-2000 (M.No.06/49/8, page No.55) 46Investment by Smt Tankala Aruna in12-09-0430,000-00NIL30,000 (45)ING Vysya Select Debt Fund growth (M.No.06/47/7, page no.74) 47Investment in ING Life Insurance in20052,00,000-00NIL2,00,000 (46)the name of Smt T.Aruna/A2 paymentthroughcheques No.800263, dt:06-12-05; 800265,

dt.:16-12-2005; 800266, dt.:19-12-

2005, 800267, dt.:19-12-2005; 800268, dt.: 19-12-05 for a total Rs.2,00,000/- (M.No.06/47/7, page Nos.91 to 95) 48Bonds purchased Vyswam Agro1997620-00NILNIL (47)Generics Pvt. Ltd., in the name of Sri T.Deepak (M.No.06/49/7, page 71 C.C. 13/2008/I CBI COURT/VSP

No.164) 49Bonds purchased Vyswam Agro1997620-00NILNIL (48)Generics Pvt. Ltd., in the name of Sri T.Sandeep (M.No.06/49/7, page No.165) 50During the house search of Sri--1,27,470-00NILNIL (49)T.BhanojiRao,cashof Rs.1,27,470/- was found from the Almirah and the said amount was incorporated in the inventory. The above said amount has been included in Statement-B i.e., assets at the end of check period 51Balance in SB A/c 52099594468 in--1,33,804-00NILNIL (50)the name of Sri T.Bhanoji Rao/A1 in State Bank of Hyderabad, Arundelpeta Branch, Guntur 52Balance in SB A/c No.36248 in ING--65,109-00NILNIL (51)Vysya Bank, Arundelpeta Branch, Guntur in the name of Smt T.Aruna 53House hold articles in the inventory--6,94,586-00594483 (52)during the check period 54Balance in SB A/c No.in Andhra--1,39,337-00NIL1,27,911 (53)Bank, Sompeta Branch, in the name of Smt T.Aruna 55Balance in SB A/c No.2471 in Costal--2,560-00NILNIL (54)Local Area bank, Sompeta Branch, In the name of Smt T.Aruna 56 Balance in ING Vysya Bank A/c--31,332-0031,33224,459 aNo.33010003443 at Visakhapatnam (55)in the name of Smt T.Bhanoji Rao bBalance in A/c No.317010011292,--23,898-00NIL21,482 ING Vysya Bank, Patnam Bazar, Guntur in the name of Smt T.Aruna cBalance in A/c No.754010029076,--3,16,772-00NILNIL ING Vysya Bank, Vidyanagar, Guntur in the name of Smt T.Aruna dBalance in A/c No.754010026368,--3,701-003,701-003,621 ING Vysya Bank, Vidyanagar, Guntur in the name of Sri T.Sandeep eBalance in A/c No.754010027553,--8,722-008,722-006,230 ING Vysya Bank, Vidyanagar, Guntur in the name of Sri T.Deepak 57During the house search of Sri25-01-06 (56)T.Bhanoji Rao, located in Mumbai,1,49,545-00NIL 1,49,545 cash of Rs.1,49,545/- was seized by the searching officer Sri K.Praveen Kumar, the then Inspector of Police, CBI, ACB, Visakhapatnam on 25-01- 06 TOTAL:1,36,11,542-008418707

The perusal of the Statement-B categorically shows that Sl.No.18 is repeated for two items which are Hero Honda CBS and Special Term Deposit taken on 18.10.2002 and similarly Sl.No.34 was omitted. Facts decided accordingly .

72 C.C. 13/2008/I CBI COURT/VSP

95.Sub Point-(iii) iii).Whether the income of the accused is Rs.1,13,65,933/- as shown in

Statement-C during the check period?

Item No.1 :

Net Salary of A1 during the check period Rs.24,60,645/-

As per the charge sheet the Net salary of the accused during the check period is

Rs.24,60,645/-. To ascertain the same the prosecution examined the then General

Manager HRD, Cotton Corporation of India, Mumbai as PW.22. PW.22 furnished the pay particulars of A1 from April, 1992 to January, 2006 which was marked as Ex.P57 along with the covering letter. The contention of the accused is that there is arithmetical mistakes in the grand total under Ex.P57 where the total amount is Rs.25,93,893/- instead of Rs.24,60,645/-. As per the contents of Ex.P57 the salary particulars of A1 were furnished from April, 1992 to January, 2006. The period from April, 1992 to

November, 1993 is excluded from check period. The annual salary of the accused for the financial year April, 1993 to March 1994 is shown as Rs.1,08,833.75/- without monthly break up. Accordingly the aggregate of the same for the financial year 1993- 1994 is taken for calculating the monthly salary from December, 1993 to March, 1994 (Rs.64,247/12*4=21,415.66) rounded off to Rs.21,416/-. Accordingly the net salary of the accused during the check period is concluded as Rs.24,95,500.04 under Item No.1 of Statement-C.

Item Nos.2 to 12 and 15 to 41 :

96.The accused is not disputing the amount shown against income under Item

Nos.2 to 12 and 15 to 41. In view of admitted facts by both sides no further on facts are law is warranted against the income under Item Nos.2 to 12 and 15 to 41 of

Statement-C and were concluded as per charge sheet.

Item No.13 and 14:

73 C.C. 13/2008/I CBI COURT/VSP

97.According to prosecution rent received by A1 on Flat No.7, Matangi Apartments,

Ahmedabad during 1994-95 is Rs.15600/- and during 2002-03 is Rs.18000/-. To prove this income the prosecution entirely relied upon the Income Tax returns of the accused for the assessment year 1995-1996 and 2003-2004 marked through PW.13 and PW.44 under Ex.P99 and Ex.P32. Contrarily A1 claims that he received rent of Rs.1,25,700/- during the check period by letting out the Flat No.7 of Matangi Apartments,

Ahmadabad. On this aspect the accused relies upon the evidence of DW.2, DW.6 and DW.7. DW.2 stated that he worked as Deputy Manager, Cotton Corporation of

India at Ahmedabad from 1994 to 1996 and during that period he resided in a rented accommodation i.e., Flat No.7, Matangi Apartment, Ambawadi, Ahmadabad. According to him he stayed in that Flat from July, 1994 to June, 1996 and paid rent at the rate of Rs.1,550/-per month to A1 who is owner of the Flat.

98.DW.6 General Manager, Cotton Corporation of India, Punjab deposed that from 1994 to 1999 he worked as Asst.Manager CCI at Ahmadabad and that he know A1

Mr.T.Bhanoji rao. He further stated that A1 was the owner of the flat No.7, Matangi

Apartments, Manorama Complex, Amabawadi, Ahmadabad and he was a tenant of the A1 in that Flat No.7 from October, 1996 to June 1998 and that during the said period he paid the rent at the rate of Rs.2,500/- per month to A1. According to him he used to pay the rent in cash and sometimes directly to A1 and other times sent it through some persons. He further stated that he informed his department in writing about his stay in Flat No.7, Matangi Apartments on rent. Similarly the evidence of

DW.7 Rajendra Kumar Gupta is that he worked as Dy.Manager, CCI, Ahmadabad from

June, 2000 to September, 2001 and that during the period June, 2000 to July, 2001 he stayed in Flat No.7, Matangi Apartment, Ambawadi, Ahmedabad and paid rent of

Rs.3,000/- per month to the accused.

99. The prosecution did not admit any specific evidence to prove the income of the accused under Item No.13 and 14 except relying upon the income tax returns filed by 74 C.C. 13/2008/I CBI COURT/VSP the accused for assessment years 1995-1996 and 2003-2004. The only contention raised by the prosecution with regard to the evidence of DW.2, DW.6 and DW.7 is that they did not file any receipts for payment of the alleged rent. Admittedly the accused reflected lesser rental income in his income tax returns. However the probative value of income tax returns is not conclusive and always rebuttable. Accordingly the facts on this aspects are looked into the evidence of DW.7 is corroborated with the correspondence made by A1 to the Chief General Manage(Vigilance), CCI, Mumbai vide original letter 17.07.2000 at page No.105 of Ex.P62. As per the contents of letter

dated 17.07.2000 A1 intimated that “on his transfer from Ahmedabad to Guntur he

vacated his apartment situated in 7 Matangi Apartment, Manorama Complex,

Ahmedabad and given the same for monthly rent of Rs.3200/- and Rs.250/- pm towards society maintenance charges to Sri R.K.Gupta, Dy.Manager who has been transferred from Coimbatore to Ahmedabad”. Though there is difference of Rs.200/- in the evidence of DW.7 it does not ruled out his statement that he paid Rs.3,000/- per month during his stay in Matangi Apartment to A1 is taken into consideration. Further the burden on the accused is different from the prosecution which requires a proof beyond reasonable doubt. In absence of any positive evidence on part of prosecution the evidence led by the accused by examining DW.2, DW.6 and DW.7 discharge him from the burden of proving his defence. There is no substantial reason raised by the prosecution to disbelieve the evidence of DW.2, DW.6 and DW.7. Accordingly it is concluded that the accused sufficiently proved that he received rent of Rs. Rs.1550/- per month for 24 months from DW.2 in total Rs.37,200/- and rent of Rs.2500/- per month for 24 months from DW.6 in total Rs.52,500/- and Rs. Rs.3000- per month for 12 months from DW.7 in total Rs.36,000/-. Accordingly this Court is of the opinion that the accused received consolidated Rent of Rs.1,25,700/- by letting out, Flat no.7, Matangi

Apartment, Ahemedbad during the check period.

75 C.C. 13/2008/I CBI COURT/VSP

100.In view of the above discussion the income of the accused under Statement-C arraigned in the charge sheet, claimed by the accused and arrived by the Court are as follows :

INCOME DURING THE CHECK PERIOD JAN 1994 TO 25-01-2006

STATEMENT – C

Amount inAmountAmount S.Typist of IncomeRs.as perarrived by Noaccused the Court . 1Net Salary during the check period24,60,645 25,93,893 24,95,500.04 2Loans / Advances : Housing Loans:300000No300000 Housing loan from Vysya Bank to purchase flat at Sea dispute Shells Apartments at Visakhapatnam Housing loan in State Bank of Hyderabad (A/c 975000No975000 No.01593009367) from September, 2003 to january, dispute 2006 Advance received from Sri MR Prasad on 8-3-2003 350000No350000 towards selling sea shell apartment in Visakhapatnamdispute 3PF loan to purchase the above property125000No125000 dispute 4Non refundable PF loan for construction of house at 600000No600000 4/4, Vidyanagar, Gunturdispute 5Housing loan from ICICI bank for construction of the 1100000No1100000 said propertydispute 6Vehicles Loans: 80000No80000 Conveyance Advance from CCI to purchase old Maruti dispute Car availed on 27-09-1994 7Loan availed from Anagram Finance Co., Vijayawada 170000No170000 for purchase of New Maruthi Car in the year 1996dispute 8Loan from State Bank of Hyderabad for purchase of 250000No250000 Santro Car in the year 2000dispute 9Loan availed from M/s Associates of India financial 400000No400000 Services Pvt Ltd., Vijayawada for purchase of Opel dispute Corsa on 19-06-2002 10 Loan from Centurion Bank Ltd., Ahmedabad for 61292No61292 purchase of Hero Honda CBZ on 31-12-1999dispute 11 Education Loan: 479949No479949 Education loan availed from State Bank of Hyderabad dispute in respect of Sri T.Deepak Domestic loan availed from ING Vysya Bank, 440000No440000 Vidyanagar Branch, Guntur in the name of Sri dispute T.Deepak Vide loan A/c No.754041003895 12 Loan obtained from Staff Welfare Benefit Loan availed 10000No10000 on 25-08-2000dispute 13 Rents: 15600 Rent on Flat No.7, Matangi Apartments, Ahmedabad during 1994-95 as declared in the income tax return for the Asst.year 1995-961,25,700125700 14 Rent on Flat No.7, Matangi Apartments, Ahmedabad 18000 during 2002-03 as declared in the income tax return for the Asst.year 2003-04 15 Interest / Dividends etc. 8840No8840 Dividend received on 3400 units of UTI during the dispute financial year 1994-95 as declared in the income tax return for the Asst.year 1995-96 16 Interest accrued on SB A/c during the financial year 8117No8117 76 C.C. 13/2008/I CBI COURT/VSP 2002-03 as declared in the income tax return for the dispute Asst.year 2003-04 17 Interest accrued on SB A/c during the financial year 2850No2850 2003-04 as declared in the income tax return for the dispute Asst.year 2004-05 18 Income from Postal Life Insurance received on (page 9000No9000 No.75) of CCI, Vigilance property returns file of Shri dispute T.Bhanoji Rao 19 Maturity value of units under CGGF86 of Unit Trust of41314No41314 India deposited in 1986 in the name of Sri T.Deepakdispute (page no.268 of CCI, Vigilance property returns file of Shri T.Bhanoji Rao 20 Sale proceeds of 4253.45 units of Unit Trust of India49765No49765 sold in 2003 dispute 21 Profit accrued from ULIP policy invested regularly from32222No32222 1995-2004 dispute 22 Maturity value of ULIP policy invested from 1986 to25000No25000 2005 received in the year 2005 dispute 23 Maturity value of LIC policy No.671306574 37500No37500 dispute 24 Maturity value of LIC policy No.24690785 on 28-06-16566No16566 1997/- dispute 25 Sale proceeds of Flat No.7, Matangi Apartments,490000No490000 Ambawadi, Ahmedabad in the month of August, 2003 dispute Profit on 1.78 acres of coconut orchard at Jagati Village35600No35600 in Itchapuram purchased 1996 and sold (1999) duringdispute the check period (Rs.1,78,000-1,42,000) Sale proceeds of one house with site measuring 4990300000No300000 sft at Resapuvanipalem which was purchsed by Smtdispute T.Aruna on 23-11-1989 at Rasapuvanipalem, Visakhapatnam vide document no.4816/1989 of JSR, Visakhapatnam for an amount of Rs.80,000/-. This was sold away on 23-02-1996 to Smt Mahaboob Subhani vide Doc.No.373/1996 26 Sale proceeds on vehicles purchased and sold100000No100000 during the check perioddispute sale proceeds of Maruti 800 second hand car (AP 07 6543) purchased in 1994 and sold in 1996 (page no.81 of CCI, Vigilance property returns file of Shri T.Bhanoji Rao), 27 Sale proceeds of Maruthi car brought in the year 1996140000No140000 and sold on 30-12-2000 (page no.156 of CCI, Vigilancedispute property returns file of Shri T.Bhanoji Rao Sale proceeds of Santro Car in the year 2000 and sold340000No340000 on 19-06-2002 dispute 28 Sale proceeds of Hero Honda CBZ purchased on 31-40000No40000 12-1999 and sold on 17-09-2004 dispute 29 Income Tax Refunds: 1813No1813 Income Tax Refund for the Asst.year 2001-02 videdispute Refund Order No.A – 022404, B/2 240330, dated 27- 06-2002 30 Income Tax Refund for the Asst. Year 2002-03 vide260No260 Refund Order No.A/11-936517, dated 25-11-2002 dispute 31 Income Tax Refund for the Asst.year 2004-05 vide1190No1190 Refund Order No.021/F-697074 dispute 32 Income Tax Refund for the Asst. Year 2005-06 vide1290No1290 Refund order no.021/F-672581 dispute 33 Income allowed to Smt T.Aruna during the Asst. Year51000No51000 1998-1999dispute 34 Income allowed to Smt T.Aruna during the Asst.year60000No60000 1999-2000dispute 35 Income allowed to Smt T.Aruna during the asst.year56670No56670 77 C.C. 13/2008/I CBI COURT/VSP 2000-2001dispute 36 Income allowed to Smt T.Aruna during the Asst.year53839No53839 2001-2002dispute 37 Income allowed to Smt T.Aruna during the Asst.year55752No55752 2002-2003dispute 38 Gross income of Smt T.Aruna during the Asst.year769443No769443 2003-2004 with housing loan of Rs.7 lakhs from Uniondispute Bank of India 39 Income allowed to Smt T.Aruna during the Asst.year210478No210478 2004-2005dispute 40 Income allowed to Smt T.Aruna during the Asst.year263236No263236 2005-2006dispute 41(Income allowed to Smt T.Aruna during the Asst.year293702No293702

a)2006-2007dispute

(b) Insurance payment for repairing charges of Car opel35000No35000 Corsa No.AP-07-Q-7576 in M/s Sumithra Motors,dispute Mahanadu Road, Auto Nagar, Vijayawada which met anaccidentnearSompetavideletter No.GDO:SDMS:205:2005 dt.3-2-2006 of Sr.Divisional Manager, United India Insurance Co. Ltd., Guntur TOTAL: 1136593311492888.04

101.ADDITIONAL INCOME CLAIMED BY THE ACCUSED: Statement –C1

The contention of the accused is that A2 is having independent source of income during the check period and also prior to the check period and that she filed her income tax returns from 1998-1999 onwards. The income ofA2 from different sources is averred as follows :

Sl.No.1: Item No.1 :Rental Income received by A2 from house bearing Door No.3-1- 16 at Sompeta:

102.It is submitted that the prosecution has not considered the rental income of this house property mentioned at Item No.3 of Statement-B. According to accused A2 let out the said house consisting of three portions during April, 1999 to March, 2004 to T.Krishna

Rao and received rent of Rs.2,10,000/-. On this aspect the accused relied upon the evidence of the said Krishna Rao who was examined DW.12 and also the contents of

Ex.P21, Ex.P23 to Ex.P26 the income tax returns of A2 for the years 1999-2000 to 2003- 2004. Accordingly it is important to look into the evidence of DW.12. DW.12

Mr.T.Krishna Rao testified that he is resident of Sompeta village, doing gold business and he knew A2 and he is owning a house consisting three portions in China Komiti veedhi of

Sompeta village. According to DW.12 himself and his brothers took the entire house of

A2 for rent in the month of April, 1999 and they resided in that house till March, 2004 and 78 C.C. 13/2008/I CBI COURT/VSP that during the period April, 1999 to March, 2004 they paid consolidated rent of

Rs.3,500/- per month in cash for all the three portions through one Bapuji, relative of A2.

The contention raised by the prosecution is that there is no rental agreement or any receipt to believe the said tenancy. In view of the contradiction raised by the prosecution it is necessary to look into the contents of Ex.P22 to Ex.P26 income tax returns filed by

A2. Ex.P21, Ex.P23 to Ex.P26 were the prosecution documents marked through PW.10.

As per the evidence of PW.10 Ex.P21 is the IT returns for assessment year 2000-2001,

Ex.P23 is the IT returns for assessment year 2001-2002, Ex.P24 is the IT returns for assessment year 2002-2003, Ex.P25 is the IT returns for assessment year 2003-2004 and Ex.P26 is the IT returns for assessment year 2004-2005 filed by A2. All these documents categorically reflects the rental income received by A2 from house at Sompeta as Rs.42,000/- annually. The contention of the prosecution is that the IT returns were filed subsequently, however all the IT returns were filed prior to the registration of the crime against the accused. Inspite of the same the contents of these documents were not disputed by the prosecution. Accordingly though there is no rental agreement or receipt , in view of the corroborative evidence under Ex.P22 to Ex.P26 it is held that the accused convincingly proved the rental income over item No.3 of Statement-B for the period from

April, 1999 to March, 2004 as Rs.2,10,000/-(Rs.42,000x5).

Sl.No.2:Item No.2: Rental income for Flat No.2 Seashell Apartment, Visakhapatnam (Item No.1) of Statement-B:

103.It is submitted that the prosecution willfully omitted the rental income received by A2 from Item No.1 of Statement-B. According to A2 the said flat was let out on monthly rent from 01.02.1994 to 01.01.2006 for total value of Rs.3,43,500/-. The accused relied upon the contents of income tax returns filed by A2 under Ex.P20 to

Ex.P28. The contents of these Ex.P20 to Ex.P28 discloses income from Apartment in

Vizag/Vizag house, as Rs.36,000/-, Rs.36,000/-, Rs.36,000/-, Rs.38,400/-, Rs.38,400,

Rs.38,400/- Rs.38,700, Rs.42,000/- and Rs.39,600/- for assessment years 1998-1999 to 2006-2007. Contradictingly the annual property returns filed by A1 for the year 2002-2003 79 C.C. 13/2008/I CBI COURT/VSP under Ex.P106 and Ex.62 discloses as if Flat No.2 Seashell Apartment, Visakhapatnam was sold to one sold to Medisetty Ram Prasad, s/o Sri Mallikarjuna Rao residing at

Srinagar, Visakhapatnam informed to HO vide letter dated 06.02.2003 and 13.03.2003.

This averment by the A1 deferrers with the unspecified rental income mentioned in

Ex.P26 to Ex.P28 Income Tax returns filed by A2. Pertinently the property herein is standing jointly in the name of A1 and A2. The letter dated 17.07.2000 addressed by A1 to General Manager,(Vigilance), CCI at Page No.150 of Ex.P62 discloses that his tenant

Srinivas Reddy residing in his Flat nNo.2 Sea Shells Apartment, Visakhapatnm is presently paying Rs.3,000/- per month. This is further corroborated with letter dated 11.08.2000 at page No.162 of Ex.P62 wherein A1 reiterated the rent of Rs.3,000/- received from Sea Shells Apartment as source of payment of installments to SBH

Finance. Accordingly no benefit can be given to A2 based upon the contents of Ex.P26 to Ex.P28. However , A2 is entitled to claim the rental income over this property is till 2002 which comes to Rs.2,23,200/-.

Sl.N.3:Item No.3: Sale of the site in the extent of 335sq.yards, Srikakulam vide document No.2190/1991:

104.The contention of the A2 is that A2 purchased an extent of 335sq.yards at

Srikakulam under LP No.11/1981, Prabhakar Nagar Colony Layout, Part-B, Plot No.22 vide document No.2190/1991 for Rs.40,000/- and sold away the same to DW.8 during the check period for Rs.2,21,500/- under Ex.X10 and that the same is reflected under

Ex.P26 IT Returns of A2 at page No.5. On this aspect DW.8 Smt Podugu Usha Rani stated that she was acquainted with A2 in the month of October, 2003 she purchased house site bearing No.335sq.yards at Hospital road, Srikakulam from A2 for

Rs.2,21,500/-. The certified copy of the said transaction was marked as Ex.P10. The prosecution did not dispute with the evidence of DW.8 and Ex.X10. As per the contents of Ex.X10 DW.8 purchased document schedule property i.e., an extent of 335sq.yards at

Srikakulam under LP No.11/1981, Prabhakar Nagar Colony Layout, Part-B, Plot No.22 by paying consideration of Rs.2,21,500-/. As the property was purchased by A2 prior to the 80 C.C. 13/2008/I CBI COURT/VSP check period i.e.,1991 the total sale consideration of Rs.2,21,500/- is taken as additional income of the accused.

Sl.4 :Item No.4 : Income from the sale of gold by A2:

105.The submission of the accused is that A2 at the time of her marriage received gold ornaments weighing 3761.460grms towards Stridhan and sold away 2708.350grms gold merchant at New Delhi out of the said sale she received an amount of Rs.8,99,172/-.

It is submitted that A2 declared the same in her income tax returns at page No.39 of

Ex.P20 and relied upon the evidence of PW.10 and argued that the investigating officer also admitted the sale of the same by A2. The contention of the prosecution is that A2 intentionally declared large amount of gold and silver articles under Voluntary Disclosure of Income Tax Scheme 1997 and laundered the illegal income by showing the sale of gold ornaments at Delhi even though there is a family with business in gold and they could have easily sell the same locally.

106.Accordingly with regard to additional income claimed under item No.4 initially it is important to look into the contents of Ex.P20 Income tax Returns filed by A2.

According to the evidence of Pw.10 the then Income Tax Officer, Guntur A2 filed the income tax Returns for the assessment 1998-1999 on 22.03.2005 under Ex.P20. Further stated that A2 showed income by sale of gold of 2708.350grms at Rs.89,172/- and that the IT Returns under Ex.P20 has to be filed on 31.10.1998. Therefore a notice under

Section 148 of IT Act were issued to her and she paid income tax of Rs.3,46,019/- under

Voluntary Disclosure of Income Tax Scheme 1997 and that the action against her was dropped.

107.Pertinently from the contents of Ex.P20 it is evident that A2 declared the income as Rs.10,41,983/- over the sale of gold and diamond ornaments for the assessment year 1987-1988 and income as Rs.46,125/- for the assessment year 1976- 1977 over the sale of silver articles. It is also evident that a Notice under Section 18 was issued for not filing the Income Tax returns for the assessment year 1998-1999 by 81 C.C. 13/2008/I CBI COURT/VSP disclosing the value of gold and diamond ornaments and silver utensils under Voluntary

Disclosure of Income Tax Scheme 1997. The explanation furnished by the A2 discloses that for the assessment year 1998-1999 she had no taxable income and as such she did not file the return of income for that year and that she filing the return of income for that year. The certificate issued under Section 68(2) of Voluntary Disclosure of Income Tax

Scheme 1997 at page No.7 of Ex.P20 elicit that A2 disclosed the income of

Rs.10,41,983/- for the sale of gold and diamond articles for the assessment years 1987- 1988 and income of Rs.46,125/- for sale of silver utensils for assessment year 1976-1977 paid the income tax of Rs.3,26,433/- along with interest of Rs.19,500/- on 07.04.1998.

The income covered under Voluntary Disclosure of Income Tax Scheme 1997 is completely different from the income of Rs.8,99,172/- claimed by the accused under this item. The accused No.2 in her IT Returns under Ex.P20 at page No.20 claims the

Income of long Term Capital gains i.e., sale of 2708.350 of gold as Rs.8,99,172/-. The correspondent receipt issued by V.R.Agrawal & Co., for Rs.8,99,172/- was also enclosed under Ex.P20. The investigating officer PW.43 in his cross examination admitted that the declaration of income by A2 in Voluntary Disclosure of Income Tax Scheme 1997 and about possession of large scale money she acquired by selling gold given to her by her parents as Stridhana and relative payment of tax and acceptance of the same by the

Income Tax Authority. There is no reasonability in the analogy adopted by the investigating officer denying the income received by A2 while calculating the tax paid by her as expenditure attributing to the disproportionate assets alleged against the accused.

The consolidate discussion therefore elicit that there is no specific denial of income of A2 from Ex.P20 by the prosecution on this aspect. Accordingly the benefit of additional income of Rs.8,99,172/- was given to A2:

Sl.No. 5 to 7 , Item Nos.5 to 7:

108.Item No.5 : Loan borrowed from Kaja Rama Reddy DW.5 in October, 2005. To prove this item the accused examined the said Kaja Rama Reddy as DW.5. DW.5 stated that he was acquainted with A2 since 2005 through his maternal uncle Mr.Donthireddy 82 C.C. 13/2008/I CBI COURT/VSP

Venkata Appareddy of Guntur who was doing finance business at that time. According to

Dw.5 he gave loan of Rs.3,50,000/- to A2 on interest at the rate of 12%p.a., for which A2 executed a promissory note and said Venkata Appareddy signed as a witness. One year thereafter A2 repaid Rs.3,92,000/- along with the interest and that he returned the promissory to A2. The assertion of the accused is the loan advanced by DW.5 was reflected in the income tax returns of A2 for the assessment year 2006-2007. Evidently

Ex.P28 marked through PW.10 categorically discloses that there is a credit of

Rs.3,69,216/-to one Kaja Ramireddy by A2 as on 31.03.2006.

Item No.6 :

109.Loan borrowed in the month of October, 2005 from Velaga Yelamanda DW.9 by

A2. The similar contention of the accused is that A2 borrowed an amount of Rs.2,00,000/- from Velaga Yelamanda who was examined as DW.9. According to DW.9 on 16.10.2005

A2 borrowed a loan of Rs.2,00,000/- from him with interest at the rate of 12%p.a. and executed a demand promissory note in his favour. DW.9 stated that after one year A2 repaid the entire loan of Rs.2,00,000/- with interest and he returned the promissory note to A2. The contents of Ex.P28 also discloses that there is a credit balance of

Rs.2,10,981/- to DW.9 as on 31.03.2006.

Item No.7 :

110.Loan borrowed by A2 from Palakaluri Swamyji DW.10 by A2.The contention of the accused is that A2 borrowed an amount of Rs.2,00,000/- from Palakuri Swamyji who was examined as DW.10. According to DW.10 on 16.10.2005 A2 borrowed a loan of

Rs.2,00,000/- from him with interest at the rate of 12%p.a. and executed a demand promissory note in his favour. DW.10 stated that after one year A2 repaid the entire loan of Rs.2,00,000/- with interest and he returned the promissory note to A2. The contents of

Ex.P28 also discloses that there is a credit balance of Rs.2,10,981/- to DW.10 as on 31.03.2006.

83 C.C. 13/2008/I CBI COURT/VSP

111.The prosecution denied the version of DWs.5,9,10 as false and they never extended any loan amount to A2. However the contention of the accused is the said loans were reflected in the income tax returns of A2 for the assessment year 2006-2007.

Though A2 examined DWs.5,9 and 10 no promissory note with regard to transaction or any other document was filed. The check period in this case upto 26.01.2006. Even as per the accused the loans were repaid subsequent to the registration of crime. There is no reason by the alleged promissory notes were not produced before this Court as proof of transaction. There mere averment by DWs.5, 9 and 10 without mentioning the date of repayment is doubtful and in the absence of any documentary evidence the contents of

Ex.P28 does not provide convincing material to believe the version of the accused.

Accordingly , accused was not entitled to benefit of additional under Item Nos.5,6, and 7.

Sl.No.8 :Item No.8 : Amount received from R.V.K.Prasad DW.15 by A2 on 01.07.2005

112.The version of the accused is that A2 received a loan of Rs.5,00,000/- from

R.V.K.Prasad on 01.07.2005 through cheque on interest basis at the rate of 12%p.a.

The said R.V.K.Prasad was examined as DW.15. The evidence of DW.15 is that he was the Manager of firm M/s S.B.C.Marine Exports and that he has monetary transaction with A1 and A2. He stated that he extended loan of Rs.5,00,000/- on 01.07.2005 to A2.

The corresponding statement of account in the name of DW.15 was marked as Ex.D6. As per the contents of Ex.D6 statement of account the transaction dated 01.07.2005 shows debit of Rs.5,00,000/- to the account of A2. It is also evident from the contents of Ex.D4 statement of account bearing No.396010036248 in the name of A2 marked through

DW.13 Manager, ING Vysya Bank, Arundalpeta that on 01.07.2005 A2 presented a cheque for Rs.5,00,000/- for collection and the same was credited to her account.

Further according to DW.15 the said amount was repaid to him in the month of March, 2014. The contents of Ex.P28 income tax of returns of A2 for the assessment year 2006- 2007 also discloses credit of Rs.5,22,500/- to DW.15 Rayapati Venkata Prasad as on 31.03.2006. Though the prosecution contended that no promissory note was executed in view of this transaction the contents of Ex.D6 and Ex.P28 suffice the convincing 84 C.C. 13/2008/I CBI COURT/VSP evidence with regard to receiving loan of Rs.5,00,000/- by A2 from DW.15. Accordingly the benefit of Rs.5,00,000/- additional income was given to A2 under item no.8.

Sl.No.9 :Item No.9 : Interest of Rs.2,35,000/- received from S.V.C.Marine Exports by

A2:

113.The argument of the accused is that A2 received an amount of Rs.5,00,000/- from DW.15 R.V.K.Prasad on 01.07.2005 through cheque on interest basis at the rate of 12%p.a. According to the evidence of DW.15, Manager M/s S.V.C.Marine Exports on 15.07.2000 their firm borrowed an amount of Rs.6.5lakhs from A2 through cheque with interest at the rate of 12%p.a. and on 09.02.2000 they gave Rs.7.5lakhs to A2 through cheque and the balance amount of Rs.1,35,000/- was due to A2 and the said amount was repaid on 20.04.2005 through three cheques. The certified copy of statement of account bearing No.CA/01/001726 of Corporation Bank marked as Ex.D7 reflects the said transaction. As per the contents of Ex.D7 the cheque issued by A2 in favour of S.V.C

Marine exports for Rs.6,50,000/- was credited on 20.07.2000. Ex.D7 also reflects the issuance of cheque for Rs.7,50,000/- by the said firm to A2 to discharge the loan amount for Rs.6,50,000/-. However there is no evidence with regard to payment balance account of Rs.1,35,000/- on 20.04.2005 to A2 through three cheques. Accordingly as the extension of loan and repayment was made only during the check period, the proved interest of Rs.1,00,000/- i.e., (Rs.7,50,000/- - Rs.6,50,000/-) was only given benefit to A2.

Sl.No.10 :Item No.10 : Advance received vide agreement to sale dated 29.12.2005

from DW.11 by A2:

114.On this aspect the accused examined DW.11. DW.11 Mr.Malla Yugandhar stated that his primary avocation is Real Estate business and that he was acquainted with

A2 and that A2 was owning an RCC building in China Komativeedhi, Sompeta and proposed the sale of the same in the year 2005. According to DW.11 in the month of

December, 2005 he secured a party by name Samba Murthy for the purchase of the said 85 C.C. 13/2008/I CBI COURT/VSP house and the said Samba Murthy entered into agreement of sale in writing for purchase of the said house for consideration of Rs.12,00,000/- on 29.12.2005 and gave

Rs.1,00,000/- to A2. He further stated that on 02.01.2006 the said Samba Murthy gave further advance of Rs.50,000/-, however subsequently he did not show any interest to obtain sale deed from A2 as he was afraid of purchasing of property as A2 was involved in CBI Case and A2 returned the advance amount of Rs.1,50,000/- to said Samba Murthy on 25.02.2006 , wherein A2 taken back the sale agreement and torned it. DW.11 also stated that Mr.Samba Murthy died about one year back. The prosecution suggested

DW.11 that no such agreement was entered into by A2 and she never received any advance as stated by him. Inspite of the denial made the prosecution A2 ought to have filed some document in support of the transaction. Evidently the agreement of sale was returned to Samba Murthy only after registration of the crime. The said transaction was neither reflected in any account of A2 are corroborated with any other evidence. In absence of least supporting evidence the sole evidence of DW.11 who is not the party to the document does not substantiate the cause of A2. Accordingly accused is not entitled any additional income under this item.

Sl.No.11 :Item No.11 : Share in partition in ancestral property:

115.The contention of the accused is that the parents and brothers of A2 hails from business family and have joint family movable and immovable properties. It is contended that in pursuance of partition of joint family properties the brothers of A2 gave

Rs.5,00,000/- to her towards her share in settlement of Hindu Undivided Family. The accused relies upon the evidence of DW.4 on this aspect and also the contents of

Ex.P28. As per the evidence of DW.4 who is the brother of A2 which was already discussed above DW.4 gave cash of Rs.3,00,000/- and his brother Mr.Tirumala Rao gave

Rs.2,00,000/- to their sister A2 in the year 2005. This was also corroborated by the evidence of DW.3 who is the mother of A2. The prosecution suggested no amount was given to A2 as stated by DW.3. However the contents of income tax returns under

Ex.P21 to Ex.P28 specifically Ex.P21 categorically shows that A2 received large amount 86 C.C. 13/2008/I CBI COURT/VSP of gold and silver as Stridhana and she hails from family being gold business. This fact that the family of A2 is having gold business locally was also averred in the charge sheet.

Further tax of Rs.3,60,019/- paid by A2 as per the assessment year for the sale of gold and silver ornaments disclosed by Voluntary Disclosure of Income Tax Scheme 1997 was shown as expenditure at Item No.73 of Statement-D. Further the contents of

Ex.P28 also discloses the receipt of Rs.5,00,000/- on 01.04.2005 from her brothers by

A2. In view of this evidence, this Court is of the opinion that A2 successfully proved the receipt of Rs.5,00,000/- from her brothers in view of joint family settlement and is accordingly entitled for additional income of the said amount.

Sl.No.12 :Item No.12 : Income earned by T.Deepak at U.K.

116.The version of the accused is that their son T.Deepak worked at London(UK) during September 2002 to November, 2005 and earned Rs.10,60,000/- and the same is to be added to their income. On this aspect the son of the accused Sri T.Deepak who was examined by the prosecution as PW.32 stated that he is resident of Guntur and doing Jewellary business under name and style of Geetanjali Jewelries, his Education qualification is MBA studied in Middlesex University, UK from September, 2002 to

November, 2004. PW.32 further stated that he availed educational loan of Rs.4,80,000/- and did part time job while studying and that initially he was employed in Traphic Data

Centre from September 2002 to February, 2003 at 6400 pounds and thereafter he employed at Macdonald as floor manager from March, 2003 to November, 2004 at 12,500 pounds. During the course of examination he further stated he remitted

Rs.1,90,000/- to his Educational Loan account i.e., State Bank of Hyderabad, Arundelpeta

Branch, Guntur and during his three visits he brought Rs.5,53,000/- and finally when he returned to India he brought Rs.3,20,000/- and invested in fixed deposit in his name in

ING Vysya Bank, Ring road Branch Guntur. The relevant entries in the passport for his visits dated 26.05.2003, 09.02.2004 and 10.01.2005 was marked as Ex.D2. The prosecution except marking the statement made by PW.32 before the investigating officer under Ex.P72 with regard to amount earned by him in UK, did not contradict with the 87 C.C. 13/2008/I CBI COURT/VSP evidence PW.32 either in his chief examination or cross examination. Considering the value of pound in rupees which is almost 50% more the amount claimed by PW.13 during his four years of stay abroad is not extraneous. There is no dispute by the prosecution that PW.32 stayed in UK from September, 2002 to November, 2004. Accordingly this

Court is of the opinion that T.Deepak son of the accused had independent source of income during the period 2002 to 2004 he accrued an amount of Rs.10,60,000/-.

Sl.No.13 :Item No.13 : Cash of Rs.1,00,000/- gift received by A2 from her mother.

117.A2 submitted that she received Rs.1,00,000/- from her mother and relied upon the contents of Ex.P23 income tax returns of A2 for the assessment year 2001-2002 as proof of the same and pleaded to add the said amount as additional income to

Statement-C. However the mother of A2 who was examined as DW.3 did not depose anything on this aspect. Accordingly the sole contents of Ex.P23 cannot be conclusive to consider the amount under this item as Additional Income. Accordingly A2 is not entitled to any benefit under this item.

Sl.No.14 :Item No.14 : Refundable advance of Rs.97,110/- received from Chaitanya Educational Institution.

118.With regard this item no oral evidence is adduced and A2 relied upon the contents of Ex.P27 Income Tax Assessment year 2005-2006. The contents of Ex.P27 discloses as if the said premises was rented to Sri Chaitanya Educational Committee and the amount claimed under this Item was refundable rent deposit. However without any oral evidence or documentary corroboration the contents of Ex.P27 cannot be considered as sufficient proof to consider the amount under this item as Additional

Income. Issue answered against the accused.

Sl.No.15 :Item No.15 (a) to (e) : Additional income claimed under the items deals with Interest received by A2 as follows:

Item No.15(a): Interest of Rs.1,26,986/- Earned on fixed deposit of T.Deepak and

T.Sandeep credited to the account of A2.

88 C.C. 13/2008/I CBI COURT/VSP

119. On this aspect the evidence of PW.15 is that A2 is having SB account

No.396010036248 opened on 24.10.2002 in ING Vyasya Bank, Arundelpeta, Guntur.

The corresponding statement of account was marked as Ex.P36. According to PW.15 the sons of A2 T.Sandeep and T.Deepak were having several fixed deposits with their branch and quarterly interest on the said deposits was credited to the SB account of A2 under Ex.P36. Evidently there are 10 fixed deposits in the name of T.Sandeep and

T.Depak with ING Vyasya Bank, Arundelpeta , Guntur and same was marked as Ex.P37 to Ex.P46. In the cross examination PW.15 stated that the total deposit under Ex.P37 to

Ex.P46 is Rs.6,10,941/- and the total interest accrued is Rs.1,26,986/- and the same was credited to SB account under Ex.P36. ExP36 is the statement of account standing in the name of A2 from 24.11.2002 to 31.08.2007. The prosecution did not dispute the rate of interest credited to the account of A2 wherein the investment made in his FDs were reflected in Statement-B. Therefore, taking into consideration the evidence of PW.15 and contents of Ex.P36 the accused No.2 was given benefit of additional income of

Rs.1,26,986.

Item No.15(b):Interest received on FD of T.Deepak in ING Vysya Bank, Vidyanagar,

Guntur.

120. As per the evidence of PW.24 the then Branch Head, ING Vysya Bank, there are eight Fixed deposit accounts under Ex.P63 one in the name of T.Sandeep and rest of accounts in the name of T.Deepak with ING Vysya Bank, Vidyanagar Branch, Guntur.

The total investment under this FDs was discussed under Item No.27(b) to (g), Item

No.56(d) Item No. 56(e) of Statement-B. There is no dispute by the prosecution with regard to the interest of Rs.28,912/- accrued on this fixed deposits. However except account No.754010026368 and 754010027533 all other accounts were closed subsequent to the check period in the month of February, and April, 2006. There is no withdrawal within the check period except in the accounts Nos.754010026368 and 754010027533 wherein the accrued interest withdrawn during the check period is only

Rs.2,571.47. Accordingly the accused is only entitled to benefit of Rs.2,571/-.

89 C.C. 13/2008/I CBI COURT/VSP

Item No.15(c):

121.Income interest from Savings Bank account No.0173, Andhra Bank, Sompeta for the period 24.11.1999 to 25.01.2006.The particulars of this account was discussed under

Item No.54(55) of Statement-B vide evidence of PW.39 the then Branch Manager, Andhra

Bank, Sompeta and contents of Ex.P79 statement of SB account No.0173 standing in the name of A1 and A2. In addition to the balance amount at the end of 25.01.2006 of

Rs.1,39,337/- the accrued interest from 24.11.1999 to 25.01.2006 is Rs.11,426/-. The prosecution did not dispute the accrued interest in the referred SB account during the examination of Ex.P39. Accordingly A2 is entitled to additional income of Rs.11,426/- under this item.

122.Item Nos.15(d) and (e):Interest income from SB account No.3443, Vysya Bank,

Visakhapatnam for the period 24.11.1999 to 25.01.2006 and Refund of locker deposit from ING Vysya Bank, Visakhapatnam due to closure of lockers on 27.08.2005. As per the evidence of PW.30 the then Vice President, ING Vysya Bank, Main Branch,

Visakhapatnam A1 had account No.333010003443 in their branch, which was opened on 08.04.1998 and was in operation till 07.09.2007. The corresponding statement of account was marked as Ex.P17. As per the evidence of PW.30 A1 and A2 held separate locker with Nos.119 and 196 and were closed on 27.08.2005, the locker deposit of Rs.8,775/- was returned to A1 and A2. Further as per the contents of Ex.P70 the balance at the end of the check period is Rs.31,332/- and the accrued interest is Rs.

6,873/-, the same was discussed under Item No.56(a)(57) of statement-B. The prosecution has no dispute with regard to the evidence of PW.30 and the contents of

Ex.P70. Accordingly the accused is given benefit of interest of Rs.6,873/- and refund of locker deposit of Rs.8,775/- . The total amount of Rs.15,648/- was given benefit as

additional income under Item Nos.15(d) and (e).

90 C.C. 13/2008/I CBI COURT/VSP

123.In view of the above discussion, the Additional income of the accused claimed by the accused and arrived by the Court is as follows :

Sl.No.Item No.Amountas Amount as perAmount per accused prosecution arrived by the Court

1.Rental Income for2,10,000NIL2,10,000 house Door bearing No.3-1-16 received by A2

2.RentalApartment3,43,500NIL2,23,200 fromSeashell Apartment, Visakhapatnam received by A2 during the check period

3.Sale of the site in the2,21,500NIL2,21,500 extentof 335sq.yards, Srikakulamvide document No.2190/1991

4.Income from the sale8,99,172NIL8,99,172 of gold by A2

5.Loan borrowed from3,50,000NILNIL Kaja Rama Reddy DW.5 in October, 2005

6.Loan borrowed in2,00,000NILNIL themonthof October, 2005 from Velaga Yelamanda DW.9 by A2 7Loan borrowed by2,00,000NILNIL A2 from Palakaluri Swamyji DW.10 by A2

8.Amountreceived5,00,000NIL5,00,000 from R.V.K.Prasad DW.15 by A2 on 01.07.2005

9.Interestreceived2,35,000NIL1,00,000 from S.V.C.Marine 91 C.C. 13/2008/I CBI COURT/VSP

Exports by A2 10Advance received1,50,000NILNIL vide agreement to saledated 29.12.2005from DW.11 by A2 11 Share in partition in5,00,000NIL5,00,000 ancestral property 12Income earned by10,60,000NIL10,60,000 T.Deepak at U.K.

13Cash gift received1,00,000NILNIL by A2 from her mother 14Refundable97,110NILNIL advancereceived fromChaitanya Educational Institution 15Interest received by A2 as follows 15(a)Interest Earned on1,26,986NIL1,26,986 fixed deposit of T.Deepak and T.Sandeep credited to the account of A2

(b)Interest received on28,912NIL2,571 FD of T.Deepak in ING Vysya Bank, Vidyanagar, Guntur

(c)Interest income from11,426Not disputed 11,426 SBaccount No.0173,Andra Bank, Sompeta for theperiod 24.11.1999to 25.01.2006

(d)Income interest from6873NIL6,873 SavingsBank account No.3443, VysyaBank Visakhapatnam for theperiod 24.11.1999to 25.01.2006 92 C.C. 13/2008/I CBI COURT/VSP

(e)Refund of locker8,775Not disputed 8,775 deposit from ING VysyaBank, Visakhapatnam due to closure of lockers on 27.08.2005

Total 52,51,15638,70,503

124.Sub Point-(iv) iv)Whether the expenditure of the accused is Rs.1,10,07,053/- as shown in

Statement-D during the check period?

The Expenditure of each Item under Statement-D based upon the oral and documentary evidence led by the prosecution and accused is discussed as follows:

Item No.1: Land at Waltair Ward registered (RO) in the name of T.Bhanoji Rao and

T.Aruna registeredvide Document No.62/1994 :

125.With regard to this expenditure, the prosecution relied upon the evidence of

PW.4 the then Joint Sub Registrar-II, Visakhapatnam who furnished the certified copies of Document No.62/1994 which was marked as Ex.P1. Pw.4 did not specifically anything with regard to the payment of stamp duty and registration charges under this document. Further in view of contradictory evidence under Ex.P1 and Ex.P62 the admitted fact by the accused vide letter dated 28.02.1994 at page No.53 of Ex.P62 is relevant. The contents of letter goes to show that “the balance amount of Rs.25,000/- out of Rs.1,25,000/- from CPF withdrawal and Rs.3,00,000/- housing finance from

Vysya Bank is utilized for purpose of stamp paper and for the purpose of registration”.

The same is taken into consideration. Accordingly the admitted amount of Rs.25,000/- is therefore concluded as expenditure under this item.

Item Nos.2 to 4:

93 C.C. 13/2008/I CBI COURT/VSP

126.The expenditure under Item No.2 to 4 were not in dispute. Accordingly the expenditure under Item Nos.2 to 4 was concluded as per charge sheet.

Item No.5 :

127.Stamps and Registration charges for transaction relating to purchase of property at Koritepadu, Guntur Urban registered vide doc.no.3726/2001 in SRO, Guntur (RO).On this aspect PW.14 the then Joint Sub Registrar, Guntur was examined and the certified copy of sale deed vide document No.3726/2001 dated 26.04.2001 was marked as Ex.P83. PW.14 deposed that the stamp duty of Rs.54,550/- and registration fee of Rs.3,545/- was paid by A1 in respect of transaction under Ex.P81. There is no denial by A1 and A2 except denying the competency of witness. Since PW.14 is the competent authority to issue the certified copy of the document during the relevant period his competency cannot be disputed. Therefore the contents of the documents with regard to stamp duty and registration charges was concluded as averred in the charge sheet.

Item No.6 : Stamps and Registration charges of Rs.21,990/- pertaining to transaction for purchase of property at Perecharla village Guntur Dist. Registered vide Doc.No.3281/2002.

128.With regard to this expenditure, the prosecution relied upon the evidence of

PW.41 the then Sub Registrar, Nallapadu, Guntur District and got marked the certified copy of the document No.3281/2002 as Ex.P89. The value of this asset for

Rs.1,86,000/- was concluded positively in favour of the prosecution under Item No.4 of

Statement-B. The prosecution claims that A2 paid stamp and registration charges of Rs.21,990/- for the corresponding transaction under document No.3281/2002. A2 in her income tax returns under Ex.P25 for the assessment year 2003-2004 disclose the cost of acquiring the property under Item No.4 of Statement-B i.e.,2.65cents of agriculture land at Perecharla village, Guntur as Rs.2,07,990/- . The stamp and registration charges of Rs.21,990/- was shown by A2 inclusively in the purchase 94 C.C. 13/2008/I CBI COURT/VSP value of property under Item No.4 of Statement-B in her income tax returns under

Ex.P25 i.e., (Rs.2,07,990/- - Rs.1,86,000/- = Rs.21,990). Accordingly there is no negative evidence on record to disbelieve the version of the prosecution. Therefore in view of the evidence led by the prosecution and admitted contents under Ex.P25 the expenditure under this item is concluded as Rs.21,990/-.

Item Nos.7 and 8:

129.The prosecution under Item No.7 claims that A2 paid stamp and registration charges of Rs.28400/- for transaction under document No.4241/2002 marked under

Ex.P110 regarding purchase of Shopping Complex “Ananda Nilayam”at D.No.5-87-40.

Similarly the prosecution under Item No.8 claims that A2 paid stamp and registration of charges of Rs.20950/- pertaining to registered construction agreement of Ananada

Nilayam at Dr. No.5-87-40 vide Doc.No.4244/2002 marked under Ex.P111. The sale transaction under document No.4241/2002 and the construction value under document No.4244/2002 were already discussed positively in favour of prosecution under Item.5 and Item No.15 of Statement –B, taking into consideration the evidence of

PW.46 and PW.14,

130.Replicating the relevant discussion PW.14 specifically mentioned the registration and stamp and registration charges for document No.4241/2002 as Rs.26,575/- and

Rs.1825/-. Similarly PW.14 also specified the stamp duty and registration of document

No.4244/2002 as Rs.19,950/- and Rs.1,000/-. A2 disclosed the total purchase and construction value of property in Ananda Nilayam, Laxmipuram, Guntur as

Rs.7,40,000/-. The sale consideration and construction agreement under Ex.P110 and Ex.P111 is for Rs.2,90,000/- and Rs.3,99000/- in total Rs.6,89,000/-. There is no necessity for A2 to show the higher value of Rs.7,40,000/- under Ex.P25 unless she accounted for and included stamp and registration charges. Accordingly when the stamp duty and registration charges as averred by PW.14 is added to this amount the total value is Rs.7,38,350/-. Though there is slight discrepancy with the total value 95 C.C. 13/2008/I CBI COURT/VSP there is no discrediting evidence on record to presume that the stamp and registration charges were incurred by A2. By examining PW.14 and PW.46 and marking

Ex.P110 and Ex.P114 and Ex.P25 the prosecution discharged its burden satisfactorily. If the accused intends to elicit anything contradicting the prosecution evidence about payment of stamp and registration charges the burden rests on the accused under Section 106 Evidence Act. In absence of any rebuttable evidence on part of the accused the evidence led by the prosecution holds good and this Court concludes the expenditure under Item No.7 and 8 of Statement-D as mentioned in the charge sheet.

Item Nos.9 to 12:

131.The prosecution claims that A1 paid stamp and registration charges of

Rs.10,945 for transaction under document No7560/04 Rs.10,945/- for transaction under document No.7561/04 , Rs.14,230/- for transaction under document No.7562/04 pertaining to sale of Plot at Gorantla village, Guntur Dist; Rs.10,945/- for transaction under document No.7542/04 pertaining to purchase of Plots at Gorantla village, Guntur

Dist.; The total expenditure for stamp and registration charges spent on these transactions as per prosecution is Rs.47,065/-

132.The acquisition of these properties under Item Nos.6 to 9 of Statement-B was already held positive in favour of the prosecution concluding that A2 purchased the said properties by incurring the corresponding expenditure of Rs.57,000, Rs.57,000,

Rs.75,000/- and Rs.57,000/-. The total sale consideration under the four documents is

Rs.2,46,000/-. A2 in her annual property returns for the assessment year 2005-2006 (for financial year 2004-2005) under Ex.P27 disclosed the acquisition of these properties and the cost of acquisition was shown as Rs.2,88,410/- (Rs.69040+219370).

There is no necessity for A2 to show excess value than that of the sale consideration under the document unless she met the required stamp and registration charges along with other auxiliary expenditure for conclusion of the transaction. Therefore, in 96 C.C. 13/2008/I CBI COURT/VSP absence of any rebuttal evidence the expenditure under these items is concluded as per charge sheet against A2.

Item No.13:

133.The prosecution claims that A2 paid stamp and registration of charges of

Rs.60,775/- for purchase of Plot measuring 1278.77 sq.yards at Gorantla village, Guntur for Rs.6,39,500/- . The acquisition of this property was concluded positive in favour of prosecution under Item No.10 of Statement-B. A2 disclosed the acquisition of this property for Rs.7,01,350/- in her income tax returns for the assessment year 2006-2007 under Ex.P28 in excess of Rs.61,910/-. Even in this case there is no necessity for A2 to reflect excess value than that of document consideration unless it includes stamp and registration charges and other auxiliary charges. Therefore, in absence of any rebuttal evidence as per the contents of income tax returns and the evidence of

PW.14, this court concludes that A2 paid the necessary stamp and registration charges for transaction under document No.14233/05 under Ex.P87. The expenditure under this item is concluded as per charge sheet.

Item No. 14 :

134. Item No.14 is relating to Fees paid to Guntur Municipal Corporation for building approval for House No.4-05-29/74/A . The prosecution claims that the accused paid an amount Rs.58,415/- for building approval. On this aspect the prosecution got examined

PW.21 S.Chakrapani the then Dy.City Planner, Guntur and got marked the corresponding building approval file as Ex.P56. According to PW.21 as per the contents of Ex.P56 A1 remitted in total Rs.55,435/- towards approval building plan for 1st and 2nd period. The contention of accused is that the original challan was not produced and PW.21 is not the competent witness. The acquisition of the property by the accused under Item No.1(b) at Koretipadu, Guntur under Ex.P81 for consideration of Rs.2,20,000/- was already answered positive in favour of the prosecution. The subsequent construction of house in the land measuring 97 C.C. 13/2008/I CBI COURT/VSP 500sq.yards under Item No.1(b) was not in dispute. In fact the accused intimated the proposal for construction of the said house to Cotton Corporation of India enclosing the details source of expenditure. The cost of construction of the house was reflected in his income tax returns as on 01.01.2005. The building plan application form furnished by A1 is under Ex.P55 is original document containing the signature of A1 which was not denied. Further the scrutiny proforma of building application enclosed therein is also original document which discloses that A1 T.Bhanoji Rao paid VLT property Tax vide receipt No.2667/418 for Rs.3180, BLF for Rs.6900/-, UDA Charges for

Rs.11,840/-, Debris charges for Rs.7,800/-, VC for Rs.20,950/- add BF Rs.5,520/-, Tree guards Rs.1050 and balance debris charges Rs.1175 on 28.02.2002 subject to which permission was granted by Commissioner for ground plus two floor residential building.

The total amount comes to Rs.58415/-(3180+6900+11840+7800+20950+5520+ 1050+1175). Therefore, the amount paid by A1 for approval of building plan is concluded as Rs.58415/-.

Item No. 15 :

135.Compounding fee paid to Commissioner of GMC vide SBH BC No.142544. The prosecution did not adduce any oral or documentary evidence on this aspect.

Accordingly the expenditure Item No.15 is deleted from Statement-D.

Item No.16 to 18 :

136.Item No.16 to 18 deals with fee paid to Guntur Municipal Corporation as house

Tax for house at 4-5-29/74/a, Vidyanagar, Guntur from 25-02-2003 to Jan 2006 by A1.

With regard to payment of house tax for house bearing No.4-05-29/74/A the prosecution examined the then Dy.Commissioner, Municipal Corporation, Guntur as

PW.19. Pw.19 testified that Dr. No. 4-05-29/74/A belongs to A1 with assessment

No.5881324/A of Guntur Municipal Corporation. He further stated A1 paid house tax of

Rs.29,890/-, water tax of Rs.2880 and primary service charges of Rs.420/- for the period 25.02.2003 to January, 2006. The corresponding property account statement 98 C.C. 13/2008/I CBI COURT/VSP was marked as Ex.P50, water charges account statement marked as Ex.P51 and primary account charges is marked as Ex.P52. The contention of the accused is that

Ex.P50 to Ex.P52 are not correct and prepared at the instance of CBI. Ex.P50 to

Ex.P52 are the certified copies entries in Municipal Corporation record issued by the then Revenue Officer, Municipal Corporation, Guntur. PW.19 being the Dy.

Commissioner of Municipal Corporation is the competent person to testify the taxes paid within the corporation. Accordingly there is no considerable reason to doubt the veracity of Ex.P50 to Ex.P52. The payment of taxes by A1 during particular period was also corroborated by the evidence of PW.52 Revenue Inspector, Guntur, Municipal

Corporation and contents of Ex.P123-E. Accordingly the expenditure under these items was concluded as averred in the charge sheet.

Item No.19 and 20 :

137.As per the prosecution A1 paid tax of Rs.6680 and primary services charges of

Rs.240 Guntur Municipal Corporation for house tax of house at D.No.GF-1, Ananda

Nilayam, Guntur from 20-07-2004 to Jan 2006. On this aspect PW.19 the Dy.

Commissioner of Municipal Corporation being competent person testified that the house bearing Door No.GR-I, Ananda Nilyayam belongs to A2 with assessment

No.5342b/1 of Guntur, Municipal Corporation and she paid the tax of Rs.6680 and primary services charges of Rs.240 during the period 25.02.2003 to January, 2006. The correspondent account statements are marked as Ex.P53 and Ex.P54. The counsel

for accused took the same objection as referred under Item No.16 to 18 which was

rejected. Therefore considering the competency of PW.19 and also the admitted ownership of A2 against the property referred the expenditure under these items is concluded as Rs.6680 and Rs.240.

Item No.24 : House tax paid to Sompeta Gram Panchayat till 25-01-2006.

138.The prosecution examined the then Panchayat Secretary, Sompeta as PW.29.

According to PW.29 on 03.06.1998 A2 submitted an application for approval of three portions of building plan for construction in China Komati Street. The Gram Panchyat 99 C.C. 13/2008/I CBI COURT/VSP

Executive Officer approved the plan on 02.07.1998 and the building fee of Rs.220/- was remitted by A2. The building application and order of approval was marked as

Ex.P68. PW.29 further stated that the construction of the said building are subsequently completed and was assessed with assessment No.490, 491 and 492 for three portions. The corresponding tax receipts paid by A2 to the Gram panchayat,

Sompeta from 1999-2000 to 2006-2007 for Rs.3,448.50ps furnished by PW.29 to the

Investigating Officer was marked as Ex.P69. The contention raised in defence are that

Ex.P69 is not the primary evidence and no receipts and ledgers are produced to substantiate the alleged payment of taxes by A2 and argued that Ex.P69 is hit by

Section 162 Cr.P.C. Ex.P68 is the original document along with the approved plan by

Gram panachayat, Sompeta. Accordingly there is no dispute with regard to the remittance of building fee of Rs.220/-. As far as the contents of Ex.P69 are looked into it is the proceedings issued by Panchayat Secretary, Gram Panchayat Sompeta vide

RC No.420/07/B dated 29.10.2007. It is only the correspondence in letter form signed

by PW.29 to investigating officer. Further the investigating officer recorded the statement of PW.29 as LW.50 under Section 161 Cr.P.C. Therefore, the contents of

Ex.P69 cannot be considered as barred by Section 162 Cr.P.C. Further the possession of the said building by A2 subsequent to the acquisition from DW.3 is not in dispute and payment of taxes positively follows. In addition to the same A2 claimed all the tax paid and copies of receipts were enclosed in her income tax returns under

Ex.P21 to Ex.P28. Accordingly the expenditure incurred by A2 pertaining to approval of building plan and for payment of taxes during the check period under this item is concluded as Rs.3,668/-.

Item Nos.25 to 33 :

139.The prosecution did not adduce any oral or documentary evidence on this aspect. Accordingly the expenditure Item Nos.25 to 33 are deleted from Statement-D.

Item Nos.34 and 35 :

100 C.C. 13/2008/I CBI COURT/VSP

140.Item No.34 and 35 deals with premium paid to United India Insurance Co.Ltd., for policy No.150800/ 31/21/04/00232 relating to Opel Corsa Car bearing No.AP-07-

Q-7576 on 26-05-2004 and Premium paid to United India Insurance Co.Ltd for policy

No.150800/31/21/04/00302 relating to Opel Corsa Car bearing No.AP-07-Q-7576 on 01-06-2005. To prove this expenditure covered under Item Nos.34 and 35, the prosecution examined PW.49 the then Senior Divisional Manager, United Indian

Insurance Co., Ltd., Divisional Office , Guntur and got marked letter dated 03.02.2006 addressed by him to SP, CBI for furnishing the details of car insurance policy and claim of A1 under Ex.P115. The evidence of PW.49 is that A1 is the owner of the Car Bearing

AP 07Q 7576 and the same was insured with United India Insurance co., Ltd.,

Divisional Office, Guntur from 17.01.2005 to 26.05.2005 and the said policy was renewed in the same office from 01.06.2005 to 31.05.2006, the first premium of

Rs.12,654/- was paid by cheque drawn on SBH, Guntur and second premium of

Rs.13,571/- was paid by cheque drawn on SBH, Guntur . The defence contention is that the particulars furnished by A2 vide letter dated 03.02.2006 cannot be considered as evidence and that the prosecution failed to prove the expenditure under this item. However the certified copies of policy for vehicle AP 07Q 7576 Opel

Corsa Car were marked with consent by accused under Ex.P65. The accused cannot take double stand by denying the contents of the same at the time of the arguments.

As per the contents of Ex.P65 A1 paid premium of Rs.13,571/- for policy from 01.06.2005 to 31.05.2006 and Rs.12,654/- from 19.06.2006 to 18.06.2007 for private car package policy of Opel Corsa Car bearing No.AP 07 Q 7576. Therefore excluding the premium of Rs.12,569/- which is beyond the check period and the premium of

Rs.13,571/- is taken into consideration in corroboration with oral evidence of PW.49.

There is no substantial evidence with regard to the policy premium of Rs.12,654/- for period 27.05.2004 to 26.05.2005. Therefore the expenditure under Item No.35 is fixed as Rs.13,571/- and the item No.34 is deleted.

Item Nos.36 (a) and (b) and 37:

101 C.C. 13/2008/I CBI COURT/VSP

141. The expenditure in this item deals with repairing charges of Opel Corsa Car bearing No.AP-07-Q-7576 in M/s Sumithra Motors, Mahanadu Road, Auto nagar,

Vijayawada which met an accident near Sompeta and later at Amaravathi. On this aspect to prove the expenditure covered under Item Nos.36(a) and (b) and 37, the prosecution witness PW.49 the then Senior Divisional Manager, United Indian

Insurance Co., Ltd., Divisional Office , Guntur stated that A1 preferred damage claim on 17.01.2005 as his vehicle met with an accident at Sompeta on 12.1.2005 by hitting against the lorry and they did not settle the claim as license found to be fake one. He further stated that A1 preferred another vehicle damage claim on 06.11.2005 for submitting an estimate of Rs.61,216/- their office settle the claim after assessment by company surveyor for Rs.35,000/- on 16.01.2006 through HDFC bank cheque No.1211

dated 16.01.2006 in favour of A1. However PW.49 did not produce any record of

claim settlement and the prosecution equally failed to produce any receipts supporting the repairs carried out by the A1 pertaining to the alleged accidents and claim made on 06.11.2005. Accordingly these three items are deleted from Statement-D.

Item Nos.38 and 39 :

142.Item Nos.38 and 39 deals with petrol Expenses of Car Corsa bearing

No.AP7Q7576 and Petrol Expenses of Motor Cycle Hero Honda CBZ : AP 7AA 9335.

The prosecution did not adduce any oral or documentary evidence on this aspect.

Accordingly the expenditure Item Nos.38 and 39 are deleted from Statement-D.

Item No. 40 : TATA INDICOM No.08635534349:

143.Item No.40 deals with cost of Installation of TATA INDICOM Fixed wireless telephone at house No.4-5-29/74/A,4/4, Vidyanagar, Guntur in the name Smt T.Aruna on 22-2-2005. To prove the expenditure incurred by A2 under Item No.40 prosecution got examined PW.34 the then Alternate Nodal Officer, Tata Tele Services Ltd.,

Hyderabad and got marked Statement of account relating to Walky No.08635534349 of A2 installed at Dr.No.4-5-29/74/A, 4th line, 4th cross road, Shiridi Sai Baba Temple,

Vidyanagar, Guntur from 16.03.2005 to 17.10.2007 as Ex.P74. PW.34 further stated 102 C.C. 13/2008/I CBI COURT/VSP that as per Ex.P74 till 26.01.2006 A2 paid an amount of Rs.8,362/- including deposit amount of Rs.1500/-. The contention raised by the accused is Ex.P74 is not genuine document and PW.34 is not competent to speak with reference to Ex.P74. PW.34 was working as Alternate Nodal Officer, Tata Tele Services during the relevant time is having administrative control over all the affairs of the questioned Tele Services accordingly his competency with regard to fact in issue cannot be disputed. Further the contents of Ex.P74 confirms the payment of Rs.8,362/- including deposit amount of

Rs.1500/- for Walky No.08635534349 in the name of A2. The averments of Ex.P74 were corroborated with the bills and receipts issued for TATA Indicom

No.08635534349 in the name of A2 at Dr.No.4-5-29/74A/A, Vidyanagar, Guntur, seized under Ex.P121 file(LD.75) 25 sheets from the house of accused, marked through

PW.43. Accordingly in view of contents of Ex.P74 and Ex.P121 the expenditure incurred by A2 under Item No.40 is fixed as Rs.8362/-

Item No.41 :

144.Item No.41 deals with Amount paid to CCI towards personal calls made by Sri

T.Bhanoji Rao vide receipto.1503, dt.11-11-2005. The prosecution did not adduce any evidence to prove the expenditure incurred by the accused except relying on the receipts at Page No.83 of Ex.P104 marked through PW.45. the prosecution examined number of employees of Cotton Corporation of India as PWs.20, 22 and 23 however did not confront the contents of receipt under Ex.P104. In absence of any substantial corroborative evidence the contents of receipt under Ex.P104 alone cannot be considered as proof of expenditure under Item No.41. Accordingly this item is deleted from Statement-D.

Item No.42 :

145.Item No.42 deals with Telephone charges paid to Reliance Infocom for Cell

No.9323365035 vide receipt No.S018510214 dated 13-01-2006 . With regard to this item the prosecution did not adduce any evidence to prove the expenditure incurred by the accused except relying on the receipts at Page No.102 of Ex.P104 marked through 103 C.C. 13/2008/I CBI COURT/VSP

PW.45. In absence of any reasonable corroborative evidence the contents of receipt under Ex.P104 cannot be considered as sufficient proof of expenditure under Item

No.42. Accordingly this item is deleted from Statement-D.

Item No.43 :

146.As per charge sheet A1 paid telephone charges of Rs.1850/- to BSNL for Tel

No.2254231.The prosecution did not adduce any oral or documentary evidence on this aspect. Accordingly the expenditure Item No.43 is deleted from Statement-D.

Item No.44 :

147.Item No.44 deals with the rent paid to Sri M.R.K.Prasad for the month of

February and March, 2001 (through cheque).The prosecution except relying upon two receipts at page No.36 and 37 of Ex.P99 did not adduce any oral or documentary evidence on this aspect. The prosecution is required to examine the said M.R.K.Prasad to corroborate the contents of those receipts and also specify the particulars of the house, amenities and rent. In absence of any substantial evidence the expenditure Item

No.44 is concluded as not proved. Accordingly the expenditure Item No.44 is deleted from Statement-D.

Item Nos.45 to 47 :

148.Rent paid by A1 during the AY 2000-2001, 2001-2002 and 2002-2003 as per the

I.T.Returns, The prosecution did not adduce any oral or documentary evidence on this aspect. The prosecution atleast ought to have mention the amount of rent, name of the landlord and specify the address of alleged tenancy. In absence of any evidence expenditure under Item Nos.45 to 47 was concluded as not proved. Accordingly the expenditure Item Nos.45 to 47 are deleted from Statement-D.

Item No .48 :

104 C.C. 13/2008/I CBI COURT/VSP

149.Item No.48 deals with donation made by A1 to ISKCON, Vijayawada on 17-11- 2000 for Rs.2500/-. Except the receipt page No.40 under Ex.P99 the prosecution did not adduce any appropriate evidence to corroborate the expenditure under this item.

The close perusal of the receipt dated 17.11.2000 discloses “4th installment in total

Rs.7,500/-“. This creates an ambiguity with regard to the payment if any made to the

ISKCON by A1. Therefore in absence of any substantial evidence the expenditure under this Item was excluded from Statement-D.

Item No.49 :

150.As per charge sheet donation made by A1 to Little Sisters of the Poor,

Namburu, Guntur Dist., in the years 1995, 1997, 2000, 2001, 2002 and 2004 for

Rs.28,000/- was dealt under item No.49. The exhibits under Ex.58 counter foil receipt

dated 25.10.97, Ex.P.59 Counter foil receipt dated 26-06-2002, Ex.P.60 Counter foil

receipt dated 10-07-2000 and Ex.P61 Counter foil receipt dated 14-10-95 regarding donations made by A1 to Donation to Little Sisters of the Poor, Namburu, Guntur Dist were marked with consent and there is no dispute. With regard to the donation made during the year 2001 it was corroborated with original receipt dated 02.07.2001 at page No.30 of Ex.P99 and with regard to donation made during the year 2004 the same was corroborated with original receipt for Rs.5,000/- dt.17.02.2004 annexed to

Ex.P33 income tax returns for assessment year 2004-2005 claimed under 80G. The letter addressed by the said organization dated 14.07.2002 and 23.5.1996 categorically discloses the accused is in the habit making donations to the organization regularly.

Therefore the expenditure under this item is concluded as Rs.28,000/-

Item No.50 :

151.Item No.50 deals with policy taken by Sri T.Bhanoji Rao in his own name vide

Policy number 690670950 at Srikakulam 28-03-1993. The prosecution did not adduce any oral or documentary evidence on this aspect. Accordingly the expenditure Item

No.50 is deleted from Statement-D.

105 C.C. 13/2008/I CBI COURT/VSP

Item No.51 :

152.Item No.51 deals with premium paid at the rate of Rs.10,000/- annually for Policy

Number 671313581 by A1 in total Rs.90,000/-. As per the prosecution this policy was taken on 15.03.1997 as pension plan with yearly premium of Rs.10,000/- and was in force subsisting the end of the check period. On this aspect the prosecution got examined PW.16 the then Senior Divisional Manager, LIC, Machilipatnam and got marked the particulars of LIC Policy standing in the name of accused and their family members. According to PW.16 the policy No.671313581 dated 15.03.1997 was standing in the name of A1 and he was paid Rs.10,000/- premium annually and the total premium paid from 03.1997 to 03.2007 is Rs.1,10,000/-. The contention of the accused is that the contents of the documents under Ex.P47 and Ex.48 were hit by

Section.162 Cr.P.C. and PW.16 is not the competent person to testify the transactions.

PW.16 being Senior Divisional manager, LIC is competent person to speak about the transactions under the alleged policies. With regard to the contents of Ex.P47 with regard to this policy the same were corroborated with Form 16 of A1 for assessment year 1997-1998 at page 72 of Ex.P99, Form-16 of A1 for assessment year 1998-1999 at page No.66 of Ex.P99, income tax for the assessment year 2000-2001, Form 16 at page 23 for assessment 2001-2002 of Ex.P99 , income tax for the assessment year 2003-2004 under Ex.P32, income tax returns for the assessment year 2004-2005 under Ex.P33 and income tax for the assessment year 2005-2006 under Ex.P34. The averments categorically shows the payment of Rs.10,000/- premium annually for this policy by A1. Accordingly the evidence of PW.16 and Ex.P47 are taken as corroborative to the self assessment made by A1 under above Form-16 and Income

Tax returns. Therefore excluding the premium which was paid in the month of February, 2006 as reflected in Ex.P35 IT returns the total expenditure under this item is taken as

Rs.80,000/-

Item No.52 :

153.As per charge sheet A1 paid premium paid Rs.36,567/-. for Policy number 830216916 during the check period. According to the evidence of PW.16 and contents 106 C.C. 13/2008/I CBI COURT/VSP of Ex.P48 this policy was taken on 28-03-1989 as a pension plan with yearly premium of

Rs.2151/- and is in force by end of the check period. The contention of the defence is that Ex.P48 is hit by Section 162 Cr.P.C. However Ex.P48 includes status report of policy bearing No830216916 along with other policies with covering letter. The covering letter addressed to the investigating authority does not render the entire document into the ambit of Sec.162 CrP.C which deals with statement recorded by the investigating officer and obtaining the signature of the witness. Accordingly taking into consideration the contents of Ex.P48 at page No.3 and the evidence of PW.16 the premium paid by A1 during the check period from December, 1993 to January, 2006 is calculated as Rs.25,812/-.

Item Nos. 53 and 55 :

154.The prosecution claims that the accused paid premium of Rs.1,42,230/- for policy Number 671306574 and Rs.36,568/- for Policy Number 900881799 .As per the prosecution the policy under Item No.53 was taken on 28-04-1995 as money back plan with yearly premium of Rs.12930/- and is in force by the end of the check period. The policy under Item No.55 was taken on 20.01.1992 as child plan with yearly premium of

Rs.2612/- and is in force by the end of the check period. However except the letter

dated 22.8.2007 issued by Manager C.R.M., LIC , no statement or report pertaining to

these policies was furnished by PW.16. The prosecution did not corroborate the oral evidence of PW.16 if any receipts or documents. Accordingly these items was held as not proved .

Item No.54 :

155.The prosecution claims that the accused paid Premium of Rs.10,000/- annually for Policy Number 671313581. This item was already discussed under Item No.51 as repeated deleting from Statement-D.

107 C.C. 13/2008/I CBI COURT/VSP

Item No.56 :

156.The prosecution claims that the accused paid Premium paid of Rs.52,416/- for

Policy number 690309402.According to the evidence of PW.16, this policy No.

690309402 was taken by Smt T.Aruna/A2 in her own name on 28-03-1993 with yearly premium of Rs.4032/- and the policy is in force by the end of the check period. The contents of Ex.P48 status report of the policy No. 690309402 corroborates the same.

The contention raised by the accused is that Ex.P48 is hit by Section 162 Cr.P.C. The argument of the defence was answered negatively in the preceding paragraph for discussion under Item No.52 of Statement-D. The payment of annual premium for this policy was also corroborated with receipt dated 17.03.2004 for installment of

Rs.4032/- for policy No. 690309402 in the name of A2 at page No.15 of IOR for assessment year 2004-2005 under Ex.P26. As the installment for this policy is mid yearly, the installment for the year 1993 and 2006 are excluded. Accordingly the expenditure incurred by A2 under this Item during the check period is calculated as

Rs.48,384/-.

Item No.57 :

157.Item No.57 deals with Premium of Rs.2,24,400/- paid by A2 for Policy number 672342434 .As per the evidence of PW.16 Policy number 672342434 was standing in the name of P.Aruna at LIC, Guntur Branch-2 and the said policy was taken on 28.11.2000 with annual premium of Rs.37,400/- and the total amount paid is

Rs.2,61,800/-. The evidence of Pw.16 is corroborated with the copy of receipt dated 26.02.2001 issued by LIC for Rs.37,400/- premium installment for policy No.

672342434 furnished by A2 along with her income tax returns for assessment year 2001-2002 at page No.5 of Ex.P23 and also with premium installment receipt dated 31.12.2001 for Rs.37,400/- at Page No.10 annexed to Income tax returns for assessment year 2002-2003 under Ex.P24 and also receipt dated 04.12.2002 under for self same amount at Page No.8 for income tax returns for assessment year 2003- 2004 under Ex.P25 and also similar receipt dated 30.12.2003 for Rs.37,400/- at page

No.14 of income tax returns for assessment year 2004-2005 under Ex.P26 and vide 108 C.C. 13/2008/I CBI COURT/VSP receipt dated 06.12.2004 at page No.16 of Ex.P27 Income Tax returns for assessment year 2005-2006. Therefore the oral evidence of PW.6 in corroboration with the admitted contents of income tax returns filed by A2 the total premium paid for this policy during the check period is calculated as Rs.2,24,400/-(6x37,400).

Item No.58 :

158. Item No.58 deals with premium paid by accused for Rs.46,490/- for Policy

Number 690683386. As per the evidence of prosecution this policy was taken in the name of T.Deepak on 28.03.1996 annual premium of Rs.4,694/-. This was corroborated with the evidence of PW.16 and contents of status report for policy No.

690683386 under Ex.P48. Accordingly the expenditure for payment annual premium during the check period is calculated as Rs.46,490

Item No.59 :

159.Item No.58 deals with Premium of Rs.1,24,584/- paid for Policy number 672730591 in the name of Deepak. As per the evidence of PW.16 this policy was taken on 28-07-2002 as money back plan with yearly premium of Rs.31146/- and the policy is in force as on end of the check period. The evidence of PW.16 was also corroborated with the copy of receipts dated 10.03.2004 for amount of Rs.32,792/- (including late fee of Rs.1646) for Policy number 672730591 at Page No.16 of Ex.P26

IOR for assessment year 2004-2005. According to PW.16 an annual premium of

Rs.31,146/- was paid regularly from July, 2002 at the rate of Rs.1,86,876/- as on date.

Therefore the total expenditure for four installments during the check period is calculated as Rs.1,24,584/-.

Item No.60 :

160.Item No.60 deals with premium of Rs.48,540/- paid for Policy Number 690683194 in the name of T.Sandeep. According to the evidence of Pw.16, this policy was taken on 28-03-1996 with yearly premium of Rs.4854/-. As per the contents of status of policy under Ex.P48 the policy is in force and the total premium paid is

Rs.58,248 as on date. The payment of premium for this policy was corroborated with copy of receipt dated 03.03.2005 for amount of Rs.4,854/- at Page No.18 of Ex.P27 109 C.C. 13/2008/I CBI COURT/VSP

IOR for assessment year 2005-2006 filed by A2. Therefore taking into consideration the evidence of PW.16, contents of Ex.P48 and Ex.27 the annual premium during the check period is calculated as Rs.48,540/-(Rs.4854x10)

Item No.61 ::

161.Item No.61 deals with Premium of Rs.32,950/- paid for Policy Number 691780113 in the name of T.Sandeep.As per the evidence of PW.16 this policy was taken on 14-08-2001 with yearly premium of Rs.6590/- in the name of T.Sandeep and the total premium of Rs.32,950/- was paid as on date. The evidence of Pw.16 was corroborated with copy of receipts dated 17.08.2004 for amount of Rs.6590/- at Page

No.19 of Ex.P27 IOR for assessment year 2005-2006 and receipt dated 14.08.2001 for amount of Rs.6590/- at Page No.9 of Ex.P24 IOR for assessment year 2002-2003 filed by A2. Accordingly taking into consideration, the evidence of PW.16, Ex.P24 and

Ex.P27 the expenditure for payment of premium for this policy during the check period is calculated as Rs.32,950/- (Rs.6590x5)

Item No.62 :

162.Item No.62 deals with ULIP paid by T.Bhanoji Rao from 1986 but, 2 installments during the check period i.e., 1994 &1995.The prosecution did not adduce any oral or documentary evidence on this aspect. Accordingly the expenditure Item No.62 is deleted from Statement-D.

Item No.63 :

163.Item No.63 deals with Premium paid Rs.60,000/- towards ULIP Policy

No.UL9830231000579 in the name of Smt T.Aruna for a period of 10 years, annual contribution at the rate of Rs.7500/. As per the prosecution version this policy was taken by A2 on 03.07.1998. The prosecution relied upon the Income tax returns under Ex.P21 to Ex.P28 filed by A2 on this aspect. The perusal of Ex.P21 to Ex.P28 categorically discloses the payment of premium of Rs.7500/-by A2 annually under ULIP and she also claimed rebate under Section 88. The corresponding receipts were also 110 C.C. 13/2008/I CBI COURT/VSP enclosed along with Exs.P23 to Ex.P28. Accordingly the premium for assessment year 1999-2000 to 2006-2007 is calculated is Rs.60,000/- (Rs.7500x8).

Item No.64 : Premium towards ICICI Prudential Life Insurance for Sri T.Sandeep for

Rs.1,00,000/-

164.With regard to this item the prosecution examined PW.51 the then Vice

President, Legal, ICICI Prudential Life Insurance Company, Mumbai and got marked the details of premium pertaining to the policy No.01580454 in the name of T.Sandeep as Ex.P117. The Ex.P117 is marked subject to objection raised by counsel for accused contended the same was hit by Section 162 Cr.P.C . However this contention is ruled out as the correspondence under Ex.P117 is not made by PW.51. Inspite of defence version the prosecution did not file any substantial document to corroborate the information furnished under Ex.P117. Further original letter addressed by ICICI

Prudential Life Insurance dated 01.12.2005 pertaining to policy bearing No. 01580454 at page No.2 and statement of account from 01.07.2005 to 30.09.2005 for policy bearing No.01580454 at page No.71 of Ex.P104 (bunch of document) seized from the house of the accused categorically discloses as if the policy stands in the name of

Aruna Tankala. There is much contradiction between the evidence of PW.51 and the contents of these original documents. In view of ambiguity and also for want of substantial evidence the expenditure under this item is held as not proved.

Accordingly Item No.64 is deleted from Statement-D.

Item Nos.65 to 71 :

165.Except relying upon the receipts under Ex.P104, the prosecution did not adduce any evidence to corroborate the contents of receipts. Accordingly expenditure under

Item Nos.65 to 71 is held not proved and excluded from Statement-D.

Item No.72 :

111 C.C. 13/2008/I CBI COURT/VSP

166.Item No.72 deals with Foreign Travel Expenses shown in IT Return for AY 2006- 07 of Smt T.Aruna and in the bank statement of account no.396010036248 of ING

Vysya Bank, Arundelpet Br.Guntur belonging to Smt T.Aruna (M.No.07/315/1 page 5).

On this aspect The prosecution relied upon the averment made by A2 in her income tax for the assessment year 2006-2007 under Ex.P28 to prove this item. Without any corroborating documentary or oral evidence the mere mentioning of expenditure in the income tax returns by the accused cannot be considered as proof of fact.

Accordingly the expenditure under Item No.72 is held not proved and excluded from

Statement-D.

Item No.73 to 77 :

167.Item Nos.73 to 77 deals with The income tax paid by A2 for assessment 1998- 1999 to 2002-2003: The expenditure made by A2 for payment of income tax for the assessment years from 1998-1999 to 2002-2003 under Item No.73 to 77 were not disputed by the accused and accordingly concluded as per the amounts mentioned in the charge sheet.

Item No.78 : Unverifiable domestic expenditure @ 1/3rd of Gross salary Rs.36,17,772 during the check period:

168.The prosecution claims that Rs.12,05,924/- as unverifiable domestic expenditure of the accused during the check period. The accused argued that there is no basis for the prosecution to arrive the sum of Rs.12,05,924/- as unverifiable domestic expenditure. As per the principle laid by the Hon’ble Apex Court in Sajjan Singh Vs.

State of Punjab reported in AIR 1964 Supreme Court 464, 1/3rd income is to be taken as non-verifiable expenditure. Accordingly 1/3rd of the net salary of the accused i.e.,Rs.8,31,833.34 (Rs.24,95,500.04x1/3) is fixed as unverifiable domestic expenditure

Item No.79 : Cost of Maruti 800 second hand car (AP 07 6543) purchased in 1994 for

Rs.80,000/- 112 C.C. 13/2008/I CBI COURT/VSP

169.The prosecution on this aspect relied upon the annual property returns filed by

A1 and correspondence made to the General Manager, Cotton Corporation of Indian on 08.12.1994 at page Nos.73, 74 and 75 of Ex.P62. The annual property returns of A1 as on 31.12.1994 elicit that he purchased Maruti Car bearing No.AP 6543 for amount of Rs.80,000/- from M/s M.Adinarayana & Co., Guntur and source of income is shown as conveyance loan. The said fact is also evident from the letter dated 08.12.1994 addressed to General Manager, Cotton Corporation of Indian. The corresponding of copy of receipt issued by Mittapalli Adinarayana & Co was disclosed at Page 71 and 72 of Ex.P62. The purchase of car was made during the check period and the conveyance loan was already given benefit under Statement –C at Item No.6.

Accordingly the expenditure under this item was concluded as proved.

Item No.80 : Cost of Maruthi car brought in the year 1996 and sold on 30-12-2000 for

Rs.2,27,742/- .

170.The prosecution on this aspect relied upon the correspondence vide letter dated 07.10.1996 at page No.100 and the annual property returns filed by A1 for the year 1996 at page No.114 of Ex.P62/Ex.P62-J from the contents of annual property returns it is evident that A1 purchased Maruthi Car bearing AP 16 K 3573 on 07.10.1996 for total value of Rs.2,27,000/- from Amit Deep Motors Allahabad . The source of income is shown as Rs.57,500/- vide sale proceeds of old car bearing No.AP 7 A 6543 to one

Ramalingeswara Rao for Rs.1,00,000/- and car loan of Rs.1,70,000/- from Anagram

Finance co.., Vijayawada. The car loan of Rs.1,70,000/- was given benefit under

Statement-C. Therefore excluding the sale proceeds of old car i.e., Rs.57,000/- the expenditure for purchasing Maruti Car under this item No.80 is calculated as

Rs.1,70,742/-.

Item No.81 : Cost of Santro Car for Rs. 3,71,701/-.

171.Even with regard to this item the prosecution relied upon the property annual property returns filed by A1 as on 01.01.2000 under Ex.P66-F. The correspondence

dated 11.08.2000 made by A1 to Chief General Manager discloses that A1 purchased

113 C.C. 13/2008/I CBI COURT/VSP

Santro LS Euro II Car for Rs.3,77,701/- from M/s Bharat Auto Enterprises Hundai

Division, Vijayawada. The source of income is shown as Rs.2,50,00/- finance from

SBH, Rs.37,500/- amount from LIC, Rs.30,000/- house rents and Rs.60,201/- from balance salary savings. The accused also enclosed the copy of receipt issued by

Bharat Auto Enterprises with regard to purchase of Santro Car to the letter dated 11.08.2000. The accused also did not dispute with the sale proceeds of this Car for

Rs.3,40,00/- on 19.06.2002 mentioned at Column No.27(b) of Statement-C. Therefore taking into consideration the undisputed fact of income by the accused, annual property returns and contents of letter dated 11.08.2000 at page No.154 of Ex.P62, expenditure under this item is fixed as Rs. 3,71,701/-

Item No.82 : Cost of Hero Honda CBZ, purchased on 31-12-1999 and sold on 17-09- 2004 for Rs. 61292/-

172.The contents of letter dated 21.01.2000 addressed by A1 to General Manager,

Cotton Corporation of India at page No.139 of Ex.P62 discloses that A1 purchased

Hero Honda Motocycle for his son by incurring Rs.61,292/- from Bikes Auto, near

Vijaya Restaurant , Drive in road , Navarangapura, Ahmedabad by taking loan from

Centurion Bank Ltd., The copy of invoice dated 31.12.1999 at Page No.138 was also enclosed to the said letter. Further as per the contents of letter dated 01.10.2004 addressed by A1 to General Manager, Cotton Corporation of India at Page no.265 of

Ex.P62, A1 sold CBZ Hero Honda bearing No.GJ-1BR 6345 purchased in the year 1999 to one P.Kalyanchakravathi, S/o T.Narasimha Rao, Sattenapalli for Rs.40,000/- on 17.09.2004. this letter was also enclosed with copy of letter dated and cash receipts issued by P.Kalyanchakravarthi. The accused also claimed the income from the sale of vehicle at column no.28 of Statement –C for Rs.40,000/- undisputedly. Accordingly the expenditure incurred for purchase of this vehicle is fixed at Rs.61,292/-.

Item No.83 :

173.Gift to Sri T.Sandeep (son) shown in the I.T.Return of T.Aruna for the Asst.year 2006-2007 for Rs.6,00,000/-. The prosecution relied upon the averment made by A2 in 114 C.C. 13/2008/I CBI COURT/VSP her income tax for the assessment year 2006-2007. However did not adduce any corroborative evidence on this aspect. Accordingly the expenditure under this Item was held not proved.

Item No.84 and 85 :

174.Locker rent shown in the I.T.Return of T.Aruna for the Asst.year 2006-2007 for

Rs. 5,950/- and Bank charges shown in the I.T.Return of T.Aruna for the Asst.year 2006-2007 for Rs.550/.With regard to these items the prosecution solely relied upon the contents of Ex.P28, no specific details of bank or account numbers were mentioned.

Therefore in absence of any specific evidence this item is held as not proved.

Item No.86 : Repayment of housing loan from Vysya Bank to purchase flat at Sea

Shells Apartments at Visakhapatnam for Rs.3,00,000/-The prosecution did not adduce any oral or documentary evidence on this aspect. Accordingly the expenditure Item

No.86 is deleted from Statement-D.

Item No.87 :

175.Repayment of Housing loan from ICICI bank for construction of the said property for Rs.12,24,467/-.To prove the repayment of housing loan from ICICI bank prosecution examined the then Area Operational Manager, ICICI, Laxmipuram Branch, Guntur as

PW.36. According to his evidence A1 availed house loan of Rs.11,00,000/- in the month of July, 2002 and by September, 2003 paid Rs.12,04,467/-and closed the loan account.

The contention raised by the counsel for the accused is that the loan was taken over by

State Bank of Hyderabad, Arundelpeta. However accused did not adduce any evidence to show that the loan was taken over by State Bank of Hyderabad.

Accordingly the expenditure for repayment of housing loan from ICICI Bank is fixed as per charge sheet is Rs.12,24,467/-.

Item No.88 : Repayment of Conveyance advance from CCI to purchase old Maruti Car availed on 27-09-1994 for Rs.25,000/-

176.The initial conveyance loan was obtained by the accused for the purchase of

Maruti Car and the same was evident from his annual property returns as on 115 C.C. 13/2008/I CBI COURT/VSP 31.12.1992. The contents of letter dated 04.05.1995 addressed to the General

Manager(Vigilance) Cotton Corporation of India, Bombay at Pge No.76 of Ex.P62 discloses that accused have taken vehicle loan of Rs.80,000/- from CCI in the month of September, 1994 and he repaid an amount of Rs.25,000/- vide cheque No.052859

dated 04.05.1994 of SBH, Adilabad in BO, Adilabad and the said proceeding is

received by him towards maturity policy of ULIP. Further the letter dated 21.06.1996 at page No.82 of Ex.P62 elicit that the accused sold the said Maruti Car to Sri

Ramalingeswara Rao for Rs.1,00,000/- as declared in his annual property returns for the year 1994 and out the sale proceeds he had repaid the conveyance loan taken from CCI on 21.06.1996 amounting to Rs.41,134/- vide cheque bearing No.442536

dated 21.06.1996 drawn on SBH, Arundelpeta, Guntur in favour of CCI, Guntur. All

these correspondence are original letters bearing the signature of the A1. In view of the corroborating evidence between the letter dated 21.06.1996 and 09.02.1995 along with the undisputed annual property returns at Page Nos.75 and 74 of Ex.P62, excluding the previous payment and sale proceeds of old car the expenditure under this Item No.88 is held as Rs.25,000/-.

Item No.89 :

177.Repayment of loan availed from Anagram Finance Co., Vijayawada for purchase of New Maruthi Car in the year 1996 for Rs.170000/-.The prosecution did not adduce any oral or documentary evidence on this aspect. Accordingly the expenditure Item

No.89 is deleted from Statement-D.

Item No.90 :

178.Repayment of loan from State Bank of Hyderabad for purchase of Santro Car in the year 2000 for Rs.3,03,765/-.On this aspect when we look into the evidence PW.11 he stated that as per the contents of Ex.P29 “A1 exchanged his old Santro car and purchased new Opel Corsa and the value of car was Rs.6,05,744/-. The exchange of old Santro was Rs.3,90,996/- In this regard in addition to the contents of Ex.P29, the contents of Ex.P62(A) Annual property return for the year 2004 filed by A1 shows that 116 C.C. 13/2008/I CBI COURT/VSP he purchased Opel Corsa Car for Rs.6,05,744/- by A1 and has informed to the HO vide letter dated 19.06.2002 which discloses that A1 has purchased the above said car for Rs.6,05,744/- from Sumitra Motors meeting the expenditure by availing loan of

Rs.4,00,000/- from the Associates Indian Financial Service Ltd., and Rs.1,94,635/- from the sale proceeds of Old Santro Car at Rs.3,40,000/- out of which the remaining

Rs.1,45,365/- was repaid to the earlier finance taken from State Bank of Hyderabad for purchase of the said car vide cheque No.300215 drawn on State Bank of Hyderabad.

Accordingly the above evidence categorically shows A1 has availed loan for purchase of Santro Car and subsequently cleared the loan balance loan from the sale proceeds of said car at the time of purchasing new Opel Corsa Car. In view of this discussion the repayment of loan of Rs.3,03,765/- to SBH is held proved.

Item No.91 :

179.As per prosecution the amount of Rs. Rs.4,52,940/- was incurred by A1 for repayment of loan availed from M/s Associates of India Financial Services Pvt.Ltd.,

Vijayawada for purchase of Opel Corsa on 19-06-2002. On this aspect the prosecution got examined PW.42 and got marked the statement of loan account No.814358 standing in the name of A1 as Ex.P91. According to which A1 availed loan of

Rs.4,00,000/- for purchasing Opel Corsa car from Sumitra Motors on 24.05.2002.

PW.42 further stated that the mode of repayment is 60 installments at the rate of

Rs.9,004/- and the said loan fore closed on 26.03.2003 by paying Rs.4,52,940/- with last installment payment of Rs.3,62,900/-. Ex.P91 was marked subject to objection raised by counsel for accused. However irrespective of contents of Ex.P91 there is much evidence on record corroborating the oral evidence of PW.42. As per the letter

dated 13.03.2003 under Ex.P62 at Page No.221 addressed by the accused to General

Manager(Vigilance) Cotton Corporation of India, Navy, Mumbai. The accused intimated that he had repaid the entire outstanding car loan amount to “ The Associates Indian

Financial Services(P)Ltd amount into Rs.3,62,900/- vide cheque No.831038 dated 11.03.2003 drawn on State Bank of Hyderabad and balance amount of Rs.12,900/- after existing Rs.3,50,000/- is paid out of the realization of unit amounts received from 117 C.C. 13/2008/I CBI COURT/VSP

UTI and the same was intimated vide letter No.6121 dated 11.03.2003”. Further the letter dated 07.02.2003 under Ex.P62 at Page No.208 addressed by the accused to the General Manager(Vigilance) discloses that “ as regard to recovery of car loan is concerned as stated in my letter dated 09.12.2002, so far I am paying only Rs.2,804/- out of my salary savings and remaining amount of Rs.6,200/- is paid out of rental amounts received from Flats situated at Ahmedabad and Visakhapatnam. Besides above, it is to inform you that as soon as I sell my flat I propose to repay the entire car loan mount of Rs.3,70,000/- approximately and I am be able to repay some portion of housing loan availed from ICIC bank. The sale proceeds of these two flats my fetch around Rs.10,00,000/- to Rs.12,00,000/-“.

180.As per the averments of annual property returns of accused under Ex.P62(A), the accused submitted that he purchased Opel Corsa Car for Rs.6,05,744/- , wherein the source of income includes Rs.4,00,000/- loan from the Associates Indian Financial

Service Ltd., The above mentioned correspondence vide letter dated 07.02.2003 confirms that the accused is regularly paying the car loan instalment and correspondence under 13.03.2003 concludes that the accused had repaid the entire outstanding loan to the Associates Indian Financial Service Ltd., In view of the admitted facts the accused vide correspondence under Ex.P62 along with the evidence of PW.42 the expenditure under this item is held sufficiently proved.

Item No.92 :

181.Repayment of loan from Centurion Bank Ltd., Ahmedabad for purchase of Hero

Honda CBZ on 31-12-1999 for Rs.71,250/-.The contents of letter dated 21.01.2000

addressed by A1 to General Manager, Cotton Corporation of India at page No.139 of

Ex.P62 discloses that A1 purchased Hero Honda Motocycle for his son by incurring

Rs.61,292/- from Bikes Auto, Ahmedabad by taking loan from Centurion Bank Ltd.,

Further as per the contents of letter dated 01.10.2004 addressed by A1 to General 118 C.C. 13/2008/I CBI COURT/VSP

Manager, Cotton Corporation of India at Page no.265 of Ex.P62, A1 sold CBZ Hero

Honda bearing No.GJ-1BR 6345 purchased in the year 1999 to one

P.Kalyanchakravathi, S/o T.Narasimha Rao, Sattenapalli for Rs.40,000/- on 17.09.2004.

This letter was also enclosed with copy of letter dated and cash receipts issued by

P.Kalyanchakravarthi. The accused also claimed the income from the sale of vehicle at column no.28 of Statement –C for Rs.40,000/- undisputedly. The accused was not expected to sale the vehicle without clearing the vehicle loan and receive the full payment from the purchaser. Based upon the admitted and undisputed facts by the accused the payment of loan to Centurion Bank under this item was presumed proved.

Accordingly the repayment of loan amount to Centurion Bank Ltd., is concluded as

Rs.71,250/-

Item No.93 :

182.Repayment of Education loan availed from State Bank of Hyderabad in respect of Sri T.Deepak for Rs.5,60,834/-.The prosecution did not adduce any oral or documentary evidence on this aspect. Even the particulars of account number was also not mentioned. Accordingly the expenditure Item No.93 is deleted from Statement-D.

Item No.94 :

183.As per the prosecution A1 incurred Rs. Rs.77,920/- for repayment of housing loan paid directly to CCI other than the salary deductions vide Receipt No.1821 dt.25- 03-2003.The prosecution examined PW.20 the then Branch Manager, CCI, Guntur and he testified that the accused repaid house building advance of Rs.77,920/- for Flat at

Ahemdabad vide receipt No.1821 dated 25.03.2003. In addition to the evidence of

PW.20 A1 in his correspondence dated 29.04.2003 at page No.233 of Ex.P62 acknowledges that he received Rs.75,000/- from Sri P.R.Gopujkar at the time of entering into agreement vide DD No.500854 dated 18.03.2003 drawn on bank of

Maharastra payable at Guntur and the said proceeds have been utilized for repayment of outstanding house building taken from CCI. Further this transaction through cheque for Rs.77920/- was also evident from the statement of SB account in the name 119 C.C. 13/2008/I CBI COURT/VSP of A1 marked under Ex.P126. Accordingly taking into consideration the oral evidence of PW.20 corroborated with the admitted facts of accused under Ex.P62 and contents of Ex.P126 validly certified under Bankers Book Evidence Act and IT Act, for which further proof is not required, this Court concludes the Item No.94 as per statement-D

Item No. 95 : Repayment of housing loan from Union Bank of India for Rs.6,06,000/-

184.To prove this expenditure the prosecution examined the then Manager, Union

Bank of India, Main Branch, Guntur as PW.18 and got marked the statement of account bearing No.33020639000301 standing in the name of A2 as Ex.P49. He stated that as per the contents of Ex.P49 a loan of Rs.7,00,000/- was extended to A2 for acquiring commercial shops on 12.07.2002. He further stated A2 paid sum of Rs.6,06,000/- as

EMI on 29.08.2004 to 31.01.2006 including interest and other charges. The counsel for accused reported no cross examination to the witness. Accordingly the evidence of

PW.18 and contents of Ex.P49 statement of account certified under Section 2 of

Bankers Book Evidence Act, 1981 r/w Sec.93 of IT Act, 2000. The expenditure under this item was fixed as Rs.6,06,000/-.

Item No.96 : Educational expenses of Shri T.Deepak from Std VIII to X in Loyala

College Public School, Nallapadu, Guntur from 1994 to 1997 for Rs.23,800/-

185.To prove this expenditure the prosecution examined PW.2 the then Principal,

Loyala College Public School, Nallapadu, Guntur . According to PW.2 T.Deepak son of accused studied in their school studied VIII to X standard during 1995-1997. He further stated an amount of Rs.4,395/-, Rs.4,385/-, Rs.5,040/- in total Rs.14,280/- was paid as fee during the three academic years. The evidence of PW.2 was not supported any documentary evidence like receipts or records. Accordingly the oral evidence of

PW.2 almost 16 years from the date of occurrence cannot be considered as conclusive to prove the expenditure under this item. The expenditure under Item

No.96 is therefore held as not proved.

Item Nos.97 and 101 :

120 C.C. 13/2008/I CBI COURT/VSP

186. Educational expenses of Shri T.Deepak in B.Com., 2ndand final year in TJPS college during 2000-2001 and 2001-2002 for Rs. 2161/- and Educational expenses of

Shri T.Sandeep (2ndson) towards college fees and hostel fees during 2002-2003 in intermediate at Gautam Junior College, Guntur for Rs.9,000/-.The prosecution examined Principal, Gautam Junior College, Guntur as PW.3. According to PW.3

T.Sandeep son of accused studied IInd year Intermediate Group during the academic years 2002-2003 and paid fee of Rs.8,000/- and mess fee of Rs.1,000/-. However the evidence of PW.3 without any corroborative documents like receipts or records cannot be considered as sufficient proof to prove the expenditure under these items. Item

No.97 and 101 are held as not proved.

Item No.98 :

187.As per the prosecution A1 incurred an amount of Rs.6,04,102/- for Educational expenses of his son T.Deepak towards MA/Msc joint Masters programme at Middlesex

University, England. On this aspect the prosecution got examined the then Chief

Manager, UCO Bank Arundelpeta, Guntur as PW.40. As per the evidence of PW.40 he furnished the particulars of demand draft in the name of T.Deepak issued in British currency, GBP 7790 equivalent to Indian Currency of Rs.6,04,102/- drawn on HSBC

Bank, London. However he further stated that on the request of the party the said DD was cancelled on 05.09.2002 and the proceeds were paid by way of pay Order No.2271

dated 05.09.2002 for Rs.5,87,366/- in favour of T.Deepak. The connected document

was marked under Ex.P80. There is no dispute by the counsel for the accused with regard to the oral evidence of Pw.40 in the cross examination or with the contents of

Ex.P80. Accordingly the expenditure under this item was concluded as Rs.5,87,366/-.

Item No.99 :

188.Educational expenses of T.Deepak his study at Middlesex University, England as per the statement of account of loan a/c no.01593011123 Education Loan, State Bank of Hyderabad, Arundel Branch, Guntur, The loan amount was used for education 121 C.C. 13/2008/I CBI COURT/VSP purpose for Rs.8,15,548/-.The prosecution did not adduce any oral or documentary evidence on this aspect. Accordingly the expenditure Item No.99 is deleted from

Statement-D.

Item No.100 :

189.Educational expenses of Shri T.Sandeep (2ndson) from class V and class VI at

Kendriya Vidyalaya, Nallapadu, Guntur from 1994 to 1996 for Rs.913/-.The Principal

Kendriya Vidyalaya, Nallapadu, Guntur who was examined PW.6 stated that T.Sandeep son of A1 studied in their school from III standard to VI Standard during the academic years 1992-1993 to 1995-1996 and paid fee of Rs.563/-. The evidence of PW.3 without any supporting document cannot be considered as convincing evidence to prove the expenditure under Item No.100. accordingly the expenditure under Item No.100 is held as not proved.

Item No.102 :

190.Educational expenses of Shri T.Sandeep (2ndson) towards college fees in

B.Com., Computers at TJPS college, Guntur during 2004-2005 and 2005-2006 for

Rs.7,120:The Principal, TJPS College, Guntur was examined as PW.1 with regard to this item. He stated that T.Deepak and T.Sandeep both are sons of the accused,

T.Deepak studied in their college, 2nd and 3rd year B.Com from 2000-2001 to 2001-2002.

He further stated that T.Sandeep studied B.Com computers during the academic years from 2004-2005 to 2006-2007 with regard to the pay particulars he stated that

T.Deepak paid Rs.2,161/- for both the academic years and T.Sandeep paid Rs.9,895/- for all the academic years. However no documentary evidence like receipts or account book were adduced by the prosecution to corroborate with the evidence of

PW.1. Accordingly the expenditure under Item No.102 of Statement –D is held as not proved.

Item No.103 :

122 C.C. 13/2008/I CBI COURT/VSP

191.Repayment of housing loan in State Bank of Hyderabad (A/c No.01593009367) from September, 2003 to January, 2006 for Rs. 280000.The prosecution did not adduce any specific oral or documentary evidence to prove that an amount of Rs.2,80,000/- was incurred for repayment of housing loan in State Bank of Hyderabad. Though the statement of term loan account No. 01593009367 was marked through PW.5 he did not specify anything about repayment housing loan by A1 except the testifying the credit balance was Rs.8,70,614/- as on 30.06.2006. Accordingly for want of evidence the expenditure under Item No.103 of Statement –D is held as not proved.

Item No.104 :

192.Repayment of Domestic loan from ING Vysya Bank, Vidyanagar Br.Guntur taken by T.Deepak for Rs. 224904.No oral or documentary evidence was adduced by the prosecution to prove that an amount of Rs.2,24,904/- was incurred for repayment of

Domestic loan from ING Vysya Bank. Accordingly for want of evidence the expenditure under Item No.104 of Statement –D is held as not proved.

193. In view of the above discussion, the Expenditure for each item under

Statement-D averred in the charges sheet, claimed by the accused and arrived by

the Court based on the evidence is concluded as follows:

EXPENDITURE DURING THE CHECK PERIOD JANUARY 1994 TO 25-01-2006

STATEMENT – D

Date/yearAmountAmountAmount S.No.Name of the Assetofas peras perarrived by Acquisitionchargeaccused the Court sheet Stamp and Registration Charges spent on properties acquired during check period 1Land at Waltair Ward registered (RO) in 199429181NIL25000 the name of T.Bhanoji Rao and T.Aruna registeredvide Document No.62/1994 2Property at Lagisetty Palem village, 19967191No7191 Sabbavaram Mandal, Visakhapatnam dispute registered vide Doc.No.2476/96 of SRO, Sabbavaram in the name of T.Aruna 3A coconut garden at Jagati village 199616716No16716 srikakulam Dist. AP., registered vide dispute doc.no.988/1996 in the office of SRO Itchapuram in the name of Smt T.Aruna 123 C.C. 13/2008/I CBI COURT/VSP 4Property at Chinna Komati Street, 199829056No29056 Sompeta village registered vide dispute doc.no.92/1998 5Property at Koritepadu, Guntur Urban 200158095NIL 58095 registered vide doc.no.3726/2001 in SRO, Guntur 6Property at Perecharla village Guntur Dist.200221990NIL21990 Registered vide Doc.No.3281/2002 7Shopping Complex “Ananda Nilayam”at200228400NIL28400 D.No.5-87-40registeredvide doc.no.4241/02 8Construction Agreement on the “Ananda200220950NIL20950 Nilayam”atD.No.5-87-40vide Doc.No.4244/02 9Plot at Gorantla Village, Guntur Dist. A.P.,200410945NIL10945 registered vide doc.no.7560/04 of Joint Sub Registrar Guntur 10Plot at Gorantla village, Guntur Dist. A.P.200410945NIL10945 registered vide Doc.No.7561/04 11Plot at Gorantla village, Guntur Dist.200414230NIL14230 Registered vide Doc.No.7562/04 12Plot at Gorantla village, Guntur Dist.200410945NIL10945 Registered vide doc.no.7542/04 13Plot at Gorantla village, Guntur Dist.200560775NIL60775 A.P.registered vide doc.no.14233/05 14House Tax for House No.4-05-29/74/A,200258415NIL58415 Guntur: Fees paid to Guntur Municipal Corpn. For building approval vide BA No.69/2002/G2 15Compounding fee paid to Commissioner18-12-20027100NILNIL of GMC vide SBH BC No.142544 16Fee paid to Guntur Municipal Corpn. For200329890NIL29890 house Tax of house at 4-5-29/74/a, Vidyanagar, Guntur from 25-02-2003 to Jan 2006 17Fee paid to Guntur Municipal Corpn. For20032880NIL2880 water Tax of house at 4-5-29/74/a, Vidyanagar, Guntur from 18-07-2003 to Jan 2006 18Fee paid to Guntur Municipal Corpn.for2003420NIL420 Primary Service Charges of house at 4-5- 29/74/a, Vidyanagar, Guntur from 25-02- 2003 to jan 2006 19Fee paid to Guntur Municipal Corpn. For20046680NIL6680 house tax of house at D.No.GF-1, Ananda Nilayam, Guntur from 20-07-2004 to Jan 2006 20Fee paid to Guntur Municipal Corpn.for2004240NIL240 Primary Service Charges of house at D.No.GF-1, Ananda Nilayam Guntur from 20-07-2004 to Jan 2006 24House tax paid to Somepeta Gram34448NIL3,668 Panchayat till 25-01-2006 25House Tax paid for D.No.11-2-1/1 vide1050NILNIL Receipt No.1536837 26Property Tax paid to Visakhapatnam1050NILNIL Municipal Tax paid for house No.11-2-1/1 by T.Bhanoji Rao vide Receipt No.160503 dt.11-10-2005 M.No.06/47/7-52 27Payment of House Tax towards1050NILNIL Ast.No.27999/154toVMC, Visakhapatnam vide Receipt No.129265 124 C.C. 13/2008/I CBI COURT/VSP dt.22-8-2002 28Electricity Bill paid on 28-09-2005 for flat743NILNIL at Siripuram vide Bill dt.28-9-2005 29Maintenance charges for Sea Shells1800NILNIL Apartment, VSKP @ Rs.600/- per month paid for 3 months upto Sept, 2002 vide letter from A.N.Ganga Raj, 41-A, Sea Shells, VSKP dt.2-11-2002 File 7/160 30Maintenance charges for Sea shells600NILNIL Apartment, VSKP @ Rs.600/- per month paid for 3 months upto Sept, 2002 vide receipt no.372 dt.9-9-2005 M.No.06/47/7- 48 31Maintenance charges for Sea shells600NILNIL apartment, VSKP @ Rs.600 per month paid for 3 months upto sept, 2002 vide receiptno.393dt.5-10-2005 M.No.06/47/7-49 32Lease Deed for Sea S Shells, VSKP vide3500NILNIL letter from A.N.Ganga Raj, 41-A, Sea Sshells, VSKP dt.2-11-2002 File 7/160 33Stamp paper purchased for PGA104NILNIL executed in favour of Sri P.Gopujkar vide letter addressed to Sri P.Gopujkar, file No.06/47/1-47 34Premium paid to United India Insurance200412654NILNIL Co.Ltd.,inpolicyNo.150800/ 31/21/04/00232 for Car opel Corsa No.AP-07-Q-7576 on 26-05-2004 35Premium paid to United India Insurance200513571NIL13571 Co.Ltdinpolicy No.150800/31/21/04/00302 for Car opel Corsa No.AP-07-Q-7576 on 01-06-2005 36(a) Repairing charges of Car opel Corsa3-2-200690646NILNIL No.AP-07-Q-7576 in M/s Sumithra Motors, Mahanadu Road, Auto nagar, Vijayawada which met an accident near Sompetavideletter No.GDO:SDMS:205:2005 dt.3-2-2006 of Sr.Divisional Manager, United India Insurance Co.Ltd. Guntur

(b)Repairing charges of Car Opel Corsa200548857NILNIL No.AP-07-Q-7576 in M/s Sumithra Motors, Mahanadu Road, Auto nagar, Vijayawada which met an accident near Sompetavideletter No.GDO:SDMS:205:2005 dt.3-2-2006 of Sr.Divisional Manager, United India Insurance Co.Ltd. Guntur 37Repairing of his Car opel Corsa No.AP-3-2-200613857NILNIL 07-A-7576 in M/s Sumithra Motors, Mahanadu road, Auto Nagar, Vijayawada which met an accident near Amaravathi vide letter no.GDO:SDMS:205:2005 dt.3- 2-2006 of Sr.Divisional Manager, united India Insurance Co. Ltd., Guntur 38Petrol Expenses ofCarCorsa165152NILNIL GLS:AP7Q7576 {@10KM/L and Rs.40 per litere} 041288 KM 39Petrol Expenses ofMotor Cycle Hero9268NILNIL

Honda CBZ : AP 7AA 9335 {@50KM/Ltr.

And Rs.40 per litre} 11,585 KM 125 C.C. 13/2008/I CBI COURT/VSP 40TATA INDICOM No.08635534349: 22-02-20058362NIL8362 Description, payment date and amount: Installation of Fixed wireless telephone at house No.4-5-29/74/A,4/4, Vidyanagar, Guntur TATA INDICOM in the name Smt T.Aruna on 22-2-2005 and call charges 41Personal Calls:11-11-20051470NILNIL Amount paid to CCI towards personal calls made by Sri T.Bhanoji Rao vide receiptNo.1503,dt.11-11-2005 (M.No.06/47/7-83) 42Reliance Infocom:13-01-20062205NILNIL Telephone charges paid to Reliance Infocom for Cell No.9323365035 vide receipt No.S018510214 dated 13-01-2006 43BSNL:24-03-20051850 NILNIL Payment of telephone charges ot BSNL Tel No.2254231 by Sri T.Bhanoji Rao vide DemandNote No.TRA/INV/39839/ANGR.2 dt.9-3-2005 &Receipt No.25371 dt.24-3-2005 44Rent paid to Sri M.R.K.Prasad for the200110000NILNIL month of February and March, 2001 (through cheque) 45Rent paid during the AY 2000-2001 as per200050000 NILNIL the I.T.Return 46Rent paid during the AY 2001-2002 as per200250000NILNIL the I.T.Return 47Rent paid during the AY 2002-2003 as per200350000NILNIL the I.T.Return, Reduced expenditure is due to shifting to new own residence 48Donation to ISKCON, Vijayawada on 17-17-11-20002500NILNIL 11-2000 49Donation to Little Sisters of the Poor,28000NIL28000 Namburu, Guntur Dist., in the years 1995, 1997, 2000, 2001, 2002 and 2004 50The following policies were taken by Sri28-03-1993440NILNIL T.Bhanoji Rao in his own name Policy number 690670950 : This policy was taken at Srikakulam (BO-673). Only one premium of Rs.440/- was paid and then the policy was allowed to lapse. The date of commencement is 28-03-1993 51Policy Number 671313581 : This policy15-03-199790000NIL80000 was taken on 15-03-1997. This is a pension plan with yearly premium of Rs.10,000/-. The policy is now in FORCE condition and is being serviced by Branch Guntur-I 52Policy number 830216916 : This policy28-03-198936567NIL25812 was taken on 28-03-1989 as a pension plan with yearly premium of Rs.2151/-. The policy is now in FORCE condition and isbeingservicedbyBranch Visakhapatnam 53Policy Number 671306574 : This policy28-04-1995142230NILNIL was taken on 28-04-1995. This is a money back plan with yearly premium of Rs.12930/-. The policy is now in FORCE condition and is being serviced by Branch Guntur-I (BO-688). An amount of Rs.1,00,000/- might have been paid 126 C.C. 13/2008/I CBI COURT/VSP towards SURVIVAL BENEFIT. 54Policy Number 671313581 : This policy15-03-199790000NILNIL was taken on 15-03-1997. This is a pension plan with yearly premium of Rs.10,000/-. The policy is now in FORCE condition and is being serviced by Branch Guntur BO-I 55Policy Number 900881799 : This policy20-01-199236568NILNIL was taken on 20-01-1992. This is a child plan with an yearly premium of Rs.2612/-. The policy is now in FORCE condition and is being serviced by Branch Guntur-I 56The following policies were taken by28-03-199352416NIL48384 Smt T.Aruna in her own name: Policy number 690309402 : This policy was taken on 28-03-1993. This is a endowment plan with yearly premium of Rs.4032/-. The policy is now in FORCE condition and is being serviced by Branch, Visakhapatnam-5 57Policy number 672342434 : This policy28-11-2000224400NIL224400 was taken on 28-11-2000. This is an endowment plan with yearly premium of Rs.37400/-. The policy is now in FORCE condition and is being serviced by Branch Guntur-2 58 The following policies were taken on the28-03-199646940NIL46940 name of Sri T.Deepak and Sri T.Sandeep : Policy Number 690683386 : This policy was taken on 28-03-1996. This is an endowment plan with yearly premium of Rs.4694/-. The policy is now in FORCE condition and is being serviced by Branch, Visakhapatnam – 5 59Policy number 672730591 : This policy28-07-2002124584NIL124584 was taken on 28-07-2002. This is a money back plan with yearly premium of Rs.31146/-. This policy is now in FORCE condition and is being serviced by Branch Tenali (BO-687). An amount of Rs.1,25,000/- might have been paid towards SURVIVAL BENEFIT 60Policy Number 690683194 : This policy28-03-199648540NIL48540 was taken on 28-03-1996. This is a children plan with yearly premium of Rs.4854/-. The policy is now in FORCE condition and is being serviced by branch Visakhapatnam – 5 (BO-69P). 61Policy Number 691780113 : This policy14-08-200132950NIL32950 was taken on 14-08-2001. This is an endowment plan with yearly premium of Rs.6590/-. The policy is now in FORCE condition and is being serviced by Branch Srikakulam 62ULIP paid by T.Bhanoji Rao from 19868800NILNIL but, 2 instalments during the check period i.e., 1994 &1995 63PremiumtowardsULIPPolicy60000NIL60000 No.UL9830231000579 in the name of Smt T.Aruna. DOC 03-07-1998 for a period of 10 years – Annual contribution – Rs.7500/- 127 C.C. 13/2008/I CBI COURT/VSP 64Premium towards ICICI Prudential Life100000NILNIL Insurance for Sri T.Sandeep 65Travelling from Guntur to Hyderabad by2-12-2005432NILNIL Rail in 7255 Exp. On 4-12-2005 payment to Trade Wings Ltd. Guntur vide Receipt No.RA2005000834 dt.02-12-2005 66Travelling from Hyderabad to Mumbai by6-12-20052878NILNIL flight in IC927 on 06-12-2005 payment to Trade Wings Ltd., Guntur vide Receipt No.AI2005000480 dt.06-12-2005 67Amount paid to Sheraton Air wings Guntur21-11-2005485NILNIL towards train journey from Guntur to Hyderabad and back in 3AC (Rs.854/- minus Rs.369/-) 68Amount paid to Sheraton Air wings Guntur22-11-2005427NILNIL towards train journey from Hyderabad to Guntur in 3AC vide bill No.4625, dt.22-11- 2005 69Amount paid to Sheraton Air wings Guntur22-11-20055606NILNIL towards flight journey from Hyderabad to Delhi and back vide bill no.4086, dt.22-11- 2005 (Rs.13088/- minus Rs.7482/-) 70Expenditure incurred for purchase of Unit6-10-199420000NILNIL Week: 40 at Status Resorts India Pvt.Ltd. In Silver Castle, Kodaikanal vide Receipt No.003605 dt.6-10-1994 by T.Aruna which is part payment 71Expenditure incurred for purchase of Unit18-11-199420500NILNIL Week : 40 at Status Resorts India Pvt.Ltd. In Silver Castle, Kodaikanal vide Receipt No.003838 dt.18-11-1994 by T.Aruna which is part payment 72Foreign Travel Expenses shown in IT2005-0690000NILNIL Return for AY 2006-07 of Smt T.Aruna (M.No.07/278/ page 7) and in the bank statement of account no.396010036248 of ING Vysya Bank, Arundelpet Br.Guntur belonging to Smt T.Aruna 73Income Tax paid bty T.Aruna in March346019No346019 1998 as per I.T. Return for AY 98-99 dispute 74Income Tax paid by T.Aruna in June 200213525No13525 for the Asst.Year 1999-2000 as perdispute I.T.Return 75Income Tax paid by T.Aruna in June 200234150No34150 for the Asst year 2000-01 as perdispute I.T.Return 76Income Tax paid by T.Aruna in 31-3-200523709No23709 for the Asst. Year 2001-02 as perdispute I.T.Return 77Income Tax paid by T.Aruna in 31-3-200513623No13623 for the Asst. Year 2002-03 as perdispute I.T.Return 78Unverifiable domestic expenditure @1205924NIL8,31,833.34 1/3rd of Gross salary i.e., Rs.3,617,772 during the check period 79Cost of Maruti 800 second hand car (AP80000NIL80000 07 6543) purchased in 1994 (page no.71 of CCI, Vigilance property returns file of Shri T.Bhanoji Rao 80Cost of Maruthi car brought in the year227742NIL170742 1996 and sold on 30-12-2000 81Cost of Santro Car (page no.154 of CCI,371701NIL371701 128 C.C. 13/2008/I CBI COURT/VSP

Vigilance property returns file of Shri T.Bhanoji Rao) 82Cost of Hero Honda CBZ, purchased on61292NIL61292 31-12-1999 and sold on 17-09-2004 83Gift to Sri T.Sandeep (son) shown in the600000NILNIL I.T.Return of T.Aruna for the Asst.year 2006-2007 84Locker rent shown in the I.T.Return of5950NILNIL T.Aruna for the Asst.year 2006-2007 85Bank charges shown in the I.T.Return of550NILNIL T.Aruna for the Asst.year 2006-2007 86Repayment of housing loan from Vysya300000NILNIL Bank to purchase flat at Sea Shells Apartments at Visakhapatnam 87Repayment of Housing loan from ICICI1224467 NIL12,24,467 bank for construction of the said property 88Repayment of Conveyance advance from25000NIL25000 CCI to purchase old Maruti Car availed on 27-09-1994 89Repayment of loan availed from Anagram170000NILNIL Finance Co., Vijayawada for purchase of New Maruthi Car in the year 1996 90Repayment of loan from State Bank of303765NIL303765 Hyderabad for purchase of Santro Car in the year 2000 91Repayment of loan availed from M/s452940NIL452940 Associates of India Financial Services Pvt.Ltd., Vijayawada for purchase of Opel Corsa on 19-06-2002 92Repayment of loan from Centurion Bank71250NIL71250 Ltd., Ahmedabad for purchase of Hero

Honda CBZ on 31-12-1999

93Repayment of Education loan availed560834NILNIL from State Bank of Hyderabad in respect of Sri T.Deepak 94Repayment of housing loan paid directly77920NIL77920 to CCI other than the salary deductions vide Receipt No.1821 dt.25-03-2003 95Repayment of housing loan from Union606000NIL606000 Bank of India 96Educational expenses of Shri T.Deepak23800NILNIL from Std VIII to X in Loyala College Public School, Nallapadu, Guntur from 1994 to 1997 97Educational expenses of Shri T.Deepak in2161NILNIL B.Com., 2ndand final year in TJPS college during 2000-2001 and 2001-2002 98Educational expenses of T.Deepak for604102NIL5,87,366 MA/Msc joint Masters programme at Middlesex University, England (7790 GBP paid vide draft no.100001 dated 26 july 2002 drawn from UCO Bank Mumbai payable at Midland Bank, International Branch London). 99Educational expenses of T.Deepak his815548NILNIL study at Middlesex University, England as per the statement of account of loan a/c no.01593011123 Education Loan, State Bank of Hyderabad, Arundel Branch, Guntur, The loan amount was used for education purpose 100Educational expenses of Shri T.Sandeep913NILNIL 129 C.C. 13/2008/I CBI COURT/VSP (2ndson) from class V and class VI at Kendriya Vidyalaya, Nallapadu, Guntur from 1994 to 1996 101Educational expenses of Shri T.Sandeep9000NILNIL (2ndson) towards college fees and hostel fees during 2002-2003 in intermediate at Gautam Junior College, Guntur 102Educational expenses of Shri T.Sandeep7120NILNIL (2ndson) towards college fees in B.Com., Computers at TJPS college, Guntur during 2004-2005 and 2005-2006 103Repayment of housing loan in State Bank280000NILNIL of Hyderabad (A/c No.01593009367) from September, 2003 to January, 2006 104Repayment of Domestic loan from ING224904NILNIL Vysya Bank, Vidyanagar Br.Guntur taken by T.Deepak Total 1100705364,54,276.34

194.In view of the above discussion and sub points i to iv both on fact and law the assets of the accused under Statements, A,B,C and D are concluded as follows:

Statement –A Rs.82,244-00 Assets acquired prior to check period Statement –BRs.84,18,707-00 Assets acquired at the end of the check period Statement – C(C+C1)Rs.1,53,63,391-00 Income during the check period Statement –DRs.64,54,276.34 Expenditure during the check period B-A Rs.83,36,463 Assets acquired during the check period Disproportionate assets [(B-A)+D]-C[(83,36,463+64,54,276)-1,53,63,391] (1,47,90,739)-1,53,63,391 = -5,72,652 Savings Rs.5,72,652/-

195.In view of the above calculations the total income of the accused during the check period is Rs.1,53,63,391 and the total value of assets acquired during the check period and expenditure arrived goes to Rs.1,47,90,739/-. Accordingly subtracting the same from the total income the accused is having savings income of Rs. 5,72,652/- and there are no disproportionate assets. Therefore the acquisition laid by the prosecution with the regard to the disproportionate assets against accused lacks justification and fails on merits

196.POINT Nos.3 to 4 :

130 C.C. 13/2008/I CBI COURT/VSP

3) Whether the prosecution proved the guilt of A1 beyond all reasonable doubt for the offences punishable under Section 13(2) r/w 13(1)(e) of P.C Act ?

4) Whether the prosecution proves beyond all reasonable doubt that A2 abetted the commission of above offence by intentionally aiding A1 in acquisition and possession of pecuniary resources and assets disproportionate to his known source of income?

5) Whether the prosecution proved the guilt of A2 beyond all reasonable doubt for the offences punishable under Section 109 IPC r/w 13(2) r/w 13(1)(e) of P.C

Act ?

In view of the conclusion arrived under Point No.2, this Court is of the opinion that the prosecution failed to prove beyond all reasonable doubt that the accused being public servant and possessed in his name and in the name of his family members disproportionate assets worth Rs. Rs.1,31,70,418/- as on 26.01.2006. Accordingly this is concluded that the prosecution failed to prove the guilt of accused for the offence under Section 13(1)(e) r/w 13(2) of P.C Act. As the allegations against A1 stands not proved the auxiliary allegations against A2 that A2 abetted A1 for the offence under 13(1)(e) r/w 13(2) of P.C Act also does not sustains any merits. Therefore the allegations laid by the prosecution against A2 for the offence under Section 109 IPC r/w 13(1)(e) r/w 13(2) of P.C Act also fails as not proved

In the result, A1 is found not guilty for the offence punishable under sec. 13(1)

(e) r/w 13(2) of Prevention of Corruption Act, 1988 and he is acquitted under Section 248(1) of Cr.P.C. A2 is found not guilty for the offence punishable under Sec.109 IPC r/w sec. 13(1)(e) r/w 13(2) of Prevention of Corruption Act, 1988 and she is acquitted under Section 248(1) of Cr.P.C.

The accused are held entitled for return of FD amount of Rs.1,49,545/-(Rupees

One lakh forty nine thousand five hundred and forty five only) along with the interest under M.O.1 after appeal time.

The existing bail bonds of A1 and A2 shall stands cancelled. A1 and A2 are directed to execute self bond for Rs.10,000/- (Rupees ten thousand only) with two sureties for like sum each as contemplated under Section 437-A of Criminal Procedure 131 C.C. 13/2008/I CBI COURT/VSP

Code, for a period of six months, to ensure his appearance before the appellate court, if warranted.

The attachment against movable and immovable properties worth

Rs.1,16,13,116/- as per Orders in Crl.M.P.470/2011 dated 10.05.2011 after the expiry of appeal period.

Typed to my dictation to Stenographer Grade-I, corrected and pronounced by me in open Court on this the day 4th day of March, 2022.

S/d B.S.V.Hima Bindu

PRINCIPAL SPL. JUDGE FOR C.B.I. CASES,

FAC I Addl. SPL.JUDGE FOR C.B.I CASES,

VISAKHAPATNAM.

APPENDIX OF EVIDENCE

LIST OF WITNESSES EXAMINED ON BEHALF OF PROSECUTION.

P.W.1: J.V.Ramanjaneyulu (The then Principal TJPS Decree college, Guntur) P.W.2:Arockiaswamy (The then Principa, Loyala Public School, Nallapadu, Guntur) P.W.3: :G.Venkateswara Rao (Principal, Gowtham Junior College, Guntur) P.W.4: :K.Bodenna (The then Joint Sub-Registrar-II, Old Post Office, Visakhapatnam) P.W.5: :P.P.Patabhi Ramayya (The then Branch Manager, Arundalpet branch, Guntur) P.W.6: :L.S.Ram Babu (The then Principal, Kendriya Vidyalaya, Nallapadu, Guntur) P.W.7: :P.Pothu Raju (The then Sub-Registrar, Sabbavaram, Visakhapatnam) P.W.8: :Saha Jeevan Mahanthi (The then Sub-Registrar, in-charge Sompeta, Srikakulam) P.W.9: :P.Venkata Narayana (The then Sub-Registrar, Itchapuram, Srikakulam) P.W.10::B.Thyagaraju (The then Income Tax Officer, Guntur) P.W.11: V.Srinivas (The then Chief Executive Officer, Sumitra Motors, Vijayawada) P.W.12: Ch.Veera Babu (Practicing Chartered Accountant, Guntur) P.W.13: Ch.V.Subba Rao (The the Asst.Commissioner, Income Tax Department, Guntur) P.W.14: U.V.V.Ratna Sagar (The then Joint Sub-Registrar-II, Guntur) P.W.15: B.V.Chalamayya (The then Branch Manager, ING Vysya Bank, Arundalpet branch, Guntur) P.W.16: M.Veerabhadra Rao (The then Sr.Divisional Manager in-charge, LIC, Machilipatnam) P.W.17: M.Praveen 132 C.C. 13/2008/I CBI COURT/VSP (The then Branch Manager, HDFC Bank, Lakshmipuram Main road, Guntur) P.W.18: M.Sambayya (The then Branch Manager, Union Bank of India, Main branch, Guntur) P.W.19: N.Yadagiri Rao (The then Dy.Commissioner, Municipal Corporation, Guntur) P.W.20: Prakash Amrit Rao Ghate (The then Branch Manager, Cotton Corporation of India, Guntur) P.W.21: S.Chakrapani (The then Dy.City Planner, Guntur Municipal Corporation, Guntur) P.W.22: S.K.Roongta (The then General Manager, HRD, Cotton Corporation of India, Mumbai) P.W.23: Sunanda Acharekar (The then Dy.General Manager, Cotton Corporation of India, Mumbai) P.W.24: V.Subba Rangaiah (The then Branch Head, ING Vysya Bank, Vidya Nagar Branch, Guntur) P.W.25: Sk.Jani Basha (The then Executive Engineer, Valuation, Income Tax Dept, Vijayawada) P.W.26: T.V.Redy (Sub-Registrar, Bukkapatnam, Ananthapuram district) P.W.27: P.Chandra sekhar Rao (R/o Guntur and rendering service as Gold appraiserto ING Vysya Bank, Main branch, Guntur) P.W.28: Y.Trinadha Rao (Private person and r/of Bheemavaram, West Godavari District) P.W.29: R.Govinda Rao (The then Panchayat Secretary, Sompeta Grama panchayat, Srikakulam) P.W.30: S.Kumar Raja (The then Vice President, ING Vysya Bank, Main Branch, VSP.) P.W.31: Subhash Chander Grover (Chairman-cum-Managing Director, Cotton Corporation of India, Mumbai) P.W.32: Deepak (R/of Guntur and doing jewel business under the name and style of Geethanjali Jewellers) P.W.33: G.Venkateswara Rao (R/of Guntur and practicing Chartered Accountant) P.W.34: B.Chinaramiah (Alternate Nodal Officer, Tata Tele Services Ltd., Hyderabad P.W.35: T.Eswara Rao (Private person and R/of Guntur) P.W.36: P.Srinivas (The then Area Operations Manager, ICICI bank, Lakshmipuram Branch, Guntur P.W.37: M.Nageswara Rao (The then Head post Master, Arundalpet, Guntur P.W.38: K.Saritha (Private person and R/of Sompeta, Srikakulam P.W.39: Dhaneswara Mahapatro (The then Branch Manager, Andhra Bank, Sompeta, Srikakulam P.W.40: J.Satya Chandra sekhar Murthy (The then Chief Manager, UCO Bank, Arundalpet, Guntur P.W.41: M.V.V.Srinivasa Rao (The then Sub-Registrar, Nallapadu, Guntur P.W.42: V.Suresh Kumar (The then Collection Manager, City Financial Consumer Finance India Ltd., Lakshmipuram ) Road, Guntur 133 C.C. 13/2008/I CBI COURT/VSP

P.W.43: N.Raja Rao (The then Inspector of Police, CBI, Visakhapatnam)

P.W.44: V.Lakshmi (The then Income Tax Inspector, Grade-I, Vijayawada) P.W.45: S.S.Kumbhar (Tally Clerk in Mumbai Port Trust) P.W.46: G.Padmaja (R/of Guntur and Managing Director of Sai Balaji Housing Pvt. Ltd.,) P.W.47: K.Praveen Kumar (The then Inspector of Police, CBI, Visakhapatnam) P.W.48: M.Karunanidhi (The then A.E., CPWD, Visakhapatnam) P.W.49: N.Pauly Sukumar (The then Sr.Divisional Manager, United India Insurance Co.Ltd., Divisional Office, Guntur.) P.W.50: M.Suresh (The then Branch Manager, ING Vysya Bank, SKP Temple street, Patnam Bazar, Guntur P.W.51: Preeti Nahar (Working in ICICI Prudential Life Insurance Company Ltd., Mumbai) P.W.52: G.Sridhar (Revenue Inspector) P.W.53: K.Rajeev Kumar (working in Exide Life Insurance) P.W.54: C.Vasantha Malini P.W.55: R.Sudheer Kumar (I.O., Further Investigation in supplementary charge sheet)

LIST OF DOCUMENTS MARKED ON BEHALF OF PROSECUTION.

Ex.P.1/PW4Sale deed bearing No.62/1994 Dt.15-1-1994 executive by D.V.Ramu in favour of Accused Nos.1 and 2. Ex.P.2/PW4Sale Deed bearing No.374/96 Dt.29-2-1996 executed by 2ndaccused in favour of Smt Mehaboob Subhani Ex.P3/PW4Sale Deed bearing No.4816/1989 Dt.24-5-1898 executed in favour of 2ndaccused Ex.P.4/PW4Sale deed bearing no.2122/2006 Dt.27-4-2006 executed by M.Ram Prasad in favour of son of the accused Ex.P.5/PW4Sale deed bearing No.1716/2006 Dt.10-4-2006 executed by M.Ram prasad and another in favour of son of the accused Ex.P.6/PW4Sale deed bearing no.1715/2006 Dt.10-4-2006 executed by M.Ram Prasad and another in favour of son of the accused Ex.P.7/PW4Sale deed bearing no.1714/2006 Dt.10-4-2006 executed by M.Ram Prasad in favour of son of the accused Ex.P.8/PW4Sale deed bearing no.1713/2006 Dt.10-4-2006executed by M.Ram prasad in favour of son the accused Ex.P.9/PW4Sale deed bearing No.1712/2006 Dt.10-4-2006 executed by M.Ram Prasad in favour of son of the accused Ex.P.10/PW5Statement of account for special term deposit account no.01292009367 of 1staccused Ex.P.11/PW5Statement of term loan account no.01593009367 of 1staccused Ex.P.12/PW5Statement of account No.52099630849 of 2ndaccused Ex.P.13/PW5Statement of term loan joint account no.0159301123 in the name of 1staccused and his son Ex.P.14/PW5Statement of account for special term deposit account no.0129201108301 in the name of son of the accused 134 C.C. 13/2008/I CBI COURT/VSP

Ex.P.15/PW5Statement of account for special term deposit account no.0129201108300 in the name of son of the accused Ex.P.16/PW7Certified copy of sale deed bearing Doc.No.2476/96, dated 28-09-1996 executed by Oaleti Tirumala in favour of A2 Ex.P.17/PW8Certified copy of sale deed bearing Doc.No.92/1998, dated 29-1-1998 executed by K.Suseela in favour of A2 Ex.P.18/PW9Certified copy of sale deed bearing Doc.No.988/1996, dated 25-10- 1996 executed by by T.Satyanarayana and others in favour of A2 Ex.P.19/PW9Certified copy of sale deed bearing Doc.No.590/99, dated 12-05-1999 executed by A2 in favour of B.Hema Rao Ex.P.20/PW.10I.T.Returns for the assessment year 1998-1999 of A2 filed on 05-06- 2002 Ex.P.21/PW.10I.T.Returns for the assessment year 1999-2000 of A2 filed on 05-06- 2002 Ex.P.22/P.W.10I.T.Returns for the assessment year 2000-2001 of A2 filed on 05-06- 2002 Ex.P.23/P.W.10I.T.Returns for the assessment year 2001-2002 of A2 filed on 31-03- 2005 Ex.P.24/P.W.10I.T.Returns for the assessment year 2002-2003 of A2 filed on 31-03- 2005 Ex.P.25/P.W.10I.T.Returns for the assessment year 2003-2004of A2 filed on 31-03- 2005 Ex.P.26/P.W.10I.T.Returns for the assessment year 2004-2005of A2 filed on 31-03- 2005 Ex.P.27/P.W.10I.T.Returns for the assessment year 2005-2006of A2 filed on 30-12- 2005 Ex.P.28/P.W.10I.T.Returns for the assessment year 2006-2007of A2 filed on 05-09- 2007 Ex.P.29/P.W.11Letter dated 06-2-2006 along with statement of account furnished by Chief Executive Officer, Sumitra Motors, Vijayawada Ex.P.30/P.W.13I.T.Returns for the assessment year 2001-2002filed by A1 Ex.P.31/P.W.13I.T.Returns for the assessment year 2002-2003filed by A1 Ex.P.32/P.W.13I.T.Returns for the assessment year 2003-2004filed by A1 Ex.P.33/P.W.13I.T.Returns for the assessment year 2004-2005filed by A1 Ex.P.34/P.W.13I.T.Returns for the assessment year 2005-2006filed by A1 Ex.P.35/P.W.13I.T.Returns for the assessment year 2006-2007filed by A1 Ex.P.36/P.W.15Statement of account of SB A/ No.396010036248 of A2 Ex.P.37/P.W.15Statement of account pertaining to fixed deposit receipt No.396091008804 Ex.P.38/P.W.15Statement of account pertaining to fixed deposit receipt no.396091008797 Ex.P.39/P.W.15Statement of account pertaining to fixed deposit receipt no.396091008789 Ex.P.40/P.W.15Statement of account pertaining to fixed deposit receipt no.39609100294 Ex.P.41/P.W.15Statement of account pertaining to fixed deposit receipt no.396091003327 Ex.P.42/P.W.15Statement of account pertaining to fixed deposit receipt no.396091003319 Ex.P.43/P.W.15Statement of account pertaining to fixed deposit receipt no.39609213300 Ex.P.44/P.W.15Statement of account pertaining to fixed deposit receipt no.396092133611 Ex.P.45/P.W.15Statement of account pertaining to fixed deposit receipt No.396092078580 Ex.P.46/PW15Statement of account pertaining to fixed deposit receipt No.396092145241 135 C.C. 13/2008/I CBI COURT/VSP

Ex.P.47/PW16Letter dated 22.8.2007 issued by Manager, Divisional Office, Machilipatnam Ex.P.48/PW16File containing the status report of policies bearing Nos.830216916, 690683194, 690309402, 690683386, 691780113 and 671313581 Ex.P.49/PW18True copy of statement of account No.33020639000301 of A2 along with covering letter Ex.P.50/PW19Property tax account statement bearing D.No.4-5-29/74/A belonging to A1 Ex.P.51/PW19Property tax account statement bearing D.No.4-5-29/74/A belonging to A1 Ex.P.52/PW19Primary charges account statement bearing D.No.4-5-29/74/A belonging to A1 Ex.P.53/PW19Property tax account statement bearing D.No.G.F-I, Ananda Nilayam belonging to A2 Ex.P.54/PW19Primary charges account statement bearing D.No.G.F-I, Ananda Nilayam belonging to A2 Ex.P.55/PW21Attested challan for the building plan approval paid by A1 Ex.P.56/PW21Building plan approval order Ex.P.57/PW22Pay particulars of A1 from April, 1992 to January, 2006 along with a covering letter dated 16-02-2006 Ex.P.58 Counter foil receipt dated 25-10-97 (By consent) Ex.P.59 Counter foil receipt dated 26-06-2002(By consent) Ex.P.60 Counter foil receipt dated 10-07-2000(By consent) Ex.P.61 Counter foil receipt dated 14-10-95 (By consent) Ex.P.62/PW.23Annual property returns file relating to A1 Ex.P.62-A/PW23Annual property Returns for the year 2004 Ex.P.62-B/PW.23Letter dated 26-8-2004 which was addressed to The General Manager, Cotton Corporation of India, Navy Mumbai by A1 along with enclosure Ex.P.62-C/PW.23Letter dated 7-10-2002 addressed by A1 to The General Manager (Vigilance) Ex.P.62-D/PW.23Annual property returns for the year 2001 Ex.P.62-E/PW.23Annual property returns for the year 1999 Ex.P.62-F/PW.23Annual property returns for the year 2000 Ex.P.62-G/PW.23Annual property returns for the year 1997 Ex.P.62-H/PW.23Annual property returns for the year 1998 Ex.P.62-I/PW.23Annual property returns for the year 1996 Ex.P.62-J/PW.23Annual property returns for the year 1995 Ex.P.63/PW.24Statement of accounts pertaining to SB A/c No.754010026368, 754010027553, TDRNo.754092046320, TDR A/c No.754092046331, TDR A/c No.754092046342, TDR A/c No.754092046353, TDR A/c No.754092046364, and TDR A/c No.754092046375 Ex.P.64/PW.25Valuation report given by Executive Engineer, CPWD, Vijayawada Ex.P.65 Insurance policy of Opel Corsa Car (By consent) Ex.P.66/PW26Certified copy of sale deed dated 29-03-2000 executed by V.Somasekhara Reddy and another in favour of A2 Ex.P.67/PW.28Marked portion of 161 statement of P.W.28 Ex.P.68/PW.29The building application, plan and order of the approval for the building of A2 Ex.P.69/PW.29House tax particulars from 1999-2000 to 2000-2007 along with covering letter dated 29-10-2007 Ex.P.70/PW.30Statement of account of A1 bearing account No.333010003443 in ING Vysya Bank, Main branch, Visakhapatnam Ex.P.71/PW.31Sanction order dated 31-12-2007 to prosecute A1 Ex.P.72/PW.32Marked portion of 161 statement of P.W.32 Ex.P.73/PW.33File containing documents pertaining to A1 and A2 regarding IT returns for the assessment year 1998-1999 and 2002-2003 Ex.P.74/PW.34Statement of account relating to Walky No.08636534349 of A2 136 C.C. 13/2008/I CBI COURT/VSP

Ex.P.75/PW.35Marked portion of 161 statement of P.W.35 Ex.P.76/PW.36Certified copy of statement of account pertaining to home loan account bearing no.350078 which is in the name of A1 Ex.P.77/PW.37Xerox true copy of Kisan Vikas Patra application dated 2.11.2000 Ex.P.78/PW.38Marked portion of 161 statement of PW.38 Ex.P.79/PW.39Certified copy of statement relating to SB A/c No.0173 stands in the joint names of A1 and A2 Ex.P.80/PW.40Demand draft petition of T.Deepak S/o A1 Ex.P.81/PW.14Certified copy of sale deed dated 26-4-2001 Ex.P.82/PW.14Certified copy of mortgage deed dated 17.4.2004 Ex.P.83/PW.14Certified copy of sale deed dated 28.06.2004. Ex.P.84/PW.14Certified copy of sale deed dated 25.6.2004 Ex.P.85/PW.14Certified copy of sale deed dated 25.4.2004 Ex.P.86/PW.14Certified copy of sale deed dated 25.6.2004 Ex.P.87/PW.14Certified copy of sale deed dated 19-10-2005 Ex.P.88/PW.14Certified copy of sale deed dated 20-6-2002 Ex.P.89/PW.41Certified copy of printout of sale deed document No.3281/2002, dt.22.8.2002 in respect of S.No.327/A-B Ex.P.90/PW.41Certified copy of printout of sale deed document no.8487/2006, dt.26.10.2006 in respect of S.No.327/A-B Ex.P.91/PW.42Statement of account in respect of loan account no.814358 in the name of A1 for purchase of Opel Corsa Car Ex.P.92/PW.43Orders dated 28.12.2005 given by SP, CBI to register and investigate the case Ex.P.93/PW.43FIR in RC No.27(A)/2005 Ex.P.94/PW.43Valuation report given by DW1 Ex.P.95/PW.44Photocopy of search list prepared on 25.1.2006 and 26.1.2006 (subject to objection) Ex.P.96/PW.44Photocopy of inventory of articles prepared at the residence of A1 and A2 during search (Subject to objection) Ex.P.97/PW.44Photocopy of inventory of gold items found in locker of A1 and A2 (Subject to objection) Ex.P.98/PW.44Photocopy of inventory of gold items found in the house of A1 and A2 (Subject to objection) Ex.P.99/PW.44Income tax file of T.Bhanoji Rao which contains 386 sheets Ex.P.100/PW.44File captioned as T.Bhanoji Rao, General manager reported at D.O., Guntur on 25.5.2000 containing 24 sheets Ex.P.101/PW.44File captioned as Municipal Taxes receipts containing 15 pages Ex.P.102/PW.44Letter written in Telugu by Sudhakar addressed to T.Bhanoji Rao Ex.P.103/PW.45Photocopy of search list and Inventory dated 25.1.2006 (subject to objection) Ex.P.104/PW.45Bunch of documents seized from the house of A1 containing 199 sheets Ex.P.105/PW.45 Bunch of Unit Trust of India mutual fund shares seized from the house of A1 containing 12 sheets Ex.P.106/PW.45File captioned as T.Bhanoji Rao, G.M., containing 118 sheets Ex.P.107/PW.45File containing Income Tax returns of A1 containing 83 sheets Ex.P.108/PW.45Personal file of A1 containing 105 sheets Ex.P.109/PW.45Income Tax file of accused 1 and 2 containing 69 sheets Ex.P.110/PW.46Photocopy of registered agreement dated 20-06-2002 between A2 and PW.46 (Subject to objection) Ex.P.111/PW.46Photocopy of sale deed bearing Reg.No.4241 of 2002, dated 20-6- 2002 Ex.P.112/PW.48Letter addressed by the CPWD Executive Engineer to SP, CBI, Visakhapatnam along with valuation report of PW.48 Ex.P.113/PW48Valuation report given by P.W.48 Ex.P.114/PW.24Statement of account bearing No.754010029076 of ING Vysya Bank, 137 C.C. 13/2008/I CBI COURT/VSP

Guntur pertaining to A2 along with A2 Ex.P.115/PW.49Letter dated 3.2.2006 containing the details of Car Insurance Policy and Claim of A1 Ex.P.116/PW.50Statement of SB account bearing No.317010011292 of A2 in ING Vysya Bank, Guntur Ex.P.117/PW.51Letter dated 4.10.2007 containing the details of premium pertaining to policy no.01580454 (subject to objection) Ex.P.118/PW.43File containing 6 share certificates bearing nos.3151, 2641, 2191, 1775, 1422 and 1096 issued by Cotton Corporation of India Ltd., Employees Co-Op Credit Society Ltd., in the name of A1 Ex.P.119/PW.43 Photocopy of sale deed dated 26.4.2000 vide document no.3726/2001 along with translated copy in English (Subject to objection) Ex.P.120/PW43L.D.No.61 file contains loose sheets numbering 1 to 168 Ex.P.121/PW.43File containing receipts from TATA Indicom telephone bills (25 sheets) Ex.P.122/DW16Photocopy of the cost index approved by the Chief Engineer, C.P.W.D., Hyderabad (subject to objection) Ex.P.123/PW25The CBI addressed a letter to the Chief Engineer, Valuation Cell, Income tax, Chennai for valuation of the property of 1staccused Ex.P.123-A/PW25The letter addressed to the CBI by the witness Dt.01-06-2006 in the file Ex.P.123-B/PW.25 Letter addressed to the 1staccused Dt.20-06-2006 in the file Ex.P.123-C/PW.25 Letter along with photocopies of valuation report and approved building Ex.P.123-D/PW.25Note papers of measurements, important specifications and additional features of building. Ex.P123-E/PW.52LetterDT.29.01.2020 issued for Commissioner, Municipal Corporation Guntur. Ex.P.124/PW.54Authorization letter dated 03-12-2019 Ex.P.125/PW.54Authorization letter dated 22-02-2018 Ex.P.126/PW.54LD16 statement of account pertaining to T.Bhanoji Rao for the period from 06-01-2001 to 30-06-2007 Ex.P.127/PW.54Statement of account pertaining to SB Account No.0173 Ex.P.128/PW.54Authorization letter dated 04-03-2020 issued by SP, CBI, Visakhapatnam Ex.P.129/PW.55Authorization letter dated 01-02-2021 Ex.P.130/PW. 55Sanction order dated 12-07-2021

LIST OF WITNESSES EXAMINED ON BEHALF OF DEFENCE.

DEFENCE SIDE:

D.W.1: V.A.Reddy R/of Guntur and Consultant Engineer D.W.2: R.Deshmukh The then Dy.Manager, Cotton Corporation of India, Ahmadabad D.W.3: K.Suseela R/of Sompeta of Srikakulam District and mother of 2nd accused D.W.4: Konchada Mohana Rao R/of Amadalavalasa and doing gold business D.W.5: Khaja Ramireddy R/of native of Damarapalli village of Tadikonda Mandal, Guntur and agriculturist D.W.6: A.K.Srivastav The then Assistant Manager, Cotton Corporation of India, Ahmadabad D.W.7: Rajendra Kumar Guptha The then Dy.Manager, Cotton Corporation of India, Ahmadabad D.W.8: Podugu Usha Rani R/of Srikakulam Town and Private person D.W.9: Velaga Yelamanda 138 C.C. 13/2008/I CBI COURT/VSP

R/of Ponnekallu village of Tadikonda Mandal, Guntur and agriculturist D.W.10: Palakaluri Swamiji R/of Ponnekallu village, Tadikonda Mandal, Guntur and agriculturist D.W.11: Malla Yugandhar R/of Sompeta, Srikakulam and doing real estate business D.W.12: T.Krishna Rao R/of Sompeta village and doing gold business D.W.13:J.Satyanarayana Manager, ING Vysya Bank, Arundalpeta branch, Guntur D.W.14: B.Ashok Joint Sub-Registrar-I (Stamps and Registration), Guntur D.W.15:R.V.K.Prasad R/of Guntur and doing cotton business D.W.16: Abdul Rawof Naushad R/of Visakhapatnam and property valuer

LIST OF DOCUMENTS MARKED ON BEHALF OF DEFENCE.

Ex.D1/PW.23Employees of Cotton Corporation of India governed by the Cotton Corporation of India Ltd., Conduct Discipline &Appeal Rules, 1975 of Cotton Corporation of India Ltd., Ex.D2/PW.32Three relevant entries in the passport of P.W.32 regarding his visits Ex.D3/PW.43Booklet containing circular and Guidelines issued by CBI Ex.D4/DW13Certified copy of statement of account Ex.D5/DW14Construction values information in writing dt.24-01-2005 Ex.D6/DW15Certified copy of statement of account pertaining to personal SB Ac/ bearing no.SB/01/012321 of Corporation Bank, Guntur Ex.D7/DW15Certified copy of statement of account bearing No.CA/01/001726 of Corporation Bank, Guntur. ‘X’ series

Ex.X1/PW.12 Cash flow statement of A2 dt.31.03.1998 Ex.X2/PW.12Cash flow statement of A2 dt.31.03.2001 Ex.X3/PW.12Cash flow statement of A2 dt.31.03.2002 Ex.X4/PW.12Cash flow statement of A2 dt.31.03.2003 Ex.X5/PW.12Cash flow statement of A2 dt.31.03.2004 Ex.X6/PW.12Cash flow statement of A2 dt.31.03.2005 Ex.X7/PW.12Cash flow statement of A2 dt.31.032006 Ex.X8/DW.1 Copy of evaluation Report dt.14.07.2004 Ex.X9/DW.2 Two journals of Indian Institute of Valuers for the months August, 2010 and May 2011. Ex.X10/DW.8Certified copy of registered sale deed dt.8-10-2003 Ex.X11/PW.31Sanction file. Ex.X12/PW.31File relating to Departmental Enquiry initiated against A1. Ex.X13/DW.16Assessment of costs of construction of the building Ex.X14/DW.16Report of variations of assessment costs of the construction of the building

MATERIAL OBJECTS MARKED ON BEHALF OF PROSECUTION

M.O.1:Currency notes totaling Rs.1,49,545/- seized in the search

S/d B.S.V.Hima Bindu

PRINCIPAL SPL. JUDGE FOR C.B.I. CASES,

FAC I Addl. SPL.JUDGE FOR C.B.I CASES,

VISAKHAPATNAM.

Copy submitted to The Hon’ble Registrar (Judicial), High Court of Andhra Pradesh. Copies to: The Superintendent of Police, C.B.I., Visakhapatnam.

139 C.C. 13/2008/I CBI COURT/VSP

PSJC/VSKP Page no. 1 C.C.No.20 of 2014

IN THE COURT OF THE PRINCIPAL SPECIAL JUDGE FOR C.B.I. CASES,

VISAKHAPATNAM.

Present: Smt. B. Satya Venkata Hima Bindu

Principal Special Judge for C.B.I. Cases,

Visakhapatnam.

Friday, this the 10 th day of February, 2023

C.C.No. 20/2014

Between:

State Represented by Central Bureau of Investigation, Visakhapatnam. …Complainant And :

1.Mr. Surendranath Datti S/o D. Krishna Murthy, aged 40 years, AGM (Under Suspension), Regional Office, Personal Banking Group, IDBI Bank, Basheerbagh, Hyderabad. Presently residing at Flat No. 201, Sri Nivas Apartment, H. No. 49 & 56, Bandlaguda Jagir, Post Don Bosco Nagar, Near Kali Mandir, Ranga Reddy District, Hyderabad.

2.Mr.Buddha Srinivasa Rao S/o Jagga Appala Swamy, D. No. 17-04-47, Buddha Ramdas Street, Gavarapalem, Anakapalli, Visakhapatnam District. (Private Person)

3.Mrs. Buddha Nirmala W/o Buddha Srinivasa Rao D. No. 17-04-47, Buddha Ramdas Street, Gavarapalem, Anakapalli, Visakhapatnam District. (Private Person)

4.Mr. Kotha Kama Raju S/o Sri Radha Krishna, aged 50 years, Proprietor, M/s R. K. Engineers, D. No. 47-7-15, 4th Lane, Dwaraka Nagar, Visakhapatnam. Resident of D. No. 18-223, OHP Layout, Near HB Colony, Seethammadhara, Visakhapatnam (Private Person).

5.M/s Aspen Business Solutions Represented by R.V.L.N.Rao Plot No. 260, Sri Sai Nilayam, Flat No. 201, Visalakshi Nagar Visakhapatnam (Private Person)

PSJC/VSKP Page no. 2 C.C.No.20 of 2014

6.M/s Nimble Corporate Services Private Limited Represented by its Managing Director Mr. Panigrahi Chandra Mouli, S/o Jagabandhu, aged 33 years, R/o Flat No. 3, UCO Avenue, Navodhaya Colony, Srinagar Colony, Ameerpet, Hyderabad (Private Person).

….. Accused Nos.1 to 6

This case came on 23.12.2022 for final hearing before me in the presence of Sri A. Chenna Keshavulu, Ld. Public Prosecutor for the Complainant and of Sri G. Praksh Rao, Advocate for Accused No. 1, Sri V. Satish, Advocates for Accused No. 2 and 3, Sri K. V. Rama Murthy and Sri S. S. Murthy, Advocates for Accused No. 4, Sri N. V. V. Prasad, Advocate for Accused No. 5 and 6 and the matter having stood over for consideration till this day, this Court deliver the following:

J U D G M E N T

1.The accused Mr. Surendranath Datti former Assistant General Manager-cum-

Center Head, IDBI Bank, Visakhapatnam, Retail Asset Centre, Siripuram Junction,

Visakhapatnam, Mr. Buddha Srinivasa Rao, Mrs. Buddha Nirmala, Mr.Kotha Kama Raju, who was the Panel valuer of IDBI Bank, M/s Aspen Business Solutions represented by

Mr. R.V.L.N.Rao and M/s Nimble Corporate Services Pvt Ltd., represented by its

Managing Director Mr.Phanigrahi Chandra Mouli, hereinafter referred as Accused Nos. 1 to Accused No. 6 are arraigned and prosecuted for conspiracy and other substantial offences under Indian Penal Code (in short IPC) in this case. Accused No.1 being Public

Servant arrayed and prosecuted for the offence under Prevention of Corruption Act, 1988 (in short PC Act) in addition to IPC offences.

2. Registration of F.I.R:

The case in RC 13(A)/2011-CBI/Visakhapatnam was registered against

Mr.Surendranath Datti former Assistant General Manager-cum-Centre Head, IDBI Bank,

Visakhapatnam, Retail Asset Centre, Siripuram Junction, Visakhapatnam and 31 private persons under Section 120-B IPC r/w 420, 468, 471, 477-A IPC and Section 13 (2) r/w 13(1)(d) of PC Act, on the basis of written complaint dated 19.12.2011 filed by Mr.

R.Venkata Rama Rao authorized signatory, IDBI Bank Ltd., Vizag Retail Asset Centre,

Visakhapatnam. After completion of the investigation and obtaining necessary sanction

PSJC/VSKP Page no. 3 C.C.No.20 of 2014 order against Accused No. 1 who is a Public Servant, charge sheet has been filed before this Court for the offences punishable under Sec. 120-B r/w 420, 471, 477-A of IPC and

Sec. 13 (2) r/w 13 (1) (d) of P.C., Act 1988 against Accused No. 1 and for the offences punishable under Sec. 120-B r/w 420, 471, 477-A of IPC against Accused No. 2 to

Accused No. 6.

3. The brief averments of the Charge Sheet:

The investigation discloses that Accused No. 1 Mr. Surendranath Datti while functioning as Assistant General Manager cum Centre Head, IDBI Ltd., Vizag Retail

Assets Centre, Siripuram Junction, Visakhapatnam during the period from 2009 to 2010 entered into conspiracy with private persons and 3rd party agencies and in pursuance of said criminal conspiracy, sanctioned and disbursed loans fraudulently beyond repaying capacity of the borrowers without ascertaining the value of the property and by violating the Bank Guidelines.

(i)It is alleged that in pursuance of the criminal conspiracy between the Accused,

Mr.Buddha Srinivasa Rao Accused No. 2 and Mrs. Buddha Nirmala, Accused No. 3 as co-applicant, submitted a loan application to Mr. Surendranath Datti Accused No. 1 on 18.08.2010, seeking sanction of loan for Rs.49,00,000/- towards purchase of property in

Survey No. 28/1, 29/34 and 29/46 at Aganampudi Revenue Village, Gajuwaka Mandal,

Visakhapatnam District through M/s Aspen Business Solutions Accused No. 5 which is a

Direct Sales Agent engaged by IDBI Bank for securing business to the Bank on commission basis.

(ii)The investigation revealed that in furtherance of criminal conspiracy, Accused No.

5 M/s Aspen Business Solutions, Accused No. 6 M/s Nimble Corporate Services Pvt Ltd.,

Field Investigation Agency at the instance of Accused No. 1 Mr. Surendranath Datti without verifying the borrowers Income Tax Assessment details, personal and business profile, submitted positive reports to the Bank in favour of the borrowers. In continuation of the said criminal conspiracy, Mr. K. Kamaraju, Accused No. 4, Panel Valuer of the

Bank, assessed the property proposed to be purchased by Accused No. 2 and Accused No.

PSJC/VSKP Page no. 4 C.C.No.20 of 2014 3 at exorbitant rate i.e., Rs.67,53,000/- (Rs.13,000/- per sq.yd., for 519.44 sq.yds) vide

Valuation Report dt.31.08.2010 in order to facilitate them to secure huge amount as loan.

(iii)It is specifically alleged that Mr. Surendranath Datti in pursuance of the criminal conspiracy, abusing his official position as public servant knowing fully that Accused No.

4 to 6 have given positive reports in favour of the borrowers without conducting any verification, sanctioned Rs.38,50,000/- on 30.08.2010 to Accused No. 2 and 3 and disbursed the same in favour of Mr. Pinapala Apparao, Vendor of the property in his

Account bearing No. 434104000012546 in IDBI Bank. Investigation further revealed that the Income Tax Returns submitted by Accused No. 2 are fake and fabricated and that

Accused No. 1 despite glaring irregularities in the financial statements which are not in confirmity with the audited guidelines, did not raise any objection while sanctioning the loan.

(iv)Investigation further revealed that subsequent to the discovery of alleged fraud, the property against which loan was sanctioned was revalued by Mr. K. Srinivasa Rao another Panel Valuer of the Bank wherein he reported that exact identification of the property could not be made in absence of plot numbers and the land value in surrounding areas is ranging from Rs.8,000/- to Rs.9,000/- per square yard. It is alleged that Accused

No. 4 Mr. K.Kamaraju has gaven an inflated valuation report of the property which is not approved by any competent authority.

(v)Investigation further disclosed that Accused No. 1 has sanctioned and disbursed the loan arbitrarily and unilaterally without a joint call with other officers of the Bank and without checking/verifying the borrowers profile, creditworthiness and actual value of the property.

(vi)It is further disclosed in the charge sheet that on the account of submission of inflated valuation report by Accused No. 4 and sanction of loan by Accused No. 1 beyond the repaying capacity of the borrowers, the loan became Non Performing Assets (NPA).

The acts of Accused No. 1 to 6 caused wrongful loss to the tune of Rs.39.15 lakhs as on 10.11.2011 to the Bank and corresponding wrongful gain to the Accused persons.

PSJC/VSKP Page no. 5 C.C.No.20 of 2014 4.Taken on File :

The case was taken on file against Accused No. 1 to Accused No. 6 U/sec 120-B, 420, 471, 477-A IPC and against Accused No.1 for the offence punishable 13 (1) (d) r/w 13 (2) of P.C. Act, 1988. On receipt of summons, accused appeared before this court and copies of documents relied upon by the prosecution, were served on them as required under Section 207 Cr.P.C.

5. Framing of Charges :

Accused were examined U/sec.239 of Cr.P.C, The accused denied the allegations made by the prosecution. After hearing both sides and on consideration of material on record, Charges U/secs.120-B, 420 and 477-A IPC and u/Sec. 13 (2) r/w 13 (1) (d) of PC

Act against Accused No.1, Charges under Sec. 120-B, 420 and 471 IPC against Accused

No. 2 and Accused No. 3, Charges under Secs. 120-B and 420 of IPC against Accused

No. 4 to 6 were framed by this Court and the same were read over and explained to the

Accused. Accused No. 1 to 6 pleaded not guilty and claimed to be tried.

6. Evidence on Record :

In order to substantiate its case, the Prosecution examined PWs.1 to 13 and got marked Exs.P.1 to P.69. After completion of prosecution evidence, accused were examined U/sec. 313 Cr.P.C. They denied the incriminating material against them in the evidence of prosecution. Separate Written Statements as provided under Sec. 243 (1)

C.P.C., were filed by Accused No.1 to 4. Accused No. 1 examined DW.1 to DW.4 as defence witnesses. Ex-D.1 was got marked during the cross-examination of PW.1 as defence exhibit.

7. Prosecution side Evidence :

The prosecution initially examined Mr. R. Venkata Rama Rao, complainant in this case as PW.1 and Exs P.1 to P.58 were marked through him. Mr. M. Ajoy Nath Jha, Chief

General Manager, IDBI Bank who is competent authority to issue sanction against

Accused No. 1 was examined as PW.2 and Exs P.59 & 60 were marked through him. The

Bank employees, Mr. Santhi Prakash Kindo and Mr. Vasukumar Masetty who were

PSJC/VSKP Page no. 6 C.C.No.20 of 2014 acquainted with the facts of the case and Banking procedure, were examined as PW.3 and

PW.4 and were confronted with the relevant documents marked as prosecution exhibits.

Mr. M. Ramu, Assistant General Manager, IDBI Bank was examined as PW.5. Mr. K.

Srinivasa Rao, Panel Valuer for IDBI bank who is the author of Ex-P.44 letter was examined as PW.6. Mr. G. Ramesh, erstwhile employee of M/s Aspen Business Solutions was examined as PW.7. Mr. Ch. V. Atchutharama Rao, Assistant Commissioner of

Income Tax was examined as PW.8 and Ex-P.62 and P.63 were marked through him. Mr.

G. Durga Prasad, erstwhile branch Manager, IDBI Bank, Viziaagaram was examined as

PW.9. Mr. P. Pothuraju, the then Sub-Registrar, Lankelapalem was examined as PW.10.

Mrs. M. Aruna Kumari, Deputy Tahsildar, Gajuwaka was examined as PW.11 and Ex-

P.64 Adangal reports were marked through her. The Investigating Officers Mr. S. V. S.

Naidu was examined as PW.12 and he deposed about registration of FIR, examination of witnesses and collection of relevant documents from the concerned authorities. Exs P.65 is the Photostat copy of FIR in R.C.No.13-A/2011 (Original marked in C.C.16/2014 part of batch cases from C.C.16/2014 to C.C.26/2014) and Ex-P.66 copies of Field

Investigation Reports by Nimble Agency was marked through him. Mr. I. Johnson Babu

Rao, the Investigating Officer who filed Charge Sheet was examined as PW.13 and he deposed about examining the relevant witnesses, collecting documents connected to the case, obtaining sanction against Accused No. 1 and filing charge sheet after completion of the investigation. Ex-P.67 to 69 i.e., copy of Land survey proceedings, Market Value assistance and photocopy of Return Receipt of Tax Register were marked through him.

8. Defence side Evidence :

Mr. Y. Rajesh Babu, Mr. E. Satish, Mr. Sourav Kumar and Mr. Anil Naik, the then employees Retail Asset Centre, IDBI Bank, Siripuram, Visakhapatnam were examined as

DW.1 to 4 respectively for Accused No. 1 and Ex-D.1 document was marked.

9. Arguments on prosecution side:

The learned Public Prosecutor for CBI specially appraised the evidence of PW.1 to

PW.13 and the documentary contents of Exs P.1 to P.69 and submitted that the oral and

PSJC/VSKP Page no. 7 C.C.No.20 of 2014 documentary evidence adduced by the prosecution has satisfactorily proved the charges for the offences punishable under Sec. 120-B r/w 420, 471 and 477-A of IPC against

Accused No. 1 to 6 and for the offence punishable under Sec. 13 (2) r/w 13 (1) (d) of PC

Act against Accused No. 1 beyond reasonable doubt and accordingly prays to convict them as per law. The prosecution relied upon the following Case Laws in support of its case.

1. CBI Vs. Mahendra Singh (AIR 2015 SC 3657)

2. Sakshi and Others Vs. Union of India and Others (2004 (2) ALD (Cri) 504)

3. State of Himachal Pradesh Vs. Lekhraju and Another (2001 (1) ALD (Crl) 43) 10.Arguments on the defence side :

Arguments for Accused No. 1:

The learned counsel for Accused No.1 submitted that Accused No. 1 never committed any offences as alleged against him and he performed his duties and worked with best judgment under the directions of his office superiors. It is submitted that

Accused No. 1 worked as Centre Head, RAC, Visakhapatnam from 19.07.2008 to 05.02.2011. It is the version of Accused No. 1 that he was not assigned any responsibility to verify Field Investigation Reports, Reports of Panel Valuer or Panel Advocate Report and that he never submitted any report to the Credit Manager, IDBI Bank, favouring the customers. It is contended that a false case was foisted against him due to the internal disputes between the Bank employees through PW.1 who is not competent to lodge complaint to CBI. The learned counsel for Accused No.1 appraised that the loan in this case was sanctioned and disbursed as per the norms and guidelines of the Bank in practice and he cannot be made liable for the loan account turning into Non-Performing

Asset for default on the part of the borrower. It is strenuously argued that sanctioning and disbursal of loan involves the role of different branches like CPA, RCU, Operations,

Collections and other Departments, which were purposefully disguised by the

Complainant and the Investigating Agency suppressing the relevant documents only with the intention to discredit him. The learned Counsel led this Court to the evidence of all

PSJC/VSKP Page no. 8 C.C.No.20 of 2014 the Prosecution witnesses and documentary contents of Exhibits marked on behalf of the prosecution and submitted that the prosecution failed to place sufficient evidence to prove the allegations beyond all reasonable doubt against Accused No. 1 and pleads to acquit him of the charges leveled against him. A specific defence taken by Accused No. 1 in the elaborated written arguments will be discussed at relevant stage in the subsequent paragraphs.

Arguments for Accused No. 2 and 3 :

The learned counsel for borrowers in this case who were cited Accused No. 2 and 3 submitted that Accused No. 2 and 3 availed loan of Rs.38,50,000/- from IDBI Bank to purchase an extent of 677 sq.yds., situated at Lankelapalem, Gajuwaka Mandal,

Visakhapatnam. It is submitted that the property was purchased by them in accordance with the norms provided by the Bank. It is submitted that there is no truth in the allegations made by the prosecution and submitted that the Borrowers were nowhere concerned with the individual opinion of the Panel Valuer and the Banking procedure adopted by the Complainant Bank. It is submitted that the loan schedule property which was offered as security to the Bank is still intact and Bank can recover the loan at any time by initiating appropriate proceedings and that technically there is no ostensible loss to the Bank. It is further submitted that the prosecution has not adduced any evidence with regard to submission of alleged Income Tax Returns by the Borrowers and no reference can be made to the facts of the case based upon the photostat copies. The Ld.

Counsel argued that the loan proceeds in this case has not been routed to the borrowers and were made use by the officials of the Bank to close the third party loan account through their vendor as evident from the evidence of PW.1 and PW.5. It is further argued that the entire evidence excludes any stretch of fraud, conspiracy and dishonest intention on the part of Accused No. 2 and 3 and the allegations of wrongful loss to the Bank,

Criminal Conspiracy, Fraud and production of fabricated documents have no substance against the borrowers and prays to acquit them accordingly.

PSJC/VSKP Page no. 9 C.C.No.20 of 2014

Arguments for Accused No. 4 :

The learned counsel for Panel Valuer who is cited as Accused No. 4 submitted that

Accused No. 4 is practicing Civil Engineers and approved Valuer for several Nationalized

Banks, Private Banks and Financial Institutions and also empanelled by IDBI Bank as an approved Valuer for valuation of properties during the relevant period. It is submitted that in the year 2010 at the request of Branch Manager, RAC, IDBI Bank, Visakhapatnam, he valued the loan schedule property in Survey No. 28/1, 29/34 and 29/46 at Aganampudi

Revenue Village, Gajuwaka Mandal, Visakhapatnam District. It is submitted that Accused

No. 4 after securing all information and making enquiry pertaining to the market value in the local area and nearby layouts and considering the existence of abutting road, nearby residential layouts came to opinion that the property under consideration has potential high market value and consciously prepared Ex-P.28 Valuation Report. It is submitted that Accused No. 4 during the course of discharging his duties as approved valuers strictly adhered to the Bank norms and guidelines as per the agreement with the IDBI

Bank.

The learned counsel for Accused No.4 appraised the prosecution evidence and vehemently argued that there is no contrary evidence against the approved valuer so as to incriminate him. It is submitted that the opinion of Panel Valuers is only advisory in nature with limited purpose and that it is not the sole basis for the Bank to part with referred loan amount. It is further argued that there is no evidence on record to show that

Accused No. 4 deferred with the terms of service agreement with the Bank and the veracity of Ex-P.28 cannot be depreciated based upon the sole evidence of alleged subsequent panel valuer PW.6 and inchoate contents of Ex-P.44. The learned Counsel relying upon the Judgments of Hon’ble High Court of Punjab & Haryana in CRR.No.

752/2021, dt.02.11.2021 between Nand Lal Sehgal Vs. Central Bureau of

Investigation, Hon’ble High Court of Kerala in C.D.J.1998 Ker HC 031 between

Manilal Vs. State of Kerala, and Hon’ble High Court of Judicature at Patna in

Crl.Miscellaneous No. 27162 of 2011, dt.10.12.2013 between Vijay Kumar Singh Vs.

PSJC/VSKP Page no. 10 C.C.No.20 of 2014

The State of Bihar, submitted that in absence of any evidence as to fabrication of document, criminal intention or conspiracy with the other Accused, Panel Valuer cannot be held liable only on the allegation of inflated Valuation Report without there being any corroborating disclosure statement of the witness or any document to prove such allegation and accordingly prays to acquit Accused No.4.

Arguments for Accused No. 5 and 6:

The learned counsel for Accused No. 5 and 6 strenuously argued that there is no specific role or overt act played by Accused No. 5 was mentioned in the charge sheet except mentioning that M/s Aspen Business Solutions has Direct Sales Associate. It is submitted that the photocopy of agreement entered by Accused No. 5 which are marked as Ex-P.5 is inadmissible in evidence and hit by Sec. 60 and 61 of Indian Evidence Act. It is submitted that except PW.1 no other prosecution witness deposed anything about the role played by Accused No. 5 pertaining to the loan of Accused No. 2 and 3 and appraised the evidence of PW.1 in his cross-examination that Direct Sales Associate has not played any role in the verification of borrowers’ profile.

With regard to Accused No. 6 Agency, the Ld., Counsel submitted that Prosecution has not adduced any evidence against M/s Nimble Corporate Service., except marking the

Field Investigation Report submitted by them and that all the reports submitted by

Accused No. 6 Agency covered under Exs P.21 to P.25 were confirmed by the RCU and

Astitute Corporate Service Ltd., against which there is no case for the Prosecution. The specific argument of counsel for Accused No. 5 and Accused No. 6 is that these Agencies are juridical persons and no vicarious liability can be fixed against them for the alleged reports submitted by their employees and placed reliance on Judgment reported in 2005

ALD Crl. 732 between AP State Finance Corporation Vs. Rajahmundry Chemical

Industries and in 2004 (1) ALD Crl. 2006 between State Bank of Hyderabad Vs. T.

Meenakshi. Accordingly prays to acquit Accused No. 5 and 6 Agencies.

On hearing the learned Public Prosecutor for CBI and the learned counsels for

Accused No. 1 to 6 and perusing the material on record and written arguments filed by

PSJC/VSKP Page no. 11 C.C.No.20 of 2014

Prosecution and Accused No. 1, 6 and 7, the following points are framed for determination.

11.Points for determination :

1. Whether the sanction obtained to prosecute Accused No.1 by CBI is valid?

2. Whether prosecution has established offence U/secs.471 of IPC against

Accused No. 2 and 3 beyond reasonable doubt?

3. Whether prosecution has established offence U/secs.477-A of IPC against A1 beyond reasonable doubt?

4.Whether prosecution has established offence U/sec.420 IPC against A1 to A6 beyond reasonable doubt?

5. Whether prosecution has established the offence of criminal conspiracy under sec.120-B IPC against A1 to A6 beyond reasonable doubt?

6. Whether prosecution established offence U/sec. 13 (1) (d) r/w 13 (2) of PC Act against A1 beyond reasonable doubt?

12. POINT NO.1: Whether the sanction obtained to prosecute Accused No.1 by

CBI is valid?

The Accused No.1 Mr. Surendranath Datti during the significant point of time between 2008 to 2011 worked as Assistant General Manager cum Centre Head, IDBI

Bank Limited, Retail Asset Centre, Siripuram Junction, Visakhapatnam. The designation and employment of Accused No. 1 is not in dispute. Accused No. 1 being public servant under Sec.2 of the P.C Act during the relevant period, falls under the ambit of Section 19 of the P.C. Act, wherein valid sanction is prerequisite to launch prosecution against him.

In order to suffice this condition precedent, the prosecution got marked the sanction order against Accused No. 1 for the offences under Sec. 120-B, 420 and 477-A IPC and u/Sec.

13 (2) r/w 13 (1) (d) of PC Act as Ex-P.61 and examined the Sanctioning Authority Mr.

Ajoy Nath Jha as PW.2.

13.The contention of the Accused No. 1 is that Ex-P.61 Sanction was issued by PW.2 without verifying the documents in haste and without application of mind at the instance of CBI Officials. In view of contradicting pleadings to determine the validity of Ex-P.61, it is relevant to look into the evidence adduced by PW.2.

PSJC/VSKP Page no. 12 C.C.No.20 of 2014

14.PW.2 Mr. Ajoy Nath Jha, Chief General Manager, IDBI Bank, Mumbai testified that Accused No. 1 during the relevant period was working as Assistant General Manager in RAC in the cadre of Grade “C” Officer and that the Chief Manager is the competent authority to issue Sanction against Group “C” Officers as per the IDBI Bank Officers, “Service, Conduct, Discipline and Appeal Rules 2006” as amended from time to time.

The photostat copy of “IDBI Bank Officers Service, Conduct, Discipline and Appeal

Rules 2006” is marked as Ex-P.59 and the corresponding amended Rule issued to all

Divisional Branches of IDBI by Chief General Manager on 09.02.2012 is marked as Ex-

P.60. The Sanction Order issued against Accused No. 1 along with covering letter is marked as Ex-P.61 (Original marked in C.C.16/2014 part of Batch cases from

C.C.16/2014 to C.C.26/2014). PW.2 stated that he has perused the statements of all the witnesses, FIR, all material documents and after due application of mind, issued Ex-P.61

Sanction Order against Accused No. 1.

15.As per the provisions of Sec. 19 of P.C., Act, the validity of a sanction order issued against a public servant can be infringed only on two aspects. Firstly; an error, omission or irregularity in such sanction and secondly; the incompetency of the sanctioning authority. In this case on hand, the evidence of PW.2 and the contents of Ex-P.61 Sanction

Order clinchingly disclose that PW.2 perused the copies of FIR, Statement of witnesses and all other relevant documents and thereafter on application of mind, issued sanction covered under Ex-P.61. Ex-P.61 specifies the course of allegations, role of Accused No. 1 and other particulars referred by PW.2 for issuing Sanction Order. There is no material apparent on record to show that PW.2 did not pursue the relevant documents and issued

Ex-P.61 without reasonable application of mind. Similarly the contents of Ex-P.59 and

P.60 shows that as per the amendments to the Schedule of

Disciplinary/Competent/Appellate Authorities for Officers, Executives (On contract) and workmen, employees of the Bank under IDBI (Staff) Rules 2004 and Industrial

Development Bank of India Limited Officers (Discipline and Appeal) Rules, 2006, Chief

General Manager is held competent disciplinary authority to issue Sanction against the

PSJC/VSKP Page no. 13 C.C.No.20 of 2014

Officers in Grade “C” and Grade “D”, wherein Accused No. 1 falls into cadre of Grade “C” Officer. Therefore, in view of the above oral evidence of PW.2 and documentary evidence, Ex-P.61 Sanction Order is considered valid both technically, substantively and legally for the purpose of sec 19 of the Act. There is no clog of error or incompetency of authority elicited either in the cross-examination or otherwise. Therefore, the sanction issued against Accused No. 1 under Ex-P.61 is held valid.

16.The accusation in this case is that during the period between 2009 to 2010 Accused

No. 1 to 6 entered into criminal conspiracy to cheat IDBI Bank, RAC, Visakhapatnam with regard to sanction of various Housing and Plot loans. The case of the prosecution is that in pursuance of the said criminal conspiracy, the Accused No. 2 and 3 submitted a loan application for Rs.49,00,000/- on 18.08.2010 to purchase property in Aganampudi

Revenue Village, Gajuwaka Mandal, Visakhapatnam by submitting fake and fabricated documents. It is averred that Accused No. 1 to 6 in pursuance of their criminal conspiracy, dishonestly induced IDBI Bank, RAC, Visakhapatnam to sanction to Accused

No. 2 and 3 an amount of Rs.38,50,000/- and subsequently disburse the same in favour of the vendor by bringing into existence false, fabricated, forged documents and fake reports etc; and thereby committed substantial offences charged against them. Before setting into the factual matrix of the case and merits, it is important to discuss the facts and circumstances leading to the registration of the crime and the banking procedure of IDBI

Bank pertaining to sanction and disbursement of loans. In this regard, it is pertinent to look into the evidence of relevant prosecution witnesses recapitulated as follows.

17.In this case on hand the criminal law was set into motion based on the complaint, dt.19.12.2011 lodged by PW.1. PW.1 Mr. R. Venkata Rama Rao, Manager, IDBI Bank,

Hyderabad testified that he worked as Assistant Manager, Retail Collections at RAC,

Visakhapatnam from 09.07.2007 to 31.07.2011 and his duties during the relevant period were Collection of Home loans, mortgage loans and other loans. According to PW.1 he submitted Ex-P.1 complaint dt.19.12.2021 to CBI, Visakhapatnam against Accused No. 1

Mr. Surendranath Datti and 31 others regarding loans having multiple mortgages, fake

PSJC/VSKP Page no. 14 C.C.No.20 of 2014 income documents and over valuated properties sanctioned during June 2009 to

September 2010. It is the evidence of PW.1 that complaint was lodged pertaining to 12 loans against which fraud was detected wherein total amount sanctioned/disbursed is

Rs.6,54,00,000/- and outstanding amount is Rs.6,82,37,000/-. His evidence with regard to the loan account in this case is that the loan was not in approved layout and was sanctioned in haste and were antedated in the login register for the month of August 2010 since the Bank has stopped the plot purchase product in the month of September 2010.

The relevant extract of login register for the month of August 2010 was marked as Ex-

P.2. PW.1 deposed that apart from other lapses on revaluation of property, it was found that the property is overvalued and is in unapproved vacant land and that Accused No. 2 and 3 have submitted fake income documents. According to PW.1 fraud investigation reports were submitted by PW.3 Shanti Prakash Kindo PW.5 Mr. Ramu and Mr. Y. V. Rao (LW.5). The relevant Bank Circulars were marked under Exs-P.3 and P.4, respective

Service Agreements of IDBI Bank with Accused Nos. 4, 5 and 6 were marked as Exs P.5,

P.6 and P.7. The loan application and the connected documents handed over to

Investigating Officer vide Ex-P.8 letter dt.24.01.2012 were marked as Exs P.9 to P.19.

The CIBIL Reports and the Verification Reports submitted by Accused No. 6 were marked as Ex-P.21 to 25. Valuation Report submitted by Accused No. 4 was marked as

Ex-P.28. Legal Opinion by Panel Advocate Mr. K. Appalaraju were marked as Ex-P.29.

The Credit Interview document, RCU Sampling Report and Approval Note, dt.30.08.2010 signed by Accused No.1 were marked as Exs P.26, P.27 and P.30. The

Sanction letter dt.30.08.2010 along with Home loan Agreement dt.09.09.2010 and

Disbursement request letter by Accused No. 2 and 3 were marked as Exs P.31 to P.33.

18.The discrepancy check list and Disbursement memo signed by Accused No.1 and copy of Journal voucher dt.20.09.2010 were marked as Exs-P.34 and P.35. The Original

Sale Agreement in favour of Accused No. 2, Sale deed dt.20.09.2010 along with corresponding Agreement to sell cum GPA in favour of the vendor with translation copy and encumbrance certificates were marked as Exs P.36 to P.39. The original affidavits

PSJC/VSKP Page no. 15 C.C.No.20 of 2014 cum undertaking submitted by Accused No. 2 and 3 along with Cash Receipt signed by the vendor, statement of original documents were marked as Exs P.40 to P.42. The

Statement of original documents is marked as Ex.P.43, Original valuation report submitted by K.Srinivasa Rao/LW.5 is marked as Ex.P.44, Fraud investigation report is marked as Ex.P.45, Original pay orders bearing no’s.2097 for Rs. 23,50,000/- and 2096 for Rs. 15,00,000/- both favouring IDBI savings account of P.Appa Rao was marked as

Ex.P.46 and 47, Original loan account statement a/c no. 031675100019488 of Accused

No. 2 and 3 along with 65-B certification was marked as Ex.P.48, Original IDBI bank savings account opening form of Accused No.2 was marked as Ex.P.49, Certified copy of sale deed 2771/2010 favouring Accused No.2 along with EC was marked as Ex.P.50,

Photocopy of IDBI cheque 29429, dated 21.10.2010 and cash deposit slip dated 21.10.2010 both for Rs. 87,77,073/- were marked as Ex.P.51, Photocopy of IDBI Savings account statement of P.Appa Rao was marked as Ex.P.52, Photocopy of IDBI Savings account statement of G.Venkata Laxmi was marked as Ex.P.53, Photocopy of IDBI loan account of G.Venkata Laxmi was marked as Ex.P.54, Photocopy of extract of register (Legal) maintained in IDBI bank was marked as Ex.P.55, Photocopy of extract of register (Technical) maintained in IDBI bank was marked as Ex.P.56, Photocopy of extract of register (Field Investigation) maintained in IDBI bank was marked as Ex.P.57 and

Photocopy of Fax letter from RBI was marked as Ex.P.58 through PW.1.

19.PW.1 specifying the allegations against the Accused deposed that apart from the other latches on revaluation of the property, it was found that the property was overvalued and it is in unapproved vacant site and that Accused No. 2 submitted fake income documents. PW.1 further stated that subsequent to disbursement of loan amount to the account of P. Apparao, an amount of Rs.87,77,073/- was withdrawn and deposited in the

Savings Account of Mrs. G. Venkata Lakshmi and subsequently transferred for closure of loan account of Mrs. G. Venkata Lakshmi. According to PW.1 Fraud Investigation

Reports pertaining to this loan account was submitted by PW.3, PW.5 and Mr. Y. V. Rao.

PSJC/VSKP Page no. 16 C.C.No.20 of 2014

20.In this case on hand, the allegations against Accused revolves much around the violations, deviations of Banking Rules and Guidelines and also exceeding the Procedural limits and Technicalities by the Accused with fraudulent intention to defraud the IDBI

Bank. Accordingly it is initially important to understand the exact procedure adopted by the IDBI Bank in processing the loans, which is extracted hereunder as elicited from the oral and doumentary evidence of the Prosecution. In this regard PW.3 Mr. S. P. Kindo,

Assistant General Manager, IDBI Bank deposed that he worked as Centre Head/Branch

Head, RAC, Visakhapatnam from February 2011 to June 2012 and Accused No. 1 Mr.

Surendranath Datti worked as Centre Head of the said branch from September 2008 to

February 2011. According to him, during the relevant period i.e., from August 2009 to

May 2010, he worked as Credit Manager RAC, Visakhapatnam and thereafter resigned and recruited as Assistant General Manager wherein he joined in the same branch for further posting to RAC, Rajahmundry for the period August 2010 to January 2011.

21.PW.3 specifically stated about the role and responsibilities of the Centre Head and the functions of RAC. According to PW.3, RAC is basically engaged in sourcing, sanctioning and disbursement of Retail loans to individual, self employed professionals, self employed non-professionals and NRIs. It deals with different loans like home loans, mortgage loans, education loans, auto loan and personal loans and during thatperiod

RAC, Visakhapatnam was processing loans sourced from Srikakulam, Vizianagaram,

Visakhapatnam and East Godavari Districts. The Retailed loan business of the bank is sourced mainly through four different channels i.e., DST, DSA, Branch channel and RAC itself. PW.3 specifically deposed with regard to the role and responsibilities of Direct

Sales Agents (DSA), Loan Process and Responsibility of the Centre Head as follows; discussed under sub heads A, B & C for brevity.

A. Direct Sales Agent :-

i)According to PW.3 Direct Sales Agents are engaged in sourcing of Retail Loans in local market. They should have sufficient experience in sourcing/marketing such loans, office infrastructure, sufficient staff to process the sourced loans. DSAs are being paid

PSJC/VSKP Page no. 17 C.C.No.20 of 2014 certain commission decided by the Bank on sourcing of such loans. DSA basically is appointed for minimum period of one year and further period on their satisfactory performance. The service is being availed from DSA through service agreement entered by the Bank. The main duty of DSA is creating database of customers and providing the same to the Bank, conducting marketing campaigns, distributing marketing collaterals provided by Bank, assisting IDBI Bank in processing the loan, sanctioning and documentation of loan.

ii)As per Ex-P.4 Sales process manual the Direct Sale Executives working under

DSA would approach the customer and explains bank loan products, EMI, charges and other process and receive the loan application, KYC Documents, financial documents, property documents which are required to process the loan at RAC and verify with the original of the documents and submits the same to RAC for processing. The DSA should be convinced about the creditworthiness of the customers and the loan sourced is as per the guidelines and qualify for the sanction. The DSA procures property related documents from the customers for legal and technical verification and submits to RAC for triggering the same. The detailed role and responsibilities are mentioned in Ex-P.5 service agreements of DSA and for point No. 9 wherein indemnity clause was included in point

No. e of Page No. 7.

iii).According to PW.3 in this case on hand, during 2009 to 2010, 2010 to 2011, RAC has entered into service agreement with Darshan Management, Nirmal Agency, Aspen

Business Solutions and Abhaya Agencies. Ex-P.5 is the agreement entered into by

Managing Partner of Aspen Business Solutions and Accused No. 1 on behalf of the IDBI bank.

B. Loan Process :

i)PW.3 stated that on receipt of loan application and supporting documents from the customers, the file will be logged in by giving unique identification number. The login is subject to availability of minimum loan documents provided by the customers. If any document is missing, the same may be asked to submit. The loan documents will be

PSJC/VSKP Page no. 18 C.C.No.20 of 2014 handed over to Central Processing Associate (CPA), who initiates pre-login process. The loan process is basically divided into four stages.

a) Pre-Login Process : The pre-login process involves verification of documents by CPA providing unique number to the file and checking relevant documents.

b) Pre-Sanction Process : The Pre-sanction process involves generation of CIBIL

Report, scrutiny of documents, triggering for field verification through FIA. Triggering of

RCU and triggering legal and technical verifications can be also initiated at this stage.

c) Sanction Process : The Sanction Process involves arriving of loan, eligibility basing on the income documents/Bank statements and other financial documents. The CPA prepares the approval note and forward the same to sanctioning authority for their consideration.

d) Post Sanction : The Post Sanction mainly involves field verification, RCU verification, legal verification and technical verification.

C. Role and Responsibility of Centre Head :

i)The key role and responsibility of Centre Head is explained in Circular 96 dt.14.07.2008 which includes sales, credit collection, compliance etc. It is the responsibility of Centre Head to monitor over all business of Retail Asset Centre. The

Centre Head has to report to Cluster Head/Regional Head. He also deals with sourcing of loans through different channels, recruitment of DST and DSA, provide adequate training to DST and DSA enabling them to market the IDBI Loan products. The Centre Head has to maintain healthy relationship with builders for sourcing of loan and has to provide training to the liability branches for sourcing such loans and ensure sourcing of business through different channels. The Centre Head has to provide training and upgrade the knowledge of CPA regarding latest development for processing the loan and is responsible for monitoring of business sourced by DSA and DST. He has to initiate all control measures suitable for sourcing and sanction of loans with RCA. The Centre Head forwards the payment forms of DSA and DST for releasing the payment. He is

PSJC/VSKP Page no. 19 C.C.No.20 of 2014 responsible for credit decisions and establishing such procedure which would enable

RAC to sanction the source to loan within a stipulated Turn Around Time (TAT).

ii)The Centre Head is having joint sanctioning power along with Credit Manager for the loans falling under his Delegation of Power (hereinafter referred as DOP). Due diligence of the proposal is to be ensured by sanctioning authority. The Centre Head can approve the deviations falling under his DOP or recommend to the higher authority under whom the deviations fall in. Centre Head has to ensure the deviations with regard to this risk involved and consequences and has to ensure proper documentation of loan.

iii)The Centre Head is responsible to monitor the decision made by Credit Collection and Recovery Departments, FI Agencies and others is responsible to authorize the disbursement and for sake keeping of documents and maintaining of MIS relevant to

RAC.

iv)The sanctioning authority is competent to sanction or reject the loan proposal after scrutinizing the documents, reports received from legal and technical verification. He is responsible for empanelment of FI Agency, RCA Agency, Panel Advocates and Panel

Valuers. Empanelment of RCU Agency is recommended by Centre Head.

v)Centre Head is responsible over all Asset quality and for timely collection of dues.

He has to ensure adherence to existing guidelines and proceedings. He is responsible for monitoring of performance of vendors, DST, DSA, legal agency and technical agency and to ensure good audit rating of RAC. He is responsible to ensure adherence of operation guidelines.

22.In addition to the evidence PW.3, to elicit specific Guidelines and Circulars of

IDBI Bank covered under Exs P.3 and P.4 examined PW.5. In this regard PW.5 Mr.

Ramu, Assistant General Manager, IDBI Bank stated that he worked in RAC,

Visakhapatnam as AGM Collections from May 2011 to 31.03.2012 and that from April 2012 to October 2016 he worked in the same branch as AGM, Recovery. PW.5 specifically testified about that Circulars covered under Ex-P.3 as follows for brevity discussed under Sub Heads A, B, C, D, E, F & G.

PSJC/VSKP Page no. 20 C.C.No.20 of 2014

A) Product program guidelines 2003 :

i)Product program guidelines 2003 was issued by the bank in 2003 pertaining to basic guidelines for sourcing, sanctioning and disbursement of home loans, mortgage loans etc and that mainly the product program parameters describe the various types of loans that can be sanctioned, disbursed to the customers. Mainly the sourcing of the loans is by way of branches, sales officers, direct sales associates and direct sales team and basically it speaks about the minimum standards or norms required for sanctioning the loan to individuals like Salaried employees, Business men and NRIs. It also provides minimum requirement of the documents to be obtained from the customers for processing the loan like Identity proof, address proof and income documents and property documents. It also provides credit authority delegation to respective officers and in cases of deviation from the approved norms the matrix is also prescribed in it.

ii)Regarding the Pre sanction process as and when the documents are received by the bank from the customers along with the required application, the credit process associate, will be initiating field investigation to ascertain the genuineness of the documents which include address verification both residential and office, ITR verification, Pay slip verification and any other relevant document pertaining to it.

iii)The legal and technical verification also will be done by the bank through its empanelled advocates and technical valuers. On receipt of a clear title report from the empanelled advocate and report from technical valuer, the credit manager will approve for the disbursement of the loan to the borrowers. The various forms and formats are also specified in the PPG guidelines 2003. As per the formats specified in the guidelines, the empanelled agencies like Field investigation, Legal and Technical will be providing the reports.

iv)Apart from the same, the technical valuers need to provide detailed valuation of the property by giving the details of the approval status of the property i.e., whether the property is approved by competent authority like Urban development authority,

Municipal Corporation, DTCP etc. In case of any deviations from the approved plan, the

PSJC/VSKP Page no. 21 C.C.No.20 of 2014 same also needs to be mentioned in the technical valuation report. If the property is not approved by any competent authority, it should also be mentioned in the report in order to enable the bank to take appropriate decision in this regard.

v)The RAC is mainly into processing, Sanction and disbursement of home loans and mortgage loans, wherein SARFAESI Act needs to be enforced and money is to be recovered in case of default. The technical valuation report therefore, should clearly mention the approval status from the competent authority. Various products mentioned in

PPG 2003 include home loans, loan against property, plot loans etc.

B) Home Loan Credit Process Volume-3 :

i)Home loans credit process volume-3 dt.27.4.2005, mainly mentions regarding the credit process to be followed right from receipt of the application till disbursement of the loan. It consists of pre sanction verification and also the role of credit process associate.

When the application is received by the sales manager, he in turn, will be handing over the same to the credit department after preliminary check and by ensuring the basic minimum requirements for processing the loan. The credit department in turn will be handing over the file to the credit process associate. The credit process associate will check the file again and ensure that KYC documents and income documents are available in the file and the file will be logged in by giving a login number. Subsequently CPA will be triggering for verification of address proof and income documents apart from ITR verification to field investigating agency. On receipt of positive report from the FI agency

CPA will prepare the appraisal note and the same will be put up to the credit manager for his review and approval.

ii)If the credit manager satisfies with the borrowers profile and the income eligibility and other norms, he will be calling for personal discussion of the customer. On satisfaction of the banks norms, the loan will be sanctioned purely on the basis of financial eligibility. Then the property documents will be triggered for legal and technical valuation to the respective empanelled advocate and valuer. On receipt of the clear legal

PSJC/VSKP Page no. 22 C.C.No.20 of 2014 report and technical valuation report, the CPA will be preparing the disbursement check list.

iii)The check list clearly indicates the details of the property and its valuation. If there are any deviations, the same have to be mentioned in it. Thereafter based on the request made by the borrower, the discrepancy check list will be submitted to the credit manager for his decision regarding the disbursement of the loan. If the credit manager satisfies that the proposal is within the norms, he will approve the same if it is within his delegation of power and submit the file to operations department for further process. If the proposal is not within his DOP, he will be putting up the same to the higher authority for appropriate decision. The credit process also mentions about the approval grid to be followed while sanctioning and disbursement of the loans.

C) Relevant Circulars :-

i)Circular No.96 : Circular No.96 of PPG-11-2008-09 dt.14.7.2008 specifies about roles and responsibilities of Regional head, Cluster head, Centre head, Credit

Manager, Business development manager and Collections Manager. In respect to the role and responsibilities of Centre head pertaining to credit, he has to ensure that credit decision needs to be taken on a joint call with the credit manager in RAC.

ii)Circular no. 137: Circular no. 137: -PBG-16-2008-09 dt.10.9.2008 mentions about the norms relating to repayment capacity to be followed in respect of sanctioning of loans to self employed professionals and business man. While sanctioning the loan under this circular, vacant plots should not be funded or sanctioned.

iii)Circular no. 138:- Circular no. 138-PBG-17-2008-09 pertains to plot loan and plot LAP (Loan against property/ Residential/Commercial). As per this circular, loans should be sanctioned and disbursed only for approved plots and that total exposure to the individual project should not exceed beyond 10% of the project.

iv)CIBIL guidelines circular :- CIBIL guidelines circular dt.16.11.2009 mainly informs that if the existing customers are having loan default of more than 60 days in

PSJC/VSKP Page no. 23 C.C.No.20 of 2014 respect of loans and more than 90 days in respect of credit cards, such proposals need to be declined and there is no deviation approval in this case.

v)RBI master circular :- RBI master circular on housing finance dt. 1.7.2009 and 1.7.2011, clearly mentioned that un approved colonies should not be funded and incase need to be funded such colonies need to be regularized by the competent authority by paying the requisite fee.

vi)Home loan sales process :- Home loan sales process primarily explains about the process of sales being followed in RAC i.e., by way of DSA sourcing, branch sourcing,

DST sourcing and the roles and responsibilities of the sales manager in that regard.

vii)Product program guidelines 2003 :- Product program guidelines 2003 also specifies about the process to be followed and the basic requirements while appointing

DSA.

viii)Review of norms on home loan circular :- Review of norms on home loan circular number IDBI bank/ 2009-10/144/RBG/PBG/58 dt.25.8.2009 mentions about the modification of loans and the relevant guidelines in this regard. Similarly circular no.

IDBI bank/2009-10/92/RBG/PBG/32 dated 13.7.2009 also mentions about the modifications of loans and the relevant guidelines. It also mentions about FOIR (Fixed obligation to Income Ratio) guidelines to be adopted by the bank and apart from the same

IIR (Income to Installment Ratio) norms in respect of salaried, self employed, business men profile are prescribed therein and that the Process fee details are also mentioned in that circular.

D) Field verification :-

i) Field verification is triggered by CPA to the empanelled field investigating agency by giving them the copy of the documents submitted by the borrowers and that on receipt of the same the Field investigating agency will verify the same by visiting the respective place and will be submitting the report in the prescribed format.

ii)Apart from the same, the bank statement submitted by the borrower will also be verified by the filed investigating agency and they will be submitting the report in this

PSJC/VSKP Page no. 24 C.C.No.20 of 2014 regard to the bank. On the basis of report submitted by them credit manager will be taking a decision and if there is any deviation he will be putting up the same to the competent authority for necessary approval.

iii)Field Investigating agency will be mentioning either recommended, refer or not recommended. In case of recommended cases bank will be proceeding further for sanctioning/disbursement of loan.

E) Risk Containment Unit :-

i)Risk Containment Unit i.e., RCU is a parallel investigating agency apart from

Field Investigating agency. The documents are also investigated by them and will be submitting the report to the bank. The credit manager need to take a decision basing on the report furnished by them. Their report might be recommended, refer or not recommended.

F) Credit Processing Associate:-

i)Legal Verification will be initiated by the CPA to the empanelled advocate along with the copies of the documents submitted by the borrower. The empanelled advocate on perusing the documents will be submitting his opinion and on that basis credit manager will be taking a decision.

ii)Panel advocate will submit his report to CPA and CPA will submit the same to credit manager. Similarly Technical verification will be initiated by the CPA to the empanelled valuer along with the copies of the documents. On receipt of the report from the empanelled valuer to CPA, the same will be put up to the credit manager for his decision.

G) Disbursement of the loan :-

i) Disbursement of the loan will be approved by the credit manager on receipt of the clear file from the CPA i.e., if all the norms are satisfied the credit manager will be approving for the same. Upon the request made by the borrower and fulfillment of the bank norms, the credit manager will be approving for disbursement of the loan.

PSJC/VSKP Page no. 25 C.C.No.20 of 2014 ii)Borrowers need to execute the documents pertaining to the loan for disbursement of the loan and the credit manager upon satisfaction of execution of documents, will approve for disbursement of the loan. The same is preliminarily checked by the CPA and will be put up to the credit manager for his approval. All the documents need to be filled by the borrowers for the disbursement of the loan. In order to enforce the documents, applicable stamp duty needs to be paid and it is the responsibility of the credit manager to ensure the same before handing over the file to operations department for disbursement of the loan.

iii)In case of Home loan, documents consists of home loan agreement, power of attorney and guarantee agreement if applicable. All these documents need to be signed by the borrowers. Apart from the same for disbursement of the loan post dated cheques need to be obtained from the borrower to ensure repayment of the loan.

iv)In cases wherein borrowers are having savings account in IDBI bank, standing instructions need to be obtained for repayment of EMIs and in case of non IDBI savings bank account holders, ECS mandate need to be obtained for recovery of loan.

v)Sanction letter terms and conditions need to be accepted and agreed by the borrowers for further disbursement of the loan and the same needs to be checked by the

CPA before putting up the file to credit manager for disbursement of the loan.

vi)In respect of mortgage loans original documents need to be deposited with the bank before release of the loan and in respect of plot purchase or flat purchase loans, documents will be deposited by the borrowers subsequent to registration of the property in their name. In this regard at the time of disbursement, it has to be ensured that indemnity from the borrower to be obtained that he will be depositing the original documents to the bank subsequent to registration of the property in his name.

vii)Disbursement check list is prepared by the CPA and will be submitted to the credit manager for his approval. The final call in sanctioning the loan will be taken by the credit manager if the proposal is within the delegation of power. If the same is not within his

PSJC/VSKP Page no. 26 C.C.No.20 of 2014 delegation of power he will recommend the same to the higher authority for approval and that the said guidelines are mentioned in PPG 2003 and in credit process manual 2005.

23.As per the evidence of PW.3 Mr. Shanti Prakash Kindo, who was the Centre Head,

Retail Asset Centre, Visakhapatnam during the period from February 2011 to June 2012, the loan process is basically divided into four different stages i.e., Pre-login, Pre-sanction,

Sanction Process and Post Sanction as discussed supra. This procedure can be explicitly understood from the contents of Chapter 7 of Product Program Guidelines of Ex-P.3.

According to Ex-P.3, the pre-sanction procedure initiates with sourcing of loan through

Direct Sales Associate (in short DSA) or other sources provided under Chapter 3. The loan if sourced by DSA, the specific procedure to be adopted by the concerned DSA is recited as follows in Ex-P.3.

Process at DSA :

1.Application form needs to be filled with full details.

2.All documents need to be latest

3.All copies of documents must be signed by the Applicant, by Sales Executive of the DSA or the Relationship Manager of the Bank of the Branch after originals being verified.

4.Documents check list should be followed and kept in the file to ensure complete documentation.

The specific role and responsibilities of DSA is recited in Ex-P.4 Home Loans

Sales Process Volume I at point No. 1.5.1 and 1.5.2 are as follows:

1.5.1 :- Duties and Responsibilities while procuring new business:

1.A Sales executive of Home Loans is not authorized to conclude the contract with the borrower. His job is to simply forward the duly completed Application Form along with other documents to the Bank which alone is competent authority to have binding contract with the borrower.

2.The Sales Executive must take reasonable inquiries in regard to the borrowers before recommending proposals for acceptance, and bring to the notice of the Bank any circumstances, which may adversely affect the risk to be underwritten.

3.The Sales Executives must take into consideration the repaying capacity and the needs of the client.

4.The Sales Executive should not interfere with any Application introduced by any other Sales Executive.

5.The Sales Executive must provide all material information about the proposed policy to enable the prospect to decide without basis.

PSJC/VSKP Page no. 27 C.C.No.20 of 2014 1.5.2 :- Duties and Responsibilities while conserving business :

1.The Sales Executive shall maintain contact with all borrowers of the Bank sourced through him to enable reference sales.

2. The Sales Executive shall advise every borrower in the important matters such as EMI dates, charges, term life insurance, chance of address or any other assistance in this behalf.

3.The Sales Executive shall always render necessary assistance to the borrowers in filling application forms/disbursal documents, so that as far as possible all relevant information required or desired for underwriting is disclosed.

24. Loan Process : As per the contents of Ex-P.3 Home Loan Credit Process Volume 3, the procedure for login process is described as follows:

Generally, Retail Asset Centre which is also known as RAC is set up where Sales,

Credit, Operations and Collection Managers are posted and it is fully equipped to handle large business volumes. The loan files sourced by the Direct Sales Agency or other sources are submitted to Credit Processing Agency (CPA) allocated at RAC with specified window timings of each centre called as login. On receipt of file from the Sales

Co-Ordinator, the CPA Executive checks the availability of following documents.

1.Application form duly filled in and latest passport size photograph.

2.Latest two months pay slip (For salaried class)

3.Latest Form-16 (for salaried class)

4.Latest six months Bank Statement

5.ITR for the past two Financial Years along with computation of income statement, profit and loss account and balance sheet with annexures (for self-employed class). Business Profile on letter head (for self-employed class)

6.Age proof, identify proof, address proof.

7.Processing fees, cheque from the application or co-applicant.

25.If the file does not contain the minimum documents/information, the file is returned to the Sales Co-ordinator or Sales Manager of DSA or DST. A Unique ID

Number is allotted by CPA Executive if the file is found to be complete in all aspects. The numbers so allotted is return on the face of the file and entered in login register maintained by CPA. carries out a check on DST/DSE before allocating a unique number and accepting the file for further process. Thereafter the subsequent procedure pertaining to pre-sanction activity is incepted in Chapter No. IV of RCU Manual marked as Ex-D.1 through PW.1.

PSJC/VSKP Page no. 28 C.C.No.20 of 2014

26.The Chapter No. 4 at Page No. 12 of Ex-D.1 discloses the concept of screening and sampling as follows:

4.1 : Screening : The process of file screening begins the moment the file is logged in at

CPA. Sampler who is a resource of an external RCU Agency will be based out of the CPA and screen all the files logged in based on RCU Triggers.

4.2 : Sampling : Samples which are picked up by the sampler for verification based on the RCU Triggers are covered under Sampling Process. The primary objective of sampling is to study and analyze the risk in the products offered and established relevant measures to cover risk.

To monitor the levels of basic functions namely Sales, verifications and Credit evaluation.

To filter out wrong cases thereby reducing the quantum of bad cases getting disbursed.

Process of Screening and Sampling :

27.The sampler will be based out of CPA point to conduct such screening/sampling.

All files logged in at the CPA shall be screened/reviewed by the sampler and will maintain the RCU Login Register with a particular number, date and time parallel to CPA login register. Files reviewed are stamped as “RCU Screened” on the file cover, application form and other documents present in the file with date and time. While screening suspicious triggers are looked for and if found relevant, the same is sampled up for verification. The concerned filed application/document sample are stamped as “RCU sampled” with date and time. Sampled Trigger will not be written on the sampled file.

Sample Triggers will be written in the RCU Register under the control of RCU Officer.

All such cases which are RCU Sampled are marked off in the RCU Register. Samplers will verify the concerned document for authentication. He will be responsible for maintaining Turn Around Time (TAT) set for the activity. While screening if any particular document is not clearly visible/not available as required by the policy/process of the Bank viz., ITR-Receipt No., Ward No. etc., Bank Statements, the sampler will mark that file as “RCU query”. List down the discrepancies on the file and will ask CPA

PSJC/VSKP Page no. 29 C.C.No.20 of 2014 to submit the same. Such cases will be verified only after receiving the clear copies of the required documents by the channel. Daily status of file stamped with RCU Query should be sent to Credit/CPA Unit. RCU/Collection Manager to maintain the record of all the files sample along with the original RCU report and copy of application form/documents sampled. Such records are to be kept in the custody of the collections/RCU Management.

A copy of RCU Sampling Report as given in Annexure 5 is kept in the loan file.

28.The samples files will be stamped mentioning the pick up date, report date, triggers and status of the cases such as recommended/not recommended/refers.

Collections/RCU Manager to sign below the stamp as provided under Annexure 6.

Sampling agency will be bound by Service level agreement signed with the Bank for deliverables. RCU Unit will be bound by three decided sampling % (As per Matrix) and will ensure that RCU Agency performance is monitored based on the sampling %. In case of delaying sanction or cases goes for re-credit, new/latest documents e.g., Banks

Statement/Pay Slips submitted need to be screened/sampled based on the trigger.

29.In this case, all the documents filed by the Accused No. 3 and 4 along with the loan application bear the RCU Stamp wherein few are stamped as RCU Screened and others are stamped as RCU Sampled. After verification of all the documents and calculation of eligibility of the borrowers as per the Rules and Guidelines, the sanction process will be initiated. The credit under writing standards as mentioned in Home Loan

Credit Process after obtaining required clarifications and further information is noted in the query sheet as per Annexure 5 which is also called as First Review Form (FRC). The

CPA Executive prepares the approval note separately for self-employed and professionals basing upon the ratio analysis for two previous Financial Years as per Annexure 4. In case of deviations, the approval captures deviation for covering under the Deviation Approval

Grid.

Sanction Process as mentioned at Point No. 3.2.8 of Home Loan Credit Process

Volume III covered under Ex-P.3:-

The file along with approval note and financial analysis is forwarded by CPA

Executives to Credit Manager for decision. The Credit Manager scrutinize the file and

PSJC/VSKP Page no. 30 C.C.No.20 of 2014 holds personal discussions with the applicants for all loans above Rs.10,00,000/- (In

Mumbai, Delhi, Bangalore and Chennai) and above Rs.5,00,000/- in other centres personal interviews are conducted by the Credit Manager as per Annexure 7.

Issuance of Sanction Letter :- The approved files are issued only in principal sanction letters subject to subsequent verification and sanction letter is signed by Credit Manager.

The Credit Manager approves the cases within the approving powers and deviation matrix and cases beyond his approval authority will be escalated to Regional Manager.

3.3 : Post Sanction Process :-

The following processes are managed by CPA after the in-principle approval of the case is received from the Credit Manager.

1.Field Investigation (FI)

2.Document verification

3.Legal Verification

4.Technical Verification

First two verifications i.e., FI and Document Verifications are initiated simultaneously.

Legal and Technical verifications are triggered only after receipt of relevant documents from the applicant through sales co-ordinator. The specific activities conducted by CPA31 under the above mentioned four processes is discussed in point No. 3.3.1/, 3.3.2.1 and 3.3.2.2/3.3.3 and 3.3.4 of Home Loan Credit Process Volume III covered under Ex-P.3 extracted below for brevity.

(i) 3.3.1 : Field Investigation Process (FI) :

The Field Investigation Process is to check the following.

1.Resident of the applicant

2.Office or business establishment of the Applicant

3.Authenticity of the Applicant

4.CPA Staff initiates Field Investigation through a designated FI Agency appointed by Collection Manager at every location.

(ii). 3.3.2 : Document Verification :

In order to ensure the key documents submitted by the applicant are genuine and free from fraud and forgery the verification of below documents is conducted. Pay slip, Form–

PSJC/VSKP Page no. 31 C.C.No.20 of 2014 16, IT Returns, Bank Statements CPA staff initiates document verification through an agency appointed by the Credit Manager at every location.

(iii). 3.3.3 : Legal Verification :-

This process get initiated on receipt of relevant documents from the customer through DST/DSA. Every Retail Asset Centre has a set of legal documentation as it depends upon the local real estate market practices.

(iv) 3.3.4 : Technical Verification Process :

This process is initiated on receipt of relevant documents from the customer through DST/DSA. This process involves ascertaining fair market price of the property, ensuring the approval of competent authority is available etc.The technical agency on receipt of documents scrutinizes the papers and visit the property site and send back – .Further requirement of information .Technical report as per the format

If the positive final report is received from the Agency is filed in the respective file by the CPA Executives. The initiation of technical report from another agency on the panel is resorted to either in case of high value of loans or market value assessed is at significant variance with the value declared by the borrower.

3.3.4.4 : Calculation of LTV (Loan to Value Ratio) based on Market Value :

At the time of in-principle approval Credit Manager does not take into account the assessed market value of the property and approves based on the document cost. LTV is calculated both on document cost as well as Market Value by CPA Executive. The loan amount for disbursal is recalculated and revised approval letter issued, if required.

3.4 : Disbursement Process :

This is the final stage of loan processing where the case is ready for disbursement after completion of credit approval verification. This is a crucial stage as based on various verifications/documents, the Bank actually parts with the money to the customer at this stage. This process gets initiated as soon as the disbursement docket containing the following is submitted to CPA by the DSA/DST Co-Ordinator.

PSJC/VSKP Page no. 32 C.C.No.20 of 2014

1.Copy of Sanction letter duly accepted by the applicant and co-applicant.

2.Balance processing fee (if any)

3.Loan agreement duly signed by the applicant and co-applicants.

4.Power of Attorney (part of documentation kit) duly signed and notarised

5.Post Dated Cheques (minimum 18) or Standing Instruction letter duly signed by customer or Authority letter to Deduct at Source (DAS) OF Salary Payment or ECS Mandate.

6.All the original documents and copies of documents as per legal scrutiny report received from Panel Advocate.

7.Power of Attonrey in case of NRI Customer with due adjudication

8.Disbursement Request Format (DRF) as per Annexure – 26.

3.4.1 : Process at CPA : On receipt the docket for disbursement as mentioned above, following process starts. The file is entered in the disbursement log-in register which contains the following column to control the TAT on disbursement :

1.File Unique number

2.Name of applicant

3.Date of log-in for disbursement, loan amount

4.Details of deviation in LTV, IIR, Age and others

5.Builder details

6.CPA Executive provides acknowledgment to the DSA/DST Co- Ordinator

(j) CPA Executive checks the following: The Credit Processing Associate checks all the loan documentation, legal report and connected documents and thereafter prepares disbursement check list. After the above checks, the CPA prepares the disbursement check list as per the standard format Annexure-27. This is a check which enables the CPA and Credit Manager to scan through the file and confirm all mandatory checks viz FI, document verification, legal, technical, sanction conditions, approval of appropriate authority are available in the file. LTV calculation is checked, final IIR and LTV are captured along with the deviation. The pending documents and waiver if any in the file are captured for authentication by Credit Manager who indicates the probable date of obtaining of the pending documents and the name of the person responsible for obtaining them. The disbursement details like payee, amount, bank account details of payee are captured. After checking the above and preparing the disbursement checklist, queries if any are mailed to the DSA/DST coordinator for compliance. On compliance of the query raised by CPA, the file moves to Credit Manager for authentication of disbursement.

3.4.2 : Final Check by Credit Manager : The Credit Manager does the following

PSJC/VSKP Page no. 33 C.C.No.20 of 2014

Checks whether all mandatory verification reports are available in file. Appropriate approval for the loan and deviations is available in the file. Queries raised by CPA are complied with. Confirms availability of all original title deeds and relevant document in the file. Checks if specific instructions, if any, are captured by CPA in appropriate registers. He signs the disbursement check list in token of confirmation of all requisite formalities having been completed and authorization to disburse the loan.

3.4.3 : Handing over the file to Operations department After Credit Manager signs the disbursement check list the file is sent to the Retail Asset Operation Department for further process.

3.4.4 : Updating the Log in register

Once the case is disbursed the log in register is updated by CPA executive for the disbursed loan amount, date of disbursement and loan agreement/PDC.

30.The above procedure recapitulated by the prosecution witnesses is purely technical and as per the documentary evidence provided under Ex-P.3, P.4 as well as Ex-D.1. In defence Accused No. 1 also examined Dws 1 to 4 to draw out the Banking Procedure.

Initially DW.1 Mr. Y. Rajesh Babu deposed that previously during 2007 to 2010 he worked as Credit Processing Associate, Team Leader in IDBI, Visakhapatnam and that he acquainted with the procedure relating to the loan application, role of Credit Manager pertaining to Processing of loan proposals, CIBIL Login, Sales Login, Credit Process and

Risk Containment Unit. According to DW.1 whenever a loan application was received by

RAC, the details of loan application were uploaded in the Bank Software with specific login ID, on generating CIBIL Report of the applicant, the Bank uploaded the loan application. Thereafter copies of the loan application will be forwarded to Field

Investigating Agency Legal Agency, Technical Agency and RCU. Meanwhile the Credit

Manager who is authorized to sanction the loan will verify the eligibility of the applicant and if satisfies with the eligibility, the CPA team will process the file along with the Field

Investigating Report, Legal and Technical Report, Report of RCU and other connected reports and placed before the Credit Manager. After verification of all the records, Credit

Manager will sanction the loan and before disbursement, Collection Manager again verifies the loan file. With regard to RCU Procedure, DW.1 further stated that Collection

Manager is the Head of the RCU and if the RCU Manager is satisfies with loan file, he

PSJC/VSKP Page no. 34 C.C.No.20 of 2014 will affix a green colour stamp “RCU Screened” and in case of any doubt, the red colour stamp “RCU Sampled” will be affixed and retains the file. The Collection Manager or

RCU Manager will personally verify the document which was stamped as RCU Sampled and if the ambiguity persists, the loan application will be rejected and if the doubt is resolved, he may permit the disbursement of loan and that Collection Manager relies on the report of RCU.

31.Similarly, DW.2 Mr. E. Satish who worked as Sales Co-Ordinator during the relevant period also testified similarly with regard to procedure adopted by Credit team and Credit Processing Associate. According to DW.2 whenever loan application is filed, the entire file will be forwarded to Credit team for generating CIBIL Report. If the CIBIL

Report is clear, the CPA team generate specific login ID for that loan. If there is any issue with regard to the CIBIL Report of the applicant, the credit manager considers deviations within his authority and continue the file login. If the CIBIL Report is beyond his discretionary authority, the Credit Manager would reject the loan proposal. With regard to preparation of Credit Appraisal Memo, DW.2 specifically stated that CPA team will verify the financial eligibility of the applicant and prepares credit Appraisal Memo (CAM) and places the same before the Credit Manager. After receiving FI Report, Legal and Technical report, the Credit Manager will verify all the documents. Similarly, RCU

Manager issued RCU Report with regard to the genuineness of the documents and also the Risk. If the report is negative, the loan will be rejected. If the RCU report is positive, the Credit Manager who is authorized to sanction the loan will sanction the loan and after preparing the necessary documentation, the file will be forwarded to Operations

Department to disburse the loan amount, which verify all the documents before

Disbursing. The evidence of DW. 3 Mr. Saurav Kumar and DW.4 Mr. Anil Naik is also akin to the evidence Dws 1 and 2. At this point it is explicit on record that there is no material contradiction with regard to procedure adopted by the IDBI Bank in sanction and disbursal of loans and obligation vested with various Departments in the evidence of defence witnesses DWs 1 to 4 and the Prosecution witnesses.

PSJC/VSKP Page no. 35 C.C.No.20 of 2014

32.In the light of above oral and documentary evidence with regard to Banking

Procedure pertaining to the Loan Processing, it is important to look into the evidence adduced by the Prosecution pertaining to the alleged fraudulent deviations in the loan file of Accused No. 2 and 3. To bring on record the allegations against the Accused

Prosecution mainly relied upon the evidence of PW.5 AGM, IDBI Bank. As per record, the evidence of PW.5 is three folds. Firstly; in the former part of his deposition, he speaks about the Banking Procedure which was already discussed earlier, in the second part, he testifies about the Documentary evidence pertaining to the loan file of Accused No. 2 and 3 and Lastly; he deposes with regard to the alleged fraudulent deviations and irregularities. The relevant evidence of PW.5 in the second part is recapitulated as follows:

33.With regard to disputed loan account in this case, PW.5 testified that as per loan application dated 18.8.2010 under Ex.P.9 Sri Budda Srinivasa Rao (Accused No.2) and

Smt. Budda Nirmala (Accused No.3) have applied for the loan of Rs 49 lakhs for purchase of plot. As per the application the property address is mentioned as

Lankelapalem, Gajuwaka Mandal, Visakhapatnam. Neither the area of the land nor the layout or survey numbers of the property are mentioned in the application form. Ex.P.10 is the photocopy of PAN card of Accused No.2 attested by DSA, M/s ASPEN Business solutions (Accused No.5). Ex.P.11 is the photocopy of PAN card of Accused No.3 attested by DSA, M/s ASPEN Business solutions (Accused No.5). Ex.P.12 is the photocopy of voter identity card of Accused No.2 attested by DSA, M/s ASPEN Business solutions (Accused No. 5). Ex.P.13 is the photocopy of VAT registration certificate of

Accused No.2 duly attested by DSA M/sASPEN Business solutions (Accused No.5).

Ex.P.14 is the photocopy of certificate of registration issued by ACTO, Anakapalle to

Accused No.2 on 7.3.2005 duly verified by DSA. Ex.P.15 is photocopy of bank statement of Accused No.3 maintained with SBI, Anakapalli branch for the period from 6.9.2008 to 23.8.2010, duly verified by DSA. Ex.P.16 is photocopy of bank statement of Accused

No.2 maintained with SBI, Anakapalli branch for the period from 20.2.2010 to 20.8.2010,

PSJC/VSKP Page no. 36 C.C.No.20 of 2014 duly verified by DSA. These two exhibits were verified by FI agency M/s NIMBLE corporate Services Pvt. Ltd. and positive report given by them vide Exs.P.24 and P.25.

34.In the backdrop of above evidence on record, before probing into allegations against the Accused for the charges under substantial offences averred under Point No. 2 to 6, there are certain important foregoing aspects which are to be determined on merits based on the versatile defence raised by the Accused. The relevant fact-in-issue acceding to the charges are discussed as follows in the preceding frame of reference.

35. Competency of PW.1 to file Ex-P.1 Complaint:

The contention of the Accused initially is that PW.1 is not competent to file Ex-P.1

Complaint to CBI. In this connection, the Ld., Counsel for Accused No.1 argued that

PW.1 has misguided by signing as authorized signatory but not submitted any authorization letter. It is submitted that only Chief Vigilance officer of the Bank is only authorized the complaint to CBI/Police as per guidelines of CVC. On this aspect Accused

No. 1 heavily relied on the contents of Ex-P.59 IDBI Bank Officers Service Conduct,

Discipline and Appeal Rules, 2006. The counsel for Accused No. 1 highlighted the cross- examination of PW.1 wherein he stated that the Head Office had given him GPA. It is the contention of the Accused No. 1 that no such document was submitted by PW.1 and he is not authorized in any manner to give complaint. Similarly the cross-examination of the

Investigating Officer PW.12 was appraised wherein he stated that he did not conduct any enquiry prior to registering the FIR based on the complaint and that he did not verify the competency of PW.1 to file Ex-P.1 and he did not collect any GPA in favour of PW.1 as referred in Ex-P.1 and that he did not examine IDBI authorities to verify whether PW.1 was competent or not. In the like manner, the cross-examination of PW.13 Mr. I. Johnson

Babu Rao, Investigating Officer who filed the Charge sheet that he did not enquire PW.1 from whom he received authorization was specified.

36.Explicitly the offences alleged against Accused in this case are under Sec. 120-B, 420, 477, 477-A IPC and Sec. 13 (2) r/w 13 (1) (d) of PC Act, 1988 which are all cognizable offences. In this regard, it is relevant to overview the technicalities of

PSJC/VSKP Page no. 37 C.C.No.20 of 2014 registration of FIR on receiving an information pertaining to cognizable offence as provided under Criminal Procedure Code ( in short CPC). For better appreciation Sec.

154 Cr.P.C., is extracted as follows.

154 Cr.P.C Information in cognizable cases

1)Every information relating to the commission of a cognizable offence, if given orally to an officer in charge of a police station, shall be reduced to writing by him or under his direction, and be read Over to the informant; and every such information, whether given in writing or reduced to writing as aforesaid, shall be signed by the person giving it, and the substance thereof shall be entered in a book to be kept by such officer in such form as the State Government may prescribe in this behalf.

2)A copy of the information as recorded under sub- section (1) shall be given forthwith, free of cost, to the informant.

(3) Any person aggrieved by a refusal on the part of an officer in charge of a police station to record the information referred to in subsection (1) may send the substance of such information, in writing and by post, to the Superintendent of

Police concerned who, if satisfied that such information discloses the commission of a cognizable offence, shall either investigate the case himself or direct an investigation to be made by any police officer subordinate to him, in the manner provided by this Code, and such officer shall have all the powers of an officer in charge of the police station in relation to that offence.

37.Unlike cases of civil nature, there are less parameters provided for determining the competency of complainant under criminal law. Admittedly as per the contents of Ex-P.79

IDBI Bank Officers Service Conduct, Discipline and Appeal Rules, 2006 where it is alleged that an Officer has committed an act of criminal conduct or where the investigation and proof of the allegations would require the evidence of persons who are not employees of the Bank or where in the opinion of the Chairman the investigation into the allegations cannot be conveniently undertaken by the Bank, the Investigation into the allegations may, with the approval of the Chairman be entrusted to the CBI or CVC or any other such agency as may be approved by the Chairman.

38.This provision provided under Rule No. 12 is not absolute in terms and is only a lateral to preceding provisions. The provisions of Ex-P.59 cannot be in any manner

PSJC/VSKP Page no. 38 C.C.No.20 of 2014 interfere with the procedural concepts of Cr.P.C. The provisions of Cr.P.C., mandates the

Investigation Officer to registration of FIR on receiving information with regard to cognizable offence and thereafter to carry out the investigation and to find out whether any guilt is made out against the alleged persons and after completion of the investigation, make him competent to file charge sheet. The mandate to register FIR under Section 154 of the Code, on receiving information disclosing commission of a cognizable offence is impeachable. The Constitutional bench of Honble Apex Court in

Lalitha Kumari Vs. State of U.P. (2014) 1 SCC (Cri) in the context of straining stipulations for preliminary enquiry emphasized that , the police officer cannot avoid his duty of registering offence if cognizable offence is disclosed. Accordingly in view of the provisions of Cr.P.C., and the case law discussed supra, there are no merits in the contention of the Accused pertaining to the competency of PW.1 for filing Ex-P.1 before

CBI.

39. Whether Accused No.5 Agency submitted positive report pertaining to personal and business profile of Accused No. 2 and 3 without verification .

As discussed earlier, it is evident on record that Direct Sales Agents comes under the purview of private agency engaged by the Bank to solicit business from prospective loanees on commission basis. In this case M/s Aspen Business Solutions (Accused No. 5) is the Direct Sales Agent engaged by the IDBI Bank to procure business. Ex-P.5 is the photostat copy of agreement (Original agreement was marked in C.C.19/2014 part of batch cases from C.C.16/2014 to 26/2014) entered by IDBI Bank with Accused No. 5

Agency in this connection and there is no much dispute between the parties pertaining to factum of entering into agreement. According to the contents of Ex-P.5 an agreement was entered between IDBI Bank and M/s Aspen Business Solutions represented by R. V. L. N.

Rao on 11.08.2010 with retrospective effect from 01.08.2010 to 31.03.2011.

40.As per the terms of agreement, the operations to be performed by M/s Aspen

Business Solutions were recited as follows:

PSJC/VSKP Page no. 39 C.C.No.20 of 2014 9.1: The M/s Aspen Business Solutions shall undertake and perform the following, among other, operations, duties and functions;

1.Solicitation of existing and potential customers to avail of the products.

2.Creating a database of customers and allowing IDBI Bank full access thereto.

3.Identification of Potential customers. Including IDBI products in own advertising subject to prior written approval of IDBI Bank. Tele calling customers on the list provided by the IDBI Bank are developed by M/s Aspen Business Solutions. Holding Exhibitions, Seminars, demonstrations, campaigns and other means of displaying the products.

4.Dissemination of information and answering queries about the products to walk in customers or on the phone.

5.Mailing and Distributing product information, brouchers and other material provided by IDBI Bank.

6. Explaining to customers the terms and conditions of, access to availability of the products.

7. Providing information to IDBI Bank on the status of the documentation or about the customers.

8.Assisting customers to fill up the application form to avail of the products.

9.Assisting IDBI Bank to process and prepare the relevant loan documentation pursuant to the policies and procedures of IDBI Bank.

10. Calling for from the customers and reviewing and collating the papers produced by them pertaining to their income employment or professional status, property, the offered security including shares, securities, insurance policies, and such other information and documents as IDBI Bank may require.

11. Assisting customers to prepare and file the final product documentation, post dated cheques, security and other documents that IDBI Bank may require.

12. Forwarding the papers referred to in this Clause 9 of the IDBI Bank and such verification agencies, lawyers, search clerks, accountants or valuers, as may be appointed or designated by IDBI Bank and following up with them to receive and review and their reports or opinions till the account is loaded on IDBI Bank systems.

13. Providing the customers with information on the status of their applications for the Products.

14. Visiting the customers at their homes or places of employment or business and performing all or any of the functions or operations herein specified at those places.

15. Providing information to the customers on the availability and status of specific loan related items.

16. Performing cheque and document pick up, delivery and courier services from and to IDBI Bank Office and customer residence or placement of employment or business.

17. Maintaining an information center and providing loan related services for IDBI Bank and the customers.

18. Coordinating with IDBI Bank approved property developers and builders with a view to providing the best options to the customers and optimum security for IDBI Loan products.

19. Attending to customer’s loan related service requests, processing and forwarding them to IDBI Bank and coordinating with IDBI Bank the completion of these requests and routing them back to the customers.

20. Such other duties, functions and operations as may be authorized in writing by IDBI Bank.

PSJC/VSKP Page no. 40 C.C.No.20 of 2014

41.The allegation of the Prosecution is that Accused No. 5 Agency at the instance of

Accused No. 1 without verifying the borrowers income tax assessment details, personal and business profile, submitted positive reports in favour of the borrowers. Accordingly it is appropriate to determine whether the oral and documentary evidence adduced by the prosecution sufficiently proved the allegations against Accused No. 5 Agency.

42.In this regard PW.1 who is the Complainant did not speak anything about M/s

Aspen Business Solutions in his examination in chief except confirming Ex-P.5

Agreement when confronted to him. PW.3 Mr. Shanti Prakash Kindo who worked as

Credit Manager from August 2009 to May 2010 in RAC, Visakhapatnam testified that during the year 2009-2010 and 2010-2011 RAC has entered into Service Agreement with

M/s Aspen Business Solutions and specified that Ex-P.5 is the corresponding Agreement signed by Managing Partner of M/s Aspen Business Solutions and Accused No. 1 on behalf of the Bank. PW.3 further stated that “DSA is Direct Sales Agent engaged for sourcing of retail loans in the local Market and they should have sufficient experience in sourcing/marketing such loans, office infrastructure, staff to process the sourced loans.

DSAs are being paid certain commission decided by the Bank on sourcing of such loans and basically appointed for minimum period of one year and thereafter renewed and further on their satisfactory performance. The service of DSA is availed through service agreement entered by the Bank. The main duty of DSA is creating database of the customers and providing the same to the Bank, conducting marketing campaigns, distributing marketing collaterals provided by the Bank, assisting IDBI Bank in processing the loans and sanctioning and documentation of the loan. The Direct Sales

Executives working under the DSA would approach the customer to obtain application and other loan documents mentioned above and verify the originals of the documents and submit it to Retail Asset Centre for processing. The DSA should be convinced about the creditworthiness of the customer and the loan sourced is as per Bank guidelines and qualify for sanction. The sourcing person would first visit the customer and satisfy himself. The DSA procures property related documents from the customers for legal and

PSJC/VSKP Page no. 41 C.C.No.20 of 2014 technical verification and submits to RAC for triggering the same. The detail roles and responsibilities is mentioned in Service Agreement at Point No. 9. There is an indemnity clause in the agreement regarding Bank claims suits, damage, liabilities, expenses, sustaining any loss, damage, prejudice by any unauthorized act things done, committed or omitted by the DSA or any employee, agent and sub-contractor”. PW.3 except deposing about the role and responsibilities of Accused No. 5 Agency did not make any statement with regard to alleged conspiracy, acts of omissions or commissions attributed to Accused

No. 5 Agency in processing the loan file of Accused No. 2 and 3.

43.Coming to PW.5 Mr. Ramu, he worked as AGM, Collections during the period from 2012 to 2016 in RAC, Visakhapatnam. He is the officer who conducted Internal

Investigation covered under Ex-P.45 along with PW.3. With regard to Accused No. 5

Agency, the only evidence of PW.5 is that the loan in this case was sourced by empanneled DSA, M/s Aspen Business Solutions. PW.5 deposed that all the connected documents covered under Exs P.10 to P.19 filed by the borrowers along with Ex-P.9 loan application were duly verified by DSA. PW.5 did not testify anything incriminating against Accused No 5 Agency. Likewise the Investigating Officers PW.13 and PW.15, in their examination in chief did not depose anything against Accused No. 5 Agency.

44.Moving further it is relevant to look into cross-examination of the prosecution witnesses. In the cross-examination by counsel for Accused No. 5 Agency, PW.5 stated that “it is true that the agents who are appointed by IDBI Bank are called as Direct Sales

Associates” and adds mainly in respect of Retail Assets, they will be appointed which includes advances”. PW.5 further stated that “It is true that Bank relies upon the documents produced by customer to process the loan and adds that however these documents have to be verified by DSA before submitting to the Bank”. “I have gone through the conditions in the agreement between IDBI Bank and DSA. It is true that it is not the job of DSAs to go to Registration Department and verify the addresses for verification. It is true that it is also not the job of DSA to verify the genuineness of the documents by going to respective Departments”. PW.5 on one hand asserts that DSA has

PSJC/VSKP Page no. 42 C.C.No.20 of 2014 to verify the loan documents and on the other hand, negate the gravity of verification.

This discrepancy in evidence of PW.5 overthrew the case of Prosecution against Accused

No. 5 Agency to much extent.

45.In the same context, when a question was posed to PW.5 by the counsel for the

Accused No. 5 Agency with regard to ascertaining genuineness of the document, PW.5 stated that before sourcing the proposal, the concerned DSA will be in touch with the customer either at his residential or official place and will be going through basic background details of the customers and hence genuineness of the borrower has to be ascertained preliminary at the time of sourcing the proposal by DSA. PW.5 admitted that by simply seeing customer or documents produced without verification, DSA cannot specifies the genuineness of the customer or document and further appraises the duties of

DSA mentioned at point No. 9-1.J of agreement and adds that duties of DSA implies verifying the genuineness of the customer also. Accordingly it is necessary to recapitulate the terms of Agreement at Point No. 9.1-J.

“9.1-J : Calling for from the customers and reviewing and collating the papers produced by them pertaining to their income employment or professional status, property, the offered security including shares, securities, insurance policies, and such other information and documents as IDBI Bank may require”.

46.In this regard the close perusal of Point No. 9.1-J of Agreement, only speaks of collecting, reviewing and consolidating the required documents by the DSA from the customers and do not expressly disclose anywhere in Agreement that Accused No. 5

Agency is obliged to confirm the genuineness of the documents submitted by the customer. Proceeding further the investigating officer PW.12, in his cross-examination admitted at Page No. 4 that “I did not make any investigation with regard to role of M/s

Aspen Business Solutions Accused No. 6 Agency. It is explicit on record that PW.5 also specifically stated that he did not mention in his report about any irregularities or illegalities committed by M/s Aspen Business Solutions in procuring the customers or

PSJC/VSKP Page no. 43 C.C.No.20 of 2014 documents in respect of this loan in Ex-P.51 Report. Therefore, it can be concluded that there is no material forthcoming against Accused No. 5 Agency either in the investigation made by PW.12 and PW.13 or the Fraud Investigation conducted by PW.5 and others. The evidence of prosecution witnesses above discussed do not disclose at any point the mandatory obligations of Accused No. 5 Agency to verify and confirm the genuineness of the documents submitted by the borrowers. Ex-P.4 which is a detailed document pertaining to the Home Loan Sales Process Volume-I much relied by the prosecution also precise the role and responsibilities of Direct Sales Associate to reasonable inquiries with regard to the borrowers, to take into consideration the repaying capacity and needs of the client. Even as per Ex-P.3 Chapter 7 the process at DSA branches is confined as follows:

1. Application form needs to be filled with full details.

2.All documents to be latest.

3.All copies of documents must be signed by the applicant by Sales Executive of the DSA or relationship manager of the Branch after originals being verified.

4.Document check list should be followed and kept in the file to ensure complete documentation.

47.Appending further the liabilities between Accused No. 5 Agency and the IDBI

Bank are determined and restricted to the terms and condition mentioned in the

Agreement as referred supra and cannot be inferred beyond the indenture. Therefore the entire oral and documentary evidence adduced by the Prosecution shows no inclination, calling for confirmation of genuineness of documents pertaining to the borrowers by

Accused No. 5 Agency. At the same time, obligation on Accused No. 5 Agency is to collect the documents, consolidate the documents and submit the same to the Bank, after reasonable enquiries with regard to the repaying capacity of the customer and the documents is undeniable. However the factum of reasonability does not mandate either expressly or impliedly the confirmation or genuineness. It is the scale of prudence which an ordinary persons exercise in the specific circumstances pertaining to the given facts.

As per the evidence on record, the verification and genuineness of the information provided and documents submitted by the customer is entrusted with other agencies like

Field Investigating Agency, Risk Containment Unit etc., by the Bank which will be

PSJC/VSKP Page no. 44 C.C.No.20 of 2014 triggered only after submission of the loan application and file login. Explicitly the responsibility of the Accused No. 5 Agency is confined to verification of documents submitted by the customer with the originals and affix the stamp of the Agency along with the signature of the Sales Executive after reasonable satisfaction of material information. Now the point for consideration is whether Accused No. 5 Agency performed its duties as per the terms and conditions of the agreement and as per the guidelines of the Bank.

48.In this context it is also relevant to discuss the evidence of PW.7 G. Ramesh who was the employee of M/s Aspen Business Solutions during the relevant period. The evidence of PW.7 is that previously he worked in M/s Aspen Business Solutions owned by Mr. R.V.L.N.Rao in the year 2010 for about one year. PW.7 further stated that he filled up loan application under Ex-P.9 under the instructions of Mr. R.V.L.N.Rao and that the

Co-ordinator of IDBI Bank has assisted him in that regard. The allegation of the prosecution against Accused No. 5 Agency is not about filling up the application. The crux of the charges is that Accused No. 5 Agency forwarded the connected documents along with Ex-P.9 without verification. Implicitly on perusal of Exs P.10 to 19 all the documents bears the stamp of Accused No. 5 Agency as “Verified Aspen DSA” with initial of concerned person of Accused No. 5 Agency. Prosecution did not adduce any evidence whether it is PW.7 who had put the signature on Exs P.10 to P.19 and whether he did the same without verifying the same with the originals. The stray statement that

P.W.7 filled the loan application is inadequate to inculpate Accused No. 5 Agency.

Therefore, no omissions or violations of duties determined as per agreement covered under Ex-P.5or against the guidelines of the complainant bank are forthcoming from the evidence on record, on part of Accused No. 5 Agency.

49.Whether Accused No. 4 submitted Ex-P.28 Valuation Report with an inflated

value and without conducting proper inspection at the instance of Accused No. 1

Accused No. 4 the then Panel Valuer of IDBI Bank are charged for the offences under Sec. 120-B and 420 IPC. The accusation is that Accused No. 4 at the instance of

PSJC/VSKP Page no. 45 C.C.No.20 of 2014

Accused No. 1 without conducting proper inspection of the site and layout documents had submitted inflated Valuation Report covered under Ex-P.28 on 31.08.2010 pertaining to the loan schedule property with exorbitant value at Rs.67,53,000/- @ Rs.13,000/- per sq.yd. The case of prosecution is that on subsequent revaluation by PW.6 Mr. K.

Srinivasa Rao, another Panel Valuer of the Bank, it was found that exact identification of the property could not be made in absence of plot numbers and the land value in surrounding areas is only Rs.8,000/- to Rs.9,000/- per sq.yd.

50.The copy of Service agreements between the IDBI Bank and Accused No. 4 were marked as Ex-P.7. The Valuation Reports submitted by Accused No. 4 was marked as Ex-

P.28 through PW.1. PW.1 further stated that on revaluation of the loan schedule property, it is found that the property is overvalued and it is an unapproved vacant land. PW.3 Mr.

Shanti Prakash Kindo stated that in the valuation reports given by Accused No. 4 , the value of the property is mentioned as @ Rs.13,000/- per sq.yd., and he did not mention about the layout approval and that in the 2nd Valuation report covered under Ex-P.44 PW.6 submitted that he was unable to value the property in absence of layout plan and boundaries and approximate property value in that area is Rs.7,000/- to Rs.8,000/- per sq.yd.

51.PW.5 Mr. Ramu, AGM, IDIBI Bank testified that “Ex.P.28 is Technical valuation report given by Accused No. 4 on 31.8.2010 for the property proposed to be purchased by Accused No.2 situated in Survey No. 28/1, 29/34, 29/46 of Aganampudi Village,

Gajuwaka Mandal, GVMC, Visakhapatnam. The property was valued at Rs. 67,53,000/- i.e. @ of Rs. 13,000/- per Sq.Yard and that Accused No. 4 did not mention about the layout status and absence of demarcation of the property and that the Valuation Report was accepted by Accused No. 1 on 20.09.2010. He further stated that Ex.P.44 is the

Valuation Report given by another emplanneled Valuer PW.6 on 18.04.2011 pertaining to loan schedule property which discloses that exact identification of the property could not be made in absence of Plot number and proper information on boundaries and advised the

Bank to furnish proper schedule of the property along with layout copy of property for

PSJC/VSKP Page no. 46 C.C.No.20 of 2014 identification and that PW.6 further appraised the market value prevailing in the locality as Rs.7,000/- to Rs.8,000/- per sq.yd.

52. From the above evidence of PW.5 the allegations against Accused No. 4 is two folds. Firstly; Accused No. 4 issued Ex-P.28 with inflated value and secondly; Accused

No.4 failed to mention that the property is unapproved vacant site. To corroborate the evidence of PW.5, prosecution further examined the subsequent Panel Valuer of the Bank who issued his opinion pertaining to the above aspects as PW.6. The evidence of PW.6 is that on 16.04.2011 he physically visited the loan schedule property situated in

Aganampudi village, Gajuwaka Mandal in Visakhapatnam District along with P.W.1 who has shown the property to him. He was also given a copy of sale deed of loan schedule property, according to which, the property stood in the name of Accused No. 2. The property which was shown to him did not match with the property covered by the document supplied to him. As such he could not assess the value of that property and have given a letter to that effect mentioning prevailing market rate of the properties in that area in my letter which is Rs.7000/- to Rs.8000/- per sq.yd. The letter submitted by

PW.6 to that effect was marked as Ex-P.44.

53.In the same context, the prosecution further to elicit the validity of the title covered under Ex-P.37 got examined PW.11 Mrs. M. Arunka Kumari the then Thasildar,

Gajuwaka. According to the evidence of PW.11 about 8 years back she was working as

Deputy Thasildar, Gajuwaka and during that time, she handed over set of two 10 (1)

Adangal and three No.3 Adangal Reports covered under Ex-P.64 to CBI Officials. PW.11 further stated that as per Ex-P.64 there is an extent of Ac.0.68cts of land in the name of

Mamidi Musalayya F/o. Mamidi Appala Naidu in Survey No.28/1. Similarly there is an extent of Ac.0.10cts of land in Survey No.29/34 and in extent of Ac.0.19cts in Survey

No.29/46 in the name of Mamidi Sanyasi S/o. Mamidi Peraiah. PW.11 further stated that as per No.3 Adangal under Ex.P.64 there is extent of Ac.0.69cts in Survey No.28/1 in the name of Mamidi Musalayya and that the possession is shown as blank and the nature of land is shown as dry land. According to PW.11 No. 3 Adangal depict the details of

PSJC/VSKP Page no. 47 C.C.No.20 of 2014

Survey Number, extent, classification of land, sist (Tax), Pattadar details, enjoyment details and type of crop and specified that Ex-P.64 contains the particulars as on 10.04.2013. According to PW.11 there are no mutations in the No.3 Adangal after 1956.

54.Acceding further with regard to transfer of title to the borrowers prosecution examined the then Sub-Registrar, Lankelapalem as PW.10. The evidence of PW.10 is that

Ex.P.38 is a General Power of Attorney cum sale agreement dated 05.01.2008 executed by one Mr.Mamidi Srinivas and 5 others in favour of Mr.Pinapala Appa Rao for a valuable consideration of Rs.33,24,500/- for the property in an extent of 2077.77 square yards situated in survey numbers 28/1,29/34 and 29/46 of Aganampudi Village. As per the Encumbrance Certificate under Ex.P.39 the property covered under Ex.P.37 Sale deed

No. 2770/2010 dt.27.09.2010, in an extent of 519.44 sq.yds.,was sold to Accused No. 2.

The detailed evidence of PW.10 and PW.11 do not elicit any breach with regard to the title of the vendor of Accused No. 2 as per Sale deed under Ex-P.37. The prosecution got marked Ex-P.67 photostat copy of Land Survey Proceedings, dt.12.04.2013 through

PW.13 Investigating Officer pertaining to land in survey No. 28/1, 29/34, 29/46 of

Aganampudi Village, Gajuwaka Mandal, Visakhapatnam drawn in presence of Mr. B.

Srinivas and Mr. Ramakrishna Benarjee (LW.8). However, except marking the Photostat copy, the prosecution did not choose to examine either LW.8 or any other witnesses to corroborate the contents of Ex-P.67. Accordingly from the consolidate averments of document discussed above and oral evidence of PW.10 and PW.11, no material severance in the title of the borrower or his vendor with regard to loan schedule property covered under Ex-P.37 was proved on record.

55. However from the evidence of PW.10 and PW.11, it is clearly evident that the schedule property in an extent of 519.44 sq.yds., covered under Ex-P.37 sale deed is not in a approved layout but purchased by Accused No. 2 and 3 from private individual for sale consideration of Rs.15,00,000/- @ Rs.2,800/- per sq.yd. Initially, Accused No. 2 and 3 submitted an application for purchase of property in Lankelapalem, Gajuwaka Mandal,

Visakhapatnam seeking loan of Rs.49,00,000/- on 18.08.2010. Subsequently after the

PSJC/VSKP Page no. 48 C.C.No.20 of 2014 submission of loan application, Accused No. 2 entered into agreement of sale dt.25.08.2010 with the vendor. Ex-P.36 is an agreement of sale dt.25.08.2010 executed in favour of Accused No. 2 for vacant site in an extent of 519.44 sq.yds., for consideration of Rs.48,13,000/-. At this point without effecting the merits of other facts to be decided at subsequent stages, it is evident that loan was sanctioned to Accused No. 2 and 3 based on the face value of the sale consideration mentioned in Exs P.36. Per contra, subsequently after disbursement of loan amount, Accused No. 2 and 3 got registered Ex-

P.37 Sale deed, dt.20.09.2010 in the name of Accused No. 2 for vacant site in an extent of 519.44 sq.yds., for sale consideration of Rs.15,00,000/- @ Rs.2,800/- per sq.yd. The document value on the registered sale deed is sweepingly low when compared to the

Agreement of sale executed by them under Ex-P.36.

56.Now in the background of these facts elicited from the documentary evidence adduced by the prosecution, it is to be decided whether the valuation fixed by Accused

No. 4 is inflated. In this context it is warranting to have comparative analysis of divergent values outspread on record pertaining to self same loan schedule property.

Amount mentionedRegistered SaleAccused No. 4 as perPW.6 as per Ex-P.44 in Agreement todeed valueEx-P.28 sell covered undercovered under Ex-P.36Ex-P.37

Rs.48,13,000/- Rs.15,00,000/-Rs.67,53,000/- @Rs.7,000/- to Rs.8,000/- @ Rs.2800/- perRs.13,000/- per sq.ydper sq.yd sq.yd

In the above frame of reference we deal with three sets of property value , firstly value or price agreed by the party in agreement to sell , secondly the sale consideration reflected in registered sale deed and thirdly the purported market value placed by panel valuers.

In order to rationalize these diversity it is necessary to understand the concept of Market

Rate, Circle rate and Selling price of a property.

57.Circle rate is generally called as SRO value or guidance value. In other words the

Government rate or Circle rate is the minimum value below which a property cannot be

PSJC/VSKP Page no. 49 C.C.No.20 of 2014 sold in a particular area. Likewise selling price is the amount for which the vendee actually buys the asset after negotiating against the listing price proposed by the vendor.

The market value on the other hand represents the price at which a property can be sold in the market. This is the fair price that the property should fetch at a particular time.

Explicitly there was no hard and fast rule to prefix the fluctuating market value, however it is calculated based on the average selling price for similar properties in the locality.

Admittedly the Circle rate will be relatively less when compared with market value .

However market value and selling price need not be the same. The parameters for fixing selling price and market value are completely divergent, wherein the former is determined by collective phenomenon of market and other circumstances and the later is determined by purely individual interests of vendor and vendee. That is the reason for inclusion of comparative analysis of these values in the technical valuation format fixed by the Banks as reflected at page No. 70 of Ex-P.3 in this case. The Technical Appraisal

Format provided by the IDBI Bank covered under Ex-P.3 at page No. 70 mandates 14 columns wherein Column No. 14.14 specifically warrants comparative evaluation of original cost of the property, Government Approval Rate, Current Market Rates etc.

14.14 Valuation :

A.AOriginal Cost of Property

B.BGovernment approved rate in the year of acq. / construction, if available

C.CCurrent Government Approved RateRate per sq.ft:Area: Total Value :

D.DCurrent Market ValueRate per sq.ft:Area: Total Value :

E.ERecommended RateRate per sq.ft:Area: Total Value :

Break up of recommended Value : Value of Land Component : Value of Construction :

F.FBasis for recommended rate

PSJC/VSKP Page no. 50 C.C.No.20 of 2014

58.The careful study of the documentary evidence adduced by the Prosecution and

Ex-P.3 parameters, it is evident that the Panel Valuer is required to study the Value of the property mentioned in the document, SRO Values as on date of document and as on date of valuation, market value as on date of documentation and Market Value as on date of valuation and prepare a comparative analysis of the same before arriving the proposed market value for the purpose of Bank transaction. The terms and conditions covered under Agreement between Accused No. 4 and the IDBI Bank specially provide that “Valuation Certificate to be given as per the terms and conditions of the Bank, the basis of valuation shall be accepted system of assessment by the Institute of Engineers/Institute of Valuers/Formats suggested by the Bank”.

59.In the backdrop of above evidence, the initial accusation against Accused No. 4 is mainly pivoted on allegation of giving inflated value of loan schedule property. As already discussed, the market value of the property is the value fetched for that property depending upon the development in that area and comparative analysis with document value and SRO Value. Firstly; with regard to development and activity in the loan schedule property, it is clearly evident from the Sale deed and valuation report under Exs

P.37& P.28 that the loan schedule property is within the limits of Greater Visakhapatnam

Municipal corporation. The site plan enclosed to the Valuation Report categorically reflects residential constructions in and around the loan schedule property. Further, the location plan was annexed to the Valuation Report also reflects the existing commercial and residential activity in and around the loan schedule property and its proximity to civic and social amenities. Accordingly, it cannot be said that the loan schedule property is under developed or developing area like vicinity villages. Now the point for consideration is; whether this non-disclosure of facts as provided in the Bank format mislead the Bank while sanctioning the loan to the Borrowers. Apparently, the locality of the property plays a prominent role in deciding its value. The scale of development in a locality decides its worth or the lack thereof. That is the reason for which a tiny stretch of land in developed area fetches more value than large parcel of land in an undeveloped

PSJC/VSKP Page no. 51 C.C.No.20 of 2014 area. There is no contrary evidence on record on the aspect that the loan schedule property is in developed Greater Visakhapatnam Municipal limits. Accordingly, the omission of specific mentioning of developmental particulars in Ex-P.28 did not tend the complainant Bank negatively in enlarging loan to the borrowers.

60.Coming to existing market value during the relevant period, mere non-disclosure of values as per Bank Format with comparative analysis cannot itself conclude the culpability of the Accused, there should be some proximal evidence adduced by the prosecution to impeach the market value submitted by the Accused No. 4 .On this aspect prosecution relied upon the evidence of subsequent Valuer PW.6 and contents of Ex-P.44 to depreciate the veracity of the property value furnished by Accused No. 4. However, on perusal Ex-P.44, it is a letter addressed by PW.6 to the Assistant General Manager, RAC,

IDBI Bank referring the subject as Valuation Report. The contents of Ex-P.44 are extracted as follows for better understanding.

“The property pertaining to the above (i.e. Land in S.No.28/1, 29/4, 29/46 of

Aganampudi Village, Gajuwaka Mandal, Visakhapatnam ) was inspected on 16.04.2011.

Following observations were made.

1.The property could be located with the guidance of Sri Venkat of IDBI Bank, in the Ispath Nagar Area, Aganampudi, Visakhapatnam. However exact identification of the property could not be made in the absence of plot number and proper information on boundaries.

2.It was reported that the entire locality was plotted and promoted by Vijayalakshmi Co-operative House Building Society.

3.Hence please furnish us the proper schedule of the property along with the layout copy mentioned above for property identification.

The prevailing market rate in this locality is ranging between Rs.7,000/- to Rs.8,000/- per sq.yd”.

61.It is apparent on the face of Ex-P.44 that it is neither given in the format of

Technical Valuation Report prescribed by IDBI Bank nor in the general format of

Valuation Report. It does not disclose whether PW.6 inspected and identified the property as per the schedule mentioned in Ex-P.37 Sale deed. The extent of land and schedule of the property along with specific boundaries was clearly mentioned in Ex-P.37 Sale deed.

PSJC/VSKP Page no. 52 C.C.No.20 of 2014

Further even from the evidence of PW.10 and PW.11 nothing was elicited on record to dispute with the title of the vendor of Accused No. 2. In this backdrop, there are no specific circumstances averred by PW.6 as to why he could not identify the property exactly. As already discussed above the evidence of PW.10 and PW.11 categorically discloses that the property was purchased by Accused No. 2 from a private individual.

The property was mortgaged to the Bank as per norms. However, PW.6 testifies that locality was plotted and promoted by Vijayalakshmi Co-operative House Building

Society. It is not the case of prosecution that Accused No. 2 subsequently after obtaining the loan from the Bank has alienated the property and there was a development of above mentioned House Building Society. In view of unexplained ambiguity in the evidence of

PW.6 the contents of Ex-P.44 cannot be taken into consideration as substantial document to impeach the veracity of valuation report covered under Ex-P.28 by Accused No. 4.

Accordingly this Court is of opinion that the Prosecution has not placed any sufficient evidence to prove beyond reasonable doubt that Accused No. 4 issued the Valuation

Report with exorbitant rates.

62.Lastly, with regard to non-mentioning of the approval status of layout, Accused

No. 4 did not mention in his Valuation Report dt 31.08.2010 about the approval status of the layout. In the disbursal memo and check list covered under Ex-P.35 the estimate market value (as per valuation) was considered as Rs 67,53000, apparently the value mentioned by Accused no. 4 in Ex-P.28. As per Circular no. 138-PBG-17-2008-09 pertaining to plot loan and plot LAP loans should be sanctioned and disbursed only for approved plots. The disclosure of fact that the schedule property is in unapproved layout, definitely would have declined the loan proposal. Therefore, Ex-P.28 on the face of the document, suffers from suppression of fact which has entitled the borrowers to secure the loan which they were not otherwise eligible. Therefore, the Prosecution sufficiently proved on record that Accused No. 4 issued Ex-P. 28 Valuation Reports, concealing the real facts sufficient to mislead the IDBI Bank to disburse the loan amount to Accused

PSJC/VSKP Page no. 53 C.C.No.20 of 2014

No.2 and 3 beyond their eligibility. The allegations against accused no 4 accordingly concluded positive.

Whether the Income Tax Returns covered under Exs P.18 & 19 were

submitted by Accused No. 2 and 3 and whether the same were false and fabricated

Whether M/s Nimble Corporate Service submitted positive reports without

verifying the personal and business profile of Accused No. 2 and 3.

63.As per the Charge Sheet Accused No. 6 i.e., M/s Nimble Corporate Service was engaged by IDBI Bank as Field Investigation Agency on commission to conduct Field

Investigation and verify credentials and creditworthiness of the borrowers. It is based on the information provided by the Field Investigating Agency the loan application shall be forwarded for further sanction and disbursement. It is alleged that Accused No. 6 Agency submitted positive reports without verifying the personal and business profile of the

Accused No. 2 and 3. As per the evidence of PW.1, Ex-P.6 is the photocopy of Service

Agreement dt.28.04.2010 between M/s Nimble Corporate Service/Accused No. 6 and

IDBI Bank for the period from 1st April 2010 to 31.03.2011 (original agreement was marked in C.C.16/2014 part of batch cases from 16/2014 to 26/2014). PW.4 Mr.

Vasukumar Masetty stated that as per the contents of Ex-P.57 photocopy of Field

Investigation Register on 30.08.2010 documents related to Accused No. 2 and 3 were given to Accused No. 6 Agency for verification and subsequently the Bank received positive reports from Accused No. 6 on 31.08.2010. As per the evidence of PW.5 Mr.

Ramu and evidence of PW.1, Exs P.21 to P.25 are the verification done by Accused No. 6

Agency in respect of Residence, Office, ITR and Bank Statements of Accused No. 2 and

3. Prosecution did not adduce any evidence to dispute with the contents of Exs P.21, P.22,

P.24 & P.25. It is contended that FI Agency has given positive reports despite the discrepancy noted in the IT Returns of Accused No. 2 vide verification report covered under Ex-P.23. As per the evidence of PW.5 Exs P.18 and P.19 are the copies of Income

Tax Returns of Accused No. 2 submitted along with the loan application.

64.In this connection, it is relevant to look into the evidence of prosecution witnesses

PW.5 and PW.8. Initially PW.5 stated that “Ex.P.18 is the photocopy of Income Tax

PSJC/VSKP Page no. 54 C.C.No.20 of 2014 acknowledgment submitted by Accused No. 2 for the assessment year 2008-09. As per the document gross total income of Accused No.2 is shown as Rs. 8,98,780/- and the total tax payable is mentioned as Rs. 2,23,256/-. It is also mentioned that TDS of Rs.

1,68,000/- was effected on his income and self assessment tax of Rs. 55,256/- was paid.

However there is neither proof of self assessment tax paid nor TDS certificates submitted to the same. Ex.P.18 consists of self assessment details, tax computation statement, trading and profit and loss account, balance sheet for the year ended 31.3.2009. As per income tax rules if tax assessment return is filed for 2008-09 then the relevant financial year would consist of 2007-08. However in this Ex.P.18 the tax assessment return and profit and loss account statement pertains to the same year i.e. 2008-09 which is not possible. The audited statements annexed to Ex.P.18 were purported to be audited by Sri

P.L.N.Raju, Chartered Accountants, Visakhapatnam. The photocopy of the documents are duly verified by DSA. As per the document the date of filing of the return is 6.8.08 whereas on the tax computation sheet the date is mentioned as 15.9.2008 and on self assessment details page no. 2 the date is mentioned as 24.9.2008. Ex.P.19 is the photocopy of Income Tax acknowledgment submitted by Accused No. 2 for the assessment year 2009-10. As per the document gross total income of Accused No.2 is shown as Rs. 9,92,600/- and the total tax payable is mentioned as Rs. 2,03,775/-. It is also mentioned that TDS of Rs.1,55,000/- was effected on his income and self assessment tax of Rs. 48,775/- was paid. However there is neither proof of self assessment tax paid nor

TDS certificates submitted to the same. Ex.P.19 consists of self assessment details, tax computation statement , trading and profit and loss account, balance sheet for the year ended 31.3.2010. As per income tax rules if tax assessment return is filed for 2009-10 then the relevant financial year would consist of 2008-09. However in this Ex.P.19 the tax assessment return and profit and loss account statement pertains to the same year i.e.

2009-10 which is not possible. The audited statements annexed to Ex.P.19 were purported to be audited by Sri P.L.N.Raju, Chartered Accountants, Visakhapatnam. The photocopy of the documents are duly verified by DSA. As per the document the date of filing of the

PSJC/VSKP Page no. 55 C.C.No.20 of 2014 return is 24.7.09 whereas on the tax computation sheet the date is mentioned as 21.9.2009”.

65.To corroborate the evidence of PW.5 with regard to disparities in Exs P.18 and

P.19, the prosecution got examined the then Income Tax Officer, Ward III (2),

Visakhapatnam as PW.8.

In this regard PW.8 Mr. Ch. V. Atchutha Rama Rao stated that he is working as the

Assistant Commissioner of Income Tax at Hyderabad for the last 6 months. Previously he worked as the Income Tax Officer ITO Ward-III (2) in Visakhapatnam which comes under the Commissioner of Income Tax II from 2001 to 2016 and that he was attending to processing and Assessment of Income Tax Returns at that time and their Lower

Divisional Clerk would receive the Income Tax Returns and put before him and at the request of the CBI Department, he furnished two copies of some pages of Income Tax

Returns Receive Registers for the Assessment years 2008-2009 and 2009-2010. Ex.P.62is the certified copy of relevant pages of Income Tax Returns Receive Registers pertaining to receipt of Income tax returns for the Assessment year 2008-2009 containing 6 pages.

Ex.P.63 is the certified copy of relevant pages of Income Tax Returns Receive Registers for receipt of Income tax returns for the Assessment year 2009-2010 containing 2 pages, marked through PW.8 and contains his signature.

66.According to PW.8 as per Ex-P.62 the Income Tax Returns Receive Register of the year 2008-2009, the acknowledgment Bearing No.201241 was allotted to Mr. A. Jagan

Mohan Rao on 05.08.2008 and according to Ex.P.18, the Income Tax returns submitted by Accused No. 2 for the Assessment Year 2008-2009 also contain the same acknowledgment number as 201241. Further as per Ex-P.63 Income Tax Returns Receive

Register of the year 2009-2010 the acknowledgment bearing No.200820 was allotted to

Mr. Vimal Chauhan on 24.07.2009. But as per the Income Tax Returns submitted by

Accused No. 2 under Ex.P.19, it contains the same acknowledgment No.200820.

67.The contention of the counsels for Accused is that PW.8 is not the competent person to admit Exs P.62 and P.63. In this context, in the cross-examination by counsel

PSJC/VSKP Page no. 56 C.C.No.20 of 2014

for Accused No. 5 and 6, the witness stated that the Commissioner of Income Tax can

issue certified copy of the documents of their Department or he can delegate the same to any other officer in writing and further admitted that “it is true that our Commissioner of

Income Tax did not authorize me to issue Exs P.62 & P.63. It is true that I have not made an endorsement on Exs P.62 and P.63 that I have compared them with originals”. The Ld.

Counsel appraising the aforementioned admissions argued that Exs P.62 and P.63 can not be read in evidence. When the entire evidence of PW.8 in the cross-examination is read together, it cannot be interpreted in the sense that, it is only the Commissioner of Income

Tax is authorized person to issue certified copies and PW.8 is prohibited from issuing certified copies of documents pertaining to Income Tax Department. PW.8 specifically denies the suggestion by counsel for Accused No. 6 Agency that he is not competent to speak about the contents of Exs P.62 and P.63. He further denied the suggestion that he cannot authenticate the entries in Exs P.62 and P.63. In this context the close perusal of

Exs P.62 and P.63 depict that the same are certified copies of this Court pertaining to Exs

P.83 and P.84 in C.C.19/2014 (Part of batch cases from C.C.19/2014 C.C.24/2014) which are true copies of extract of Income Tax Return Reeipt Register for the Financial Year 2008-2009 and 2009-2010 attested by PW.8.

68.Income Tax Returns Receive Register evidently is a document forming the acts or records of the acts of official body and can be considered as a public document under Sec 74 of the Indian Evidence Act. Secondary evidence of public document in accordance with provisions of Sec. 76 of Indian Evidence Act, is permissible by Law. According to

Sec. 76 of Indian Evidence Act, every public officer having the custody of public document, which any person has a right to inspect shall give that person on demand a copy of it on payment of the legal fees there for. However, the documents on record of

Income Tax Department does not fall into the purview of public document which any person can inspect and seek a copy as a matter of right. The same is prohibited by the provisions of Income Tax Act. In this context, Sec. 65 (f) of Indian Evidence Act, holds that when the original is a document of which a certified copy is permitted by this Act, or

PSJC/VSKP Page no. 57 C.C.No.20 of 2014 by any Law in force in India to be given in evidence be admissible in evidence vide certified copies of the document. Accordingly it is appropriate to discuss relevant provision under Sec. 279 B of Income Act, dealing with proof of entries in records or documents.

279 B Income Tax Act : Proof of entries in records or documents: Entries in the records or other documents in the custody of an income- tax authority shall be admitted in evidence in any proceedings for the prosecution of any person for an offence under this Chapter, and all such entries may be proved either by the production of the records or other documents in the custody of the income- tax authority containing such entries, or by the production of a copy of the entries certified by the income- tax authority having custody of the records or other documents under its signature and stating that it is a true copy of the original entries and that such original entries are contained in the records or other documents in its custody.

69.The provisions of Sec. 65 (f) & 76 of Indian Evidence Act are to be read in the context of Sec. 279 Income Tax for better appreciation of the facts of this case.

Accordingly, it is appropriate to look into the contents of Sec. 76 of Indian Evidence Act which is extracted as under:

Certified copies of public documents.—Every 1public officer having the custody of a public document, which any person has a right to inspect, shall give that person on demand a copy of it on payment of the legal fees therefor, together with a certificate written at the foot of such copy that it is a true copy of such document or part thereof, as the case may be, and such certificate shall be dated and subscribed by such officer with his name and his official title, and shall be sealed, whenever such officer is authorized by law to make use of a seal; and such copies so certified shall be called certified copies.— Explanation.—Any officer who, by the ordinary course of official duty, is authorized to deliver such copies, shall be deemed to have the custody of such documents within the meaning of this section.

70.In the background of above legal provisions certified copies of entries in the records of Income Tax Department can be read in evidence with regard to prosecution of offences under Income Tax Act as per Sec. 279 B of the Act. When the same analogy is applied to Sec. 65 (f) of Indian Evidence Act, certified copies of the said entries which were permissible by Income Tax Act, apart from the provisions of Sec. 65 (e) of Indian

Evidence Act are admissible in Evidence Act. Reverting back to Sec. 76 of Indian

Evidence Act, copy of a primary document that has on it an endorsement or certificate that it is a true copy suffices the requirement of certified copy and any Officer by the ordinary course of official duty is authorized to deliver such copies shall be deemed to

PSJC/VSKP Page no. 58 C.C.No.20 of 2014 have the custody of such documents. Exs P.62 and P.63 suffices the requirements of Sec.

76 of Indian Evidence Act and PW.8 being the Income Tax Officer attending processing and assessment of Income Tax Returns within his jurisdiction shall be deemed as Officer having custody of records under Sec. 279 B of Income Tax Act and Sec. 76 of Indian

Evidence Act and want of specific authorization from the Commissioner of Income Tax to issue certified copies of extracts of Income Tax Return Receipt Register covered under

Exs P.62 and P.63 by PW.8 does not interfere with their admissibility. Accordingly this court finds no rational defense to reject the admissibility and relevancy of Exs P.62 and

P.63 in evidence.

71.Going further with regard to the contents of Exs P.18 & P.19, glaring material defects have been appraised by PW.5 as discussed supra. At this point, the Ld. Counsel

for Accused No. 2 and 3 vehemently argued that none of the prosecution witnesses

testified that they have seen Accused No. 2 and 3 submitting the disputed documents to the Bank and that no investigation was conducted by the Investigating Officers on this aspect. Taking into consideration, the argument placed by the Ld. Counsel for the

Accused No. 2 and 3, the documents under Exs P.18 & P.19 are to be scrutinized. As per the proforma covered under Ex-P.9, indicating the list of documents to be produced along with the application, the Income Tax Returns were the mandatory documents to be submitted by the borrowers along with the application. These documents forms the foundation for loan processing as they hold the very criterion for analyzing the financial eligibility of the borrowers for sanctioning the loan. Admittedly, Bank never proceeds further preparing appraisal note without these documents. Evidently Exs P.18 & P19 and contains the detailed personal particulars like business address, nature of business, address for communication, Pan number and there is no possibility for third parties to have acquaintance with classified details of the borrowers and cook up P.18 & P.19.

Further the erroneous misrepresentation of acknowledgment numbers, Assessment year and Financial Year in Exs P.18 and P.19 is strikingly blatant and no justification can be adopted to rationalize the same. Hence reading together the evidence of PW.5 and PW.8,

PSJC/VSKP Page no. 59 C.C.No.20 of 2014 in absence of any appropriate contradiction in the evidence of prosecution witness, there is no point to accede to the defence of Accused No. 2 and 3 that they did not submit Exs-

P.18 & P.19. In view of the above discussion pertaining to the glaring errors apparent and stringent enough, it is sufficient to confirm that Exs-P.18 & P.19 are fabricated with false contents.

72.Coming to the allegations against Accused No. 6 Agency, as per the discussion supra, this Court already concluded that Exs-P.18 & P.19 are fabricated and false documents. Now it is the point for consideration that whether Accused No. 6 Agency submitted positive reports covered under Ex-P.23 pertaining to Income Tax Returns for

Assessment Year 2008-2009 and 2009-2010 of Accused No. 2. On this point, the above evidence of PW.5 and PW.8 is elaborately discussed. The contention of the counsel for

Accused No. 6 Agency is that Income Tax Department never shares any information pertaining to the Assesses to the third parties except to the Investigating Agency. The learned counsel for Accused No. 2 and 3 submitted that the terms with regard to verification of IT Returns under Ex-P.6 is impracticable and is not enforceable. On that aspect in the cross-examination of PW.8, he categorically admitted that “general Public and the bank officials and their representative companies have no access with our registers. Except for Law enforcing agency we are not supposed to furnish any information from our office”. This is a clear admission on the part of PW.8 and cannot be interpreted contrarily. However, it is not the case of Accused No. 6 Agency that as per the terms and conditions under the Agreement between Accused No. 6 Agency and IDBI

Bank, there is no clause for verification of IT Returns, further Ex-P.23 bears the stamp of

Accused No.6 Agency along with signature of authorized employee which remains undisputed. The obligation for verification of IT Returns of the borrowers is the integral part of covenant between the Agency and the Bank. Firstly; if Accused No.6 Agency has knowledge about the impossibility of verification of IT Returns with Income Tax

Department, it should not have agreed to the relevant terms in Ex-P.6. Secondly; as per

Ex-P.3 Home Loan Process Volume III, the Bank has prescribed specific procedure for

PSJC/VSKP Page no. 60 C.C.No.20 of 2014 verification of IT Returns of the borrowers and the same is bearing on the Accused No. 6

Agency. In this regard, the relevant provisions covered under Ex-P.3 are extracted as below.

PROCESS OF VERIFICATION OF IT RETURNS

The objective of ITR verification is to ensure the authenticity of the ITR furnished for credit assessment and that the right income is considered for loan appraisal. ITR Verification involves the following checks: Verify, the names of the applicants in the return with computation of income Confirm that an Income Tax department’s stamp is available and is visible on the cooies submitted to us. There is also a date and a serial number mentioned either on the stamp or separately. We need to look at three years returns; the returns should have been filed for various years during the period normally available for filing returns. If the dates are beyond the regular time frame the reasoning should be justifiable. All three years returns files on one date or within a period of six months are suspicious. Please verify the copies submitted to us with the acknowledgment of ITO available with the customer. Compare and verify all the income and details mentioned in the IT return, tally with support documents, such as computation of income, Form-16, profit and loss account, balance sheet and such other documents to confirm that the income tax return is genuine and accurate. The profit and loss account whether proprietary or partnership firms should be at least certified by a CA who should state “ certified based on the books of accounts produced before him” etc, All the IT returns should be certified by the Chartered Accountant who filed the ITR stating “Certified True copy” if the original return filed with the Income Tax Authorities”. The CA’s stamp and membership number should supplement this. If in doubt or if the customer says that the returns are filed by himself without any help from a Chartered Accountant, ask for advance tax challans for the previous years and compare the advance tax paid as stated in the IT returns and as shown in advance tax challans. The above process is ideally carried through an ITR verification agency.

73.It is clearly evident that the verification of personal and business profile of the borrowers is a versatile phenomenon and there is no hard and fast rule imposed on

Accused No. 6 Field Investigation Agencies to verify the veracity of the information furnished by the borrowers. With regard to the IT Returns, Field Investigating Agency is specifically vested with three options. Firstly; to verify the information as to the submission of IT Returns from the Income Tax Department and secondly; to verify the same from the concerned Chartered Accountant who purported to have audited the

Returns and thirdly; to verify the document for self contradicting content apparent on the face of the document which can be easily identified with application of common reason.

PSJC/VSKP Page no. 61 C.C.No.20 of 2014

This procedure is explicitly inferred under the Banking terms of IDBI. If it is the case of

Accused No. 6 Agency that it could not obtain the confirmation from IT Department, the same should have been reflected in Ex-P.23. Per contra Ex-P.23 shows that Accused No. 6

Agency has verified with the Tax Assistant Ward III of Income Tax Department and confirmed Exs-P.18 and P.19 as positive. This fact on record completely depreciate the defence of the Accused No. 6 Agency. The terminal contention of the Accused is that the questioned Income Tax Returns of the borrowers were confirmed by the RCU, against which the Prosecution has no case. It is submitted that no culpability can be attributed

Accused No. 6 Agency when the information furnished by the parallel agency is not agitated by the prosecution. In this case RCU Report covered under Ex-P.27 was signed by PW.1 recommending the loan. Technically RCU Report shall be based on information furnished by a Private Agency i.e., Astitute Corporate Service during the relevant point of time. The close perusal of Ex-P.27 shows that on oral confirmation by the official, the given ITRs for the years 2008-2009 and 2009-2010 are found correct and it was endorsed by PW.1. As admitted by PW.8 Mr. Ch. V. Atchutha Rama Rao, Income tax particulars of the Assessees shall not be shared by the Income Tax Department with the private persons.

Applying the said analogy even the information mentioned in Ex-P.27 RCU Sampling

Report also do not accede any merits. The contention that the parallel agency which furnished the above information under Ex-P.27 has not been prosecuted does not give any leverage to Accused No. 6 Agency in view of the facts sufficiently proved to attract the culpability for furnishing the positive report under Ex-P.23 without verification.

Accordingly in view of the above discussion, this Court is of opinion that the

Prosecution has proved beyond all reasonable doubt that Exs P.18 & P.19 Income Tax

Returns submitted by Accused No. 2 and 3 are false and fabricated.It is further concluded that the Prosecution has proved with all reason that Accused No. 6 without verifying the veracity of Exs P.18 & P.19 apparent on face of the document, with Income Tax

Department or any other concerned issued Exs P.23 Report to the Bank.

PSJC/VSKP Page no. 62 C.C.No.20 of 2014

74.Whether the loan proceeds were misused for closing third party loan accounts.

It is the case of prosecution that the loan amount disbursed to vendor of Accused

No. 2 and 3 i.e., Pinapala Apparao was diverted to the loan account of Mrs. G. Venkata

Lakshmi. On this aspect prosecution examined the Manager, IDBI Bank, Vizianagaram as PW.9 and got marked the two pay orders in favour of Mr. Pinapala Apparao as Ex-

P.46 and 47, the evidence of PW.9 is that however the statement of account of

Mr.Pinapala Apparao under ExP.52 do not reflect the relevant entries and transactions.

The case of the prosecution in nutshell is that loan amount was sanctioned to Accused

No. 2 and 3 beyond their financial eligibility and beyond the market value of the property which is an unapproved layout. The Prosecution has no case of cheating or conspiracy against the vendor of Accused No. 2 and 3. Accordingly no culpability can be adduced to

Accused on the basis of Bank transactions if any purported to have been made by Mr.

Pinapala Apparao and Mrs. G. Venkata Lakshmi in their individual capacity.

75.Allegations against Accused No. 1:

PW.5 who conducted Internal Investigation with regard to the loan of Accused No.

2 and 3 in this case, deposed elaborately with regard to the deviations and violations by

Accused No. 1. In this regard PW.5 testified that “Ex.P.26 is the credit interview document (personal discussion) document done by Accused No.1. The document is undated and also the document did not contain the profile of the prospective borrowers and proposed property details to be purchased by the borrowers, however it is mentioned in the report that the case is recommended. Ex.P.28 is the valuation report given by empanelled panel valuer Sri K.KamaRaju (Accused No.4) on 31.8.2010 for the property situated in Survey no. 28/1, 29/34, 29/46 of Aganampudi village, Gajuwaka Mandal,

GVMC, Visakhapatnam. The property was valued at Rs. 13,000/- per sq.yard, totaling to

Rs. 67,53,000/-. The valuation report did not mention about the layout status of the property and the demarcation of the property in absence of layout. The valuation report was accepted and signed by Accused No.1 on 20.9.2010. Whereas the approval for

PSJC/VSKP Page no. 63 C.C.No.20 of 2014 disbursement of the loan was given by him on 16.9.2010. Ex.P.29 is the legal opinion given by empanelled advocate Sri K.Appala Raju (Accused No.4) on 5.9.2010 and the same was accepted and signed by Accused No.1 on 20.9.2010. whereas the approval for disbursement of the loan was given by him on 16.9.2010. The loan was approved and sanctioned by Accused No.1 on 30.8.2010 without a joint call with other credit officers in

RAC. Thereby in violation of roles and responsibility circular dated 14.7.2008 (Ex.P.3).

Sanction letter was issued on 30.8.2010 to Accused No.2 and Accused No.3 by Accused

No.1 and the same was acknowledged and accepted by Accused No.2 and Accused No.3.

The loan was sourced by empanelled DSA M/s M/s ASPEN Business solutions. Plot loan was sanctioned in violation of circular no. 138 dated 10.9.2008(Ex.P.3). Wherein plots approved by competent authority should be sanctioned. Whereas in this case there is no approval from competent authority for the property. Ex.P.32 is the home loan agreement and power of attorney executed by Accused No.2 and Accused No.3 in favour of the bank and requested for disbursement of the loan vide Ex.P. 33 for an amount of Rs.

38,50,000/-. As per Ex.P.34 approval for disbursement of loan amount of Rs. 38 lakhs was given by Accused No.1 on 16.9.2010 for an un approved property. Ex.P.37 is the registered sale deed executed in favour of Accused No.2 on 20.9.2010 for the property and the same was deposited with the bank. The registered sale deed also did not contain anything regarding approval status of the property from the competent authority. The loan was sanctioned and disbursed by Accused No.1 by ignoring the discrepancies in the financial statements submitted by the borrower. Ex.P.45 is the investigation report conducted by me along with Sri S.P.kindo (PW.3) pertaining to this case”.

76.PW.5 further stated that “ Ex.P.44 is the valuation report given by empanelled panel valuer Sri K.Srinivasa Rao(LW.5) on 18.4.2011 in respect of the property pertaining to the subject loan account. It is mentioned in the report that exact identification report of the property could not be in the absence of plot number and proper information on boundaries. The valuer advised the bank to furnish proper schedule of the property along with layout copy for property identification. The prevailing market rate in this locality is

PSJC/VSKP Page no. 64 C.C.No.20 of 2014 ranging from 7000 to 8000/-per Sq.Yard. However the loan was funded on the basis of valuation report submitted by Sri K.Kamaraju in August 2010 @ Rs.13000 Per Sq.Yard.

Hence the loan was declared as fraud due to over valuation, unapproved layout and fabricated income documents by the borrower. Property visit report is not on record.

However Accused No.1 has accepted valuation report of Sri K.Kamaraju (Accused No.4) vide Ex.P.28 for disbursement of the loan. ”

77. The multiple folds of allegations against Accused No. 1 pertaining to the sanction and disbursement of loan to Accused No. 2 and 3. as testified by prosecution witness is summarized and discussed as follows:

The initial allegation of the prosecution against the Accused No.1 circumvented the verification of creditworthiness of the borrowers and their financial eligibility. This

Court concluded that Exs P.18 & P.19 are false and fabricated and further concluded that the field investigation report by M/s Nimble Corporate agency (Accused No. 6) covered under Ex-P.23 for Income Tax returns of Accused No. 2 was submitted without any verification. Apparently no proof of self-assessment tax paid or TDS Certificates referred under Ex-P.18 and P.19 Income Tax Returns were collected at the time of appraising and approving the financial eligibility of the borrowers when the annual income of the

Accused No.2 was shown as only Rs. 200,000 per annum in the loan application .

Accused No. 1 did not consider the falsification of Ex-P.18 & P.19 or acted with due diligence or cautiousness in appraising the financial credibility of the borrower and instrumentalized Ex-P.23 which was issued without verification by Accused No. 6

Agency for disbursing the loan amount to Accused No. 2 and 3

78.The next contention of the prosecution is that Credit Interview document covered under Ex-P.26 is undated and did not contain the profile of prospective borrowers and proposed property details. As per Chapter IV of Product Program Guidelines covered under Ex-P.3 Personal interview or discussion with the borrowers is a mandatory procedure to be followed by appropriate Authority before proceeding further with the sanction of the loans and the same shall be as per the format provided under Annexure IV

PSJC/VSKP Page no. 65 C.C.No.20 of 2014 of Product Program Guidelines. Ex-P.26 apparently on the face of the document neither contain the date, profile of the borrowers nor the details of the property as provided in

Annexure IV of Product Program Guidelines .

79.The next allegation is that Accused No. 1 approved and sanctioned the loan on 30.08.2010 without joint call of the other credit officers in violation of Circular dt.14.07.2008 covered under Ex-P.3. In this context, PW.1 in his cross-examination admits that if loan amount is below Rs.20,00,000/- the loan would be sanctioned by Scale

II Officer who is PW.3 in this case. He further admitted that if it is above Rs.20,00,000/- up to Rs.1,00,00,000/- Accused No. 1 was the Sanctioning authority during that time.

Further PW.9 in his evidence testified that the final call in sanctioning the loan will be taken by the Credit Manager if the proposal is within the delegation power and if the same is not within his delegation power, he will recommend the same to the higher authority for approval. The careful appraisal of the above said evidence, elicit that for all the loans above Rs.20,00,000/- Accused No. 1 was the Sanctioning Authority subject to the recommendations by the Credit Manager. The sanctioning of cases will be joint call with RAC Credit Manager as reflected in the roles and responsibilities of Centre Head provided at Point No. 6 of Circular No. 96/PBG-11/2008-2009, dt.14.07.2008 covered under Ex-P.3. There is no explanation provided by Accused No. 1 for approving and sanctioning the loan on 30.08.2010 vide Exs P.30 & P.31 without joint call of the other credit officers in violation of Circular dt.14.07.2008. Accordingly this Court is of opinion that Accused No.1 violated the IDBI Bank Circular, dt.14.07.2008.

80.Further as alleged by the Prosecution that the Valuation Report covered under Ex-

P.28 given by Accused No. 4 on 31.08.2010 was accepted and signed by accused No. 1 on 20.09.2010 wherein disbursement memo covered under Ex-P.34 was prepared on 16.09.2010. However, disbursement of loan was made only on 20.09.2010 Accordingly, there is no flaw in signing Ex-P.34 by Accused No. 1 on 20.09.2010

81.Further contention is that Accused No. 1 signed on check list for legal opinion covered under Ex-P.34 on 16.09.2010 wherein Legal opinion covered under Ex-P.29

PSJC/VSKP Page no. 66 C.C.No.20 of 2014 given by empanelled advocate was dt 05. 09.2010, accepted and signed by Accused No. 1 on 20.09.2010 As per the evidence of PW.4 Ex-P.55 legal report Register maintained by

IDBI Bank is completely silent about regarding the name of Panel Advocate and on what date documents were handed over and reports were received from the Panel Advocate in this case. In contra, as per the contents of Ex-P.29 Legal Opinion was furnished by Panel

Advocate Mr. K. Appalaraju on 05.09.2010 and the loan was disbursed on 20.09.2010. It is evident from the contents of Ex-P.31 Check list for verifying the legal opinion that the same was prepared on 16.09.2010. Further as per the Disbursement Check List, Legal

Verification Column No. E, all the formalities pertaining to Legal Opinion has been complied by 16.09.2010. Admittedly the loan was disbursed in this case on 20.09.2010 as per Ex-P.35. Accordingly it is evident that legal opinion was obtained prior to 16.09.2010 and Accused No. 1 signed on the same on 20.09.2010. Absence of mere entries in Ex-P.55 are insufficient to incriminate Accused No. 1 on this aspect. As such, Ex-P.34 was prepared by Credit Processing Associate on 16.09.2010 and no evidence was adduced by the prosecution that the same was signed by Accused No. 1 even prior to 05.09.2010.

Mere signing on Ex-P.29 Legal opinion by Accused No. 1 on 20.09.2010 does not sufficient to prove that the same was received by the Bank on 20.09.2010. The allegations of the prosecution that Accused No. 1 signed on Ex-P.34 even prior to obtaining legal opinion does not stands any merits.

82.The contention of the prosecution is that Plot loan was sanctioned for unapproved vacant site in violation of Circular No. 138, dt.10.09.2008. The contention of the Accused is that the loan schedule property is an urban private property and it is as per practice of the Bank, this loan was funded for plot where the layout furnished is not possible by obtaining Bank specified formats covered under Ex-P.40 & P.41. The perusal of Circular no. 138-PBG-17-2008-09 as deposed by PW.5 pertains to plot loan and plot LAP (Loan against property/ Residential/Commercial discloses that loans should be sanctioned and disbursed only for approved plots. The above mentioned circular clearly mandates that layout of the plot should be approved by appropriate authority. There is no provision for

PSJC/VSKP Page no. 67 C.C.No.20 of 2014 conditional sanction of loan in unapproved layout. The contention of Accused No.1 that as per practice of the Bank, loan was funded for unapproved layout by obtaining affidavits under Exs P.41 & P.42 do not rationalize the act of the Accused No. 1 which is

Patent violation of the Circular Guidelines above referred.

83.The another contention of the prosecution is that there are clear instructions from

Higher Authorities to RAC to stop further funding of Plot loans with immediate effect from 20.08.2010 and that Accused No. 1 with malafide intention approved for login of file with antedate. In this connection, PW.5 stated that Ex.P.62 is the email communication dated 20.8.2010 with Sec. 65-B certificate from V.S.Chitnis, DGM

Products, SRA to the Centre Heads, SRA informing that it has been decided to stop sourcing plot loans and loan against property for plot with immediate effect. PW.5 further stated that this mail should be brought to the notice of all the officers /staff attached to

RACs/Branches”. The close perusal of Ex-P.62 copy of Email dt.20.08.2010 addressed by V.S.Chitnis. DGM Products-RA discloses that “it has been decided to stop sourcing

Plot loan and Loan against property for plot with immediate effect. It is further advised that Extension of APF facility to builder projects to be approved by respective Regional

Heads on recommendations from Centre Head / Cluster Head. Centre Heads / Cluster

Heads are not empowered to approve the APF facility”.

84.The contention of the Accused is that the plot loans were approved only based upon the instructions of the Higher Authorities for the loan which were already logged.

However, in this case the login date for the file was on 19.08.2010 as per Ex-P.2 and the date of application is 18.08.2010 which is prior to the above reffered circular .

Accordingly no culpability can be attached to Accused No. 1 funding plot loan beyond the instructions covered under Ex-P.62 email correspondence of IDBI Bank directions.

85. Point No. 2 : Whether prosecution has established offence U/secs.471 of IPC against Accused No. 3 and 4 beyond reasonable doubt?

PSJC/VSKP Page no. 68 C.C.No.20 of 2014

Accused No. 2 and 3 were charged for the offence under Sec. 471 IPC in addition to the other offences. The ingredients of Sec. 471 IPC are extracted below for better understanding the provision.

471 IPC. 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].

The essential ingredients of the offence under Sec. 471 IPC in view of the above mentioned provision of IPC are as follows:

1.The Accused fraudulently or dishonestly used a document or electronic record as genuine.

2.The Accused knew or had reason to believe that the document or electronic record was a forged one.

As per the above inclusive provisions of the sec. 471, it is explicit to understand the definition of forgery as provided under Sec. 463 IPC.

Sec. 463 IPC envisages Forgery.—[Whoever makes any false documents or false electronic record or 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.

86.In order to constitute forgery, the first essential is that the Accused should have made a false document and secondly, such false document must be made with a intent to cause damage or injury to the public or to any class of public or community. Reading together the provisions under Sec. 463 and 471 IPC, an Accused can be attributed with culpability if he uses any forged document as genuine which he knows or has reason to believe to be a forged document or record.

87.In this case on hand, Accused No. 2 and 3 were charged for using inflated valuation report issued by Accused No. 4, positive report submitted by Accused No. 5

Agency, verification reports of Accused No. 6 Agency and other false documents enclosed with the loan application with knowledge that the same were forged documents.

PSJC/VSKP Page no. 69 C.C.No.20 of 2014

As per discussion so far, there is no obligation rested with Accused No. 5 Agency to submit any positive reports except submitting the preliminary documents to process the loan after verifying the same with originals. Accordingly, documents furnished along with the loan application through Accused No. 5 Agency, positive report submitted by Accused

No. 6 and Valuation Report submitted by Accused No. 4 are alleged to have been used by

Accused No. 2 and 3 with an intent to cause damage to the Complainant Bank.

88.It is evident on record as per the discussion covered under Paragraphs supra, the

Prosecution has only adduced sufficient evidence to prove that Ex-P.18 & P.19 are false and fabricated. The contention raised by the Ld. Counsel for Accused No. 2 and 3 is that in absence of proof of forgery and the original document which was purported to have been forged, no conviction under Sec. 471 IPC can be recorded by the Court. As referred supra, forgery is the integral part of Sec. 471 IPC. There is no charge against Accused No.

2 and 3 for the offence under Sec. 468 IPC. Now the moot point for determination is whether Accused No. 2 and 3 can be made liable for the offence under Sec. 471 IPC without there being the original of Exs P.18 & P.19 which are concluded as false and fabricated by this Court.

89.Reverting back to corresponding legal provision, the ingredient of Sec 471 IPC is that there should be forgery, as defined under Section 463 IPC, and forgery in terms depends upon creation of false documents, as defined under Section 464 IPC.

Specification under Sec 471 IPC explicitly refers to the question that the person who didn’t committed forgery but knows or has reason to believe that the document is forged and still uses that document as a genuine one. The section clearly states that even only for using a forged document intendedly shall be treated as similar as if the person has done the offence of forgery and shall be punished correspondingly.

90.In the case of Smt Rupa Bania v. State of Assam 2006 CriLJ 3455, the Hon’ble

Gauhati High Court while considering the question that no evidence is there to prove that the accused had herself forged the documents, upheld the conviction passed by the trial

PSJC/VSKP Page no. 70 C.C.No.20 of 2014

Court against the Appellant for the offence under Sec. 471 IPC. The relevant paragraphs of above citation were extracted below; “The learned trial Court, I find, examines the accused-petitioner adequately under Section 313, Cr.P.C. In her examination aforementioned, the accused-petitioner merely claimed that she had not submitted the testimonials, in question, and that she knows nothing. In the fact of the evidence on record, particularly, when one considers the evidence of PW1 and PW2, in the light of the evidence of CW1, there remains no escape from the conclusion that the documents, on the basis of which the accused-petitioner had obtained her appointment on compassionate ground, were forged ones. The question, now, is this : whether in the face of such evidence on record, accused-petitioner could have been held guilty of the offence under Section 471, IPC?

44. While considering the question posed above, it is pertinent to note that to constitute an offence under Section 471, IPC, prosecution must prove the following ingredients-

i) That the document was forged one.

ii) That the accused person used such document fraudulently or dishonestly.

iii) That the accused used the document, in question, as a genuine one.

iv) That the accused knew or had reason to believe that it was a forged document.

45. Bearing in mind the ingredients of Section 471, IPC, when I revert to the evidence on record, I notice that there is no dispute that the minimum qualification prescribed for appointment as Lower Division Assistant is passing of the HSLC examination or equivalent examination. Claiming to have passed the HSLC examination, the accused- petitioner had obtained her appointment as Lower Division Assistant, on compassionate ground, in the office of the Executive Engineer, PWD, National Highway Division, Jorhat. There is not even an iota of evidence on record to show that the accused-petitioner has passed the HSLC examination. There is, therefore, no doubt that she could not have obtained her appointment as Lower Division Assistant on compassionate ground. This apart, the accused-petitioner had submitted, in original, the admit card, pass certificate, mark-sheet, etc., indicating as if she had passed the HSLC examination under Roll No. 5- 229 No. 718. The verification by the office of the SEBA, later on, revealed that the documents, in question, were actually forged ones inasmuch as the accused projected to have passed the HSLC examination under Roll No. 5-229 No. 718, whereas the said Roll No. was actually allotted against the name of one Pradip Mallik and not to the accused- petitioner, namely, Rupa Bania.

46. In the face of the above proven facts, there can be no escape from the conclusion, and not a shadow of doubt for any prudent man, that the accused-petitioner, having not passed the HSLC examination, used the said forged documents to obtain (sic), on compassionate ground, in the office of the Executive Engineer, PWD, National Highway Division, Jorhat, got appointment as Lower Division Assistant, knowing full well that the said documents were forged ones. Had the Roll No. 5-229 No. 718 belonging to the accused- petitioner, she could have been misled by someone to believe that she had passed the HSLC examination; but when the Roll No. 5-229 No. 718 was not even allotted against her, it cannot be said that the accused did not know that the Roll Number, where under she claimed to have appeared in the HSLC examination and passed the same were all forged ones. In the face of such facts, the conviction of the accused-petitioner under Section 471, IPC cannot be held to have suffered from any illegality, impropriety and/or incorrectness”.

Similarly, the Hon’ble Apex Court in (2004) 11 SCC 576 between A. S. Krishnan & another Vs. State of Kerala, discussed elaborately the essential ingredients of Sec. 471 IPC. The relevant paragraphs akin to the factual index of this case are extracted below:

PSJC/VSKP Page no. 71 C.C.No.20 of 2014 “The essential ingredients of Section 471 are (i) fraudulent or dishonest use of document as genuine (ii) knowledge or reasonable belief on the part of person using the document that it is a forged one. Section 471 is intended to apply to persons other than forger himself, but the forger himself is not excluded from the operation of the Section. To attract Section 471, it is not necessary that the person held guilty under the provision must have forged the document himself or that the person independently charged for forgery of the document must of necessity be convicted, before the person using the forged document, knowing it to be a forged one can be convicted, as long as the fact that the document used stood established or proved to be a forged one. The act or acts which constitute the commission of the offence of forgery are quite different from the act of making use of a forged document. The expression 'fraudulently and dishonestly' are defined in Sections 25 and 24 IPC respectively. For an offence under Section 471, one of the necessary ingredients is fraudulent and dishonest use of the document as genuine. The act need not be both dishonest and fraudulent. The use of document as contemplated by Section 471 must be voluntary one. For sustaining conviction under Section 471 it is necessary for the prosecution to prove that accused knew or had reason to believe that the document to be a forged one. Whether the accused knew or had reason to believe the document in question to be a forged has to be adjudicated on the basis of materials and the finding recorded in that regard is essentially factual.

Under the IPC, guilt in respect of almost all the offences is fastened either on the ground of "intention" or "knowledge" or "reason to believe". We are now concerned with the expressions "knowledge" and "reason to believe". "Knowledge" is an awareness on the part of the person concerned indicating his state of mind. "Reason to believe" is another facet of the state of mind. "Reason to believe" is not the same thing as "suspicion" or "doubt" and mere seeing also cannot be equated to believing. "Reason to believe" is a higher level of state of mine. Likewise "knowledge" will be slightly on higher plane than "reason to believe". A person can be supposed to know where there is a direct appeal to his senses and a person is presumed to have a reason to believe if he has sufficient cause to believe the same. Section 26 IPC explains the meaning of the words "reason to believe" thus:

26 - "Reason to believe": A person is said to have 'reason to believe' a thing, if he has sufficient cause to believe that thing but not otherwise."

In substance what it means is that a person must have reason to believe if the circumstances are such that a reasonable man would, by probable reasoning, conclude or infer regarding the nature of the thing concerned. Such circumstances need not necessarily be capable of absolute conviction or inference; but it is sufficient if the circumstances are such creating a cause to believe by chain of probable reasoning leading to the conclusion or inference about the nature of the thing. These two requirements i.e. "knowledge" and "reason to believe" have to be deduced from various circumstances in the case. (See Joti Parshad v. State of Haryana (AIR 1993 SC 1167)”.

Lastly, it is contended that no offence can be made out based upon the contents of

Photostat copies. In Nakul Kohli Vs. State (173 (2010) DLT 197) The Hon’ble High

Court of Delhi observed that the offence of forgery includes forgery in form of photocopy/colour copy of documents and the relevant discussion is extracted as under:

In my view, photocopying a document, which is not genuine and with the kind of technology that is available now, wherein exactly similar copies of the original can be made, would fall within the ambit of making a false document. With the advent of technology, scanners and computerized colour photocopiers produce identical copies

PSJC/VSKP Page no. 72 C.C.No.20 of 2014 which are exactly similar to the original. Excluding photocopying/printing from the ambit of a "false document" would be giving too narrow a reading to the word `makes‟ as used in Section 464 First (a) because the said word is not limited by the subsequent words signs, seals or executes. If the word `makes‟ was to confine to signing or executing, then there was no need of introducing this word in the said Section. It is settled law that the words used in an enactment are not superfluous.

….

The contention of the learned counsel that he should be discharged at this stage for offences under Section 471 and 474 IPC as the document is a photocopy and thus a secondary evidence, is also untenable, because in a given case where a photocopy is used as the primary offending article, the same would be the primary evidence for the purpose of trial of the said case.

91.In view of the principle held in the above case laws, it cannot be said that a false photocopy of a document would not be covered in the definition false/forged document.

The borrowers cannot be excluded from the liability under Sec. 471 IPC for using photocopy of a false document as genuine. Therefore, keeping in mind the ingredients of

Sec. 471 IPC and the principal laid in the above cases, it can be concluded that if the accused though forged the document in question or not, if presents the forged documents for his benefit fraudulently or dishonestly even after knowing the fact that the documents he is presenting is the forged one can be convicted of offence under section 471 IPC.

Coming to the facts of the case the Accused No. 2 and 3 pretty well known that the receipt no mentioned on Exs P.18 &P.19 doesn't belong to them and knowing fully that they never filed the same before the Income Tax Authorities, dishonestly submitted the same to the Bank to falsely project their financial eligibility which is otherwise adverse.

The intention as well as the acts of accused are apparent enough to conclude the culpability of accused under this section. The Accused No. 2 and 3 are therefore, held guilty for the offence under Sec. 471 IPC.

Point No. 3 : Whether prosecution has established offence U/secs.477-A of IPC

against Accused No.1 beyond reasonable doubt?

92.Accused No. 1 was charged for the offence under Sec. 477-A of IPC apart from other offences. The ingredients of Sec. 477-A are as follows:

PSJC/VSKP Page no. 73 C.C.No.20 of 2014 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 from 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.

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 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.]

93.In order to bring home the offence under this section, the prosecution has to establish three important aspects.

1.that at the material time the Accused was a clerk, officer or servant under employment.

2.that acting as such he destroyed, altered, mutilated or falsified any book, paper, writing, valuable security or account which belonged to or is in possession of his employer or has been received by him on behalf of his employer etc.

3.The Accused acted willfully with intent to defraud

94.The expression intent to defraud contains two elements under criminal jurisprudence viz., deceive and injury. A person made deceive another either by suggestio falsi or suppressio veri or both. Such deception may manifest when the Accused person intentionally induces the another person to believe a thing to be true which he knows to be false or does not believe to be true.

PSJC/VSKP Page no. 74 C.C.No.20 of 2014

95.In this case on hand, the charge against Accused No. 1 under Sec. 477-A of IPC is that Accused No. 1 during the relevant point of time being Officer employed with IDBI

Bank willfully and with intent to defraud, alter and falsified the book, extracts of the

Registers and other loan documents pertaining to loan account of Accused No. 2 and 3 which belongs to his employer and which were possessed and maintained by Accused

No. 1 on behalf of his employer. Inspite of voluminous allegations against the Accused

No. 1, prosecution did not adduce any evidence specifying what are the specific documents falsified by the Accused No. 1. Accordingly the charges under Sec. 477-A IPC against Accused No. 1 in this case fails for want of merits.

Point Nos 4 and 5 :- Whether prosecution has established offence U/sec. 120-B and 420 IPC against Accused No. 1 to 6 beyond reasonable doubt?

96.The common charge against Accused No. 1 to 6 is framed for the offence punishable under Sec. 420 IPC alleging that Accused No. 1 to 6 during the relevant period cheated the Complainant Bank by dishonestly inducing the Bank to deliver

Accused No. 2 and 3 loan amount of Rs.38,50,000/- by bringing into existence false, fabricated, forged documents and fake reports. In this context, it is necessary to look into the brief averments of Sec. 420 IPC.

420 IPC :- Cheating and dishonestly inducing delivery of property.—Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.

97.The necessary ingredient to attract the offence under Sec. 420 IPC are as follows:

1. The element of Cheating

2.Dishonest inducement to deliver property

3.Mens rea of the Accused by the time of making inducement

The prime component of Sec. 420 IPC is Cheating which was defined as under Sec. 415 IPC as follows:.

PSJC/VSKP Page no. 75 C.C.No.20 of 2014 415 IPC : Cheating —Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to “cheat”. Explanation.—A dishonest concealment of facts is a deception within the meaning of this section. In the light of the above provisions of Sec. 415 IPC, the ingredients of Cheating as held by Hon’ble Apex Court in

Devendra Vs. Baldev (2005) 9 SCC 15 can be reduced as follows:

1.Deception of any person

2.whereby fraudulently or dishonestly inducing that person to deliver any property to any person or to consent that any person shall retain any property or 3 . Intentionally inducing that person to do or omit to do anything which he would not do or omit to do if he was not so deceived.

4.Which act or omission is caused or his likely to cause damage or harm to that person in body, mind, reputation or property

98.In the light of the above provisions of law, it is clearly evident that the offence under Sec. 420 IPC primarily deals with Cheating and dishonestly inducing the deliver of property. The offene of Cheating as referred above is made up of two ingredients, firstly; deception of any person and secondly; fraudulently or dishonestly inducing the person to deliver any property to another person or to consent that any person shall retain any property. In this context the deception of a person may be either by making a false or misleading representation or by other action or omission. It is explicit that such deception shall be preceded by the fraudulent and dishonest .inducement to deliver of any property.

As per Sec. 24 & 25 of IPC, the terms “dishonestly and fraudulently” are described as follows:

24.Dishonest : whoever does anything with the dishonest intention of causing wrongful gain to one person or wrongful loss to other person is said to do that thing dishonestly.

25.Fraudulently : A person is said to do a thing fraudulently if he does that thing with intent to defraud but not otherwise.

PSJC/VSKP Page no. 76 C.C.No.20 of 2014

The case of the prosecution is that Accused No. 1 to 6 has deceived the IDBI Bank with dishonest and fraudulent intention and thereby caused wrongful loss to IDBI Bank and wrongful gain to borrowers.

99.Coming to the facts of the case, as per Ex-P.9 Accused No. 2 and 3 applied for loan of Rs.38,50,000/- on 18.08.2010 for purchase of property. The subject matter of loan application is shown as Lankelapalem, Gajuwaka Mandal, Visakhapatnam. Pertinently unregistered Agreement to sell covered under Ex-P.36 submitted by the borrowers was dt.25.08.2010 which evident that the Agreement to sell covered under Ex-P.36 for purchase of extent in 519.44 sq.yds., followed the loan application, dt.18.08.2010.

Precisely, the agreement to sell covered under Ex-P.36 was obtained from the vendor only on 25.08.2010 which is subsequent to the date of application. It was explicit that as on date of application, there is no agreement of sale regarding the loan schedule property and obtained subsequently. It clearly indicate that the Accused No.2 and 3 applied for loan for purchase of uncertain property in anticipation of future transaction. As per agreement of sale, Accused No. 2 expressly admitted to have paid the amount of

Rs.9,63,000/- out of agreed sale consideration to the vendor and required balance amount is only Rs.38,50,000/-. However, in the sale deed covered under Ex-P.37 the sale consideration has shown as only Rs.15,00,000/-. There is no whisper with regard to receipt of advance sale consideration as mentioned in Ex-P.36 Agreement of sale. Though an amount of Rs.38,50,000/- has been disbursed to the vendor from the IDBI Bank, vide

Pay Orders covered under Exs P.46 & P.47. Ex-P.37 sale deed, dt.20.09.2010 discloses that as if only an amount of Rs.15,00,000/- has been received vide Cheque bearing No.

002096 issued by IDBI Bank which itself is shown as total sale consideration. This wide range of contradiction in the loan application, agreement to sell and the subsequent registered sale deed when looked with other documents categorically shows that the agreement value has been cooked up to suit the loan value reflected in the application.

The argument is that the general market value is always higher than the SRO Value and registration of document for much lesser value is a matter of practice. These practices

PSJC/VSKP Page no. 77 C.C.No.20 of 2014 were generally adopted where the buyer sometimes agrees to get the transaction registered at the Circle rates so as to minimize the registration charges from his pocket and on the other hand, the seller insist the same with a intention to lower capital gain tax outgo. However, this unreasonable practice does not sanctify the legal liability on the vendor and the vendee. In this case, the registered transaction entered into by Accused

No. 2 vastly contradicting with the terms of agreements of sale under Ex-P.36 and remains unexplained. This cannot be concluded as a simple act of conveyance for the purpose of minimizing the registration cost and stamp duty. As such, Ex-P.36 is the primary document which persuaded to determine the eligible loan amount and the acts of

Accused No. 2 by obtaining Registered Conveyance Deed in his favour for very mean sale consideration of Rs.15,00,000/- as under Ex-P.37 than projected before the Bank through Ex-P.36 for Rs.48,13,000/- can be considered nothing but a fraudulent and dishonest intention from very initiation of the loan process.

100.In the loan application the income of the Applicant i.e., Accused No. 2 was shown as Rs.2,00,000/- p.a. The income of the co-applicant and her assets were not mentioned in the application. The financial capacity of Accused No. 2 to pay the installments is shown as Rs.10,000/- p.m. In this regard the eligibility of the Accused No. 2 for the loan applied was completely assessed based upon his Income Tax Returns covered under Exs P.18 &

P.19 which are concluded as false and fabricated. Accused No. 1 circumvented the verification of creditworthiness of the borrowers and their financial eligibility which cannot be considered as mere negligence. In addition to the same, the deviations on the part of Accused No. 1 are apparent from the initial point of approval and sanction of the loan which was without joint call of any other Officers of RAC. Even while assessing the profile of the borrowers, Accused No. 1 patently omitted the mandatory provisions to be complied with Credit Interview and ignored the borrowers profile as well as the description of the property. The knowledge of Accused No. 1 with regard to speculative transaction by the borrowers is apparent from Ex-P.26 Credit Interview Document. Lastly

Accused No. 1 being the Centre Head, approved, sanctioned and disbursed the loan for

PSJC/VSKP Page no. 78 C.C.No.20 of 2014 funding property which is an unapproved vacant site without any reasonable explanation patently violating Circular No.138. The disbursement Memo covered under Ex-P.34 bears the signature of Accused No. 1 in the place of Credit Manager besides the signature of

CPA and Manager Retail Assets. The disbursement check list covered under Ex-P.34 also contains the signature of Accused No. 1 in the place of Credit Manager along with signature of Manager, Retail Assets. So the role of Accused No. 1 even at the stage of disbursement is specific and evident. It is the contention of the Accused No.1 that disregarding the role of various Departments like Credit, Collections, Operations etc.,

Accused No.1 cannot be made liable for sanction and disbursement of loan amount.

However, it is explicit from the documentary evidence discussed above that Accused No.

1 being the Sanctioning Officer with regard to the delegation of powers vested to him for sanction of loans beyond value of Rs.20,00,000/- exercised overwhelming authority with regard to all the other Departments like Credit and Operation Departments.

101.The acceptance of all the loan documents by Accused No. 1 without rationalizing minimum requirements and ending up to disbursal substantiate the proof allegations against Accused No. 1 already discussed supra, it can be concluded that Accused No. 1 while discharging duties as Sanctioning Authority and Centre Head (RAC), grossly failed to discharge his duties with reasonable care and caution. Further, Accused No. 1 refrained himself for applying a reasonable prudence with regard to analyzing the financial eligibility of Accused No. 2 and 3, sanctioned and disbursed the loan amount ignoring the guidelines of the Bank prohibiting the funding of Plot loan and also property in an unapproved layouts without joint call of other officers. These acts of Accused No. 1 cannot be termed as mere irregularities and deviations or negligence simplicitor.Accused

No. 1 acted circumventing all the prescribed Guidelines and Procedures mandated by the

Bank and sanctioned and disbursed the loan amount with an unexplained precipitation to favour the Borrowers engaging the financial interest of the Bank at risk. The argument of

Accused No. 1 is that entire loan was sanctioned and disbursed in normal course of banking and mere irregularities and deviation do not amount to criminal culpability to

PSJC/VSKP Page no. 79 C.C.No.20 of 2014 attract the offence under sec 420 IPC. However, in view of discussion supra, the acts of the accused proved to be reserved with sufficient dishonest intention to cause wrongful gain to the borrowers as discussed supra. To determine whether the person charged has been negligent or not, he has to be judged like an ordinary competent person exercising discretion in ordinary circumstances. However the conduct of Accused No. 1 reflects an unusual conduct thrusting the bank to discernible financial crisis which cannot be ratified beyond culpability.

102.The Ld., counsel for Accused No. 1 relied upon the following decisions to disintegrate with the facts of the case and the applicable law on the disputed aspects.

State of Gujarat Vs. Ashok Kumar Lavjiram Joshi Hon’ble Gujarat High Court on 06.04.2018), Rishi Kesh Singh and Others Vs. The State of Hon’ble Allahabad High

Court on 18.10.1968, The Delhi Cloth and General Mills Vs. Kushal Bhan on 10.03.1960, and M.S.Bindravs Union of India and Others of Hon’ble Apex Court on 01.09.1998), S. V. Mothilal Vs. The General Manager Hon’ble Madras High Court on 01.12.2020 and A. Sivaprakash Vs. State of Kerala of Hon’ble Apex Court on 10.03.2016. Despite the above elaborate list of Judgments relied by the Accused No. 1 except the Judgment in Rishi Kesh Singh and Others and A. Sivaprakash Vs. State of

Kerala referred supra, other judgments were purely pertaining to the Disciplinary proceedings and does not have bearing to the facts in issue in this case. The proposition held in the above Judgments relied by Accused No. 1 is that more rigorous proof is called for from the prosecution which must establish the case beyond reasonable doubt and that the prosecution has to place sufficient evidence to show that Accused entered into illegal agreement with others and the Accused obtained pecuniary advantage thereby to establish the offence under Sec. 13 (1) (d) of Prevention of Corruption Act, 1988. Admittedly the burden of proof on the prosecution is always heavier and beyond reasonable doubt. In this case on hand, the documentary evidence is predominate and well supported by the oral evidence of the prosecution witnesses, no breach or leverage is observed or concluded in contra. The consolidate acts and omission of the Accused No. 1 yielding to

PSJC/VSKP Page no. 80 C.C.No.20 of 2014 wrongful gain to the borrowers and wrongful loss to the IDBI Bank with an intent to defraud, amply fits into the definition under Sec. 24 & 25 IPC and consequential mis- leading, misrepresentation of facts on the records connected with the loan application of

Accused No. 2 and 3 as referred supra, proves the offence under Sec. 420 of IPC against

Accused No. 1.

103. With regard to the borrowers, the Ld. Counsel referred to the citations reported in

Appeal (CRL) 1072/2001 Supreme Court of India on 18.10.2001 in between SW

Patanitkar & Others Vs. State of Bihar & Another, Crl. Appeal No.942/2009 of Hon’ble

Supreme Court on 06.05.2009 in between SVL Murthy Vs. State Rep., by CBI,

Hyderabad, Appeal (Crl.) No. 834/2002 Supreme Court of India on 20.07.2006 in between M/s Indian Oil Corporation Vs. M/s NEPC India Ltd., & Others and Appeal (Crl.) No. 313-314 of 2000 Hon’ble Supreme Court of India on 31.03.2000 in between

Hridaya Rangam Pd. Varma & Others Vs. State of Bihar & Another and argued that mere breach of contract and inability to repay cannot be concluded as offence of cheating. In contra in this case on hand, the dishonest intention of the borrowers since the very initiation of loan application and even prior is apparent. The borrowers fortified their financial eligibility based on false documents and fabricated the circumstances and documents to suit the loan amount. This very apparent from the value the borrowers projected in Ex-P.36 agreement to sell wherein the value of the total property comes to

Rs.48,13,000/- before the bank prior to sanction and value reciprocated in the Registered

Sale deed, dt.20.09.2010 covered under Ex-P.37 wherein the value of the total property comes to only Rs.15,00,000/- subsequent to disbursement of loan amount.

104.It is a scenario where the borrowers induced the Bank by showing a rosy picture of property on preliminary document and later spinning to different edge of affairs. This nothing but an attempt to take shelter behind what they have described as “market practices”. Such practices even if existing, cannot take the place of statutory and regulatory functions. There is no public interest involved in such practices and they cannot be a substitute for compliance with the regulatory or statutory prescriptions. This

PSJC/VSKP Page no. 81 C.C.No.20 of 2014 court do not find anything plausible in these explanations. A practice even if was prevailing, if wrong, is not to be approved. Such financial disintegration effect the fiscal foundation of the society and the National economy is the victim. The Ld., counsel further argued that the loan schedule property offered as security to the Bank is still lying with the Bank and Bank can redeem the loan by adopting due process and selling the same and that as long as the loan schedule property offered as security is intact, it cannot be said that Bank has suffered loss. In this case on hand, the loan amount of

Rs.38,50,000/- has been sanctioned and disbursed to the Accused No. 2 and 3 on 20.09.2010. In absence of sufficient evidence on part of prosecution, the question of fact whether the loan schedule property is not identifiable remains not proved. The bitter truth is that even after 12 years of declaring the loan as NPA, the loan amount has not been recovered. The complicate Banking process of recovery leaves no hope for recovery of loan amount in the near future, even if recovered, the unwarranted effects of Non-

Performing Physical Asset for almost 12 years shall have tremendous impact on the financial frame work of the society, which cannot be compensated. Nextly, it is explicit on record that IDBI Bank sanctioned and approved loan to the borrowers firstly, considering their financial eligibility and secondly, the value of the property purported to be offered as security to the Bank.

105.In this case on hand, the borrowers i.e., Accused No. 2 and 3 fortified their financial eligibility based on false and fabricated financial documents i.e., Exs P.18 &

P.19 photocopy of Income Tax Return Acknowledgments. Accused No. 2 and 3 knowing well that they have never submitted Income Tax Returns with particulars and receipt numbers reflected on P.18 & P.19 submitted the same to the Bank and thereby induced the Bank to sanction and disbursed the loan amount based on falsified financial capacity which they are not otherwise eligible. These acts of Accused No. 2 and 3 explicitly falls under the definition of dishonest and fraudulent intention described under Sec. 24 & 25 of IPC discussed supra. This dishonest and fraudulent intention of Accused No. 2 and 3 is apparent from the very inception of filing of loan application along with the falsified

PSJC/VSKP Page no. 82 C.C.No.20 of 2014 documents under Exs P.18 & P.19 and thereby suffices the preceding ingredient of cheating under Sec. 420 IPC. Coming to the element of deception, the evidence already discussed amply proved that Accused No. 2 and 3 by making false and misleading representation, deceived the IDBI Bank. Therefore, Accused No. 2 and 3 cannot be excluded from criminal liability for playing deceit and inducing the Bank to extend exorbitant loan amount beyond their repaying capacity based on concocted documents and are liable for committing the offence under Sec. 420 of IPC.

106.Coming to the Panel Valuer, the Ld. Counsel for Accused No. 4 relied upon the decisions of Hon’ble Apex Court and various Hon’ble High Courts in 1) Nand Lal Sehgal

Vs. Central Bureau of Investigation reported in CRR. No. 750 of 2021 (O & M) dt.02.11.2021, 2) Mani Lal Vs. State of Kerala reported in CDJ 1998 Ker. HC 031, 3) N.

Raghavendar Vs. State of Andhra Pradesh (Hon’ble Apex Court in Crl. Appeal No.

5/2010, dt.13.12.2021, 4) L. N. Rajagopalan Vs. State (CDJ 2009 MHC 3754) and 5)

Vijay Kumar Vs. State of Bihar Hon’ble High Court of Judicature at Patna Crl. Misc. No.

2716/2011, dt.10.12.2013 and submitted that in absence of proof of dishonest intention routing from the very inception, no conclusion of guilt can be perceived against the valuer. However the definition under Sec. 415 of IPC for Cheating rides an explanation wherein —A dishonest concealment of facts is a deception within the meaning of the section. Accordingly the concealment of crucial facts which adversely effect the decision of the bank is nothing but deception backed by dishonest intention and suffices the ingredient of Sec. 420 IPC. The empanelled valuer disguising under the veil of professional skill cannot wither away the solemn obligation entrusted by the bank by way of covenant. The decision of the valuer specifies the commercial worth of the property proposed to be offered as security to the bank. Nevertheless the bank is not bound by the opinion of the valuer, at the same time we should not lose the sight of fact that financial institutions determines the eligibility of loan to the borrowers to great extent considering the information furnished by the valuer. Accordingly in view of discussion supra this court doesn’t hesitate to hold that Accused No.4 dishonestly submitted valuation report

PSJC/VSKP Page no. 83 C.C.No.20 of 2014 without disclosing the fact that loan schedule property is an unapproved vacant site which adverse the loan process of the borrowers if disclosed. Suppression of information in the

Valuation Report which accords disbursement of loan amount to the borrowers which they are not entitled straightly falls into the definition of dishonest and fraudulent intention which is a pre requisite for offence under Sec. 420 IPC.

107.With regard to the Accused No. 6 Agency, as already discussed supra, the willful misrepresentation of facts misleading the IDBI Bank, resulting wrongful gain to the borrowers and wrongful loss to the Bank amply suffices the required ingredients of Sec.

420 IPC against Accused No. 6 Agency. The contention of the counsel for Accused No. 6 is that Accused No. 6 Agency is a corporate entity and no vicarious liability can be attributed to it for the offences proved against its employees. The Ld. Counsel relied upon the citations in 2005 ALD Crl. 732 between AP State Finance Corporation Vs.

Rajahmundry Chemical Industries and in 2004 (1) ALD Crl. 2006 between State Bank of

Hyderabad Vs. T. Meenakshi. The close perusal of Ex-P.23 Verification Report submitted by Accused No. 6 Agency with regard to the Income Tax verification was stamped and signed by the Authorized signatory of Nimble Corporate Services Limited. Accused No. 6

Agency failed to substantiate any probability to establish that the fraud concluded pertaining to Ex-P.23 was committed outside the work/duties of Accused No. 6 Agency by its employees. The concept of Corporate criminal liability is explained as crime committed by individuals or association of persons who perform certain action or omissions prohibited by Law or in guilty minds, for the sake of organizations or of any entity for the purpose of achieving their common purpose of obtaining business during their work. The actions or omissions during the course of business of natural persons hired by the company or an entity for obtaining business cannot be excluded from the corporate criminal liability.

108.The Hon’ble Supreme Court in Iridium India Telecom Ltd. vs. Motorola

Incorporated and Ors (2011) 1 SCC 74and held that "the criminal intent of the "alter ego" of the company/body corporate i.e. the person or group of persons that guide the

PSJC/VSKP Page no. 84 C.C.No.20 of 2014 business of the company, would be imputed to the corporation." The Hon’ble Supreme

Court affirmed the doctrine of attribution and imputation in concluding the corporate liability. By this rationale, the mens rea can be attributed to a corporation in criminal cases when the affairs of the corporation are carried out by a person or a body person who are in charge of the affairs of the corporation in course of its business. The control should be such and so intense that the company can be said to be functioning through the actions of the person or body of person. Hence, a corporation would be convicted of both statutory as well as criminal offences. The willful misrepresentation of facts misleading the IDBI Bank, resulting wrongful gain to the borrowers and wrongful loss to the Bank amply suffices the required ingredients of Sec. 420 of IPC against Accused No.6 Agency.

109. Moving to the aspect of conspiracy, the Hon’ble Apex court in Som Nath Thapa

Vs. State of Maharashtra, (1996) 4 SCC 659 summarized the position of law and the requirements to establish the charge of conspiracy, as under; “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.”

110.In this case on hand, there is substantial evidence forthcoming that there is consensus between the Accused to cheat the Bank by adopting an illegal means which gives raise conclusive and irresistible inference of agreement among the Accused No. 1 to 4 and 6 to defraud the IDBI Bank and thereby caused wrongful loss to Bank and wrongful gain member of the conspirator who are the borrowers in this case by facilitating them to reap the loan benefits which they are not eligible. In view of the above discussion, this Court without any hesitation concludes that the offences

PSJC/VSKP Page no. 85 C.C.No.20 of 2014 punishable under Sec. 120-B and 420 IPC have been proved beyond all reasonable doubt against the Accused No. 1 to 4 and 6.

Whether prosecution established offence U/sec. 13 (1) (d) r/w 13 (2) of PC Act

against Accused No.1 beyond reasonable doubt?

111.Coming to the charge against Accused No. 1 for the offence under PC Act, Section 13 (2) of the Act is precisely intended to deal with aberrations of public servants. In view of the findings against Accused No. 1, in furtherance of criminal conspiracy, in his capacity as a public servant abused his position by causing wrongful gain to Accused No.

2 and 3 and corresponding loss to the IDBI Bank. The consequential misconduct has been sufficiently proved against Accused No. 1 and the provisions of Section 13 (1) (d) read with Section 13 (2) are clearly applicable and proved against Accused no. 1.

112.Conclusion :

In view of the above discussion, this Court is of the opinion, that Prosecution has amply proved the charges for the offence punishable under Sec. 120-B and 420 of IPC and Sec. 13 (1) (d) r/w 13 (2) of Prevention of Corruption Act, 1988 against Accused

No.1 and the charges for the offence punishable under Sec. 120-B and 420 of IPC against

Accused No. 2 to 4 and 6 beyond reasonable doubt and the charge for the offence punishable under Sec. 471 of IPC against Accused No. 2 and 3. With regard to the charge for the offence punishable under Sec. 477-A of IPC against Accused No. 1 fails for want merits. As far as Accused No. 5, the charges framed against it fails for want of merits.

113.In the result,

1. Accused No. 1 is “FOUND GUILTY” for the offences under Sec. 120-B and 420 of IPC and Sec. 13 (1) (d) r/w 13 (2) of Prevention of Corruption Act, 1988 and accordingly, he is convicted for the offence under sec. 248 (2) Cr.P.C.

2. Accused No. 2, 3, 4 & 6 Agency are “FOUND GUILTY” for the offences under

Sec. 120-B and 420 of IPC and accordingly, they are convicted for the offence under Sec. 248 (2) Cr.P.C.

3. Accused No. 2 and 3 are “FOUND GUILTY” for the offence under Sec.471 of

IPC and accordingly, they are convicted for the offence under sec. 248 (2) Cr.P.C.

PSJC/VSKP Page no. 86 C.C.No.20 of 2014

4. Accused No. 1 is “FOUND NOT GUILTY” for the offence under Sec.477-A of

IPC and accordingly, he is acquitted for the offence under sec. 248 (1) Cr.P.C.

5. Accused No. 5 Agency is “FOUND NOT GUILTY” for the offence under

Secs.120-B and 420 of IPC and accordingly, acquitted for the said offence under sec. 248 (1) Cr.P.C.

Typed to my dictation by the Stenographer – Gr.I,, corrected and pronounced by me in open Court on this the day 10th day of February, 2023.

Sd/- Smt. B. S. V. HIMA BINDU

PRL. SPL. JUDGE FOR C.B.I. CASES,

VISAKHAPATNAM.

118.When questioned about the quantum of sentence, Accuse

114.When questioned about the quantum of sentence,

Accused No. 1 submitted that he was suspended from the services in the month of

March, 2011 and since then he has no employment and suffering with financial crisis. He further submitted that he is the sole breadwinner of his family and has small children to take care of them. Accordingly prays to take lenient view in imposing the sentence by considering his grievance.

Accused No. 2 and 3 pleaded that they are having small children to look after and that they are suffering various health issues and prays to consider their pathetic situation in imposing the sentence.

Accused No. 4 pleaded that he is Senior Citizen and having different health issues and he further pleaded he is having old aged parents to take care of and accordingly prays to take lenient view in imposing the sentence.

Heard the authorized representative of Accused No. 6 Agency.

115.On hearing the Accused and consideration of facts and circumstances of this case and mitigating circumstances of the Accused and charges proved against them, they are sentenced as follows:

1.Accused No. 1 is sentenced to undergo Rigorous imprisonment for a period of two years and to pay fine of Rs.10,000/- (Rupees Ten thousand only), in default of payment fine, to undergo simple imprisonment for a period of three

PSJC/VSKP Page no. 87 C.C.No.20 of 2014 months for the offence punishable under section 13 (1) (d) read with sec.13 (2) of

P.C. Act, 1988.

2.Accused No. 2 and 3 are sentenced to undergo Rigorous imprisonment for a period of one year and to pay fine of Rs.10,000/- (Rupees Ten thousand only), each in default of payment fine, to undergo simple imprisonment for a period of three months each for the offence punishable under section 471 of IPC.

3.Accused No. l, 2, 3 and 4 are sentenced to undergo Rigorous imprisonment for a period of one year each and to pay fine of Rs.10,000/- (Rupees Ten thousand only) each, in default, to undergo simple imprisonment for a period of three months each for the offence punishable under section 120-B of IPC.

4.Accused No. l, 2, 3 and 4 are sentenced to undergo Rigorous imprisonment for a period of one year each and to pay fine of Rs.10,000/- (Rupees Ten thousand only) each, in default, to undergo simple imprisonment for a period of three months each for the offence punishable under section 420 of IPC.

5.Accused No. 6 Agency is sentenced to pay fine of Rs.15,000/- each for the offence punishable under Sec. 120-B & 420 of IPC.

6.The sentence imposed against Accused No. 1 in this case and other cases i.e.,

C.C.16/2014, C.C.17/2014, C.C.18/2014, C.C.19/2014, C.C.21/2014,

C.C.22/2014, C.C.23/2014, C.C.24/2014 and C.C.26/2014 shall run concurrently as per Sec. 427 Cr.P.C.

7.The sentence imposed against Accused No. 4 in this case and other cases i.e.,

C.C.17/2014, C.C.18/2014, C.C.19/2014, and C.C.22/2014, shall run concurrently as per Sec. 427 Cr.P.C.

8.The substantive sentences imposed against Accused No. 1 to 4 shall run concurrently and all Accused are entitled for set-off any, under Sec. 428 of

Cr.P.C.

9.The existing bail bonds of Accused No. 1 to 6, if any, shall stand cancelled.

Accused No. 5 Agency is directed to execute self bond for Rs.10,000/- with single

PSJC/VSKP Page no. 88 C.C.No.20 of 2014 surety for like sum each as contemplated under Sec. 437-A of Cr.P.C., for a period of six months to ensure its appearance before the Appellate Court.

10.Accused are informed about their right to prefer an appeal against the judgment of this Court to the Hon’ble High Court of Andhra Pradesh. They are informed that if they have no means to prefer an appeal and to engage an Advocate to defend them in Appellate Court, they are entitled to legal aid.

Typed to my dictation by the Stenographer – Gr.I,, corrected and pronounced by me in open Court on this the day 10th day of February, 2023.

Sd/- Smt. B. S. V. HIMA BINDU

PRL. SPL. JUDGE FOR C.B.I. CASES,

VISAKHAPATNAM.

APPENDIX OF EVIDENCE

LIST OF WITNESSES EXAMINED ON BEHALF OF PROSECUTION.

P.W.1/20.06.2017Mr.R.Venkat Rama Rao (L.W.1), Manager, IDBI Bank, Kukatpalli Branch, Hyderabad PW.2/23.06.2017 Mr.Ajoy Nath Jha (L.W.13), Chief General Manager, IDBI Bank, Mumbai PW.3/18.07.2017Mr.Shanti Prakash Kindo (L.W.2), Assistant General Manager, IDBI Bank Ltd. PW.4/24.07.2017Mr.M.Vasu Kumar Masetty (L.W.3), Manager, IDBI Bank, Bhemavaram PW.5/27.07.2017 Mr.M.Ramu (L.W.4) Assistant General Manager, IDBI Bank, Zonal Office P.W.6/22.01.2020 Mr.K. Srinivasa Rao (L.W.5), Private Employee PW.7/18.02.2020 Mr. G.Ramesh (L.W.8), Private Employee PW.8/17.02.2020 Mr.Ch.V.Atchutha Rama Rao (L.W.7), Private Employee PW.9/16.03.2020 Mr. G. Durga Prasad (L.W.12), Employee PW.10/16.03.2020 Mr. P.Pothu Raju (L.W.11), Retired Employee PW.11/20.01.2021 Smt. M. Aruna Kumari (L.W.9), Tahshildar PW.12/29.11.2021 Mr. SVS Naidu (L.W.14), AGM (Ethics and Integrity Department) GMR Group PW.13/04-05-2022 Mr. I Johnson Babu Rao (L.W.15), I Town C.I.Kurnool

LIST OF DOCUMENTS MARKED ON BEHALF OF PROSECUTION.

Ex.P.1/P.W.1Photocopy of complaint. Ex.P.2/P.W.1Xerox copy of extract of login register for the month of August 2010 (original filed in CC.16-14).(19 sheets). Ex.P.3/P.W.1Photocopies of circulars pertaining to home loans and Mortgage loans of IDBI bank along with CIBIL guidelines and RBI circulars handed over by PW.1 to CBI. (134 Sheets). Ex.P.4 /P.W.1 Photocopy of home loan sales process circular. Ex.P.5/P.W.1 Photocopy of agreement for appointment of Direct Marketing Associate, Aspen business solutions (A.5) and IDBI bank. Ex.P.6/P.W.1Photocopy of Service agreement between Nimble Corporation Services (A.6) and IDBI bank.

PSJC/VSKP Page no. 89 C.C.No.20 of 2014

Ex.P.7 /P.W.1Photocopy of Service agreement dated 21.4.2010 between K.Kamaraju (A.4) and IDBI bank. Ex.P.8 /P.W.1Photocopy of letter for handing over original documents to CBI

dated 24.1.2012.

Ex.P.9 /P.W.1Original Loan application form dated 18.8.2010, submitted by Budda Srinivasa Rao (A.2) and Budda Nirmala (A.3). Ex.P.10/P.W.1Photocopy of PAN card of A.2. Ex.P.11/P.W.1Photocopy of PAN card of A.3. Ex.P.12/P.W.1Photocopy of Voter ID card of A.2. Ex.P.13/P.W.1Photocopy of VAT registration certificate of A.2. Ex.P.14/P.W.1Photocopy of certificate of registration by Commercial Tax Department Ex.P.15/P.W.1Photocopy of SBI account pass book of A.3. Ex.P.16/P.W.1 Photocopy of SBI account pass book of A.2. Ex.P.17/P.W.1 IDBI savings account statement of A.2. Ex.P.18/P.W.1 Income Tax returns for the assessment year 2008-09 of A.2. Ex.P.19/P.W.1 Income Tax returns for the assessment year 2009-10 of A.2. Ex.P.20/P.W.1 CIBIL report dated 27.8.2010 of A.2. Ex.P.21/P.W.1 Residence verification report submitted by Nimble Corporate Service A6. Ex.P.22/P.W.1 Office verification report submitted by A.6. Ex.P.23/P.W.1 Income Tax verification reports ofA.2 submitted by A.6. Ex.P.24/P.W.1 Bank statement verification report of A.2 submitted by A.6. Ex.P.25/P.W.1 Bank statement verification report of A.3 submitted by A.6. Ex.P.26/P.W.1 Credit interview document signed by A.1. Ex.P.27/ P.W.1 RCU sampling report dated 1.9.2010. Ex.P.28/P.W.1 Valuation report submitted by A.4 signed by A.1. Ex.P.29/P.W.1Legal opinion dated 5.9.2010 issued by K.Appalaraju, Panel Advocate. Ex.P.30/P.W.1Approval note dated 30.8.2010, signed by A.1. Ex.P.31/P.W.1Sanction letter dated 30.8.2010 for Rs. 38,50,000/- for plot purchase issued to A.2 and A.3, signed by A.1. Ex.P.32/P.W.1Home loan agreement dated 16.9.2010. Ex.P.33/P.W.1Disbursement request letter dated 16.9.2010 submitted by A2 and A3. Ex.P.34/P.W.1Discrepancy check list and disbursement memo, signed by A.1. Ex.P.35/P.W.1Journal voucher dated 20.9.2010. Ex.P.36/P.W.1Original sale agreement dated 25.8.2010 favouring A.2. Ex.P.37/P.W.1Original sale deed dated 20.9.2010 favouring A.2, Doc.no.2771/2010. Ex.P.38/P.W.1Photocopy of agreement for sale cum GPA favouring P.Appa Rao, Doc. No.59/2008. Ex.P.39/P.W.1Photocopy of Encumbrance certificate dated 28.9.2010. Ex.P.40/P.W.1Original affidavit dated 16.9.2010 submitted by A.2 and A3. Ex.P.41/P.W.1Original affidavit cum undertaking submitted by A.2 and A.3. Ex.P.42/P.W.1Original cash receipt dated 16.9.2010 signed by P.Appa Rao. Ex.P.43/P.W.1Statement of original documents. Ex.P.44/P.W.1 Original valuation report submitted by K.Srinivasa Rao/LW.5. Ex.P.45/P.W.1Fraud investigation report. Ex.P46 &P.47/Original pay orders bearing no’s.2097 for Rs.23,50,000/- and 2096 for Rs. 15,00,000/- both favouring IDBI Savings Account of Appa Rao. Ex.P.48/P.W.1Original loan account statement a/c no. 031675100019488 of A.2 and A.3 along with 65-B Certification. Ex.P.49/P.W.1 Original IDBI bank savings account opening form of A.2. Ex.P.50/P.W.1Certified copy of sale deed 2771/2010 favouring A.2 along with EC. Ex.P.51/P.W.1Photo copy of IDBI cheque 29429, dated 21.10.2010 and Cash deposit slip dated 21.10.2010 both for Rs.87,77,073/-.

PSJC/VSKP Page no. 90 C.C.No.20 of 2014

Ex.P.52/P.W.1Photocopy of IDBI Savings account statement of P.Appa Rao. Ex.P.53/P.W.1Photocopy of IDBI Savings account statement of G.Venkata Laxmi. Ex.P.54/P.W.1 Photocopy of IDBI loan account of G.Venkata Laxmi. Ex.P.55/P.W.1 Photocopy of extract of register (Legal) maintained in IDBI bank. Ex.P.56/P.W.1Photocopy of extract of register (Technical) maintained in IDBI bank. Ex.P.57/P.W.1 Photocopy of extract of register (Field Investigation) maintained in IDBI bank. Ex.P.58/P.W.1Photocopy of Fax letter from RBI. Ex.P.59/P.W.2Photocopy of IDBI bank officers Service, Conduct, Discipline and Appeal rules 2006. Ex.P.60/P.W.2Amended rule issued to all Regional Branches of IDBI by Chief General Manager on 9.2.2012. Ex.P.61/P.W.2Sanction order against A.1, who was working at that time as A.G.M in retail asset centre in the cadre of Grade C Officer along with covering letter. Ex.P.62/P.W.8Certified copy of the true copy of some of the pages of register for receipt of Income tax returns for the Assessment year 2008-2009 containing 6 pages.

Ex.P.63/P.W.8Certified copy of the true copy of some of the pages of Register for receipt of Income tax returns for the Assessment year 2009-2010 containing 2 pages. Ex.P.64/P.W.11Set of two 10(1) Adangal and three No.3 Adanagal Reports (5 sheets) Ex.P.65/P.W.12Photostat copy of FIR in RC13(A)/2011 Ex.P.66/P.W.12Field Investigation Report issued by Nimble Corporate Services Ltd. Ex.P.67/P.W.13 Photocopy of land Survey Proceedings dated 12-4-2013. Ex.P.68/P.W.13Photocopy of Market Value Assistance for year 1-8-2010 to 22-2- 2012. Ex.P.69/P.W.13Photocopy of Return Receipt of Tax Register.

LIST OF WITNESSES EXAMINED ON BEHALF OF DEFENCE

D.W.1/17.10.2022Mr. Y.Rajesh Babu (D.W.2), Real Estate Consultant. D.W.2/17.10.2022Mr.E.Satish (D.W.3), Divisional Manager, FINCARE Small Finance Bank. D.W.3/28.10.2022 Mr.Saurav Kumar (D.W.4), Assistant General Manager, IDBI Bank. D.W.4/28.10.2022 Mr.Anil Naik (D.W.5), Assistant General Manager, IDBI Bank.

LIST OF DOCUMENTS MARKED ON BEHALF OF DEFENCE.

Ex.D.1Copy of RCU Manual.

MATERIAL OBJECTS MARKED ON BEHALF OF PROSECUTION

-NIL-

Sd/- Smt. B. S. V. HIMA BINDU

PRINCIPAL SPECIAL JUDGE FOR CBI CASES,

VISAKHAPATNAM

// TRUE COPY //

PRINCIPAL SPECIAL JUDGE FOR CBI CASES,

VISAKHAPATNAM

PSJC/VSKP Page no. 91 C.C.No.20 of 2014

CALENDER

IN THE COURT OF THE PRINCIPAL SPECIAL JUDGE FOR C.B.I. CASES,

VISAKHAPATNAM.

Present: Smt. B. Satya Venkata Hima Bindu

Principal Special Judge for C.B.I. Cases,

Visakhapatnam.

Friday, this the 10th day of February, 2023

C.C.No. 20/2014

1Serial Number of the CaseCC. 20/2014 2Name of the Police Station & CrimeState Represented by Central Bureau of Number Investigation, Visakhapatnam.

3Name of the Accused1. Mr. Surendranath Datti S/o D. Krishna Murthy, aged 40 years, AGM (Under Suspension), Regional Office, Personal Banking Group, IDBI Bank, Basheerbagh, Hyderabad. Presently residing at Flat No. 201, Sri Nivas Apartment, H. No. 49 & 56, Bandlaguda Jagir, Post Don Bosco Nagar, Near Kali Mandir, Ranga Reddy District, Hyderabad.

2. Mr.Buddha Srinivasa Rao S/o Jagga Appala Swamy, D. No. 17-04-47, Buddha Ramdas Street, Gavarapalem,Anakapalli, Visakhapatnam District. (Private Person)

3. Mrs. Buddha Nirmala W/o Buddha Srinivasa Rao D. No. 17-04-47, Buddha Ramdas Street, Gavarapalem,Anakapalli, Visakhapatnam District. (Private Person)

4. Mr. Kotha Kama Raju S/o Sri Radha Krishna, aged 50 years, Proprietor, M/s R. K. Engineers, D. No. 47-7-15, 4th Lane, Dwaraka Nagar, Visakhapatnam. Resident of D. No. 18-223, OHP Layout, Near HB Colony, Seethammadhara, Visakhapatnam (Private Person).

5. M/s Aspen Business Solutions

PSJC/VSKP Page no. 92 C.C.No.20 of 2014

Represented by R.V.L.N.Rao, Plot No. 260, Sri Sai Nilayam, Flat No. 201,VisalakshiNagar, Visakhapatnam (Private Person)

6. M/s Nimble Corporate Services Private Limited Represented by its Managing Director Mr. Panigrahi Chandra Mouli, S/o Jagabandhu, aged 33 years, R/o Flat No. 3, UCO Avenue, Navodhaya Colony, Srinagar Colony, Ameerpet, Hyderabad (Private Person). 4Date of Offence During the period from 2009-2010 5Date of Apprehension-- 6Date of Commencement of trial19.06.2017 7Date of closure of Trial14.06.2022 8Date of Judgment07.02.2023 9Whether the accused are on bail/in JailOn Bail 10Plea of the accused and hisAccused No. 1 to 6 Pleaded not guilty examination if any: 11Finding of the CourtAccused No. 1 is “FOUND GUILTY” for the offences under Sec. 120-B and 420 of IPC and Sec. 13 (1) (d) r/w 13 (2) of Prevention of Corruption Act, 1988 and accordingly, he is convicted for the offence under sec. 248 (2) Cr.P.C. Accused No. 2, 3, 4 & 6 Agency are“FOUND GUILTY”for the offences under Sec. 120-B and 420 of IPC and accordingly, they are convicted for the offence under Sec. 248 (2) Cr.P.C.

Accused No. 2 and 3 are “FOUND GUILTY” for the offence under Sec.471 of IPC and accordingly, they are convicted for the offence under sec. 248 (2) Cr.P.C.

Accused No. 1 is “FOUND NOT GUILTY”for the offence under Sec.477-A of IPC and accordingly, he is acquitted for the offence under sec. 248 (1) Cr.P.C.

Accused No. 5 Agency is “FOUND NOT GUILTY” for the offence under Secs.120-B and 420 of IPC and accordingly, acquitted for the said offence under sec. 248 (1) Cr.P.C. Heardtheauthorized representative of Accused No. 6 Agency. When questioned about the quantum of sentence, Accused No. 1 submitted that he was suspended from the services in the month of March, 2011

PSJC/VSKP Page no. 93 C.C.No.20 of 2014 and since then he has no employment and suffering with financial crisis. He further submitted that he is the sole breadwinner of his family and has small children to take care of them. Accordingly prays to take lenient view in imposing the sentence by considering his grievance. Accused No. 2 and 3 pleaded that they are having small children to look after and that they are suffering various health issues and prays to consider their pathetic situation in imposing the sentence. Accused No. 4 pleaded that he is Senior Citizen and having different health issues and he further pleaded he is having old aged parents to take care of and accordingly prays to take lenient view in imposing the sentence. On hearing the Accused and consideration of facts and circumstances of this case and mitigating circumstances of the Accused and charges proved against them, they are sentenced as follows: Accused No. 1 is sentenced to undergo Rigorous imprisonment for a period of two years and to pay fine of Rs.10,000/- (Rupees Ten thousand only), in default of payment fine, to undergo simple imprisonment for a period of three months for the offence punishable under section 13 (1) (d) read with sec.13 (2) of P.C. Act, 1988. Accused No. 2 and 3 are sentenced to undergoRigorous imprisonment for a period of one year and to pay fine of Rs.10,000/- (Rupees Ten thousand only), each in default of payment fine, to undergo simple imprisonment for a period of three months each for the offence punishable under section 471 of IPC.

Accused No. l, 2, 3 and 4 are sentenced to undergoRigorous imprisonment for a period of one year each and to pay fine of Rs.10,000/- (Rupees Ten thousand only) each, in default, to undergo simple imprisonment for a period of three months each for the offence punishable under section 120-B of IPC.

Accused No. l, 2, 3 and 4 are

PSJC/VSKP Page no. 94 C.C.No.20 of 2014 sentenced to undergoRigorous imprisonment for a period of one year each and to pay fine of Rs.10,000/- (Rupees Ten thousand only) each, in default, to undergo simple imprisonment for a period of three months each for the offence punishable under section 420 of IPC. Accused No. 6 Agency is sentenced to pay fine of Rs.15,000/- each for the offence punishable under Sec. 120-B & 420 of IPC. The sentence imposed against Accused No. 1 in this case and other cases i.e., C.C.16/2014, C.C.17/2014, C.C.18/2014,C.C.19/2014, C.C.21/2014,C.C.22/2014, C.C.23/2014,C.C.24/2014and C.C.26/2014 shall run concurrently as per Sec. 427 Cr.P.C. The sentence imposed against Accused No. 4 in this case and other cases i.e., C.C.17/2014, C.C.18/2014, C.C.19/2014, and C.C.22/2014, shall run concurrently as per Sec. 427 Cr.P.C. Thesubstantivesentences imposed against Accused No. 1 to 4 shall run concurrently and all Accused are entitled for set-off any, under Sec. 428 of Cr.P.C. The existing bail bonds of Accused No. 1 to 6, if any, shall stand cancelled. Accused No. 5 Agency is directed to execute self bond for Rs.10,000/- with single surety for like sum each as contemplated under Sec. 437-A of Cr.P.C., for a period of six months to ensure its appearance before the Appellate Court. Accused are informed about their right to prefer an appeal against the judgment of this Court to the Hon’ble High Court of Andhra Pradesh. They are informed that if they have no means to prefer an appeal and to engage an Advocate to defend them in Appellate Court, they are entitled to legal aid.

12.Explanation for the delay, if any, in the Prl. CBI Court, Visakhapatnam:

On filing the Charge sheet, the Principal Special Judge for CBI Cases,

Visakhapatnam, had taken the case on file on 17.06.2014 against Accused No. 1 under

Sec. 120-B, 420, 471 and 477-A of IPC and Sec. 13 (2) r/w 13 (1) (d) of Prevention of

PSJC/VSKP Page no. 95 C.C.No.20 of 2014

Corruption Act, 1988 and under Sec. 120-B, 420, 471 & 477-A against Accused No. 2 to 6 and issued summons to the Accused No. 1 to 6. On 05.06.2017 charges under sections 120-B, 420, 471 and 477-A of IPC and Sec. 13 (2) r/w 13 (1) (d) of Prevention of

Corruption Act, 1988were framed against Accused No. 1 and Charges under Sec. 120-B, 420, 471 & 477-A against Accused No. 2 to 6 and the same were read over to the

Accused in vernacular language and they pleaded not guilty and claimed the case to be tried.

The trial in this case was commenced from 19.06.2017 to 14.06.2022 and the

Prosecution examined PWs 1 to 13 and got marked Exs P.1 to P.69 and prosecution evidence was closed. On 08.08.2022 Accused No. 1 to 6 were examined under section 313 Cr.P.C.

and they denied the incriminating evidence on record and they reported that they have defence evidence and examined the Bank Officials as DWs 1 to 4 and got marked Ex-D.1 and thereafter the case was posted for arguments. From 31.10.2022 to 23.12.2022 heard arguments of both sides and posted for judgment to 30.12.2022. On 30.12.2022 in view of

Judgments in C.C.No.16/2014, C.C.No. 17/2014 and C.C.18/2014, the case is posted for

Judgment to 03.01.2023 and thereafter posted along with connected matters on 12.01.2023.

On 12.01.2023 Presiding Officer is on CL, hence, reposted to 27.01.2023. On 27.01.2023 in view of Judgments in C.C.No.19/2014, C.C.No. 21/2014, .C.C.No.22/2014 and

C.C.23/2014, the case is posted for Judgment to 07.02.2023. On 07.02.2023 in view of

Judgment in C.C.No.24/2014, the case is posted for Judgment to 10.02.2023. On 10.02.2023 judgment pronounced (vide separate judgment).

Accused No. 1 is “FOUND GUILTY” for the offences under Sec. 120-B and 420 of

IPC and Sec. 13 (1) (d) r/w 13 (2) of Prevention of Corruption Act, 1988 and accordingly, he is convicted for the offence under sec. 248 (2) Cr.P.C.

Accused No. 2, 3, 4 & 6 Agency are “FOUND GUILTY” for the offences under

Sec. 120-B and 420 of IPC and accordingly, they are convicted for the offence under Sec.

248 (2) Cr.P.C.

Accused No. 2 and 3 are “FOUND GUILTY” for the offence under Sec.471 of

IPC and accordingly, they are convicted for the offence under sec. 248 (2) Cr.P.C.

Accused No. 1 is “FOUND NOT GUILTY” for the offence under Sec.477-A of

IPC and accordingly, he is acquitted for the offence under sec. 248 (1) Cr.P.C.

Accused No. 5 Agency is “FOUND NOT GUILTY” for the offence under

Secs.120-B and 420 of IPC and accordingly, acquitted for the said offence under sec. 248 (1) Cr.P.C.

Heard the authorized representative of Accused No. 6 Agency.

PSJC/VSKP Page no. 96 C.C.No.20 of 2014

When questioned about the quantum of sentence, Accused No. 1 submitted that he was suspended from the services in the month of March, 2011 and since then he has no employment and suffering with financial crisis. He further submitted that he is the sole breadwinner of his family and has small children to take care of them. Accordingly prays to take lenient view in imposing the sentence by considering his grievance.

Accused No. 2 and 3 pleaded that they are having small children to look after and that they are suffering various health issues and prays to consider their pathetic situation in imposing the sentence.

Accused No. 4 pleaded that he is Senior Citizen and having different health issues and he further pleaded he is having old aged parents to take care of and accordingly prays to take lenient view in imposing the sentence.

On hearing the Accused and consideration of facts and circumstances of this case and mitigating circumstances of the Accused and charges proved against them, they are sentenced as follows:

Accused No. 1 is sentenced to undergo Rigorous imprisonment for a period of two years and to pay fine of Rs.10,000/- (Rupees Ten thousand only), in default of payment fine, to undergo simple imprisonment for a period of three months for the offence punishable under section 13 (1) (d) read with sec.13 (2) of P.C. Act, 1988.

Accused No. 2 and 3 are sentenced to undergo Rigorous imprisonment for a period of one year and to pay fine of Rs.10,000/- (Rupees Ten thousand only), each in default of payment fine, to undergo simple imprisonment for a period of three months each for the offence punishable under section 471 of IPC.

Accused No. l, 2, 3 and 4 are sentenced to undergo Rigorous imprisonment for a period of one year each and to pay fine of Rs.10,000/- (Rupees Ten thousand only) each, in default, to undergo simple imprisonment for a period of three months each for the offence punishable under section 120-B of IPC.

Accused No. l, 2, 3 and 4 are sentenced to undergo Rigorous imprisonment for a period of one year each and to pay fine of Rs.10,000/- (Rupees Ten thousand only) each, in default, to undergo simple imprisonment for a period of three months each for the offence punishable under section 420 of IPC.

Accused No. 6 Agency is sentenced to pay fine of Rs.15,000/- each for the offence punishable under Sec. 120-B & 420 of IPC.

The sentence imposed against Accused No. 1 in this case and other cases i.e.,

C.C.16/2014, C.C.17/2014, C.C.18/2014, C.C.19/2014, C.C.21/2014, C.C.22/2014,

C.C.23/2014, C.C.24/2014 and C.C.26/2014 shall run concurrently as per Sec. 427

Cr.P.C.

PSJC/VSKP Page no. 97 C.C.No.20 of 2014

The sentence imposed against Accused No. 4 in this case and other cases i.e.,

C.C.17/2014, C.C.18/2014, C.C.19/2014, and C.C.22/2014, shall run concurrently as per

Sec. 427 Cr.P.C.

The substantive sentences imposed against Accused No. 1 to 4 shall run concurrently and all Accused are entitled for set-off any, under Sec. 428 of Cr.P.C.

The existing bail bonds of Accused No. 1 to 6, if any, shall stand cancelled.

Accused No. 5 Agency is directed to execute self bond for Rs.10,000/- with single surety for like sum each as contemplated under Sec. 437-A of Cr.P.C., for a period of six months to ensure its appearance before the Appellate Court.

Accused are informed about their right to prefer an appeal against the judgment of this Court to the Hon’ble High Court of Andhra Pradesh. They are informed that if they have no means to prefer an appeal and to engage an Advocate to defend them in Appellate

Court, they are entitled to legal aid.

Sd/- Smt. B. S. V. HIMA BINDU

PRINCIPAL SPECIAL JUDGE FOR CBI CASES,

VISAKHAPATNAM

Copy to:

1. The Registrar (Judl.,) Hon’ble High Court of A.P., Amaravathi. (Through CD)

2. The Inspector of Police, CBI, Visakhapatnam.

// TRUE COPY //

PRINCIPAL SPECIAL JUDGE FOR CBI CASES,

VISAKHAPATNAM