Sri B.v.l.n Chakravarthi

Page No. 1 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

IN THE COURT OF III ADDL.SPECIAL JUDGE FOR CBI CASES, HYDERABAD

Present: B.V.L.N.Chakravarthi, III Additional Special Judge for CBI Cases, Hyderabad.

Dated Friday the 21stday of December 2018

C.C.No. 39 of 2005

Between:- Inspector of police, CBI/SPE/ Hyderabad. ….Complainant.

Vs.

1.Mr.Y.V.S.Prabhakaram, S/o Y.Venkateshwara Rao, the then Branch Manager,State Bank of Hyderabad, Old Bowenpally branch,Secunderabad R/o H.No.30, G.V.Reddy Colony, Alwal, Secunderabad- 500 010.

2. M/s.Prime Pharmatech (India) Limited, Located at 10-3-167/A, 2nd floor, Opp: Wesley Junior College for Girls, Secunderabad, Factory 6-106/1, Jeedimetla, Qutbullapur, Hyderabad. Represented by Mr. KajalGhosh, Managing Director

3. Mr. Kajal Ghosh, Managing Director, M/s. Prime Pharmatech (I) Limited, R/o 29, Janakapuri Colony, Secunderabad.

4. Mr. Rajendra Prasad Rathi, Director, M/s. Prime Pharmatech (I) Limited, R/o H.No.44-7-101/3, Isamia Bazaar, Hyderabad, Andhra Pradesh. … Accused A1 to A4

This case is coming on 13-12-2018 for final hearing before me in the presence of Mr. Alexander Lenin Raja, Public Prosecutor for the State and Mr.C.Raghu, Counsel for the accused A1, Mr.BVR Durga Prasad Counsel for the accused A3 and Mr. N.Kishore Rathi counsel for the accused A4 and having heard the arguments on both sides the matter stood for consideration till today and the Court made the following:

J U D G M E N T

1.The sum and substance of the prosecution case as per the police report is that the accused A1 Mr. Y.V.S.Prabhakaram was working as the Branch

Manager, State Bank of Hyderabad, Old Bowenpally branch, during the period 1998-2000 and that the accused A2 is M/s.Prime Pharmatech (India) Limited is a company and Mr. Kajal Ghosh accused A3 is the then Managing Director of accused A2 and Mr. Rajendra Prasad Rathi accused A4 is the Director of A2 company during the period 1998-2000, the accused A2 company was having a

Page No. 2 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

Cash Credit Account(CCA) bearing No.31 in State Bank of Hyderabad, Old

Bowenpally branch, Secnderabad and that it was also having over draft facility, and Over Draft Bills in course of Collection (herein after referred as ODBCC) facility in the same branch and while so, the accused A1 to A4 entered into an agreement to do illegal acts to cheat State Bank of Hyderabad by falsifying the

CCA and ODBCC accounts maintained with branch and in pursuance of the criminal conspiracy the accused A1 who is a public servant abused his official position and committed criminal misconduct by intentionally suppressing the irregularities from the controlling authority of State Bank of Hyderabad and also falsified the accounts maintained in the bank pertaining to the accused A2 company and caused wrongful gain to the accused A2 company and wrongful loss to the State Bank of Hyderabad Old Bowenpally branch to a tune of Rs.55 lakhs and the investigation of the CBI revealed that during the period from 10.09.1998 to 30.03.1999 five cheques aggregating to Rs.9.68 lakhs were withdrawn and paid, but they were not debited to the CC account No.31 pertaining to the accused A2, by the accused A1, as a result the outstanding balance in the account was wrongly projected and it was corrected only on 31.03.1999 by crediting the proceeds of a cheque for Rs.12 lakhs into the CC account by Mr. Daniel Prasad (PW1) the then cashier on the instructions of the accused A1, even before the actual realization of the cheque proceeds and it was returned unpaid on 06.04.1999 and entry was reflected on 29-09-1999 and therefore, it is evident that the accused A1 concealing the above facts though sanction limit was exceeded and as a result the outstanding balance in the ledger of the accused A2 was well within the limits sanctioned by the Regional

Office and the accused A1 updated the ledger on 31.03.1999, as it was actually closing and the annual returns were to be sent to the Regional Office on the same day and the accused A1 intentionally with a fraudulent purpose reflected the wrong statement of CC account No.31 to the controlling authority, and thereby the company had pecuniary advantage.

2.The further case of the prosecution is that the accused A1 during period from 01.04.1999 to 31.02.2000 passed five cheques worth Rs.29,08,550/- submitted for the accused A2 company, but he did not send them to the counter and as a result they were not reflected in the ledger on the original date of transaction and accused A1 has done the same to maintain the credit limits within the limits sanctioned by the Regional Office, and he also made a credit entry for Rs.13.05 lakhs in the ledger and falsified the bank documents by not bringing the correct balance to show that the total liability of the accused A2 did not exceed the limits and further another cheque for

Page No. 3 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

Rs.35,000/- was passed by Mr. A.Janardhan, the then accountant of the bank and it was not posted in the ledger and it was not ratified by the accused A1 but an entry was reflected on 31.08.1999 and it was authenticated by the

Branch Manager regularized the same.

3.The further case of the prosecution is that the accused A1 in order to regularize the amount covered by the cheques debited aggregating to Rs.42.93 lakhs, he passed six cheques on 31.03.2000 which aggregated to Rs.55 lakhs to

A2 company exceeding his discretionary powers and without prior approval of the controlling authority and though there is no Demand Purchase facility provided to the branch by the Regional Office and out of these cheques, four entries pertaining to Rs.40 lakhs are false entries without any instruments and the remaining two local cheques proceeds aggregating to Rs.15 lakhs were credited to the CCA even before they were realized and the entries worth to four cheques for Rs.40 lakhs are reflected in the DP register maintained by the branch, and they are found to be outstation cheques as per the register but the register proves that these four cheques were not sent for realization after discounting and it shows that the above cheques were not sent for national clearing to service branch and in respect of the two local cheques they relate to AP Mahesh Co-operative Urban Bank Limited, Hyderabad drawn on the account of Sri Venkatesh Enterprises wherein the accused A4 is one of the

Directors and the said two cheques were given by the accused A4 to facilitate the accused A1 to maintain the ledger balance in CCA No.31 well within the sanction limits and those two cheques were returned unpaid and it shows that the accused A1 in collusion with the accused A4 had committed these acts fraudulently.

4.The further case of the prosecution is that the accused A1 himself made entries to tally the balance sheet (General Manager) which will be sent to

Regional Office for perusal periodically, even though staff are dealing with the ledger and the entries which are not found in the ledger of CCA 31 are found in day books, transfer scrolls, cash scrolls maintained in the bank and most of them were not routed through the counter and when compared it with the ledger it never not tallied except on 31.03.1999 and 31.03.2000 and it shows that the accused A1 abused his official position and falsified the account in collusion with the accused A4 and cheated the bank to a tune of Rs.55 lakhs showing undue favour to the accused A2 company.

5.Further case of the prosecution is that the accused A1 purchased 23 bills drawn on M/s. Shruthi Agencies by the accused A2 company and submitted to avail ODBCC facility and as per the ODBCC register 10 bills aggregating to

Page No. 4 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

Rs.42.58 lakhs ie., 75% of the amount equivalent to Rs.35 lakhs were over due for payment on the date of detection by the Controlling Authority and these bills were submitted by the accused A2 for which A3 and A4 are Managing

Director and Director respectively under the signature of accused A4 to the branch for availing ODBCC facility of Rs.35 lakhs sanctioned to the accused A2 company and that the Shruthi Agencies is found to be a fictitious firm and the accused A1 sent the bills directly to M/s. Shruthi Agencies instead of sending it to any bank as per instructions of State Bank of Hyderabad and the bills were returned unpaid after expiry of the due date and it shows that the accused A1 had knowledge that the firm was not existing and the bills were returned unpaid the accused A1 only reversed the entries in ODBCC register but at any time he did not pass any remarks in the register which he ought to have been done and those bills were returned unpaid, he accepted further bills from the accused A2 and the reversing of entries made in ODBCC account was also reflected in the statement of account of the accused A2 company and the accused A3 and A4 were aware of the fact that the bills were being returned unpaid, but still continued to submit false bills for availing the ODBCC facility and it shows that the accused A3 and A4 on behalf of the company A2 submitted the bills to avail ODBCC facility and the accused A1 suppressed all these irregularities from the controlling authority and falsified the accounts by making false entries and as such accused A1 to A4 committed the offence punishable under section 120-B r/w 420, 477-A of the Indian Peal Code and the accused A1 also committed the offence punishable under section 13 (2) r/w 13 (1) (d) of the Prevention of Corruption Act, 1988.

6.The then Special Judge for CBI Cases Hyderabad took cognizance on 31.08.2005 for the offence punishable under sections 120-B read with 420 and 477-A of the Indian Penal Code against the accused A1 to A4 and section 13 (2) r/w 13 (1) (d) of the Prevention of Corruption Act, against the accused A1. The accused A1 is the Branch Manager, the accused A2 is the company, accused A3 is the then Managing Director of the company and the accused A4 is Director of

A2 company.

7.After appearance of the accused they were furnished with case copies in the case and from the case record it appears that the accused A1 received case copies on 28.03.2008, the accused A3 received copies on 27.12.2006 and the accused A4 received copies on 13.10.2005 but it was struck off in the charge sheet, therefore, an endorsement by the accused A4 shows that he has received copies of charge sheet and other documents and the accused A2 has received copies of charge sheet and other documents personally and not

Page No. 5 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) representing second accused ie., firm and subsequently as per the docket on 27.12.2006 accused A2 represented by the accused A3 filed memo stating that he is no longer as Managing Director of A2 company. But on the charge sheet there is an endorsement of accused A3 on the same day that he has received copies of charge sheet and section 161 Statements and documents on 28.03.2008. As per docket order dated 28.03.2008 an order was passed in

Crl.MP.No.1687/07 that accused A4 can represent A2 company as accused A3

retired as Managing Director of the company and in the charge sheet there is an endorsement of accused A4 that he received copies on 28.3.2008 and the matter was posted for consideration of charges.

8.While so, when case is coming for charges on 08.09.2017, it was observed that accused A2 company arraigned as accused, represented by Mr.

Kajal Ghosh as Managing Director and summons were sent to accused A2 company were received by Mr. Rajendra Rathi (A4) and on 14.02.2006, counsel

for accused A3 filed a memo that A3 resigned from A2 company and record

does not show anything that accused A2 company has appointed any representative for the purpose of inquiry or trial as per section 305(2) of the

Code of Criminal Procedure and the accused A3 filed application under section 305 of the Code of Criminal Procedure in Crl.M.P.No.1687/2007 stating that he seized to the managing Director of the Company and resigned to the company on 12.05.2005 and then the Special Judge for CBI Cases on 23.08.2008 passed order that accused A4 can represent the company and there upon accused A4 filed criminal Revision No.1471/2008 on the file of Hon’ble High Court on 31.11.2008 and the Hon’ble High Court disposed off the revision case observing that “In the circumstances, I am leaving the position open and in case it is found that the offence was committed by accused No.3 while he was managing director of the company, he shall be liable for the consequences” and para 6 held that “Accordingly, the Criminal Revision Case is disposed of”.

9.In view of the above circumstances an opportunity was given to the accused A2 company to intimate the Court whether it has appointed any person as representative as laid down under section 305 (2) of the Code of Criminal

Procedure to proceed further in the case under section 305(4) of the Code of

Criminal Procedure. But the accused A2 company did not appoint any representative as laid down under section 305(2) of Code of Criminal Procedure and hence the Court proceeded under section 305 (4) of the Code of Criminal

Procedure against A2 company.

10.Upon hearing both sides as per section 239 of the Code of Criminal procedure, framed charges as per section 240 of the Code of Criminal

Page No. 6 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

Procedure for the offence punishable under sections 120-B r/w 420 of the

Indian Penal Code against the accused A1 to A4 and for the offence punishable under section 477-A of the Indian Penal Code and for the offence punishable under section 13 (2) r/w 13 (1) (d) of the Prevention of Corruption Act, 1988 against the accused A1. The accused A1, A3 and A4 pleaded not guilty and claimed to be tried and so far as A2 company none has appeared as representative as required under section 305(3) of the Code of Criminal

Procedure and hence proceeded with trial.

11.During trial 13 witnesses were examined as PW1 to PW13 respectively for the prosecution and during their evidence 64 documents were marked as Ex.P1 to P64 for the prosecution, and Ex.D1 which is relevant portion of statement recorded under section 161 of the Code of Criminal Procedure in the evidence of PW2 was marked for the defence and no material objects were marked for the prosecution.

12.After conclusion of the evidence for the prosecution, the accused A1, A3 and A4 were examined on 04.10.2008 under section 313 of the Code of Criminal procedure regarding incriminating circumstances appearing against them from the evidence of prosecution the accused A1, A3 and A4 denied the evidence and so far as the accused A2 company is concerned no person appeared representing A2 company in spite of opportunities, and as such no statement on behalf of A2 was recorded and it was treated that A2 has no statement as laid down under section 305 of the Code of Criminal Procedure.

13.The accused A3 and A4 filed written statements regarding their pleas in the case, and A1, A3 and A4 reported no defence evidence.

14.Heard arguments of learned public prosecutor and counsel for the accused A1, A3 and A4 and no person represented on behalf of A2 company, hence proceeded under section 305(4) of the Code of Criminal Procedure for judgment.

15.Based on the above charges the following are the points for determination;

i)Whether the accused A1 as Branch Manager of State Bank of Hyderabad, Old Bowenpally branch, Secunderabad, M/s. Prime

Pharmatech Indian Limited (A2) represented by the then Managing

Director Mr. Kajal Ghose, Mr. Kajal Ghose accused A3 as Managing

Director of the Accused A2 and Mr. Rajender Rathi accused A4

Director of the accused A2, during period 1998-2000 at Secunderabad committed criminal conspiracy by agreeing to do illegal acts ie., cheating of SBH, Old Bowenpally branch by falsification of accounts

Page No. 7 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) of the branch, ie., CCA 31 and ODBCC account pertaining to A2 company to maintain the limits sanctioned to the accused A2 in respect of Cash Credit Account and OD BCC Account as alleged by the prosecution?

ii)Whether the accused A1 to A4 during the period 1998-2000 cheated the bank SBH, Old Bowenpally, Secunderabad dishonestly inducing the bank to deliver an amount of Rs.55 lakhs to the account of accused A2 by falsification of accounts of the company maintained with the bank and by submitting false bills in the name of Shruthi

Agencies which is said to be a fictitious agency as alleged by the prosecution?

iii)Whether the accused A1 during the period 1998-2000 while working as Branch Manager, SBH, Old Bowenpally branch willfully and with an intention to defraud falsified the accounts of the bank pertaining to the accused A2 company which includes CCA and ODBCC accounts and caused wrongful loss to the bank to a tune of Rs.55 lakhs as alleged by the prosecution?

iv)Whether the accused A1 while working as Branch Manager SBH, Old Bowenpally branch during the period 1998-2000 abused his official position as public servant to the pecuniary advantage of the accused

A2 to A4 to a tune of Rs.55 lakhs and thereby committed misconduct as alleged by the prosecution?

v)Whether the prosecution proved the charge with the offence punishable under section 120-B and 420 of the Indian Penal Code against the accused A1 to A4 and for the offence punishable under section 477-A of the Indian Penal Code against the accused A1, and for the offence punishable under section 13 (2) r/w 13 (1) (d) of the

Prevention of Corruption Act, 1988 against the accused A1 beyond all reasonable doubt?

Point Nos. 1 to 4:

16.I already in the above paras in detail mentioned the allegations made by the prosecution against the accused A1 to A4 pertaining to the charges punishable under sections 120-B, 420 and 477-A of the Indian Penal and also for the offence punishable under section 13 (2) r/w 13 (1) (d) of the Prevention of

Corruption Act, 1988.

17.The summary of the allegations made by the prosecution is that the accused A1 entered into the criminal conspiracy with the accused A2 to A4

Page No. 8 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) during period 1998-2000 to cheat State Bank of Hyderabad, Old Bowenpally branch and the accused A1 who was the then Branch Manager being a public servant abused his official position and committed criminal misconduct by intentionally suppressing certain irregularities pertaining to the CCA and ODBCC account belonging to the accused A2 company whose Managing Director and

Director are the accused A3 and A4 at that point in time and that the accused

A1 falsified the accounts in pursuance of the criminal conspiracy to maintain the limits as sanctioned by the Regional Authority, and he also purchased certain bills drawn by the accused A2 company in the name of M/s.Shruthi

Agencies said to be a fictitious entity to accommodate the accused A2 to A4 to avail ODBCC facility and in that process the accused A2 to A4 wrongly gained to a tune of Rs.55 lakhs and SBH suffered wrongful loss to that amount.

Therefore, to arrive at a proper and just decision on the charges in the case which are interconnected with each other on account of facts alleged by the prosecution, I am of the considered opinion that points 1 to 4 settled for determination for the charges in the case shall be considered together to avoid conflicting findings and repetition of facts from time to time, accordingly I took up points 1 to 4 simultaneously for consideration, instead of considering them independently one by one.

18.In the above paras of judgment I have already stated that the prosecution has examined 13 witnesses as PW1 to PW13 and during their evidence produced 64 documents which were marked as Ex.P1 to P64 respectively and the details of the witnesses and documents were mentioned in the appendix of judgment.

19.Mr. Owk Daniel Prasad (PW1) is the then cashier cum clerk worked in

SBH, Old Bowenpally branch from March 1998 to June 2000 who was handling the accounts maintained in the bank and making entries during the regular course of business including the subject accounts, and he was examined by the prosecution to speak about subject CCA and ODBCC accounts of the accused A2 company and entries made by him in respect of the disputed cheques and bills as alleged by the prosecution and the purported instructions given by accused

A1 as Branch Manager to him about the maintenance of the accounts relating to the accused A2 company.

20.During his evidence, the prosecution produced lot of documents covered by Ex.P1 ledger, Ex.P2 ODBCC Register pertaining to accused A2 company.

Ex.P3 Cash Credit day book register, Ex.P4 Entry dated 18.1.1999 for Rs.30.50 lakhs Ex.P8 MICR Clearing Register of State Bank of Hyderabad Ex.P9 four cheques, Ex.P10 debit vouchers, P11 and Ex.P12 cheques P13 day book, Ex.P14

Page No. 9 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) relevant page No.145, 146 relating to entries dated 31.03.1999 in Ex.P13,

Ex.P15 Transfer scroll, Ex.P16 Demand Purchase Register, Ex.P17 and Ex.P18 cheques, Ex.P19 Credit voucher, Ex.P20 four credit vouchers, Ex.P21 Debit voucher, Ex.P22 ODBCC ledger for the period from 10.09.1998 to 16.09.2000 pertaining to accused A2 company M/s.Prime Pharmatech (India) Private

Limited, Ex.P23 Dispatch Register for the period from 05.10.1999 to 28.02.2002, Ex.P24 Suspense Account Register maintained in the branch for internal purpose for the period from 02.04.2000 to 18.03.2001, Ex.P41 to P55 bills pertaining to Shruthi Agencies, Ex.P56 registered post and courier dispatch register. He was cross-examined on various aspects with respect to the allegations made by the prosecution. I will appreciate his evidence at a later stage in the judgment.

21.Mr.Ghouse Mohiuddin (PW2) is a Tax Inspector, Circle No.3, MCH, Abids,

Hyderabad during the period 2006. He was examined by the prosecution to show that there was no premises bearing No. 1-2-336/221 in his circle which relates to door number of Shruthi Agencies. In the cross-examination for the accused A1, Ex.D1 ie., part of his statement made under section 161 of the

Code of Criminal Procedure was marked to discredit his testimony before the

Court.

22.To corroborate his evidence and also to prove that M/s.Shruthi Agencies was not in existence at the relevant point in time, prosecution also examined two more witnesses they are Smt. M.Balamani (PW7) who worked as Assistant

Commercial Tax officer Sultan Bazaar Circle, Abids Division, Hyderabad form 1995 to 2003. She deposed that the CST number found on the bills of M/s.

Shruthi Agencies was not registered with Sultan Bazaar circle office and that it was allotted to another company ie., M/s.Decent Electrical with some other address.

23.The prosecution also examined Mr.Mallaiah (PW11) retired Postman who worked in Musheerabad Post office at the relevant point in time, and he deposed that there is no Shruthi Agencies in Viveknagar, Chikkadpally area as mentioned in envelop and Ex.P39 was marked in his evidence which is a registered post letter addressed to M/s.Shruthi Agencies by CBI during investigation ie., in the year 2004.

24.The prosecution in order to show that the accused A4 was also a partner in M/s.Venkatesh Enterprises and that it was having account in AP Mahesh Co- operative Urban Bank Limited has examined Mr. Gopal Birla (PW6) who worked as accountant in AP Mahesh Co-operative Urban Bank limited, Sultan Bazaar,

Hyderabad from 2002 to 2005 and produced Ex.P28 account opening form

Page No. 10 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) pertaining to M/s.Venkatesh Enterprises and Ex.P29 cheque dishonor memos pertaining to AP Mahesh Co-operative Urban Bank Limited. Ex.P18 cheque said to be have been issued by M/s.Venkatesh Enterprises in favour of accused A2 and purchased by the accused A1 on discount basis.

25.The prosecution has examined following officials of State Bank of

Hyderabad to prove its case with regard to the alleged irregularities purported to be committed by the accused A1 in respect of the account of the accused A2 company.

26.Mr. K.G.Narsing Rao (PW3) deposed that he worked as Chief Manager (Advance) Regional Office, Region-II, Secunderabad from July 2001 to July 2004 and also he never worked in State Bank of Hyderabad Old Bowenpally branch, and he deposed about certain procedure relating to sanction of loans by SBH and the guidelines of the bank to be followed and in his evidence the prosecution got marked Ex.P5 a copy of Chapter-III (Advances) hand book on delegation of financial and administrative power updated up to 05.11.1999,

Ex.P6 copy of circular No.OPD/96-97/7 dated 16.07.1996 regarding sanction of advances in excess of discretionary powers and Ex.P7 is copy of Chapter XXI relating to bills and TT purchase/discount and Bills for collections in bank’s book of instructions Chapter-XV issued by State Bank of Hyderabad, Hyderabad.

27.Mr.L.V.Sesha Sai (PW4) deposed that he worked as typist clerk, SBH,

Bowenpally branch Secunderabad from 1999 to 2000 and that certain transactions relating to subject accounts during his time.

28.Mr.J.Mallikarjuna Reddy(PW5) deposed that he worked as Assistant

Manager, SBH, Service Branch, Abids Hyderabad from 2002 to 2006, and he deposed about clearance of different types of cheques and when he was asked about an aspect relating to clearance of cheques through national clearing process, he did not support the case of the prosecution, and he was cross questioned by the learned public prosecutor and in his evidence Ex.P26 and P27 ie., some portions of his statement made under section 161 of Code of Criminal

Procedure were marked for the prosecution.

29.Mr. A.Venkataramaiah(PW8) deposed that he worked as Deputy Manager (Advances) Region-II State Bank of Hyderabad from July 1999 to August 2002 and his evidence is about his visiting the old Bowenpally branch to conduct quarterly inspection during May 2000 and noticing some irregularities about in the account of Prime Pharmatech (India) Limited and reporting the same to the

Regional Office and in his evidence Ex.P33 quarterly report dated 26.05.2000 was marked purported to be submitted to General manager (Operations). In his evidence he also deposed about some loan proposal, communication of

Page No. 11 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) sanction and sanction letter of M/s.Prime Pharmatech India Limited forwarded by another Branch Manager Mr.P.Narasimha was marked as Ex.P30 to P32. He was cross-examined at length to say that he never visited Old Bowenpally branch as deposed by him and that Ex.P33 report was brought into existence during investigation at the instance of CBI to support CBI Case.

30.The prosecution has examined PW10, the then AGM, SBH Zonal office and whose name was referred by PW8 as signatory to Ex.P33 report.

31.Mr.C.N.K.Sharma (PW10) deposed that he worked as Assistant General

Manager, Region-II, State Bank of Hyderabad from 1999 to March 2001 and that

PW8 worked as Desk Officer (Advances) at that time and that he used to visit branches quarterly for every three months and I the year 2000 he visited Old

Bowenpally branch and accused A1 was the branch Manager at that time and

Ex.P33 shown to him is the report submitted by him to the General Manager about irregularities relating to purchase of cheques pertaining to M/s.Prime

Pharmatech (India) Limited. He was also cross-examined by the accused A1 stating that Ex.P33 report is a fabricated one.

32.Mr. P.Satyanarayana (PW9) deposed that he worked as cashier clerk,

State Bank of Hyderabad Old Bowenpally branch Hyderabad during May 2000 to

June 2002. He deposed that Mr. Balakrishnan instructed him to reconstruct cash credit ledger belonging to CC account No.31 of M/s.Prime Pharmatech (India) Limited since some irregularities were reported and in his evidence

Ex.P34 reconstructed ledger, Ex.P35 Bank Transfer Scroll register, Ex.P36

Bank’s Payment Register, Ex.P37 Suspense Accounts Register and Ex.P38 bank

Transfer Scroll Register were marked, and he deposed that on comparison of

Ex.P1 ledger, Ex.P34 was reconstructed, and he noticed certain differences, and they were tallied only on 31.03.1999.

33.He was also cross-examined that Ex.P34 was brought into existence during the investigation and that he did not prepare it and that Ex.P34 was not based on any bank records.

34.Mr. Kilambi Alwar Swamy(PW12) deposed that he worked as Deputy

Superintendent of Police and Inspector of Police in CBI from 1999 to 2005, and he registered Ex.P40 FIR on 07.04.2003, as per the instructions of the then SP,

CBI, Hyderabad and submitted the same to the Court and that it was based on source information.

35.Here, it is pertinent to note down that SBH, Hyderabad did not present any report to CBI police about the alleged irregularities of the accused A1, the

FIR in the case was registered by CBI suo-moto on the basis of source information.

Page No. 12 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

36.Mr. Ravi Suman Prasad (PW13) is the investigating officer in the case, and he filed police report in the case. He deposed that he worked as Sub-

Inspector of Police in CBI, Hyderabad from 1998 to February 2004, and he has taken over the investigation of the case on 25.07.2003, as per the orders of SP,

CBI, Hyderabad, and he obtained permission from the then Special Court for conducting investigation of the case since he was Sub-Inspector of Police, and he deposed about examination of witnesses and recording of their statements during investigation and also collection of various documents relating to case during investigation and after completion of investigation filed charge sheet.

During his evidence, prosecution got marked certain documents under Ex.P59 to P64 which were collected by him from the bank and other agencies and includes copy of internal inspection report of one Mr. N.R.Tagore, Manager,

Vigilance marked as Ex.P58 to say that an investigation was conducted by

Mr.N.R.Tagore and he found certain irregularities committed by the accused A1 with respect to account of accused A2 company.

37.The investigation officer was cross-examined by the learned counsel for defence at length to point out that he did not conduct the investigation properly and fairly and that he filed the police report based on presumptions and surmises only for the sake of filing the case against the accused and that he did not prosecute the real accused in the bank relating to falsification of accounts as alleged by the prosecution.

38.It is pertinent to note down that as per Ex.P40 FIR was registered against the accused A1 and one Mr.Janardhan, the then Accountant, SBH, Old

Bowenpally branch, Secunderabad but the police report was filed against the accused A1 to A4 only and Mr. Janardhan was not prosecuted by the CBI and it was reported that no evidence was available against Mr. Janardhan, so he was not sent for trial. The Investigation Officer in the chief examination deposed the same stating that the allegations against Mr. Janardhan was not established during investigation.

39.It is the contention of the accused A1 that he is innocent, and he discharged his duties as per rules and that he did not commit any irregularities as alleged by the prosecution and in-fact Mr. Janardhan was the accountant at that time, and he was the concerned officer of the bank and who supervised the accounts pertaining to the bank accounts and if at all any irregularities were found as alleged by the prosecution, he shall be responsible for those irregularities, but the investigation officer intentionally did not prosecute him and implicated accused A1 falsely to save Mr.A. Janardhan for the reasons best known to him.

Page No. 13 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

40.Basing on the above evidence placed before the Court, the learned public prosecutor submitted arguments that the evidence of Mr.Owk. Daniel

Prasad (PW1) who worked as Cashier cum Clerk, State Bank of Hyderabad, Old

Bowenpally Branch, Hyderabad during the period of the accused A1 as well as the subject matter shows that Cash Credit limit of the accused A2 was Rs.35 lakhs and Over Draft Bills in Course of Collection (OD BCC) limit was Rs.35 lakhs and Letter of Credit limit was Rs.20 lakhs as sanctioned by the Regional Office and the accused A1 as Branch Manager cannot permit the accused A2 company to exceed the limits without taking prior approval from the Regional Office and the evidence further established the procedure about the maintenance of the

CCA ledger, OD BCC ledger and register and as per the evidence of witnesses on 13.11.1999 an amount of Rs.13.50 lakhs was credited to the CC account of the accused A2 and it was credited under Letter of Credit and it was also found in

Ex.P3 at page No.87 on 18.11.1999 and accused A4 was authenticated by the accused A1, but he did not mention the date and cheque for Rs.7 lakhs were reflected at page No.47 of Ex.P3 but it was not reflected in Ex.P1 ledger and later it was authenticated by accused A1 on 31.3.1999 and it was not posted in

Ex.P1 ledger and all these acts were made only to show that balance was not exceeded and further as per the evidence of PW1, Ex.P17 and P18 are the documents issued by Sri Venkatesh Agencies for Rs.10 lakhs and Rs.5 lakhs respectively, and they were purchased by accused A1 for discounting though he was not having authority, and they were entered in Ex.P1 ledger and not entered in Ex.P3 day book, and they were dishonoured subsequently, and they were not debited in the CCA of the accused A2 company instead they were debited in suspense account maintained in the bank under Ex.P24 and P25 entered only to accommodate the accused A2 to maintain the ledgers and further the evidence also shows that the accused A1 also purchased four cheques for Rs.10 lakhs each on 31.1.2000 and credited the amount to Ex.P1 ledger of the accused A2, and they were reflected in DP register voucher entries at page Nos.789, 790, 791 and Ex.P21 debit voucher shows that they were debited in the accounts and later the cheques were dishonoured, but they were not debited from the account of the company and further the peon dispatch book produced by prosecution shows that actually these cheques were not sent to the drawer for collection and it shows that only to manipulate the limits the cheques were submitted by the accused A2 company and same was accommodated by accused A1 showing credit into ledger.

41.Learned public prosecutor further submitted arguments that the evidence of Mr.Ghouse Mohiuddin Tax Inspector (PW2), Smt. M.Balamani (PW7),

Page No. 14 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

Mr.S.Mallaiah Postman (PW11) shows that M/s. Sruthi Agencies is a fictitious entity and the evidence of Mr. K.G.Narsing Rao (PW3), Mr. J.Mallikarjuna Reddy (PW5), Mr. A.Venkataramaiah (PW8) and Mr. C.N.K.Sharma (PW10) shows that the accused has no authority to purchase those bills and the evidence of PW1 shows that the accused A1 purchased bills though most of the bills were dishonoured and all these facts shows that the accused A1 in furtherance of criminal conspiracy with accused A2 to A4 purchased bills drawn in the name of

M/s.Shruthi Agencies to the pecuniary advantage of the accused A2 and caused wrongful loss to the bank.

42.Learned public prosecutor further submitted arguments that the evidence of Mr.Gopal Birla (PW6) coupled with the account opening form relating to M/s.Venkatesh Agencies that accused A4 was one of the partners in

M/s. Venkatesh Agencies and Ex.P17 and P18 cheques were issued by

M/s.Venkatesh Agencies in favour of the accused A2 and those cheques were dishonoured and these circumstances shows that the cheques were issued by the accused A4 in furtherance of criminal conspiracy to maintain balance limits of CCA and ODBCC accounts of the accused A2 company.

43.Learned public prosecutor further submitted arguments that the evidence of Mr. A.Venkataramaiah (PW8) and Mr. C.N.K.Sharma (PW10) coupled with Ex.P33 quarterly audit report and Ex.P58 departmental inquiry report marked in the evidence of PW13 Investigating Officer shows that the accused A1 committed several irregularities and falsified the accounts in relation to accused A2 company and his evidence corroborates the above evidence produced by the prosecution and the evidence of the investigation officers PW12 and PW13 shows that the First Information Report Ex.P42 was registered based on source information as per the instructions of the SP, CBI,

Hyderabad and later investigation was conducted by PW13 by taking permission of the then Special Judge for CBI Cases, Hyderabad as per law and therefore, the evidence produced by the prosecution proved the charge against all the accused beyond all reasonable doubt.

44.Learned counsel for the accused A1 submitted arguments that the evidence of PW1 is sufficient to show that the case of the prosecution against the accused is false and that accused A1 was innocent as PW1 in his evidence categorically deposed that the accounts were maintained by himself and other clerks in the branch and one Mr.A.Janardhan was the accountant at the relevant point in time, and he was the immediate supervising officer of PW1, and he was also authenticated the entries made by clerks in the ledger and day books of the bank in respect of accused A2 company and it is also established

Page No. 15 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) that originally this account was with the Canara Bank and later it was taken over by State Bank of Hyderabad Old Bowenpally branch even prior to the date of joining of the accused A1 in the branch and therefore, the accused A1 has no role in sanction of the limits pertaining to CCA and ODBCC as well as LC accounts in favour of the accused A2 and all these were sanctioned by the

Regional Office and the evidence of PW1 established that the accounts were maintained by the clerical staff in the branch and as a supervising officer sometimes the branch manager authenticated the entries posted by the clerks and PW1 categorically admitted that he made entries in Ex.P1 ledger and in the chief examination he deposed that he used to make entries during business transactions in the ledger and CC ledger balance will be tallied with the general ledger weekly or fortnightly and it will be allotted to the clerks on rotation basis but surprisingly for the reasons best known to him he made attempt to say that the Branch Manager used to do tallying work of this account which is against his own statement, and he deposed that several bills were purchased and sent to the customer for realization of the branch and most of the bills were returned unpaid, and he brought the same to the notice of the Branch manager, and he said that there are some disputes between the company and M/s.Sruthi Agencies and instructed him to reverse the entries by debiting cash credit account and credit to OD BCC account and this statement is proved to be not correct when ODBCC register is scrutinized, it is very clear that out of 23 bills pertaining to Shruthi Agencies around 11 bills were

honoured which means 50% of the bills were honoured by Shruthi Agencies and

therefore, the contention of the prosecution that most of the bills were not

honoured as stated by PW1 for the reasons best known to him and his evidence

shows that accused A1 instructed him to reverse entries by debiting cash credit account and giving credit to ODBCC account whenever bills were dishonoured and therefore, no malafides can be attributed to the accused A1 to say that he manipulated the accounts to maintain balance.

45.Learned counsel for the accused A1 further submitted arguments that

PW1 in his evidence in the chief examination itself deposed that he used to make entries during the course of business transactions in the said ledger and they were authenticated by the accused A1, so, the case of the prosecution that accused A1 falsified the accounts is disproved by the testimony of PW1 and further PW1 deposed that Manager was having good faith on the company and accepted the transactions.

46.He further argued that PW1 evidence shows that accused A1 was not having any fraudulent intention while permitting the transactions relating to

Page No. 16 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) the accused A2 company and further the evidence covered by Ex.P1 ledger shows that after discounting cheques as alleged by the prosecution no amount was withdrawn by the accused A2 and it shows that accused A2 had wrongfully gained and PW1 deposed that as per entry dated 31.03.1999 in Ex.P8 one cheque for Rs.12 lakhs issued by AP Mahesh Co-operative Urban Bank in favour of the accused A2 was sent for collection and dishonoured and amount was reversed at a later date and entry is in his hand writing and it shows that these entries were made by PW1 and not by the accused A1 and further he deposed that on 31.03.1999 he posted entries in Ex.P1 ledger regarding four cheques and one debit voucher, and he made attempt to say that he made those entries as per the instructions of the accused A1 and so, the entries covered by Ex.P9 cheques were posted by PW1 in Ex.P1 ledger and not by the accused A1 and further PW1 in the cross-examination deposed that he was maintaining Ex.P1 ledger and some other clerks were also making entries in Ex.P1 during course of business and they are Smt. Aruna and Mr.Sesha Sai and the prosecution did not examine those clerks to speak that the entries in Ex.P1 ledger were posted as per the instructions of the accused A1 and it is pertinent to submit that even as per Ex.P58 report relied on by the prosecution, some irregularities were found against Mr.A.Janardhan the then accountant, and PW1 also and therefore, PW1 cannot be treated as an independent witness to believe his evidence and it shows that PW1 for the reasons best known to him, to save his skin deposing against the accused A1 and even as per the case of the prosecution

Mr.A.Janardhan the then accountant was arraigned as an accused in the FIR but the investigation officer PW13 did not bring him to the Court for trial on the ground that no evidence was found against him though Ex.P58 report also shows some irregularities against him and the investigation officer in his evidence except saying that he did not find any material against

Mr.A.Janardhan to prosecute him, but could not show any material about the same and further the prosecution did not examine Mr. A.Janardhan not even as a witness to say about the alleged irregularities in maintenance of the accounts and instructions alleged against the accused A1 and it is very clear that the prosecution suppressed the evidence of Mr. A.Janardhan only to implicate the accused A1 falsely in the case.

47.He further argued that PW1 in the cross-examination categorically admitted that Mr.A.Janardhan was working as accountant in the branch at the relevant point in time, and he was the supervising officer over PW1 and therefore, he is an important and material witness to the case, and P.W1 further admitted that Ex.p1 ledger contained some initials of Mr. A.Janardhan

Page No. 17 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) also and it is the duty of the accountant in the branch to prepare housekeeping statements which will be submitted to Regional Office, but surprisingly the prosecution alleged that the accused A1 suppressed the information from controlling authority.

48.The learned counsel for the accused A1 submitted that PW1 categorically admitted that the accused A1 during course of business relating to the accused A2 company was not aware of the exceeding limits on various facilities and during course of business whatever entries reflected in ODBCC register, LC register will also be reflected in Ex.P1 ledger and accordingly they have been reflected, and he does not know anything about the entry relating to

Rs.30.50 lakhs in Ex.P1 ledger reflected at Ex.P1/9 and that the registers like

ODBCC register, LC register, Day Book and Ex.P1 ledger will be maintained by staff of the branch and further he also admitted that accused A1 has no dishonest intention with regard to the transactions of the accused A1 and these admissions made by PW1 categorically established that all the accounts were maintained by the staff in the branch and supervised by the accountant

Mr.A.Janardhan and he was submitting monthly housekeeping statements to the regional office and the accused A1 as branch manager has authenticated the entries posted during course of business by staff in the branch and that he was not aware anything about the exceeding of the limits pertaining to the accused A2 company, and he has done everything with good faith about the accused A2 company, and he has no fraudulent intention at all while dealing with the accounts of the accused A2 and as such PW1 evidence is sufficient to disbelieve the case of the prosecution.

49.The learned counsel for the accused A1 further submitted arguments that the evidence of PW1 shows that the bills relating to M/s.Shruthi Agencies were handed over to the accused A1 who was Manager of the branch only and not in personal capacity and that it was a practice followed in the branch and some person of the company will be visiting the bank to process the work on behalf of the company and accordingly the accused A4 attended the bank for some times on behalf of A2 company as Director, and clerks were maintaining

Ex.P6 dispatch register basing on the exigency of the work and further the evidence of PW1 shows that the Director of the accused A2 submitted bills relating to M/s.Shruthi Agencies as per the practice in the branch and those bills were handed over to PW1 for discounting the bills and then PW1entered the bills in ODBCC register vide Ex.P2 and prepared vouchers to credit the proceeds in the CCA, and he was sending the bills with ODBCC register to the accused A1, and he was authorizing the same and the proceedings were

Page No. 18 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) credited to the account of A2 company and then the bills were handed over to the concerned clerks including PW1 for dispatch and then bills were dispatched through ANL parcel or courier and if the bills were honoured by Shruthi

Agencies the proceedings were sent to the branch by cheque or Demand Draft and after realization the proceeds were credited to ODBCC account and therefore, the said evidence of PW1 shows that entire process was made as per the rules and practice adapted in the branch and nothing was made out to point finger towards the accused A1 in accepting bills of M/s.Shruthi Agencies and PW1 never deposed that SBH, Old Bowenpally branch or accused A1 has no authority to purchase bills of Shruthi Agencies and the ODBCC register shows that more than 50% bills were honoured and as such the contention of the prosecution that M/s.Shruthi Agencies is a fictitious entity is not true and correct and this allegation was made by the CBI only to implicate the accused

A1 falsely in the case and the evidence of PW2 shows that the door No.1-2- 336/221 was not in existence in the records of their circle as per the report given by Inspector, Ex.D1 ie., part of statement of PW2 made under section 161 of Code of Criminal Procedure shows that the said door number is existed in the jurisdiction of Gagan Mahal area of Domalaguda and therefore, Ex.D1 shows that PW2 purposefully did not depose the said fact before the Court and made an attempt to say as if the door number was not in existence and the prosecution purposefully and intentionally did not choose to examine any person from Gaganmahal area of Domalaguda about existence of this door number and further the evidence of PW7 Balamani shows that one Kasi

Vishweswar Rao intimated about CST No.ABS/07/1/1985 standing in the name of Shruthi Agencies stating that it was not allotted to said entity and it was allotted to M/s.Decent Electrical, but surprisingly the prosecution did not choose to cite said Kasi Vishweswar Rao who furnished information to CBI, as witness, and the prosecution did not produce the records of ACTO, Sultan

Bazaar circle to show that this CST number was allotted to M/s.Decent

Electrical as mentioned in the letter and the prosecution did not examine any person from Decent Electrical also to show that this number was allotted to them and therefore PW7 evidence is not useful to the prosecution to establish that CST number mentioned in the bills of Shruthi Agencies is a fake number and the evidence of Mr. Mallanna (PW11) is also not useful to the prosecution since his beat area does not cover Gaganmahal of Domalaguda as the evidence of Tax Inspector shows that this door number existed in Domalaguda and the prosecution purposefully and intentionally did not examine the postman relating to Gaganmahal area of Domalaguda to rule out that this door number

Page No. 19 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) was also not existed in that area and further his evidence is based upon a letter addressed by CBI during course of investigation, the post man did not depose that Shruthi Agencies was not there in the year 1999 at the time of alleged bills and as such the prosecution failed to prove that Shruthi Agencies was a fictitious entity and further there is no evidence at all to say that the accused

A1 was having knowledge that M/s.Shruthi Agencies was floated by the accused

A3 and A4 on behalf of said entity and on the other hand ODBCC register proceeds shows that many of the bills were honoured by said Shruthi Agencies and in those circumstances, the case of the prosecution that Shruthi Agencies is a false and fictitious entity and that accused A1 had knowledge about it and accommodated A2 to A4 and purchased bills drawn on Shruthi Agencies to maintain the limits of CCA and ODBCC accounts cannot be believed.

50.The learned counsel for the accused A1 further argued that the evidence of Mr.Gopal Birla (PW6) also does not establish that accused A4 was a partner in M/s.Venkatesh Enterprises and the prosecution did not produce any evidence to connect the accused A4 with Ex.P28 account opening form and PW6 did not depose that the accused A4 in the case is the person who opened the account under Ex.P28 and as such case of the prosecution that accused A4 issued Ex.P17 and P18 cheques to accommodate the accused A1 to maintain the limits cannot be accepted and believable.

51.The learned counsel for the accused A1 further argued that the evidence of PW1 that an amount of Rs.55 lakhs was exceeded against sanctioned limit against CCA is also not established by any evidence and four cheques of Rs.10 lakhs each to show that those amount was entered into suspense account registered as alleged by the prosecution and the suspense account register produced by prosecution under Ex.P24 does not contain any entries relating to these four cheques and when coming to Ex.P17 and P18 also there are no entries and Ex.P25 entry as pointed out by PW1 also does not relate to Ex.P17 and P18 as there is no information available there and as such the allegation of the prosecution is not correct.

52.The learned counsel for the accused A1 further argued that Mr.K.G

Narsing Rao (PW3) deposed about procedure relating to sanction of loan CCA and term loan and admittedly the account was sanctioned by the Regional

Office and not by the accused A1 and Ex.P5 to P7 does not establish anything against the accused A1 and in the cross-examination he deposed that he was not aware whether loan was taken from Canara bank, and he was not aware that A1 was Manager at the time of sanction of subject loan, and he categorically admitted that accountant or other officer in the bank will be

Page No. 20 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) checking the day to day entries, when limits are exceeded the manager will be taking the post approval from Regional office and as per evidence of Mr. L.V.

Sesha Sai (PW4), Mr. Janardhan was the accountant in Bowenpally branch at that time and Ex.P12 cheque was posted by Mr.Janardhan though there is no sufficient balance in the account, and he admitted that other clerks were also attending counter work and Mr. Satyanarayana and Mr.Ramana are the clerks will be making entries in the ledger and clearing register, day book and accountant will send the entries for authentication of the entries made by counter clerk and Mr.Janardhan was accountant at that time and entries in

Ex.P1 ledger will be made by counter clerks ie., Aruna and, PW1, and they were maintaining the day book and therefore his evidence shows that Mr.

Janardhan was verifying entries made by the clerks and the clerks are making entries in the ledger clearing and dispatching registers and day books, but, the prosecution purposefully did not cite Mr.Janardhan either as an accused or as witness though he played vital role in maintenance of the bank registers and submitted information to the regional office at the relevant point in time and it is fatal to the case of the prosecution.

53.The learned counsel for the accused A1 further argued that as per the evidence of J.Mallakarjun Reddy (PW5) that he do not know anything about letter of chief Manager addressed to CBI and therefore the allegations of the prosecution that 4 cheques for Rs.10 lakhs each was not sent to national clearing process is not proved by the prosecution, and he further stated that the evidence of A.Venkataramaiah (PW8) shows that one day in May 2000 as per the instructions of Mr. CNK Sharma (PW10) the then AGM visited Old

Bowenpally branch conducted quarterly inspection, and he went there at 10:00 am and conducted inspection and observed some irregularities about 4 cheques for Rs.10 lakhs each, and then he informed the same to GM and GM visited the branch at about 3:30 pm on the same day and submitted report to Regional

Office under Ex.P33 and therefore, his evidence shows that as a part of quarterly inspection he visited the branch and found the alleged irregularities and then it was informed to PW10 and then submitted Ex.P33 report and in the cross-examination he admitted that Ex.P33 does not contain his signature and his name was also not mentioned in that and that in Ex.P33 there is no allegation of fraud and that the loan was secured and PW10 deposed that in the year 2000 he visited Old Bowenpally branch and Ex.P33 report was submitted by him to GM about irregularities about four cheques stating that A1 purchased cheques beyond his discretionary powers and in the cross-examination he deposed that during the morning hours he visited Old Bowenpally, and he sent

Page No. 21 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

PW8 after noon to Old Bowenpally branch, and then he visited the branch on the same day around 5.00 pm, he informed him about the cheques and basing on the report of PW8 he submitted Ex.P33 report to Regional Office and his evidence before the Court is contrary to the evidence of PW8 as PW8 deposed that he visited the branch in the morning hours whereas PW10 came to the branch during afternoon and this shows that Ex.P33 is a fabricated report subsequently for the reasons best known to the CBI and this was corroborated by the evidence of PW1 who deposed that periodical audits were conducted in the branch and in periodical inspection auditor did not raise any objection and this shows that no objections were raised in any periodically audits and as such the evidence of PW8 and PW10 cannot be believed, and therefore no value can be attached to Ex.P33 report and he also submitted that Ex.P58 was marked in the evidence of investigation officer as an internal inspection report of Mr.

N.R. Tagore, Manager, SBH, Head Office, Hyderabad and the prosecution did not choose to examine any person from vigilance department or Mr. N.R.Tagore to prove the contents of Ex.P58 report and the investigating officer in the cross-examination deposed that he cannot recollect and say how they collected

Ex.P58 report, and he also admitted that it does not contain signature of

N.R.Tagore on all pages of report he cannot say who signed on Ex.P58 report and as such the evidence of the Investigation officer shows that Ex.P58 was a fabricated document for the reasons best known to the investigation officer and it does not carry any weight and it will not prove the case of the prosecution in any manner and on the other hand the report shows that account of accused A2 was clear account and it was having collateral security as well as personal security of other persons to a tune of around four crores and admittedly as per the report the collateral security and personal security were very much available and as such the allegations of the prosecution that fraud was committed in the case is false allegation and CBI was used to collect the amount due in the account from the A2 company and CBI filed false case to coerce the accused A2 to A4 to clear the dues under the account and the evidence on record as well as documents produced by the other accused in the case shows that after registration of FIR, the accused A2 company paid amount to the bank and final settlement was recorded before the Debt Recovery

Tribunal and even before filing of police report this fact was known to the investigating officer as well as other bank witnesses but intentionally and purposefully they made an attempt to say that they do not know anything about the settlement for the reasons best known to them and the investigating officer knowing fully well about this did not mention anything about same in

Page No. 22 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) the police report and in the cross-examination also made an attempt to say that he was not aware of the payment during investigation, and he went to an extent of deposing that he did not come across about bank filed application

before the Debt Recovery Tribunal at Hyderabad on 17.07.2001 though CBI filed

police report in the year 2004 and it shows that the investigating officer intentionally prosecuted the case before the Court and as such investigation is not fair and conducted in partial manner and filed police report falsely implicating the accused for the reasons best known to him.

54.Learned counsel for the accused A3 submitted that A2 is a company and

A3 was Managing Director and A4 is Director as per the allegations of the prosecution and the accused A3 retired as Director from the A2 company on 12.05.2005, as per certified copy of Form-32 produced by the accused A3 during examination of accused under section 313 of the Code of Criminal procedure.

55.He further argued that If the police report is scrutinized carefully no specific allegation was made against the accused A3 in connection with the alleged falsification of accounts, and during trial also no evidence has been made out against the accused A3 to say that he was aware about the falsification of accounts by the bank ledger or any other bank officials to accommodate accused A2 company to maintain cash credit account and ODBCC account limits and none of the witnesses examined by the prosecution deposed anything against the accused A3 that at any point in time he came to the bank and met accused A1 in connection with any of the cheques presented or for discounting or with any other transactions and PW1 in the cross-examination also categorically admitted that no letter was addressed to the accused A2 company at any time intimating about the over draft of the account and the case was filed against accused A3 merely on suspicion as he was the Managing

Director of the company and therefore, without any evidence suspicion will not prove the case of the prosecution and in support of his argument relied upon judgment of Hon’ble Supreme Court in Sujith Biswas Vs. State of Assam reported in 2013 ALD (Crl) 618 (SC) and he further submitted that prosecution did not produce any evidence to show that Shruthi Agencies was a fictitious entity and the evidence produced by the prosecution is insufficient to prove their case and on the other hand the evidence produced by the prosecution shows that several bills drawn on Shruthi Agencies were honoured and therefore, it is a normal business activity and the prosecution also did not examine any witness to prove Ex.P58 report and therefore, it will not help the case of the prosecution and on the other hand Ex.P58 report shows that the

Page No. 23 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) account of the accused A2 company was secured account with collateral security as well as personal security to a tune of Rs.4 crores and further the evidence before the Court shows that the matter was settled before the DRT and full satisfaction was also recorded before the DRT, but the investigation officer for the reasons best known to him suppressed before the Court and during evidence also the prosecution witness made an attempt to suppress about the same before the Court and gave evasive answers for the reasons best known to them and hence absolutely there is no evidence against the accused

A3 to fix up with any of the allegations made by the prosecution.

56.Learned counsel for the accused A4 submitted arguments that the prosecution made an attempt to say that as if accused A4 was going to bank in connection with these transactions but PW1 in the cross-examination categorically admitted that A4 was going to bank as Director and some persons from the company was coming to the bank on behalf of the company for the transactions made by the company and as such no inference can be drawn that accused A4 conspired with accused A1 in any manner and there is no evidence placed before the Court to prove that accused A4 was a partner in M/s.Sri

Venkatesh Enterprises or with M/s. Shruthi Agencies is a false entity and the evidence on record shows that other than bank officials no one will have access to the bank accounts and as such accused A4 cannot be tagged with the alleged falsification of accounts and the prosecution suppressed material fact about the payment of amount due in the loan account before filing of police report and this shows that the prosecution intentionally filed false case with registration of FIR only to coercive the payment amount due under the account which is normal business transaction, and even though amount was paid proceeded with the case to harass the accused and therefore, there is no material at all against the accused A4 that he played any fraud on the bank and gained wrongfully and as such prosecution failed to prove anything against the accused A4.

57.The case of the prosecution is that the accused A1 was working as branch Manager SBH, Old Bowenpally branch during period 1998-2000 made entries in CCA No.31 pertaining to accused A2 company, in order to tally the balance sheet which has to be sent to the Regional Office for perusal periodically and that entries which were not figuring in the ledger were all figuring in the day book and cash rolls maintained in the branch and therefore, the accused A1 abused his official position as branch manager and that he falsified the accounts in pursuance of the conspiracy with the accused A3 who is the Managing Director and accused A4 who is director of the accused A2

Page No. 24 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) company at the relevant point in time and that in pursuance of the criminal conspiracy the accused cheated the SBH to a tune of Rs.55 lakhs by way of showing undue favour to the accused A2 company by purchasing certain cheques issued in favour of the accused A2 by M/s.Venkatesh Enterprises drawn on Andhra Pradesh Mahesh Co-operative Urban Bank Limited and that the accused A1 purchased those cheques though no DP facility was provided to the bank by the Regional Office and out of those cheques 2 were local cheques whose amount aggregated to Rs.15 lakhs were returned dishonoured and the remaining four chques issued for Rs.10 lakhs each were reflected in DP register were out station cheques, and they were not sent for realization as per the registered post register, and they were not sent for national clearing to service branch, and these cheuqes were said to be given by the accused A4 to facilitate accused A1 bring the balance within the sanctioned limits.

58.In order to prove said aspect, the prosecution relied on the evidence of

PW1 who deposed that Ex.P1 was maintained in respect of the accused A2 company, and he used to make entries during course of business transactions and it will be tallied with general ledger weekly or fortnightly and tally work will be allotted to the clerks on routine basis, and he used to tally during his time and the branch manager used to do tally work in the subject ledger.

59.So he wants to say that the tally work of the Ex.P1 ledger with general ledger was made by the accused A1 against the practice of procedure in the bank, he also deposed that several bills were purchased and sent to customer for realization by the branch and most of the bills returned unpaid, and he informed the same to the branch manager, and he informed him that there are some disputes between the company and M/s.Sruthi Agencies and instructed him to reverse the entries by debiting cash credit account and credit to ODBCC account. He again deposed as if several bills were purchased and most of the bills were returned unpaid and though it was brought to the notice of Branch

Manager he ignored it as if dispute is pending between the accused A2 company and Shruthi Agencies.

60.He further deposed that CC day book register vide Ex.P3 contains details of all transactions pertaining to CCA in a particular day and clerks will maintain the said register and the Manager or accountant will check the entries in the ledger and tally the same at the end of the day. He further deposed that Ex.P2

ODBCC register pertaining to A2 company contained entries relating to

M/s.Sruthi Agencies, and they were authenticated by Mr.YVS Prabhakaram and that also contains debit entry for Rs.13.50 lakhs on 18.11.1999 at page 87 and

Page No. 25 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) it was entered by the accused A1 and Ex.P4 is the said entries and that the said entry was not posted under Ex.P1 ledger and posted at a later date.

61.He further deposed that Ex.P8 is the MICR clearing Register and on 31.03.1999 one cheque for Rs.12 lakh issued by AP Mahesh Co-Operative bank in favour of accused A2 was sent for collection and it was dishonoured and amount was realized and entry was in his hand writing, and he further deposed that on 31.3.1999 he posted entries in Ex.P1 ledger about 4 cheques and one debit entry as per instructions of accused A1 covered by Ex.P9 and P10 and

Ex.P10 was prepared by him and sent to the accused A1 and that accused A1 neither passed it nor rejected it nor sent back to him.

62.He also deposed that Ex.P11 and P12 cheques issued by accused A2 company and that they were passed by the accused A1 but not posted in Ex.P1 on the same day and that amount covered by those two cheques is taken into consideration the ledger debit balance of A2 shall be more than as shown on 10.09.1999 and that accused A1 did not obtain permission from concerned office to exceed the prevailed limit and that the balance as on 29.09.1999 was

Rs.44,04,269/- and that Ex.P16 is DP Register and concerned clerk will make entries in the DP register and it was verified by the branch manager and that the cheque for Rs.10 lakhs dated 25.03.1000 covered by Ex.P17 and cheque for

Rs.5 lakhs covered by Ex.P18 cheque were issued in-favour of accused A2 by

Venkatesh Enterprises drawn on AP Mahesh Co-operative Urban Bank, and these transactions entered under Ex.P1 are authenticated by A1 branch Manager and

Ex.P20 is four credit vouchers dated 31.03.2000 relating to M/s.Prime

Pharmatech Pvt Limited entries relating to cheque discounts. Ex.P16 register also contain signatures about these transactions.

63.Therefore, this part of evidence of PW1 discloses that the account books ie., Ledger, cash credit day book register ODBCC register MICR Clearing

Register, DP Register, Suspense account register, dispatch register in the bank will be maintained by concerned clerks in the branch, and they will be making entries in those registers basing on the day to day business transactions in the branch and those entries will be scrutinized and authenticated by the accountant or branch manager as per the practice followed in the branch in the course of business.

64.PW1 has already stated above, in the chief examination stated that entries which are shown to him were made by him, and they were authenticated by branch manager ie., A1. PW1 further deposed that the then accountant Mr.Janardhan also authenticated some entries.

Page No. 26 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

65.PW1 evidence shows that some other clerks were also making entries in the above registers basing on the work contingency and exigency. PW1 in the above evidence made an endeavor at every stage to say that the entries made by him were authenticated by branch manager or the then accountants, and he also made an attempt to say that those entries which are pointed to be a as false entries were made based on the instructions of the accused A1, from time to time.

66.Surprisingly PW1 in the chief examination itself at para 86 made a statement that the manager has admitted transactions beyond sanctioned limits because the company ie., A2 is having big account and the branch is small, and he was having good faith on the company and accepted transactions.

67.PW1 in the cross-examination deposed that Mr.Janardhan was working as accountant in the branch at the relevant point in time, and he was supervising officer and supervising his work in the branch.

68.He admitted that in his statement made to CBI police under section 161 of Code of Criminal Procedure stated that he did not state that his supervising officer was the branch manager. Therefore, PW1 in his chief examination tried to improve his version for the reasons best known to him probably to give an impression that everything was made and done on the instructions of accused

A1 alone.

69.It is pertinent to note down that Mr.Janardhan was arraigned as an accused in the case in FIR Ex.P40. The Investigating Officer PW13 in his chief examination stated that Janardhan was not prosecuted, as allegations made against him in the FIR were not established during investigation.

70.When he was cross-examined by the counsel for the accused A1 on this aspect, PW13 admitted that he was aware that Janardhan was working as an accountant in the branch at that time, and also that he has perused the Ex.P58 report and it was mentioned in Ex.P58 that he had given false picture in housekeeping statement about the position of CC Register submitted to the controller and that he had not verified certain cheques. The investigation officer was suggested that Janardhan was responsible for maintenance of Ex.P1 ledger, and he misled the accused A1 at the relevant point in time.

71.It is pertinent to note down that the prosecution produced Ex.P58 report stating that it is a report submitted by internal investigation team of Mr.

N.R.Tagore. It was marked in the evidence of PW13. The prosecution did not examine Mr. N.R.Tagore to speak about the contents of Ex.P58 report. PW13 in the cross-examination deposed that Ex.P58 does not contain signatures of Mr.N

R. Tagore on all pages, and he cannot say who signed on all pages and that

Page No. 27 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

Ex.P58 starts with page No.7 and ends with page No.19 and a suggestion was given to him that Ex.P58 was fabricated for the purpose of the case and that signatures on Ex.P58 were obtained after police report was returned by the

Court and PW13 further deposed that it does not contain information as to who submitted report to whom in the bank.

72.Therefore, the prosecution though filed Ex.P58 as internal investigation report did not examine any witness to prove above contents as required in law.

But a perusal of Ex.P58 shows that some irregularities were found on the part of the accountant as well as PW1 in the case in respect of the accounts of the accused A2 company maintained in the bank. In spite of the same PW13 simply says that no material was found against A2 to prosecute him, and another clerk ie., PW1 was cited as witness in the case.

73.PW1 in the cross-examination deposed that as clerk he was maintaining

Ex.P1 ledger, in the course of business and Smt.Aruna, Sesha Sai were other clerks at the relevant point in time, and he admitted that as per bank rules monthly housekeeping statement shall be prepared and will be sent to control regional office and it is the duty of accountant of the branch to prepare housekeeping statements.

74.As already stated above the investigating officer in the cross- examination admitted that as per Ex.P58 report some irregularities were found on the part of the accountant about the maintenance of housekeeping statements.

75.Here, it is pertinent to note that Mr. Janardhan was not cited as witness in the case though it was established that he was immediate supervising officer of PW1 and made certain authentications of entries made in the ledger and other bank records pertaining to accused A2 company and also submitted housekeeping statements to the regional office about financial transactions of accused A2 company.

76.Surprisingly, the investigating officer came with an allegation that accused A1 submitted statements to regional office with false information about the financial status of accused A2 Company from time to time.

77.PW1 further deposed that generally some borrowers in the branch may exceed the sanction limits during course of business, and they will deposit some cheques and the amount will be credited to their account and later it will be debited if cheques were dishonoured, the ODBCC register of accused A2 was never exceeded Rs.35 lakhs, and he made a fatal admission to the case of the prosecution that the accused A1 during course of business pertaining to the accused A2 was not aware of exceeding limits of various facilities.

Page No. 28 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

78.These admissions go to the route of the case of prosecution since it is the case of the prosecution that accused A1 was aware that the limits sanctioned to the accused A2 company were exceeded and to manage those limits he gave instructions to PW1 to make certain entries and not make certain entries in the register to maintain the limits as sanctioned.

79.PW1 further admitted that during course of business whatever entries reflected in ODBCC Register, CC Register were also reflected in Ex.P1 ledger and accordingly they have been reflected and that registers like ODBCC, LC

Register, Day book and Ex.P1 ledger will be maintained by staff of the branch and not by the branch manager, and he made another categorical admission that the accused has no dishonest intention with regard to transactions of accused A2 company and no letters were addressed to A1 at any point in time indicating that accused A2 that sanction limits were exceeded, he also admitted that the bills were handed over to the Manager in his capacity as

Manager of the bank and not in personal capacity and it was a practice followed in the branch and that some persons from A2 company visited the bank to attend the work of the company ad accordingly accused A4 attended branch sometimes on behalf of accused A2 company as he was director at that time. He also admitted that Ex.P56 dispatch register was maintained by clerks, and he is one among them, and he was maintaining dispatch register basing on the exigency of the work.

80.Therefore, the above evidence of PW1 shows that the accounts pertaining to accused A2 covered by Ex.P1 ledger is Ex.P2, P8, P16, P22, P24,

P56 registers and Ex.P57 peon delivery book were all maintained in the bank in usual course of business by the clerks and other staff in the branch and entries were made in those registers by the clerks of the branch including the PW1 and

Mr.Janardhan was the accountant at the relevant point in time and supervising the accounts, and he submitted housekeeping statements to the regional office about financial status of the accused A2 company and the entries made by the clerks were sometimes authenticated by the accountant and sometimes by the branch manager ie., A1 in the case, but PW1 in the chief examination came with a new version as accused A1 was supervising officer, and he was making entries as per his directions and instructions.

81.Surprisingly, PW1 at the same time deposed that accused A1 was having good faith on the company and accepted the transactions and that he was not aware of the existing limits for various facilities and that ODBCC, LC, day book and Ex.P1 were maintained by staff and not by the branch manager and that accused A1 has no dishonest intention with regard to the transactions of the

Page No. 29 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) accused A2 company, as such his evidence shows that PW1 for the reasons best known to him in the chief examination made an attempt to give a picture as if everything ie., all entries pointed out in the chief examination were either made by the accused A1 or at his instructions and that they were not properly maintained.

82.But in the cross-examination, I feel that he could not able to hide his feeling for speaking false hood against A1 came with statement as stated above which makes his evidence most unreliable and therefore, the evidence of PW1 is not inspiring any confidence to believe his statement made in the chief examination about the entries made in the registers as already pointed that they were all made on the instructions of accused A1 and that those entries were made purposefully and that to manage the sanction limits as alleged by the prosecution.

83.When coming to other evidence, it is the case of the prosecution that the accused A1 purchased six cheques aggregating to an amount of Rs.55 lakhs from the accused A2 company and thereby he committed irregularities and violated the rules though the branch was not provided with the authority to purchase cheques ie., on discount.

84.PW1 in his evidence was asked to depose about these transactions, and he deposed that cheques issued in favour of customer will be purchased by the bank on their request after deducting some service charges and proceeds will be credited to the customer credit and bills will be entered in demand purchase register and authenticated by the branch manager, and he identified

Ex.P16 Demand Purchase Register for the period 28.01.2000 to 31.03.2000 and that a chque for Rs.10 lakh dated 25.03.2000 was issued in favour of accused

A2 by M/s.Venkatesh Enterprises drawn on A.P.Mahesh Co-operative Urban bank limited was purchased by branch for discount and it was dishonoured and that Ex.P16 contains an entry under Demand purchase number 790 authenticated by accused A1, he also deposed that the cheque for Rs.5 lakh

dated 29.03.2000 issued in favour of accused A2 drawn on AP Mahesh

Cooperative Urban bank limited was also dishonoured and Ex.P16 contained an entry at DP 792 authenticated by Branch Manager and that Ex.P17 is cheque for

Rs.10 lakh Ex.P18 cheque for Rs.5 lakh and that Ex.P19 is credit voucher dated 31.3.2000 for Rs.14,95,500/- and that it was authenticated by A1, and they were entered in Ex.P1 ledger also, but he wants to say that they were not entered in Ex.P3 day book and he also deposed that Ex.P20 is four credit vouchers relates to accused A2 in respect of cheque discounts for Rs.9,90,480/- .

Page No. 30 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

85.The prosecution alleged that the accused A1 purchased these cheques amounting to Rs.55 lakhs though the bank was not having demand purchase power and that among six cheques two cheques are local, and they were dishonoured and the other four cheques were out stationed cheques drawn on

Mahesh Co-operative Urban Bank Limited, and they were not dispatched for realization and not entered as found in the dispatch register and that they were issued by accused A4 as if they were issued by M/s. Venkatesh Enterprises drawn in favour of A2 company only to maintain the limits to accommodate the accused A1 and the accused A4 is one of the partner in M/s. Venkatesh

Enterprises and that when the two local cheques were dishonoured, the accused A1 instead of debiting the amount in the ledger of the A2 company, debited the amount in the suspense register vide Ex.P25 entry.

86.PW1 in the chief examination deposed that amount of Rs.55 lakh was exceeded the sanction limit against actual limit of cash credited is of Rs.35 lakhs only. Here, it is pertinent to note down that PW1 did not depose that the branch was not having authority to purchase cheques on discount from the customer/borrowers of the branch. He deposed that the amount of Rs.55 lakh was exceeding the sanction limit of Rs.35 lakh. PW1 deposed that Ex.P24 is the suspense account register maintained for internal purpose and any amount advanced to any persons/suppliers for undertaking any work in the branch will be debited to suspense account. So, he wants to say that Ex.P24 contains entries with regard to amount paid by the bank to the suppliers of the bank and the accused A1 made entries about Ex.P17 and Ex.P18 cheques in Ex.P24 register instead of making entries in the account relating to the accused A1.

87.PW1 has already stated above, deposed that Ex.P16 is Demand Purchase

Register and it contained entries about Ex.P17 as well as Ex.P18 cheques and also about four cheques for Rs.10 lakhs each. PW1 deposed that concerned clerks will maintain DP register and it will be authenticated by the branch manager, so any authentication made by accused A1 as Branch Manager in

Ex.P16 will not ipso-facto became a fraudulent entry unless there is some material to show that it is a false entry.

88.Here, PW1 says that these six cheques were purchased from A2 company on discount during course of business transactions and entries were made in

Ex.P16 and authenticated by the Branch Manager. When coming to Ex.P24 suspense account register referring Ex.P25 entry dated 08.04.2000 in page No.3 as if it relates to Ex.P17 and P18 cheques. But this entry relates to an amount of Rs.5 lakh only, but there is no endorsement connecting this amount to

Ex.P18 cheque, therefore, merely basing on Ex.P25 which has no information

Page No. 31 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) referring Ex.P17 and P18 transactions, it cannot be said that these entries pertains to the cheques covered by them and further PW1 is not deposing that

Ex.P25 entry was made by the accused A1.

89.When coming to other four cheques Ex.P20 is the four credit vouchers

dated 31.03.2000 and according to PW1, the entries relating to them were

made in DP register vide Ex.P6. The case of the prosecution is that they were not dispatched to the concerned bank for collection, and they were not sent to

National Clearing House.

90.Therefore, the prosecution wants to say that it is only a paper transaction made to accommodate the accused A1 to maintain the limits. The prosecution did not produce the alleged four cheques before the Court and prosecution did not come with any explanation as to what happened to those cheques when entries were made in Ex.P16 DP Register. The prosecution relied on Ex.P56 dispatch register stating that no entries were found in Ex.P56. PW1 has already stated above deposed that the dispatch register and Ex.P57 will be maintained by clerks in the branch, so under what circumstances the entries relating to the above four cheques was not made either in Ex.P56 or in Ex.P57 is not established by the prosecution. PW1 did not depose that he did not make any entries in said registers, as those four cheques were not handed over to him for dispatch. The prosecution did not examine any other clerk who was present or handled those registers on the date of said transactions to say that those cheques were not handed over to him by the Branch Manager, for sending them to out station and therefore, no entries were made in those registers.

91.When coming to non sending cheques to National Clearing House the prosecution has examined Mr. Mallakarjun (PW5) who deposed that he does not have any idea about National Clearing process hence he did not support the case of the prosecution to establish that the disputed four cheques were not sent to National Clearing House for process. Nothing has been made out from his evidence say that this witness suppressed the truth to accommodate to the accused A1.

92.The prosecution allegation is that those six cheques were issued by accused A4 only to accommodate the accused A1 to maintain the limits and that accused A4 was partner in M/s.Venkatesh Enterprises, and he issued those six cheques though no amount was found in the account of M/s.Venkatesh

Enterprises and as such the two local cheques were dishonoured.

93.The prosecution in support of his case has examined Mr.Gopal (PW6) who worked as accountant deposed about Ex.P28 account opening form of

Page No. 32 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

M/s.Venkatesh Enterprises was produced and he deposed that Ex.P18 cheque was dishonoured twice and Ex.P29 relates to cheque dishonor memos.

94.The prosecution wants to say that Ex.P28 contains name of the accused

A4 as partner. The accused A4 denied the case of the prosecution. The prosecution did not produce any other material connecting accused A4 with

M/s.Venkatesh Enterprises. The investigating Officer did not take any steps to send the documents containing signatures pertaining to Venkatesh Enterprises to find out that accused A4 is one of the partner in that firm. Therefore, merely basing on Ex.P28 it is not possible to connect accused A4 with

M/s.Venkatesh Enterprises as the partner in that firm.

95.Further, it is not the case of the prosecution that M/s.Venkatesh

Enterprises is a fictitious entity floated by the accused A3 or accused A4 for the purpose of issuing cheques in favour of accused A2 Company to maintain sanction limits in the case.

96.In the above circumstances the case of the prosecution that these cheques were issued by accused A4 in favour of accused A2 company and presented with accused A1 and that accused A1 had knowledge that

M/s.Venkatesh Enterprises is an entity floated by accused A4 and that it was not having any funds in his account and accused A1 knowing fully well about all these circumstances purchased these cheques on discount to accommodate accused A2 company to maintain the sanction limit.

97.The prosecution examined PW3 who worked in SBH, Old Bowenpally branch, and he deposed about general procedure about the sanction of loan to a company and the responsibility of the branch manager at the time of sanction of the loan. Admittedly, in the case on hand, the subject account was taken over from Canara Bank and all the sanction limits were issued by the regional office.

98.In the evidence of PW3, prosecution filed Ex.P5 to P7, which relates to rules pertaining to advances and discretionary powers and also purchase of bills on discount. They are all general rules, and they do not contain any rule, which specifies the power of the Branch Manager regarding purchase of cheques on discount. In the cross-examination PW3 deposed that he was not aware of whether the accused A1 was the Manager at the time of sanction and who was the accountant and other officers in the branch and who were checking day to day entries and the entries would be checking post approval of regional office and when limits were exceeded statutory audit will be conducted every year.

99.Here, it is pertinent to note down that PW1 in his cross-examination he was questioned about periodical audits, and he deposed that periodical audits

Page No. 33 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) will be conducted in the branch and in any audit, no objection was raised regarding account of the accused A2 and the auditors did not raise any objection since it was a practice prevailed at that time.

100.The prosecution examined PW4 who worked as counter clerk deposed that PW1 and Mrs. Aruna were the clerks at that time and as counter clerk his duties were ledger posting outward and inward, clearing dispatch typing demand draft and any other work endorsed by the Manager and if a cheque is received for en-cashment, he will make an entry in the ledger and cheque will be sent to the Manager for authentication and after authentication it will be sent to cashier for payment.

101.He was asked about Ex.P1 ledger and the entry dated 30.11.1999 for

Rs.30.50 lakhs, and he said that he made that entry and it was authenticated by the accused A1. Ex.P10 entry was made by PW1 and Mr.Janardhan who was the accountant at that time and in his evidence Ex.P13 shown to him does not contain his hand writing or signatures against any of the entry and the cheque for Rs.35,000/- issued by accused A2 was passed by Mr. Janardhan though there is no sufficient balance in the account and in the cross-examination he deposed that other clerks were also attending the counter work in his absence.

102.I have already discussed at length about the evidence of PW1. The prosecution did not examine Smt. Aruna or Janardhan, further as I have already observed certain irregularities were found against name of Janardhan and P.W1 in Ex.P58 report. PW4 also deposed that audit was done during his tenure in

Bowenpally branch, and he did not remember whether auditors pointed out any irregularities in their report and quarterly audit will be conducted by higher authorities of the same bank.

103.The prosecution examined Mr. A.Venkata Ramaiah (PW8) who worked as

Deputy Manager, Region-II State Bank of Hyderabad from July 1999 to August 2002 deposed that at that time Region-II was monitoring irregularities reports relating to advances submitted by the branches and the branch manager has no discretionary power to permit or allow excess limits without permission by the sanctioning authority and if he exceeds his discretionary power, he shall submit irregularity report to controlling authority and in his evidence Ex.P30 to P32 were marked which relates to sanction of loan to the accused in the time one

Mr.P.Narasimha the then Branch Manager.

104.The crucial aspect deposed by him is that the branches are subject to inspection at quarterly intervals by the controlling authority and the then controlling authority was Mr.CNK Sharma (PW10) and he instructed him to visit the branch and conduct quarterly inspection in May 2000, and he visited the

Page No. 34 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) branch in May 2000 and observed that the account of accused A2 and noticed four cheques amounting to Rs.10 lakhs each discounted by the branch and particulars were dispatched but not available in discount purchase register and dispatch register and this discount was not permitted by controlling authority and not informed to controlling authority as this is a fraud was informed to

AGM, and he visited the branch on the same day around 3.30 pm and submitted report to Regional Office.

105.In the cross-examination he deposed that in his statement made to CBI officer that his duty was to verify the irregularities reports and control returns received from the branch and put them to the AGM. He admitted that Ex.P33 does not contain his signature, and he made categorical admission that his name is not mentioned in Ex.P33 and that in Ex.P33 there is no allegation of fraud and that the loan was secured.

106.So, PW8 in his chief examination gave a picture as if on the instructions of AGM, he visited the branch to conduct quarterly inspections in May 2000 and during inspection he noticed irregularities pertains to 4 cheques of accused A2 company, and he intimated the same to AGM, and he came to bank at 3:30 pm on that day and then submitted report to Regional Office under Ex.P33.

107.Here, it is pertinent to note down that Ex.P3 report shows that Manager exceeded his authority whereas this witness before the Court deposed that this discount was not permitted by controlling authority.

108.The prosecution has examined CNK Sharma (PW10). He deposed that he used to visit the branch for quarterly for every three months and Ex.P33 is the report submitted by him to the General Manager about the irregularities relating to the purchase of cheques pertaining to accused A2 and that accused

A1 purchased six cheques beyond his discretionary powers.

109.Here, it is pertinent to note down that he did not say that the accused

A1 has no power to purchase the cheques. He stated that accused A1 exceed his discretionary powers as if he is having some powers to purchase cheques.

He further deposed that out of them four cheques were not presented for payment and two local cheques were returned unpaid and amount was debited to suspense account instead of debiting amount to accused A2 account. I have already discussed the entry in suspense account register about two cheques and held that the register is not giving any information that Ex.P24 entry in Ex.P23 suspense account register pertaining to these two cheques.

110.In the cross-examination PW10 deposed that he visited Old Bowenpally branch during morning hours on the date of inspection and sent PW8 during afternoon and that he also deposed he visited branch on the same day at

Page No. 35 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) around 5.00 pm after PW8 informed about the cheques and based on information of PW8 he submitted Ex.P33.

111.So PW10 deposed different story that PW8 visited the branch in the morning, and he came to the branch in the afternoon whereas PW10 deposed that he visited the branch in morning and PW8 came to the branch in the afternoon and above all Ex.P33 does not contain any allegations against the accused A1 that he has committed fraud.

112.The allegation is that he has exceeded is powers as branch Manager and purchased cheques. Now PW8 before the Court changed his version for the reasons best known to him and made an attempt to say that it is a fraud played by the accused A1. Therefore, in the light of the above facts and circumstances the evidence of PW8 or PW10 will not inspire any confidence to accept the case of the prosecution that the accused A1 committed fraud while purchasing the above-discussed cheques on discount. At the best, if the evidence of PW8 and

PW0 is considered, their version is that he has violated rules by exceeding his powers. As already stated above PW1 categorically deposed, that accused A1 was not aware of the exceeding limits, and he was not having any fraudulent intention in respect of the account of the accused A2 Company.

113.In the light of the above discussion, the violations which are pointed out by the prosecution as if they are all made to falsify the accounts in pursuance of the criminal conspiracy and that the accused A1 made all those entries to accommodate the accused A2 to A4 to maintain sanction limits relating to CC account and ODBCC account is not established by the prosecution.

114.It appears that the accused A1 was found guilty in the departmental inquiry for misconduct, and he was removed from the service by imposing penalty of compulsory retirement and the investigation officer in the police report also stated that no sanction is required for prosecution of the accused

A1 as he was compulsorily retired from the service by the department.

115.Admittedly, there is lot of difference between misconduct and criminal misconduct. The investigation officer in the police report made those irregularities, which were considered as misconduct by the department, as criminal misconduct as if accused A1 has committed those irregularities with an intention to defraud the bank in pursuance of criminal conspiracy with the accused A2 to A4.

116.As already discussed above the prosecution witnesses deposed that accused A1 has no fraudulent intention and that he acted with good faith and all the records were maintained by the clerks in the branch, and they were verified by the then accountant Mr. Janardhan and submitted statement to

Page No. 36 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) regional office intimating about sanction limits in respect of accused A2 company.

117.Here, it is pertinent to note down that the accused during trial of the case as well as in the arguments made an attempt to say that none of the accused has no fraudulent intention to cheat the bank at any stage and that sanction limits and loan sanctioned to the accused A2 company was secured by collateral security as well as personal security to a tune of Rs.5 crores and that in the year 2001 itself the bank has filed recovery proceedings before The Debt

Recovery Tribunal treating it as civil dispute and thereupon, the matter was settled before the Debt Recovery Tribunal in the year 2004 before filing of police report. But the investigation officer for the reasons best known to him did not mention anything about the proceedings initiated by the bank for recovery of the amount and also about the payment of the amount due under the account and the matter was settled before the DRT and that the investigation officer suppressed payment of this amount before the Court only to maintain his case before the Court, and he did not conduct investigation fairly and suppressed the material fact causing prejudice to the accused.

118.Ex.P58 though not proved by the prosecution by examining concerned officer shows that account of the accused A2 was secured by collateral and personal securities of the directors of the company to a tune of Rs.4 crores worth of properties.

119.It is not the case of the prosecution that collateral securities provided by the accused A2 or personal securities provided by the directors of accused A2 company are fake or fictitious or false properties, in fact, the report shows that on verification it was found that those collateral securities were very much available for realization of the bank.

120.It is pertinent to note down that the investigating officer in the police report did not say anything about the recovery proceedings instituted by the bank for recovery of the amount due under the account pertaining to the accused A2 company. He made allegations and opined that the accounts were maintained falsely and wrongful loss was caused to the bank to a tune of Rs.55 lakhs.

121.It is pertinent to note down that police report was filed before the Court on 20.11.2014, the accused cross-examined the bank witnesses examined by the prosecution about the proceedings instituted by bank for recovery of amount due under the bank. PW1 in the cross-examination stated that he was not aware that a suit was filed by the bank for recovery of the amount and that

Page No. 37 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) he heard from third party that matter was settled and amount was paid by the accused A2.

122.PW3 deposed in the cross-examination that he was not aware of the suit filed for recovery of subject loan transaction from the borrower before the DRT and the matter was settled and case was withdrawn by the bank. PW8 deposed that the loan was secured, and he cannot say whether it was full secured and that he was not aware of the recovery application filed before the Debt

Recovery Tribunal, and he does not know about the happenings before the Debt

Recovery Tribunal.

123.PW9 in the cross-examination deposed that the bank filed an application

before the DRT for recovery of the loan amount from the accused A2 and Mr.

Sunil was the Branch Manager at the time of filing of application and that he is aware of that the matter was settled before the DRT.

124.The investigating officer PW13 in the cross-examination deposed that he did not come across during investigation that OA No.690/2001 on the file of

DRT, Hyderabad for recovery of the amount filed on 17.07.2001 and that it was compromised between the accused A2 and others and the bank filed full satisfaction memo dated 23.1.2004 before the DRT Hyderabad.

125.Therefore, except one witness, none of the prosecution witnesses coming forward to accept the fact that the bank filed recovery proceedings

before the DRT at Hyderabad in OA 690/2001 on 17.07.2001 and it was settled

and bank filed full satisfaction memo.

126.Here, it is also pertinent to note down that the accused A4 after his examination under section 313 of the Code of Criminal Procedure, filed an application under section 294 of the Code of Criminal Procedure along with certified copies of Tribunal proceedings asking the prosecution to admit those documents. The prosecution at that stage also not willing to admit the documents, which are certified copies of DRT Hyderabad. It shows that right from the beginning of the investigation, CBI always trying to suppress the truth regarding recovery of proceedings filed by the bank in the year 2001 and it was settled before the DRT at Hyderabad on 23.01.2004 ie., before filing police report.

127.This circumstance shows that the investigation officer simply relied on the internal departmental proceedings of the bank covered by Ex.P33 and P58 which speaks about the misconduct of the accused A1, developed them into criminal misconduct and to support those allegations made all attempts to suppress the above DRT proceedings from this Court and it is very clear that case was registered on the ground that fraud was committed, the investigation

Page No. 38 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) officer went on with the proceedings and filed the police report as if, the misconduct which is sufficient for departmental disciplinary proceedings also amounts to criminal mis-conduct as laid down under the Prevention of

Corruption Act, 1988 without knowing the difference between misconduct and criminal misconduct.

128.The prosecution in order to allege that there was a criminal conspiracy between the accused A1 to A4 contended that the accused A1 falsified the accounts pertaining to the accused A2 company to maintain the cash credit and

ODBCC limits and the accused A2 to A4 has issued cheques in the name of

M/s.Venkatesh Enterprises and also submitted bills drawn in the name of M/s.

Shruthi Agencies and that most of the bills presented on behalf of the

M/s.Sruthi Agencies were purchased for discount by the accused A1 were returned unpaid and that accused A1 purchased those bills to maintain the accounts limits and that M/s. Shruthi Agencies a fictitious entity.

129.I have already in detail discussed the case of the prosecution regarding the allegations pertaining to M/s. Venkatesh Enterprises and the role of accused A4 and held that the prosecution failed to prove that accused A4 was a partner M/s.Venkatesh Enterprises and the accused A1 had knowledge that accused A4 was a partner in M/s.Venkatesh Enterprises and that accused A4 issued those cheques drawn on the account of M/s. Venkatesh Enterprises to accommodate the accused A21 for falsification of the accounts.

130.I also in the above paras of the judgment in detail discussed the evidence produced by the prosecution with regard to its allegations pertaining to maintenance of ledger ODBCC register, ledger, day book, suspense account register, dispatch register and other documents produced by the prosecution and the entries made in the said registers with reference to the transactions of the accused A2 company by considering the evidence of PW1, PW3, PW4, PW5,

PW8, PW9 and PW10 who deposed about the above registers and the entries there in and upon considering their evidence and also the evidence of the investigating officers in the case, held that the evidence is in-sufficient and not establishing the case of the prosecution that the accused A1 has made entries in the above registers with any fraudulent intention to accommodate the accused A2 to A4 and to maintain the limits as sanctioned by the Regional

Office.

131.On the other hand, I have already held that the evidence produced by the prosecution create a doubt that the then accountant Janardhan was the person who was submitting housekeeping statements to the regional office about the transactions of the A2 company and the evidence of PW1 who has

Page No. 39 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) dealt many transactions pertaining to the accused A2 company is against the case of the prosecution and showing that accused A1 was not having any fraudulent intention at the relevant point in time and that it appears that the transactions alleged against the accused A1 were projected by the investigation officer as if they amount to criminal mis-conduct and to say that the accused

A1 caused wrongful loss to the bank the investigation officer for the reasons best known to him went to an extent of suppress the suit filed by bank for recovery of the amount before the Debt Recovery Tribunal Hyderabad and also settlement of the claim and payment of the same by the accused A2 company and the investigating officer it appears that has made an attempt to enlarge the misconduct alleged against the accused A1 into criminal mis-conduct by inflating certain instances based on the accounts maintained in the bank by the clerks and the accountants at the relevant point in time.

132.One of the such things relied upon by the investigation officer is purchase of bills presented by the accused A2 company from time to time and therein in the entries of M/s. Sruthi Agencies.

133.The prosecution made an attempt to say that number of bills were purchased by the accused A1, drawn in favour of Shruthi Agencies and that

Accused A1 though most of the bills were returned unpaid went on purchasing bills only to accommodate the accused A2 Company to maintain the ODBCC limits as sanctioned by the regional office and the investigation officer went to an extent of making allegation that Shruthi Agencies is a fictitious company.

Surprisingly he did not investigate as to who was the person behind M/s.Shruthi

Agencies if it is a fictitious entity and who has raised those bills creating a fictitious entity.

134.The prosecution in the evidence of PW1 produced Ex.P41 to P55 Over

Draft bills ie., OD BCC bills pertaining to accused A2 company drawn in favour of M/s.Shruthi Agencies on various dates during the period from 14.11.1998 to 28.12.1999.

135.PW1 in the chief examination while deposing about these bills stated that Director of M/s. Prime Pharmatech Pvt Limited submitted those bills to the branch Manager for discounting purpose and the Branch Manager handed over these bills for discounting, and he handled ODBCC Register vide Ex.P2 and all entries were authenticated by the accused A1, proceeds credited to the CCA of the accused A2, and he was sending bills vouchers in ODBCC register and the branch manager after authorizing proceeds will be credited to the cash credit account of Accused A2 and those respective bills were handed over to concerned clerks including him for dispatch, and he prepared envelop for

Page No. 40 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) delivering and then bills were dispatched to Shruthi Agencies through courier and thereafter bills were honoured by M/s.Shruthi Agencies, the proceeds were sent to SBH Old Bowenpally branch by way of cheque or Demand Draft after realization of the proceeds covered by Cheque or DD were credited to the

ODBCC account of the accused A2.

136.So, this evidence shows that everything was went on as per the procedure, but important aspect is that the bills were dispatched to

M/s.Shruthi Agencies through courier and some bills were honoured amounts were paid by way of cheques of drafts and proceeds were released.

137.So it goes against the case of the prosecution that M/s.Shruthi Agencies is a fictitious entity. PW1 never deposed that the bills sent to M/s.Shruthi

Agencies through courier were returned undelivered as no such addressee or no such entity existing.

138.Further, it is very clear that in some cases the drafts and cheques issued by M/s.Shruthi Agencies were also honoured and proceeds were realized. So, it is very clear that M/s.Shruthi Agency was having a bank account and it has issued drafts and cheques while honouring some bills. Surprisingly the investigating officer did not choose to investigate about the courier organization as to how and where those bills were delivered when M/s.Shruthi

Agencies is a fictitious entity. The investigation officer also did not investigate about the drafts and cheques issued in the name of Shruthi Agencies, and he did not investigate about the bank account of Shruthi Agencies to find out who was the person behind the bank account of M/s.Shruthi Agency if it is a fictitious entity.

139.Here, it is pertinent to note down that as per ODBCC register around 23 bills were in the name of Shruthi Agencies. PW1 in the chief examination deposed that most of the bills sent to Shruthi Agencies were not honoured and the same was reported to Branch Manager, and he instructed him to reverse the entry by debiting CCA of the accused A2, and accordingly reversed the bill amount to CC account and credited to ODBCC account. So he made an attempt to say that most of the bills were dishonoured to give an impression that only few were honoured but the accused A1 purchased those bills. But the document ie., ODBCC account register is against the testimony of PW1.

140.PW1 in the chief examination deposed that there are 27 entries in Ex.P2 register and among them 23 bills were raised on Shruthi Agencies and whenever the bills were returned unpaid the same will be marked in ODBCC account by rounding off serial number and amount will be debited in CC account of the

Page No. 41 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) respective customer and credited to ODBCC register of the respective customer or company.

141.When Ex.P2 register is verified, it is very clear that 23 entries out of 27 belonging to Shruthi Agencies and the remaining 4 bills belong to Shruthi

Agencies. Those 4 bills were not rounded off. It shall be presumed that these four bills were honoured. When coming to Shruthi Agencies, 23 entries under the entry Nos.14, 15, 16, 17, 18, 19, 20, 21, 22 and 23 entries not rounded off indicating that 11 bills were honoured out of 23 bills. So, the evidence of PW1 that most of the bills were unpaid is proved to be false since 50% or the bills were honoured by Shruthi Agencies.

142.The investigation officer instead of investigating about the courier service which delivered the bills to M/s.Shruthi Agencies and the bank which is having account of Shruthi Aencies and issued cheques and drafts to know whether M/s.Shruthi Agencies is a real entity or a fictitious entity has chosen a different method for the reasons best known to him.

143.The prosecution has examined PW2 Tax inspector who deposed that he looked after Domalaguda lower Tank bund, Ashoknagar, Chikkadpally as tax inspector and on the request of CBI he furnished information that premises bearing No. 1-2-336/221 is not in existence of MCH records of their circle as per report given by tax inspector.

144.Here, it is pertinent to note down that no field report given by tax inspector is placed before the Court. PW2 made an attempt to say that this door Number is not in existence in the records of his circle, as if it is a fictitious door number.

145.But falsity in his testimony in the chief examination is exposed in the cross-examination through Ex.D1 which was his statement made under section 161 of the Code of Criminal Procedure during investigation of the case to

P.W13. It shows that PW2 during investigation stated that filed verification conducted by him at Viveknagar for door No.1-2-336/221 does not exist and that it is existing in the jurisdiction of Gaganmahal area of Domalaguda.

146.But in the evidence he came with a version that it is not existing in the jurisdiction of Gaganmahal area of Domalaguda. The investigation officer did not choose to examine concerned tax inspector of Gaganmahal area of

Domalaguda to find out whether this door number was in existence or not in that area.

147.The prosecution has examined PW7 Smt. Balamani who worked as ACTO.

She deposed that Mr. Kasi Vishweswar Rao was their CTO and a letter dated 7.11.2003 shown to her in the chief examination bears his signature and as per

Page No. 42 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) the said letter on the request of CBI he furnished information that M/s.Shruthi

Agencies was not registered at Sultan Bazaar circle office and that CST

ABS/07/1/1985 was issued to M/.s.Decent Electrical at D.NO.5-1-611/1A4

Troop Bazaar, Hyderabad.

148.The prosecution did not choose to examine the person who addressed a letter to CBI. It is not known why he was not cited as witness when he addressed a letter to CBI on verifications of records and it is not known why some other officer ie., PW7 was cited as witness and asked to depose about the letter preventing the accused from cross-examination of the person who wrote letter.

149.The prosecution did not produce any ledger from sales tax office to prove that CST number was allotted to Decent electrical as alleged by the prosecution and also did not examine any person from Decent Electrical to speak that CST number was allotted to them.

150.It is pertinent to note down that PW7 in the cross-examination deposed that no letter was addressed to her by CBI, and she did not produce any document to CBI and no copy of the letter of CTO was marked to her, and she did not play any role in preparation or transmission of above letter.

151.This shows that PW7 has nothing to do with the verification of the CST number in the records of CTO, and she does not know anything about letter addressed by CBI. Therefore, the evidence of PW7 will not help the case of the prosecution in any manner even to allege that the CST number was not allotted to M/s.Shruthi Agencies.

152.The prosecution examined Mr.S.Mallaiah,(PW11) Postman in

Musheerabad. He deposed that his beat areas were Viveknagar,Chikkadpally,

Sanjeevanagar which are under the jurisdiction of Musheerabad post office area and Ex.P39 registered post letter addressed to M/s.Shruthi Agencies contained his endorsement.

153.Here, the investigation officer adapted a peculiar view of collecting evidence, instead of collection of evidence, he generated evidence. He addressed letter during investigation to M/s. Shruthi Agencies to know whether it was in existence. It is pertinent to note down that these bills were presented in the year 1998-99 and whereas this letter was addressed by the investigating officer in the year 2004 to know whether it was in existence in the year 1998 or 1999.

154.PW11 in the cross-examination deposed that as per Ex.P39 it was sent by

CBI police and that CBI police did not collect copy of the list of beat areas allotted to him. Therefore, his evidence also will not help the case of the

Page No. 43 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) prosecution to show that M/s.Shruthi Agencies was not existed in the given address in the year 1998-99. Hence, the evidence adduced by the prosecution will not carry the Court anywhere to say that M/s.Shruthi Agencies is a fictitious entity.

155.As already stated above there is no allegation in the police report or evidence produced in the trial that either accused A3 or A4 were the persons behind this Shruthi Agencies. On the other hand, the evidence of PW1 as already discussed above shows that bills sent through courier were delivered to

M/s.Shruthi Agencies at the relevant point in time and 50% of the bills were

honoured and the amounts were paid by way of cheques and drafts and this

evidence goes against the case of the prosecution that M/s.Shruthi Agencies is a fictitious entity.

156.Under the light of the above facts and circumstances, I have no hesitation to hold that the prosecution miserably failed to prove their allegations that M/s.Shruthi Agencies is a fictitious entity and that those bills were presented by the accused A2 to A4 to accommodate accused A1 to falsify the accounts in pursuance of criminal conspiracy.

157.In the light of the above facts and circumstances discussed by me and findings arrived by me, it is very clear that the prosecution failed to prove that there was an agreement between he accused A1 to A4 to do illegal acts to cheat SBH, Old Bowenpally branch by falsifying the accounts by submitting fake bills and cheques and that in pursuance of said criminal conspiracy A1 falsified the accounts pertaining to accused A2 company and that Accused A3 and A4 as Managing Director and Director respectively submitted cheques pertaining to M/s.Venkatesh Enterprises and bills pertaining to Shruthi Agencies to accommodate A1 to falsify the accounts to maintain the limits of Cash Credit account and ODBCC account of the accused A2 company.

158.The above facts and circumstances shows that the investigation officer did not conduct proper investigation to find out the role of accused A4 behind

M/s. Venkatesh Enterprises and the role of accused A3 or A4 in respect of

M/s.Shruthi Agencies and the investigation officer for the reasons best known to him made every attempt to suppress the recovery proceedings by the bank in the year 2001 and settlement of the claim in the year 2004 before filing of police report in the Court and during evidence also an attempt was made to suppress the same and all the facts circumstances makes out one thing very specific that is some irregularities were found during internal inquiries of the bank with reference to account of accused A2 company which may amounts to misconduct on the part of the accused A1, accountant P.W1 and other clerks

Page No. 44 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) working in the branch at that time and it is pertaining to note down that this case was not based on the report given by the bank and it was registered by CBI suo-moto on the basis of source information received by CBI and it is not known why the bank authorities did not choose to give any report to CBI when a serious fraud was noticed in the branch with regard to the account of accused

A2 company as alleged by the CBI.

159.So it is very clear that this case was developed based on the certain allegations pertaining to misconduct found during internal inquiries of the bank and the investigating officer has made every attempt to develop those allegations into criminal misconduct without knowing the difference between misconduct and criminal misconduct and probably he was under the impression that the fact of payment of amount due under the account before the Debt

Recovery Tribunal is also placed before the Court, the case may not stand to the scrutiny of the Court, made all efforts to suppress the same and it indicates that he did not conduct investigation not only properly but also fairly causing serious prejudice to the accused.

160.In the light of the above facts and circumstances as well as findings arrived by me, I answered the points 1 to 4 against the prosecution that the prosecution failed to prove its case for the offence punishable under sections 120-B, 420 of the Indian Penal Code against the accused A1 to A4, and the offence punishable under section 477-A of the Indian Penal Code, and the offence punishable under section 13 (2) r/w 13 (1) (d) of the Prevention of

Corruption Act, 1988 against the accused A1 beyond all reasonable doubt.

161.In the result, the accused A1 to A4 are found not guilty of the offence punishable under sections 120-B and 420 of the Indian Penal Code.

162.The accused A1 is found not guilty of the offence punishable under section 477-A of the Indian Penal Code and offence punishable under section 13 (2) r/w 13 (1) (d) of the Prevention of Corruption Act, 1988.

163.Hence, the accused A1 to A4 are acquitted under section 248(1) of the

Code of Criminal Procedure for the offence punishable under sections 120-B and 420 of the Indian Penal Code.

164.The accused A1 is acquitted under section 248(1) of the Code of Criminal

Procedure for the offence punishable under section 477-A of the Indian Penal

Code and offence punishable under section 13 (2) r/w 13 (1) (d) of the

Prevention of Corruption Act, 1988.

Page No. 45 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

165.The bail bonds of the accused A1 to A4 shall remain in force for a period of six months from the date of judgment as per section 437-A of the Code of

Criminal Procedure.

Dictated to the steno, transcribed and typed by him, corrected and

pronounced by me in the open Court, on this the 21st day of December 2018.

III ADDITIONAL SPECIAL JUDGE

FOR CBI CASES, HYDERABAD.

APPENDIX OF EVIDENCE.

LIST OF WITNESSES EXAMINED FOR

PROSECUTION:

PW1 Mr.Owk. Daniel PrasadCashier/Clerk, State Bank of Hyderabad, Old Bowenpally Branch, Hyderabad PW2 Mr.Ghouse Mohiuddin Tax Inspector, Circle No.3, MCH, Abids, Hyderabad in the year 2006.

PW3 Mr. K.G.Narsing Raoworked as Chief Manager (Advance), Regional Office, Region-II, Secunderabad. PW4 Mr. L.V. Sesha Sai worked as Typist Clerk, SBH, Bowenpally Branch, Secunderabad. PW5 Mr. J.Mallikarjuna Reddy worked as Assistant Manager, SBH, Service Branch, Abids, Hyderabad from 2002 to 2006.

PW6 Mr.Gopal Birla worked as Accountant, A.P. Mahesh Co-operative Urban Bank Limited, Sultan Bazar Branch, Hyderabad, from 2002 to 2005.

PW7 Smt. M.Balamani worked as Assistant Commercial Tax Officer, Sultan Bazar Circle, Abids Division, Hyderabad from 1995 to 2003. PW8 Mr. A.Venkataramaiahworked as Deputy Manager (Advances), Region- II, State Bank of Hyderabad, Hyderabad from July 1999 to August 2002. PW9 Mr. P.Satyanarayanaworked as Cashier Clerk, State Bank of Hyderabad, Old Bowenpally Branch, Hyderabad from May 2000 to June 2002. PW10 Mr. C.N.K.Sharma worked as Assistant General Manager, Region-II, State Bank of Hyderabad, from 1999 to March 2001.

PW11 Mr.S.Mallaiah Postman, Musheerabad Post Office.

PW12 Mr.Kilambi Alwar SwamyDeputy Superintendent of Police and Inspector of Police in CBI from 1999 to 2005.

PW13 Mr. Ravi Suman PrasadSub Inspector of Police, CBI, Hyderabad, from 1998 to February 2004.

Defence : Nil

Page No. 46 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

LIST OF DOCUMENTS MARKED FOR

PROSECUTION:

Ex.P1 Ledger sheets belonging to M/s.Prime Pharma Tech Private Limited vide A/c.No. CC 31. Ex.P2 OD BCC registers pertaining to M/s. Prime Pharma Tech Private Limited. Ex.P3 Cash Credit day book register for the period from 25.06.1999 to 04.06.2000. Ex.P4 Entry dated 18.11.1999 for Rs.13,50,000/- in Ex.P3 at page No.87.

Ex.P5 Copy of Chapter- III (Advances) in hand book on delegation of financial and administrative power updated up to 05.11.1999. Ex.P6 Copy of circular No.OPD/96-97/7, dated 16.07.1996 regarding sanction of advances in excess of discretionary powers. Ex.P7 Copy of Chapter-XXI relating to Bills and TT-purchase/discount and Bills for collections in Bank’s Book of Instructions Chapter-XV issued by State Bank of Hyderabad. Ex.P8 MICR Clearing Register of State Bank of Hyderabad, Old Bowenpally, Hyderabad for the period from 24.12.1998 to 19.04.1999.

Ex.P9 Four cheques dated 28.01.1999 for Rs.14,000/-, dated 01.01.1999 for Rs.5,000/-, dated 06.02.1999 for Rs.5 lakh, dated 24.03.1999 for Rs.1 lakh and debit voucher dated 20.02.1999 for Rs.2,98,767/- respectively. Ex.P10 Debit voucher dated 06.04.1999 for Rs.12 lakh relating to reversal of the amount relating entry dated 31.03.1999 in Ex.P1 ledger sheet. Ex.P11 Cheque dated 10.09.1999 for Rs.7,01,050/- issued in favour of yourself on the account of M/s.Prime Pharma Tech Private Limited. Ex.P12 Cheque dated 31.03.1999 for Rs.5 lakh issued in favour of APSFC on the account of M/s.Prime Pharma Tech Private Limited. Ex.P13 Day book for the period from 16.08.1998 to 24.06.1999.

Ex.P14 Relevant page No.145 and 146 relating to entries dated 31.03.1999 in Ex.P13.

Ex.P15 Transfer scroll for the period from 16.03.1999 to 04.06.1999.

Ex.P16 Demand Purchase Register for the period from 28.01.2000 to 31.03.2000. Ex.P17 The cheque for Rs.10 lakh dated 25.03.2000 issued in favour of M/s.Prime Pharma Tech Private Limited by Venkatesh Enterprises drawn on A.P. Mahesh Co-operative Urban Bank Limited, Sultan Bazar, Hyderabad.

Ex.P18 The cheque for Rs.5 lakh dated 29.03.2000 issued in favour of M/s.Prime Pharma Tech Private Limited by Venkatesh Enterprises

Page No. 47 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) drawn on A.P. Mahesh Co-operative Urban Bank Limited, Sultan Bazar, Hyderabad, along with cheque return memo. Ex.P19 Credit voucher dated 31.03.2000 for Rs.14,95,500/-, authenticated by accused A1. Ex.P20 four credit vouchers dated 31.03.2000 relates to M/s.Prime Pharma Tech Private Limited in respect of a cheque discounts for Rs.9,90,480/- each purchased by the bank. Ex.P21 Debit voucher dated 13.05.1999 for Rs.9,07,500/-.

Ex.P22 ODBCC ledger for the period from 10.09.1998 to 16.09.2000 of M/s.Prime Pharma Tech Private Limited.

Ex.P23 Dispatch Register for the period from 05.10.1999 to 28.02.2002.

Ex.P24 Suspense Account Register maintained in the branch for internal purpose for the period from 02.04.2000 to 18.03.2001.

Ex.P25 Entry dated 08.04.2000 in page No.3 of Ex.P24 register.

Ex.P26 Relevant portion in Section 161 Cr.P.C.Statement of PW5.

Ex.P27 Relevant portion in Section 161 Cr.P.C.Statement of PW5.

Ex.P28 Accountopening form bearing A/c.No.828 of M/s.Venkatesh Enterprises.

Ex.P29 Cheque dishonour memos dated 30.05.2000 and 07.04.2000 respectively issued by A.P. Mahesh Co-operative Urban Bank Limited, Sultan Bazar Branch, Hyderabad.

Ex.P30 Loan proposal dated 29.03.1998 along with opinion report of Canara Bank, two valuation reports, Chartered Accountant certificate, loan outstanding certificate of Canara Bank, Memorandum of Association and Article of Association of M/s.Prime Pharmatech (India) Limited.

Ex.P31 Communication of sanction dated 21.07.1998 issued by Regional Office to the Old Bowenpally branch.

Ex.P32 Sanction letter dated 10.09.1998 conveying the sanction of limits to M/s.Prime Pharmatech (India) Limited by the branch manager Mr.Y.V.S.Prabhakaram. Ex.P33 Quarterly report dated 26.05.2000 submitted to General Manager (Operations).

Ex.P34 Reconstructed ledger for the period from September 1998 to May 2000 relating to CC 31 of M/s.Prime Pharmatech (India) Limited. Ex.P35 Bank Transfer Scroll register for the period from 30.12.1998 to 14.03.1999.

Ex.P36 Bank’s Payment Register for the period from 07.02.1999 to 11.06.1999.

Ex.P37 Suspense Accounts Register for the period from 27.11.1998 to 16.11.1999.

Page No. 48 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

Ex.P38 Bank Transfer Scroll Register for the period from 31.08.1999 to 23.11.1999.

Ex.P39 Register post letter addressed to the Director, Shruthi Agency, 1-2- 236/221, Vivek Nagar, Chikkadpally, Hyderabad.

Ex.P40 Original FIR in R.C.No.13(A)/2003.

Ex.P41 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 14.11.1998 for Rs.1,72,600/- drawn in favour M/s.Shruthi Agencies.

Ex.P42 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 15.12.1998 for Rs.3,47,750/- drawn in favour M/s.Shruthi Agencies. Ex.P43 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 17.12.1998 for Rs.3,77,250/- and dated 19.12.1998 for Rs.4,21,250/- drawn in favour M/s.Shruthi Agencies. Ex.P44 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 23.01.1999 for Rs.10,06,000/- drawn in favour M/s.Shruthi Agencies.

Ex.P45 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 22.03.1999 for Rs.22,82,880/- drawn in favour M/s.Shruthi Agencies. Ex.P46 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 28.03.1999 for Rs.8,40,000/- drawn in favour M/s.Shruthi Agencies. Ex.P47 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 29.03.1999 for Rs.14,26,800/- drawn in favour M/s.Shruthi Agencies.

Ex.P48 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 29.03.1999 for Rs.2,05,000/- drawn in favour M/s.Shruthi Agencies.

Ex.P49 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 25.09.1999 for Rs.5,43,920/- drawn in favour M/s.Shruthi Agencies.

Ex.P50 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 27.09.1999 for Rs.7,95,800/- drawn in favour M/s.Shruthi Agencies.

Ex.P51 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 29.09.1999 for Rs.11 lakh drawn in favour M/s.Shruthi Agencies. Ex.P52 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 23.03.2000 for Rs.8,50,750/- and Rs.9,22,500/- drawn in favour M/s.Shruthi Agencies. Ex.P53 Delivery challan bearing No.148 dated 22.03.1999 of M/s.Prime Pharma Tech Private Limited in favour M/s.Shruthi Agencies along with covering letter.

Page No. 49 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

Ex.P54 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 27.12.1999 for Rs.11,78,750/- drawn in favour M/s.Shruthi Agencies containing invoice No.126 and delivery challan No.115.

Ex.P55 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 28.12.1999 for Rs.12,49,475/- drawn in favour M/s.Shruthi Agencies containing invoice No.127 and delivery challan No.116.

Ex.P56 Register relating to register post and courier dispatch maintained by SBH, Old Bowenpally Branch for the period from 10.01.1997 to 28.01.2002. Ex.P57 Peon delivery book of SBH, Old Bowenpally Branch for the period from 20.03.1999 to 29.06.2001. Ex.P58 Internal investigation report of Mr. N.R. Tagore, Manager, Vigilance Department, SBH Head Office, Hyderabad.

Ex.P59 Application form along with annexures for credit facilities of over above Rs.15 lakh (Rupees fifteen lakh only) of M/s. Prime Pharmatech (India) Private Limited submitted to SBH, Old Bowenpally Branch, Secunderabad.

Ex.P60 Carbon copy of invoice bearing No.098 dated 18.12.1998 of M/s. Prime Pharmatech (India) Private Limited.

Ex.P61 Cheque bearing No.560825 dated 05.05.1999 for Rs.35,000/- issued by M/s. Prime Pharmatech (India) Private Limited on CC A/c.No.31 in favour of Mr. Mahendra palviya.

Ex.P62 Credit voucher dated 18.11.1999 for Rs.13,50,000/- of SBH, Old Bownpally, relating to CC A/c.No.31 of M/s. Prime Pharmatech (India) Private Limited in favour of UTI Bank Limited.

Ex.P63 Copy of SBH Bank’s Book of Instructions Chapter-I Annexure-II.

Ex.P64 Courier service book register for the period from 03.04.1998 to 05.10.1999 of SBH, Old Bowenpally Branch, Secunderabad.

Defence :

Ex.D1 Relevant portion in Sec.161 Cr.P.C. Statement of PW2

Material Objects: Nil.

III ADDL. SPECIAL JUDGE FOR CBI CASES,

HYDERABAD.

Page No. 1 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

IN THE COURT OF III ADDL.SPECIAL JUDGE FOR CBI CASES, HYDERABAD

Present: B.V.L.N.Chakravarthi, III Additional Special Judge for CBI Cases, Hyderabad.

Dated Friday the 21stday of December 2018

C.C.No. 39 of 2005

Between:- Inspector of police, CBI/SPE/ Hyderabad. ….Complainant.

Vs.

1.Mr.Y.V.S.Prabhakaram, S/o Y.Venkateshwara Rao, the then Branch Manager,State Bank of Hyderabad, Old Bowenpally branch,Secunderabad R/o H.No.30, G.V.Reddy Colony, Alwal, Secunderabad- 500 010.

2. M/s.Prime Pharmatech (India) Limited, Located at 10-3-167/A, 2nd floor, Opp: Wesley Junior College for Girls, Secunderabad, Factory 6-106/1, Jeedimetla, Qutbullapur, Hyderabad. Represented by Mr. KajalGhosh, Managing Director

3. Mr. Kajal Ghosh, Managing Director, M/s. Prime Pharmatech (I) Limited, R/o 29, Janakapuri Colony, Secunderabad.

4. Mr. Rajendra Prasad Rathi, Director, M/s. Prime Pharmatech (I) Limited, R/o H.No.44-7-101/3, Isamia Bazaar, Hyderabad, Andhra Pradesh. … Accused A1 to A4

This case is coming on 13-12-2018 for final hearing before me in the presence of Mr. Alexander Lenin Raja, Public Prosecutor for the State and Mr.C.Raghu, Counsel for the accused A1, Mr.BVR Durga Prasad Counsel for the accused A3 and Mr. N.Kishore Rathi counsel for the accused A4 and having heard the arguments on both sides the matter stood for consideration till today and the Court made the following:

J U D G M E N T

1.The sum and substance of the prosecution case as per the police report is that the accused A1 Mr. Y.V.S.Prabhakaram was working as the Branch

Manager, State Bank of Hyderabad, Old Bowenpally branch, during the period 1998-2000 and that the accused A2 is M/s.Prime Pharmatech (India) Limited is a company and Mr. Kajal Ghosh accused A3 is the then Managing Director of accused A2 and Mr. Rajendra Prasad Rathi accused A4 is the Director of A2 company during the period 1998-2000, the accused A2 company was having a

Page No. 2 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

Cash Credit Account(CCA) bearing No.31 in State Bank of Hyderabad, Old

Bowenpally branch, Secnderabad and that it was also having over draft facility, and Over Draft Bills in course of Collection (herein after referred as ODBCC) facility in the same branch and while so, the accused A1 to A4 entered into an agreement to do illegal acts to cheat State Bank of Hyderabad by falsifying the

CCA and ODBCC accounts maintained with branch and in pursuance of the criminal conspiracy the accused A1 who is a public servant abused his official position and committed criminal misconduct by intentionally suppressing the irregularities from the controlling authority of State Bank of Hyderabad and also falsified the accounts maintained in the bank pertaining to the accused A2 company and caused wrongful gain to the accused A2 company and wrongful loss to the State Bank of Hyderabad Old Bowenpally branch to a tune of Rs.55 lakhs and the investigation of the CBI revealed that during the period from 10.09.1998 to 30.03.1999 five cheques aggregating to Rs.9.68 lakhs were withdrawn and paid, but they were not debited to the CC account No.31 pertaining to the accused A2, by the accused A1, as a result the outstanding balance in the account was wrongly projected and it was corrected only on 31.03.1999 by crediting the proceeds of a cheque for Rs.12 lakhs into the CC account by Mr. Daniel Prasad (PW1) the then cashier on the instructions of the accused A1, even before the actual realization of the cheque proceeds and it was returned unpaid on 06.04.1999 and entry was reflected on 29-09-1999 and therefore, it is evident that the accused A1 concealing the above facts though sanction limit was exceeded and as a result the outstanding balance in the ledger of the accused A2 was well within the limits sanctioned by the Regional

Office and the accused A1 updated the ledger on 31.03.1999, as it was actually closing and the annual returns were to be sent to the Regional Office on the same day and the accused A1 intentionally with a fraudulent purpose reflected the wrong statement of CC account No.31 to the controlling authority, and thereby the company had pecuniary advantage.

2.The further case of the prosecution is that the accused A1 during period from 01.04.1999 to 31.02.2000 passed five cheques worth Rs.29,08,550/- submitted for the accused A2 company, but he did not send them to the counter and as a result they were not reflected in the ledger on the original date of transaction and accused A1 has done the same to maintain the credit limits within the limits sanctioned by the Regional Office, and he also made a credit entry for Rs.13.05 lakhs in the ledger and falsified the bank documents by not bringing the correct balance to show that the total liability of the accused A2 did not exceed the limits and further another cheque for

Page No. 3 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

Rs.35,000/- was passed by Mr. A.Janardhan, the then accountant of the bank and it was not posted in the ledger and it was not ratified by the accused A1 but an entry was reflected on 31.08.1999 and it was authenticated by the

Branch Manager regularized the same.

3.The further case of the prosecution is that the accused A1 in order to regularize the amount covered by the cheques debited aggregating to Rs.42.93 lakhs, he passed six cheques on 31.03.2000 which aggregated to Rs.55 lakhs to

A2 company exceeding his discretionary powers and without prior approval of the controlling authority and though there is no Demand Purchase facility provided to the branch by the Regional Office and out of these cheques, four entries pertaining to Rs.40 lakhs are false entries without any instruments and the remaining two local cheques proceeds aggregating to Rs.15 lakhs were credited to the CCA even before they were realized and the entries worth to four cheques for Rs.40 lakhs are reflected in the DP register maintained by the branch, and they are found to be outstation cheques as per the register but the register proves that these four cheques were not sent for realization after discounting and it shows that the above cheques were not sent for national clearing to service branch and in respect of the two local cheques they relate to AP Mahesh Co-operative Urban Bank Limited, Hyderabad drawn on the account of Sri Venkatesh Enterprises wherein the accused A4 is one of the

Directors and the said two cheques were given by the accused A4 to facilitate the accused A1 to maintain the ledger balance in CCA No.31 well within the sanction limits and those two cheques were returned unpaid and it shows that the accused A1 in collusion with the accused A4 had committed these acts fraudulently.

4.The further case of the prosecution is that the accused A1 himself made entries to tally the balance sheet (General Manager) which will be sent to

Regional Office for perusal periodically, even though staff are dealing with the ledger and the entries which are not found in the ledger of CCA 31 are found in day books, transfer scrolls, cash scrolls maintained in the bank and most of them were not routed through the counter and when compared it with the ledger it never not tallied except on 31.03.1999 and 31.03.2000 and it shows that the accused A1 abused his official position and falsified the account in collusion with the accused A4 and cheated the bank to a tune of Rs.55 lakhs showing undue favour to the accused A2 company.

5.Further case of the prosecution is that the accused A1 purchased 23 bills drawn on M/s. Shruthi Agencies by the accused A2 company and submitted to avail ODBCC facility and as per the ODBCC register 10 bills aggregating to

Page No. 4 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

Rs.42.58 lakhs ie., 75% of the amount equivalent to Rs.35 lakhs were over due for payment on the date of detection by the Controlling Authority and these bills were submitted by the accused A2 for which A3 and A4 are Managing

Director and Director respectively under the signature of accused A4 to the branch for availing ODBCC facility of Rs.35 lakhs sanctioned to the accused A2 company and that the Shruthi Agencies is found to be a fictitious firm and the accused A1 sent the bills directly to M/s. Shruthi Agencies instead of sending it to any bank as per instructions of State Bank of Hyderabad and the bills were returned unpaid after expiry of the due date and it shows that the accused A1 had knowledge that the firm was not existing and the bills were returned unpaid the accused A1 only reversed the entries in ODBCC register but at any time he did not pass any remarks in the register which he ought to have been done and those bills were returned unpaid, he accepted further bills from the accused A2 and the reversing of entries made in ODBCC account was also reflected in the statement of account of the accused A2 company and the accused A3 and A4 were aware of the fact that the bills were being returned unpaid, but still continued to submit false bills for availing the ODBCC facility and it shows that the accused A3 and A4 on behalf of the company A2 submitted the bills to avail ODBCC facility and the accused A1 suppressed all these irregularities from the controlling authority and falsified the accounts by making false entries and as such accused A1 to A4 committed the offence punishable under section 120-B r/w 420, 477-A of the Indian Peal Code and the accused A1 also committed the offence punishable under section 13 (2) r/w 13 (1) (d) of the Prevention of Corruption Act, 1988.

6.The then Special Judge for CBI Cases Hyderabad took cognizance on 31.08.2005 for the offence punishable under sections 120-B read with 420 and 477-A of the Indian Penal Code against the accused A1 to A4 and section 13 (2) r/w 13 (1) (d) of the Prevention of Corruption Act, against the accused A1. The accused A1 is the Branch Manager, the accused A2 is the company, accused A3 is the then Managing Director of the company and the accused A4 is Director of

A2 company.

7.After appearance of the accused they were furnished with case copies in the case and from the case record it appears that the accused A1 received case copies on 28.03.2008, the accused A3 received copies on 27.12.2006 and the accused A4 received copies on 13.10.2005 but it was struck off in the charge sheet, therefore, an endorsement by the accused A4 shows that he has received copies of charge sheet and other documents and the accused A2 has received copies of charge sheet and other documents personally and not

Page No. 5 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) representing second accused ie., firm and subsequently as per the docket on 27.12.2006 accused A2 represented by the accused A3 filed memo stating that he is no longer as Managing Director of A2 company. But on the charge sheet there is an endorsement of accused A3 on the same day that he has received copies of charge sheet and section 161 Statements and documents on 28.03.2008. As per docket order dated 28.03.2008 an order was passed in

Crl.MP.No.1687/07 that accused A4 can represent A2 company as accused A3

retired as Managing Director of the company and in the charge sheet there is an endorsement of accused A4 that he received copies on 28.3.2008 and the matter was posted for consideration of charges.

8.While so, when case is coming for charges on 08.09.2017, it was observed that accused A2 company arraigned as accused, represented by Mr.

Kajal Ghosh as Managing Director and summons were sent to accused A2 company were received by Mr. Rajendra Rathi (A4) and on 14.02.2006, counsel

for accused A3 filed a memo that A3 resigned from A2 company and record

does not show anything that accused A2 company has appointed any representative for the purpose of inquiry or trial as per section 305(2) of the

Code of Criminal Procedure and the accused A3 filed application under section 305 of the Code of Criminal Procedure in Crl.M.P.No.1687/2007 stating that he seized to the managing Director of the Company and resigned to the company on 12.05.2005 and then the Special Judge for CBI Cases on 23.08.2008 passed order that accused A4 can represent the company and there upon accused A4 filed criminal Revision No.1471/2008 on the file of Hon’ble High Court on 31.11.2008 and the Hon’ble High Court disposed off the revision case observing that “In the circumstances, I am leaving the position open and in case it is found that the offence was committed by accused No.3 while he was managing director of the company, he shall be liable for the consequences” and para 6 held that “Accordingly, the Criminal Revision Case is disposed of”.

9.In view of the above circumstances an opportunity was given to the accused A2 company to intimate the Court whether it has appointed any person as representative as laid down under section 305 (2) of the Code of Criminal

Procedure to proceed further in the case under section 305(4) of the Code of

Criminal Procedure. But the accused A2 company did not appoint any representative as laid down under section 305(2) of Code of Criminal Procedure and hence the Court proceeded under section 305 (4) of the Code of Criminal

Procedure against A2 company.

10.Upon hearing both sides as per section 239 of the Code of Criminal procedure, framed charges as per section 240 of the Code of Criminal

Page No. 6 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

Procedure for the offence punishable under sections 120-B r/w 420 of the

Indian Penal Code against the accused A1 to A4 and for the offence punishable under section 477-A of the Indian Penal Code and for the offence punishable under section 13 (2) r/w 13 (1) (d) of the Prevention of Corruption Act, 1988 against the accused A1. The accused A1, A3 and A4 pleaded not guilty and claimed to be tried and so far as A2 company none has appeared as representative as required under section 305(3) of the Code of Criminal

Procedure and hence proceeded with trial.

11.During trial 13 witnesses were examined as PW1 to PW13 respectively for the prosecution and during their evidence 64 documents were marked as Ex.P1 to P64 for the prosecution, and Ex.D1 which is relevant portion of statement recorded under section 161 of the Code of Criminal Procedure in the evidence of PW2 was marked for the defence and no material objects were marked for the prosecution.

12.After conclusion of the evidence for the prosecution, the accused A1, A3 and A4 were examined on 04.10.2008 under section 313 of the Code of Criminal procedure regarding incriminating circumstances appearing against them from the evidence of prosecution the accused A1, A3 and A4 denied the evidence and so far as the accused A2 company is concerned no person appeared representing A2 company in spite of opportunities, and as such no statement on behalf of A2 was recorded and it was treated that A2 has no statement as laid down under section 305 of the Code of Criminal Procedure.

13.The accused A3 and A4 filed written statements regarding their pleas in the case, and A1, A3 and A4 reported no defence evidence.

14.Heard arguments of learned public prosecutor and counsel for the accused A1, A3 and A4 and no person represented on behalf of A2 company, hence proceeded under section 305(4) of the Code of Criminal Procedure for judgment.

15.Based on the above charges the following are the points for determination;

i)Whether the accused A1 as Branch Manager of State Bank of Hyderabad, Old Bowenpally branch, Secunderabad, M/s. Prime

Pharmatech Indian Limited (A2) represented by the then Managing

Director Mr. Kajal Ghose, Mr. Kajal Ghose accused A3 as Managing

Director of the Accused A2 and Mr. Rajender Rathi accused A4

Director of the accused A2, during period 1998-2000 at Secunderabad committed criminal conspiracy by agreeing to do illegal acts ie., cheating of SBH, Old Bowenpally branch by falsification of accounts

Page No. 7 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) of the branch, ie., CCA 31 and ODBCC account pertaining to A2 company to maintain the limits sanctioned to the accused A2 in respect of Cash Credit Account and OD BCC Account as alleged by the prosecution?

ii)Whether the accused A1 to A4 during the period 1998-2000 cheated the bank SBH, Old Bowenpally, Secunderabad dishonestly inducing the bank to deliver an amount of Rs.55 lakhs to the account of accused A2 by falsification of accounts of the company maintained with the bank and by submitting false bills in the name of Shruthi

Agencies which is said to be a fictitious agency as alleged by the prosecution?

iii)Whether the accused A1 during the period 1998-2000 while working as Branch Manager, SBH, Old Bowenpally branch willfully and with an intention to defraud falsified the accounts of the bank pertaining to the accused A2 company which includes CCA and ODBCC accounts and caused wrongful loss to the bank to a tune of Rs.55 lakhs as alleged by the prosecution?

iv)Whether the accused A1 while working as Branch Manager SBH, Old Bowenpally branch during the period 1998-2000 abused his official position as public servant to the pecuniary advantage of the accused

A2 to A4 to a tune of Rs.55 lakhs and thereby committed misconduct as alleged by the prosecution?

v)Whether the prosecution proved the charge with the offence punishable under section 120-B and 420 of the Indian Penal Code against the accused A1 to A4 and for the offence punishable under section 477-A of the Indian Penal Code against the accused A1, and for the offence punishable under section 13 (2) r/w 13 (1) (d) of the

Prevention of Corruption Act, 1988 against the accused A1 beyond all reasonable doubt?

Point Nos. 1 to 4:

16.I already in the above paras in detail mentioned the allegations made by the prosecution against the accused A1 to A4 pertaining to the charges punishable under sections 120-B, 420 and 477-A of the Indian Penal and also for the offence punishable under section 13 (2) r/w 13 (1) (d) of the Prevention of

Corruption Act, 1988.

17.The summary of the allegations made by the prosecution is that the accused A1 entered into the criminal conspiracy with the accused A2 to A4

Page No. 8 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) during period 1998-2000 to cheat State Bank of Hyderabad, Old Bowenpally branch and the accused A1 who was the then Branch Manager being a public servant abused his official position and committed criminal misconduct by intentionally suppressing certain irregularities pertaining to the CCA and ODBCC account belonging to the accused A2 company whose Managing Director and

Director are the accused A3 and A4 at that point in time and that the accused

A1 falsified the accounts in pursuance of the criminal conspiracy to maintain the limits as sanctioned by the Regional Authority, and he also purchased certain bills drawn by the accused A2 company in the name of M/s.Shruthi

Agencies said to be a fictitious entity to accommodate the accused A2 to A4 to avail ODBCC facility and in that process the accused A2 to A4 wrongly gained to a tune of Rs.55 lakhs and SBH suffered wrongful loss to that amount.

Therefore, to arrive at a proper and just decision on the charges in the case which are interconnected with each other on account of facts alleged by the prosecution, I am of the considered opinion that points 1 to 4 settled for determination for the charges in the case shall be considered together to avoid conflicting findings and repetition of facts from time to time, accordingly I took up points 1 to 4 simultaneously for consideration, instead of considering them independently one by one.

18.In the above paras of judgment I have already stated that the prosecution has examined 13 witnesses as PW1 to PW13 and during their evidence produced 64 documents which were marked as Ex.P1 to P64 respectively and the details of the witnesses and documents were mentioned in the appendix of judgment.

19.Mr. Owk Daniel Prasad (PW1) is the then cashier cum clerk worked in

SBH, Old Bowenpally branch from March 1998 to June 2000 who was handling the accounts maintained in the bank and making entries during the regular course of business including the subject accounts, and he was examined by the prosecution to speak about subject CCA and ODBCC accounts of the accused A2 company and entries made by him in respect of the disputed cheques and bills as alleged by the prosecution and the purported instructions given by accused

A1 as Branch Manager to him about the maintenance of the accounts relating to the accused A2 company.

20.During his evidence, the prosecution produced lot of documents covered by Ex.P1 ledger, Ex.P2 ODBCC Register pertaining to accused A2 company.

Ex.P3 Cash Credit day book register, Ex.P4 Entry dated 18.1.1999 for Rs.30.50 lakhs Ex.P8 MICR Clearing Register of State Bank of Hyderabad Ex.P9 four cheques, Ex.P10 debit vouchers, P11 and Ex.P12 cheques P13 day book, Ex.P14

Page No. 9 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) relevant page No.145, 146 relating to entries dated 31.03.1999 in Ex.P13,

Ex.P15 Transfer scroll, Ex.P16 Demand Purchase Register, Ex.P17 and Ex.P18 cheques, Ex.P19 Credit voucher, Ex.P20 four credit vouchers, Ex.P21 Debit voucher, Ex.P22 ODBCC ledger for the period from 10.09.1998 to 16.09.2000 pertaining to accused A2 company M/s.Prime Pharmatech (India) Private

Limited, Ex.P23 Dispatch Register for the period from 05.10.1999 to 28.02.2002, Ex.P24 Suspense Account Register maintained in the branch for internal purpose for the period from 02.04.2000 to 18.03.2001, Ex.P41 to P55 bills pertaining to Shruthi Agencies, Ex.P56 registered post and courier dispatch register. He was cross-examined on various aspects with respect to the allegations made by the prosecution. I will appreciate his evidence at a later stage in the judgment.

21.Mr.Ghouse Mohiuddin (PW2) is a Tax Inspector, Circle No.3, MCH, Abids,

Hyderabad during the period 2006. He was examined by the prosecution to show that there was no premises bearing No. 1-2-336/221 in his circle which relates to door number of Shruthi Agencies. In the cross-examination for the accused A1, Ex.D1 ie., part of his statement made under section 161 of the

Code of Criminal Procedure was marked to discredit his testimony before the

Court.

22.To corroborate his evidence and also to prove that M/s.Shruthi Agencies was not in existence at the relevant point in time, prosecution also examined two more witnesses they are Smt. M.Balamani (PW7) who worked as Assistant

Commercial Tax officer Sultan Bazaar Circle, Abids Division, Hyderabad form 1995 to 2003. She deposed that the CST number found on the bills of M/s.

Shruthi Agencies was not registered with Sultan Bazaar circle office and that it was allotted to another company ie., M/s.Decent Electrical with some other address.

23.The prosecution also examined Mr.Mallaiah (PW11) retired Postman who worked in Musheerabad Post office at the relevant point in time, and he deposed that there is no Shruthi Agencies in Viveknagar, Chikkadpally area as mentioned in envelop and Ex.P39 was marked in his evidence which is a registered post letter addressed to M/s.Shruthi Agencies by CBI during investigation ie., in the year 2004.

24.The prosecution in order to show that the accused A4 was also a partner in M/s.Venkatesh Enterprises and that it was having account in AP Mahesh Co- operative Urban Bank Limited has examined Mr. Gopal Birla (PW6) who worked as accountant in AP Mahesh Co-operative Urban Bank limited, Sultan Bazaar,

Hyderabad from 2002 to 2005 and produced Ex.P28 account opening form

Page No. 10 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) pertaining to M/s.Venkatesh Enterprises and Ex.P29 cheque dishonor memos pertaining to AP Mahesh Co-operative Urban Bank Limited. Ex.P18 cheque said to be have been issued by M/s.Venkatesh Enterprises in favour of accused A2 and purchased by the accused A1 on discount basis.

25.The prosecution has examined following officials of State Bank of

Hyderabad to prove its case with regard to the alleged irregularities purported to be committed by the accused A1 in respect of the account of the accused A2 company.

26.Mr. K.G.Narsing Rao (PW3) deposed that he worked as Chief Manager (Advance) Regional Office, Region-II, Secunderabad from July 2001 to July 2004 and also he never worked in State Bank of Hyderabad Old Bowenpally branch, and he deposed about certain procedure relating to sanction of loans by SBH and the guidelines of the bank to be followed and in his evidence the prosecution got marked Ex.P5 a copy of Chapter-III (Advances) hand book on delegation of financial and administrative power updated up to 05.11.1999,

Ex.P6 copy of circular No.OPD/96-97/7 dated 16.07.1996 regarding sanction of advances in excess of discretionary powers and Ex.P7 is copy of Chapter XXI relating to bills and TT purchase/discount and Bills for collections in bank’s book of instructions Chapter-XV issued by State Bank of Hyderabad, Hyderabad.

27.Mr.L.V.Sesha Sai (PW4) deposed that he worked as typist clerk, SBH,

Bowenpally branch Secunderabad from 1999 to 2000 and that certain transactions relating to subject accounts during his time.

28.Mr.J.Mallikarjuna Reddy(PW5) deposed that he worked as Assistant

Manager, SBH, Service Branch, Abids Hyderabad from 2002 to 2006, and he deposed about clearance of different types of cheques and when he was asked about an aspect relating to clearance of cheques through national clearing process, he did not support the case of the prosecution, and he was cross questioned by the learned public prosecutor and in his evidence Ex.P26 and P27 ie., some portions of his statement made under section 161 of Code of Criminal

Procedure were marked for the prosecution.

29.Mr. A.Venkataramaiah(PW8) deposed that he worked as Deputy Manager (Advances) Region-II State Bank of Hyderabad from July 1999 to August 2002 and his evidence is about his visiting the old Bowenpally branch to conduct quarterly inspection during May 2000 and noticing some irregularities about in the account of Prime Pharmatech (India) Limited and reporting the same to the

Regional Office and in his evidence Ex.P33 quarterly report dated 26.05.2000 was marked purported to be submitted to General manager (Operations). In his evidence he also deposed about some loan proposal, communication of

Page No. 11 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) sanction and sanction letter of M/s.Prime Pharmatech India Limited forwarded by another Branch Manager Mr.P.Narasimha was marked as Ex.P30 to P32. He was cross-examined at length to say that he never visited Old Bowenpally branch as deposed by him and that Ex.P33 report was brought into existence during investigation at the instance of CBI to support CBI Case.

30.The prosecution has examined PW10, the then AGM, SBH Zonal office and whose name was referred by PW8 as signatory to Ex.P33 report.

31.Mr.C.N.K.Sharma (PW10) deposed that he worked as Assistant General

Manager, Region-II, State Bank of Hyderabad from 1999 to March 2001 and that

PW8 worked as Desk Officer (Advances) at that time and that he used to visit branches quarterly for every three months and I the year 2000 he visited Old

Bowenpally branch and accused A1 was the branch Manager at that time and

Ex.P33 shown to him is the report submitted by him to the General Manager about irregularities relating to purchase of cheques pertaining to M/s.Prime

Pharmatech (India) Limited. He was also cross-examined by the accused A1 stating that Ex.P33 report is a fabricated one.

32.Mr. P.Satyanarayana (PW9) deposed that he worked as cashier clerk,

State Bank of Hyderabad Old Bowenpally branch Hyderabad during May 2000 to

June 2002. He deposed that Mr. Balakrishnan instructed him to reconstruct cash credit ledger belonging to CC account No.31 of M/s.Prime Pharmatech (India) Limited since some irregularities were reported and in his evidence

Ex.P34 reconstructed ledger, Ex.P35 Bank Transfer Scroll register, Ex.P36

Bank’s Payment Register, Ex.P37 Suspense Accounts Register and Ex.P38 bank

Transfer Scroll Register were marked, and he deposed that on comparison of

Ex.P1 ledger, Ex.P34 was reconstructed, and he noticed certain differences, and they were tallied only on 31.03.1999.

33.He was also cross-examined that Ex.P34 was brought into existence during the investigation and that he did not prepare it and that Ex.P34 was not based on any bank records.

34.Mr. Kilambi Alwar Swamy(PW12) deposed that he worked as Deputy

Superintendent of Police and Inspector of Police in CBI from 1999 to 2005, and he registered Ex.P40 FIR on 07.04.2003, as per the instructions of the then SP,

CBI, Hyderabad and submitted the same to the Court and that it was based on source information.

35.Here, it is pertinent to note down that SBH, Hyderabad did not present any report to CBI police about the alleged irregularities of the accused A1, the

FIR in the case was registered by CBI suo-moto on the basis of source information.

Page No. 12 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

36.Mr. Ravi Suman Prasad (PW13) is the investigating officer in the case, and he filed police report in the case. He deposed that he worked as Sub-

Inspector of Police in CBI, Hyderabad from 1998 to February 2004, and he has taken over the investigation of the case on 25.07.2003, as per the orders of SP,

CBI, Hyderabad, and he obtained permission from the then Special Court for conducting investigation of the case since he was Sub-Inspector of Police, and he deposed about examination of witnesses and recording of their statements during investigation and also collection of various documents relating to case during investigation and after completion of investigation filed charge sheet.

During his evidence, prosecution got marked certain documents under Ex.P59 to P64 which were collected by him from the bank and other agencies and includes copy of internal inspection report of one Mr. N.R.Tagore, Manager,

Vigilance marked as Ex.P58 to say that an investigation was conducted by

Mr.N.R.Tagore and he found certain irregularities committed by the accused A1 with respect to account of accused A2 company.

37.The investigation officer was cross-examined by the learned counsel for defence at length to point out that he did not conduct the investigation properly and fairly and that he filed the police report based on presumptions and surmises only for the sake of filing the case against the accused and that he did not prosecute the real accused in the bank relating to falsification of accounts as alleged by the prosecution.

38.It is pertinent to note down that as per Ex.P40 FIR was registered against the accused A1 and one Mr.Janardhan, the then Accountant, SBH, Old

Bowenpally branch, Secunderabad but the police report was filed against the accused A1 to A4 only and Mr. Janardhan was not prosecuted by the CBI and it was reported that no evidence was available against Mr. Janardhan, so he was not sent for trial. The Investigation Officer in the chief examination deposed the same stating that the allegations against Mr. Janardhan was not established during investigation.

39.It is the contention of the accused A1 that he is innocent, and he discharged his duties as per rules and that he did not commit any irregularities as alleged by the prosecution and in-fact Mr. Janardhan was the accountant at that time, and he was the concerned officer of the bank and who supervised the accounts pertaining to the bank accounts and if at all any irregularities were found as alleged by the prosecution, he shall be responsible for those irregularities, but the investigation officer intentionally did not prosecute him and implicated accused A1 falsely to save Mr.A. Janardhan for the reasons best known to him.

Page No. 13 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

40.Basing on the above evidence placed before the Court, the learned public prosecutor submitted arguments that the evidence of Mr.Owk. Daniel

Prasad (PW1) who worked as Cashier cum Clerk, State Bank of Hyderabad, Old

Bowenpally Branch, Hyderabad during the period of the accused A1 as well as the subject matter shows that Cash Credit limit of the accused A2 was Rs.35 lakhs and Over Draft Bills in Course of Collection (OD BCC) limit was Rs.35 lakhs and Letter of Credit limit was Rs.20 lakhs as sanctioned by the Regional Office and the accused A1 as Branch Manager cannot permit the accused A2 company to exceed the limits without taking prior approval from the Regional Office and the evidence further established the procedure about the maintenance of the

CCA ledger, OD BCC ledger and register and as per the evidence of witnesses on 13.11.1999 an amount of Rs.13.50 lakhs was credited to the CC account of the accused A2 and it was credited under Letter of Credit and it was also found in

Ex.P3 at page No.87 on 18.11.1999 and accused A4 was authenticated by the accused A1, but he did not mention the date and cheque for Rs.7 lakhs were reflected at page No.47 of Ex.P3 but it was not reflected in Ex.P1 ledger and later it was authenticated by accused A1 on 31.3.1999 and it was not posted in

Ex.P1 ledger and all these acts were made only to show that balance was not exceeded and further as per the evidence of PW1, Ex.P17 and P18 are the documents issued by Sri Venkatesh Agencies for Rs.10 lakhs and Rs.5 lakhs respectively, and they were purchased by accused A1 for discounting though he was not having authority, and they were entered in Ex.P1 ledger and not entered in Ex.P3 day book, and they were dishonoured subsequently, and they were not debited in the CCA of the accused A2 company instead they were debited in suspense account maintained in the bank under Ex.P24 and P25 entered only to accommodate the accused A2 to maintain the ledgers and further the evidence also shows that the accused A1 also purchased four cheques for Rs.10 lakhs each on 31.1.2000 and credited the amount to Ex.P1 ledger of the accused A2, and they were reflected in DP register voucher entries at page Nos.789, 790, 791 and Ex.P21 debit voucher shows that they were debited in the accounts and later the cheques were dishonoured, but they were not debited from the account of the company and further the peon dispatch book produced by prosecution shows that actually these cheques were not sent to the drawer for collection and it shows that only to manipulate the limits the cheques were submitted by the accused A2 company and same was accommodated by accused A1 showing credit into ledger.

41.Learned public prosecutor further submitted arguments that the evidence of Mr.Ghouse Mohiuddin Tax Inspector (PW2), Smt. M.Balamani (PW7),

Page No. 14 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

Mr.S.Mallaiah Postman (PW11) shows that M/s. Sruthi Agencies is a fictitious entity and the evidence of Mr. K.G.Narsing Rao (PW3), Mr. J.Mallikarjuna Reddy (PW5), Mr. A.Venkataramaiah (PW8) and Mr. C.N.K.Sharma (PW10) shows that the accused has no authority to purchase those bills and the evidence of PW1 shows that the accused A1 purchased bills though most of the bills were dishonoured and all these facts shows that the accused A1 in furtherance of criminal conspiracy with accused A2 to A4 purchased bills drawn in the name of

M/s.Shruthi Agencies to the pecuniary advantage of the accused A2 and caused wrongful loss to the bank.

42.Learned public prosecutor further submitted arguments that the evidence of Mr.Gopal Birla (PW6) coupled with the account opening form relating to M/s.Venkatesh Agencies that accused A4 was one of the partners in

M/s. Venkatesh Agencies and Ex.P17 and P18 cheques were issued by

M/s.Venkatesh Agencies in favour of the accused A2 and those cheques were dishonoured and these circumstances shows that the cheques were issued by the accused A4 in furtherance of criminal conspiracy to maintain balance limits of CCA and ODBCC accounts of the accused A2 company.

43.Learned public prosecutor further submitted arguments that the evidence of Mr. A.Venkataramaiah (PW8) and Mr. C.N.K.Sharma (PW10) coupled with Ex.P33 quarterly audit report and Ex.P58 departmental inquiry report marked in the evidence of PW13 Investigating Officer shows that the accused A1 committed several irregularities and falsified the accounts in relation to accused A2 company and his evidence corroborates the above evidence produced by the prosecution and the evidence of the investigation officers PW12 and PW13 shows that the First Information Report Ex.P42 was registered based on source information as per the instructions of the SP, CBI,

Hyderabad and later investigation was conducted by PW13 by taking permission of the then Special Judge for CBI Cases, Hyderabad as per law and therefore, the evidence produced by the prosecution proved the charge against all the accused beyond all reasonable doubt.

44.Learned counsel for the accused A1 submitted arguments that the evidence of PW1 is sufficient to show that the case of the prosecution against the accused is false and that accused A1 was innocent as PW1 in his evidence categorically deposed that the accounts were maintained by himself and other clerks in the branch and one Mr.A.Janardhan was the accountant at the relevant point in time, and he was the immediate supervising officer of PW1, and he was also authenticated the entries made by clerks in the ledger and day books of the bank in respect of accused A2 company and it is also established

Page No. 15 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) that originally this account was with the Canara Bank and later it was taken over by State Bank of Hyderabad Old Bowenpally branch even prior to the date of joining of the accused A1 in the branch and therefore, the accused A1 has no role in sanction of the limits pertaining to CCA and ODBCC as well as LC accounts in favour of the accused A2 and all these were sanctioned by the

Regional Office and the evidence of PW1 established that the accounts were maintained by the clerical staff in the branch and as a supervising officer sometimes the branch manager authenticated the entries posted by the clerks and PW1 categorically admitted that he made entries in Ex.P1 ledger and in the chief examination he deposed that he used to make entries during business transactions in the ledger and CC ledger balance will be tallied with the general ledger weekly or fortnightly and it will be allotted to the clerks on rotation basis but surprisingly for the reasons best known to him he made attempt to say that the Branch Manager used to do tallying work of this account which is against his own statement, and he deposed that several bills were purchased and sent to the customer for realization of the branch and most of the bills were returned unpaid, and he brought the same to the notice of the Branch manager, and he said that there are some disputes between the company and M/s.Sruthi Agencies and instructed him to reverse the entries by debiting cash credit account and credit to OD BCC account and this statement is proved to be not correct when ODBCC register is scrutinized, it is very clear that out of 23 bills pertaining to Shruthi Agencies around 11 bills were

honoured which means 50% of the bills were honoured by Shruthi Agencies and

therefore, the contention of the prosecution that most of the bills were not

honoured as stated by PW1 for the reasons best known to him and his evidence

shows that accused A1 instructed him to reverse entries by debiting cash credit account and giving credit to ODBCC account whenever bills were dishonoured and therefore, no malafides can be attributed to the accused A1 to say that he manipulated the accounts to maintain balance.

45.Learned counsel for the accused A1 further submitted arguments that

PW1 in his evidence in the chief examination itself deposed that he used to make entries during the course of business transactions in the said ledger and they were authenticated by the accused A1, so, the case of the prosecution that accused A1 falsified the accounts is disproved by the testimony of PW1 and further PW1 deposed that Manager was having good faith on the company and accepted the transactions.

46.He further argued that PW1 evidence shows that accused A1 was not having any fraudulent intention while permitting the transactions relating to

Page No. 16 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) the accused A2 company and further the evidence covered by Ex.P1 ledger shows that after discounting cheques as alleged by the prosecution no amount was withdrawn by the accused A2 and it shows that accused A2 had wrongfully gained and PW1 deposed that as per entry dated 31.03.1999 in Ex.P8 one cheque for Rs.12 lakhs issued by AP Mahesh Co-operative Urban Bank in favour of the accused A2 was sent for collection and dishonoured and amount was reversed at a later date and entry is in his hand writing and it shows that these entries were made by PW1 and not by the accused A1 and further he deposed that on 31.03.1999 he posted entries in Ex.P1 ledger regarding four cheques and one debit voucher, and he made attempt to say that he made those entries as per the instructions of the accused A1 and so, the entries covered by Ex.P9 cheques were posted by PW1 in Ex.P1 ledger and not by the accused A1 and further PW1 in the cross-examination deposed that he was maintaining Ex.P1 ledger and some other clerks were also making entries in Ex.P1 during course of business and they are Smt. Aruna and Mr.Sesha Sai and the prosecution did not examine those clerks to speak that the entries in Ex.P1 ledger were posted as per the instructions of the accused A1 and it is pertinent to submit that even as per Ex.P58 report relied on by the prosecution, some irregularities were found against Mr.A.Janardhan the then accountant, and PW1 also and therefore, PW1 cannot be treated as an independent witness to believe his evidence and it shows that PW1 for the reasons best known to him, to save his skin deposing against the accused A1 and even as per the case of the prosecution

Mr.A.Janardhan the then accountant was arraigned as an accused in the FIR but the investigation officer PW13 did not bring him to the Court for trial on the ground that no evidence was found against him though Ex.P58 report also shows some irregularities against him and the investigation officer in his evidence except saying that he did not find any material against

Mr.A.Janardhan to prosecute him, but could not show any material about the same and further the prosecution did not examine Mr. A.Janardhan not even as a witness to say about the alleged irregularities in maintenance of the accounts and instructions alleged against the accused A1 and it is very clear that the prosecution suppressed the evidence of Mr. A.Janardhan only to implicate the accused A1 falsely in the case.

47.He further argued that PW1 in the cross-examination categorically admitted that Mr.A.Janardhan was working as accountant in the branch at the relevant point in time, and he was the supervising officer over PW1 and therefore, he is an important and material witness to the case, and P.W1 further admitted that Ex.p1 ledger contained some initials of Mr. A.Janardhan

Page No. 17 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) also and it is the duty of the accountant in the branch to prepare housekeeping statements which will be submitted to Regional Office, but surprisingly the prosecution alleged that the accused A1 suppressed the information from controlling authority.

48.The learned counsel for the accused A1 submitted that PW1 categorically admitted that the accused A1 during course of business relating to the accused A2 company was not aware of the exceeding limits on various facilities and during course of business whatever entries reflected in ODBCC register, LC register will also be reflected in Ex.P1 ledger and accordingly they have been reflected, and he does not know anything about the entry relating to

Rs.30.50 lakhs in Ex.P1 ledger reflected at Ex.P1/9 and that the registers like

ODBCC register, LC register, Day Book and Ex.P1 ledger will be maintained by staff of the branch and further he also admitted that accused A1 has no dishonest intention with regard to the transactions of the accused A1 and these admissions made by PW1 categorically established that all the accounts were maintained by the staff in the branch and supervised by the accountant

Mr.A.Janardhan and he was submitting monthly housekeeping statements to the regional office and the accused A1 as branch manager has authenticated the entries posted during course of business by staff in the branch and that he was not aware anything about the exceeding of the limits pertaining to the accused A2 company, and he has done everything with good faith about the accused A2 company, and he has no fraudulent intention at all while dealing with the accounts of the accused A2 and as such PW1 evidence is sufficient to disbelieve the case of the prosecution.

49.The learned counsel for the accused A1 further submitted arguments that the evidence of PW1 shows that the bills relating to M/s.Shruthi Agencies were handed over to the accused A1 who was Manager of the branch only and not in personal capacity and that it was a practice followed in the branch and some person of the company will be visiting the bank to process the work on behalf of the company and accordingly the accused A4 attended the bank for some times on behalf of A2 company as Director, and clerks were maintaining

Ex.P6 dispatch register basing on the exigency of the work and further the evidence of PW1 shows that the Director of the accused A2 submitted bills relating to M/s.Shruthi Agencies as per the practice in the branch and those bills were handed over to PW1 for discounting the bills and then PW1entered the bills in ODBCC register vide Ex.P2 and prepared vouchers to credit the proceeds in the CCA, and he was sending the bills with ODBCC register to the accused A1, and he was authorizing the same and the proceedings were

Page No. 18 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) credited to the account of A2 company and then the bills were handed over to the concerned clerks including PW1 for dispatch and then bills were dispatched through ANL parcel or courier and if the bills were honoured by Shruthi

Agencies the proceedings were sent to the branch by cheque or Demand Draft and after realization the proceeds were credited to ODBCC account and therefore, the said evidence of PW1 shows that entire process was made as per the rules and practice adapted in the branch and nothing was made out to point finger towards the accused A1 in accepting bills of M/s.Shruthi Agencies and PW1 never deposed that SBH, Old Bowenpally branch or accused A1 has no authority to purchase bills of Shruthi Agencies and the ODBCC register shows that more than 50% bills were honoured and as such the contention of the prosecution that M/s.Shruthi Agencies is a fictitious entity is not true and correct and this allegation was made by the CBI only to implicate the accused

A1 falsely in the case and the evidence of PW2 shows that the door No.1-2- 336/221 was not in existence in the records of their circle as per the report given by Inspector, Ex.D1 ie., part of statement of PW2 made under section 161 of Code of Criminal Procedure shows that the said door number is existed in the jurisdiction of Gagan Mahal area of Domalaguda and therefore, Ex.D1 shows that PW2 purposefully did not depose the said fact before the Court and made an attempt to say as if the door number was not in existence and the prosecution purposefully and intentionally did not choose to examine any person from Gaganmahal area of Domalaguda about existence of this door number and further the evidence of PW7 Balamani shows that one Kasi

Vishweswar Rao intimated about CST No.ABS/07/1/1985 standing in the name of Shruthi Agencies stating that it was not allotted to said entity and it was allotted to M/s.Decent Electrical, but surprisingly the prosecution did not choose to cite said Kasi Vishweswar Rao who furnished information to CBI, as witness, and the prosecution did not produce the records of ACTO, Sultan

Bazaar circle to show that this CST number was allotted to M/s.Decent

Electrical as mentioned in the letter and the prosecution did not examine any person from Decent Electrical also to show that this number was allotted to them and therefore PW7 evidence is not useful to the prosecution to establish that CST number mentioned in the bills of Shruthi Agencies is a fake number and the evidence of Mr. Mallanna (PW11) is also not useful to the prosecution since his beat area does not cover Gaganmahal of Domalaguda as the evidence of Tax Inspector shows that this door number existed in Domalaguda and the prosecution purposefully and intentionally did not examine the postman relating to Gaganmahal area of Domalaguda to rule out that this door number

Page No. 19 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) was also not existed in that area and further his evidence is based upon a letter addressed by CBI during course of investigation, the post man did not depose that Shruthi Agencies was not there in the year 1999 at the time of alleged bills and as such the prosecution failed to prove that Shruthi Agencies was a fictitious entity and further there is no evidence at all to say that the accused

A1 was having knowledge that M/s.Shruthi Agencies was floated by the accused

A3 and A4 on behalf of said entity and on the other hand ODBCC register proceeds shows that many of the bills were honoured by said Shruthi Agencies and in those circumstances, the case of the prosecution that Shruthi Agencies is a false and fictitious entity and that accused A1 had knowledge about it and accommodated A2 to A4 and purchased bills drawn on Shruthi Agencies to maintain the limits of CCA and ODBCC accounts cannot be believed.

50.The learned counsel for the accused A1 further argued that the evidence of Mr.Gopal Birla (PW6) also does not establish that accused A4 was a partner in M/s.Venkatesh Enterprises and the prosecution did not produce any evidence to connect the accused A4 with Ex.P28 account opening form and PW6 did not depose that the accused A4 in the case is the person who opened the account under Ex.P28 and as such case of the prosecution that accused A4 issued Ex.P17 and P18 cheques to accommodate the accused A1 to maintain the limits cannot be accepted and believable.

51.The learned counsel for the accused A1 further argued that the evidence of PW1 that an amount of Rs.55 lakhs was exceeded against sanctioned limit against CCA is also not established by any evidence and four cheques of Rs.10 lakhs each to show that those amount was entered into suspense account registered as alleged by the prosecution and the suspense account register produced by prosecution under Ex.P24 does not contain any entries relating to these four cheques and when coming to Ex.P17 and P18 also there are no entries and Ex.P25 entry as pointed out by PW1 also does not relate to Ex.P17 and P18 as there is no information available there and as such the allegation of the prosecution is not correct.

52.The learned counsel for the accused A1 further argued that Mr.K.G

Narsing Rao (PW3) deposed about procedure relating to sanction of loan CCA and term loan and admittedly the account was sanctioned by the Regional

Office and not by the accused A1 and Ex.P5 to P7 does not establish anything against the accused A1 and in the cross-examination he deposed that he was not aware whether loan was taken from Canara bank, and he was not aware that A1 was Manager at the time of sanction of subject loan, and he categorically admitted that accountant or other officer in the bank will be

Page No. 20 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) checking the day to day entries, when limits are exceeded the manager will be taking the post approval from Regional office and as per evidence of Mr. L.V.

Sesha Sai (PW4), Mr. Janardhan was the accountant in Bowenpally branch at that time and Ex.P12 cheque was posted by Mr.Janardhan though there is no sufficient balance in the account, and he admitted that other clerks were also attending counter work and Mr. Satyanarayana and Mr.Ramana are the clerks will be making entries in the ledger and clearing register, day book and accountant will send the entries for authentication of the entries made by counter clerk and Mr.Janardhan was accountant at that time and entries in

Ex.P1 ledger will be made by counter clerks ie., Aruna and, PW1, and they were maintaining the day book and therefore his evidence shows that Mr.

Janardhan was verifying entries made by the clerks and the clerks are making entries in the ledger clearing and dispatching registers and day books, but, the prosecution purposefully did not cite Mr.Janardhan either as an accused or as witness though he played vital role in maintenance of the bank registers and submitted information to the regional office at the relevant point in time and it is fatal to the case of the prosecution.

53.The learned counsel for the accused A1 further argued that as per the evidence of J.Mallakarjun Reddy (PW5) that he do not know anything about letter of chief Manager addressed to CBI and therefore the allegations of the prosecution that 4 cheques for Rs.10 lakhs each was not sent to national clearing process is not proved by the prosecution, and he further stated that the evidence of A.Venkataramaiah (PW8) shows that one day in May 2000 as per the instructions of Mr. CNK Sharma (PW10) the then AGM visited Old

Bowenpally branch conducted quarterly inspection, and he went there at 10:00 am and conducted inspection and observed some irregularities about 4 cheques for Rs.10 lakhs each, and then he informed the same to GM and GM visited the branch at about 3:30 pm on the same day and submitted report to Regional

Office under Ex.P33 and therefore, his evidence shows that as a part of quarterly inspection he visited the branch and found the alleged irregularities and then it was informed to PW10 and then submitted Ex.P33 report and in the cross-examination he admitted that Ex.P33 does not contain his signature and his name was also not mentioned in that and that in Ex.P33 there is no allegation of fraud and that the loan was secured and PW10 deposed that in the year 2000 he visited Old Bowenpally branch and Ex.P33 report was submitted by him to GM about irregularities about four cheques stating that A1 purchased cheques beyond his discretionary powers and in the cross-examination he deposed that during the morning hours he visited Old Bowenpally, and he sent

Page No. 21 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

PW8 after noon to Old Bowenpally branch, and then he visited the branch on the same day around 5.00 pm, he informed him about the cheques and basing on the report of PW8 he submitted Ex.P33 report to Regional Office and his evidence before the Court is contrary to the evidence of PW8 as PW8 deposed that he visited the branch in the morning hours whereas PW10 came to the branch during afternoon and this shows that Ex.P33 is a fabricated report subsequently for the reasons best known to the CBI and this was corroborated by the evidence of PW1 who deposed that periodical audits were conducted in the branch and in periodical inspection auditor did not raise any objection and this shows that no objections were raised in any periodically audits and as such the evidence of PW8 and PW10 cannot be believed, and therefore no value can be attached to Ex.P33 report and he also submitted that Ex.P58 was marked in the evidence of investigation officer as an internal inspection report of Mr.

N.R. Tagore, Manager, SBH, Head Office, Hyderabad and the prosecution did not choose to examine any person from vigilance department or Mr. N.R.Tagore to prove the contents of Ex.P58 report and the investigating officer in the cross-examination deposed that he cannot recollect and say how they collected

Ex.P58 report, and he also admitted that it does not contain signature of

N.R.Tagore on all pages of report he cannot say who signed on Ex.P58 report and as such the evidence of the Investigation officer shows that Ex.P58 was a fabricated document for the reasons best known to the investigation officer and it does not carry any weight and it will not prove the case of the prosecution in any manner and on the other hand the report shows that account of accused A2 was clear account and it was having collateral security as well as personal security of other persons to a tune of around four crores and admittedly as per the report the collateral security and personal security were very much available and as such the allegations of the prosecution that fraud was committed in the case is false allegation and CBI was used to collect the amount due in the account from the A2 company and CBI filed false case to coerce the accused A2 to A4 to clear the dues under the account and the evidence on record as well as documents produced by the other accused in the case shows that after registration of FIR, the accused A2 company paid amount to the bank and final settlement was recorded before the Debt Recovery

Tribunal and even before filing of police report this fact was known to the investigating officer as well as other bank witnesses but intentionally and purposefully they made an attempt to say that they do not know anything about the settlement for the reasons best known to them and the investigating officer knowing fully well about this did not mention anything about same in

Page No. 22 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) the police report and in the cross-examination also made an attempt to say that he was not aware of the payment during investigation, and he went to an extent of deposing that he did not come across about bank filed application

before the Debt Recovery Tribunal at Hyderabad on 17.07.2001 though CBI filed

police report in the year 2004 and it shows that the investigating officer intentionally prosecuted the case before the Court and as such investigation is not fair and conducted in partial manner and filed police report falsely implicating the accused for the reasons best known to him.

54.Learned counsel for the accused A3 submitted that A2 is a company and

A3 was Managing Director and A4 is Director as per the allegations of the prosecution and the accused A3 retired as Director from the A2 company on 12.05.2005, as per certified copy of Form-32 produced by the accused A3 during examination of accused under section 313 of the Code of Criminal procedure.

55.He further argued that If the police report is scrutinized carefully no specific allegation was made against the accused A3 in connection with the alleged falsification of accounts, and during trial also no evidence has been made out against the accused A3 to say that he was aware about the falsification of accounts by the bank ledger or any other bank officials to accommodate accused A2 company to maintain cash credit account and ODBCC account limits and none of the witnesses examined by the prosecution deposed anything against the accused A3 that at any point in time he came to the bank and met accused A1 in connection with any of the cheques presented or for discounting or with any other transactions and PW1 in the cross-examination also categorically admitted that no letter was addressed to the accused A2 company at any time intimating about the over draft of the account and the case was filed against accused A3 merely on suspicion as he was the Managing

Director of the company and therefore, without any evidence suspicion will not prove the case of the prosecution and in support of his argument relied upon judgment of Hon’ble Supreme Court in Sujith Biswas Vs. State of Assam reported in 2013 ALD (Crl) 618 (SC) and he further submitted that prosecution did not produce any evidence to show that Shruthi Agencies was a fictitious entity and the evidence produced by the prosecution is insufficient to prove their case and on the other hand the evidence produced by the prosecution shows that several bills drawn on Shruthi Agencies were honoured and therefore, it is a normal business activity and the prosecution also did not examine any witness to prove Ex.P58 report and therefore, it will not help the case of the prosecution and on the other hand Ex.P58 report shows that the

Page No. 23 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) account of the accused A2 company was secured account with collateral security as well as personal security to a tune of Rs.4 crores and further the evidence before the Court shows that the matter was settled before the DRT and full satisfaction was also recorded before the DRT, but the investigation officer for the reasons best known to him suppressed before the Court and during evidence also the prosecution witness made an attempt to suppress about the same before the Court and gave evasive answers for the reasons best known to them and hence absolutely there is no evidence against the accused

A3 to fix up with any of the allegations made by the prosecution.

56.Learned counsel for the accused A4 submitted arguments that the prosecution made an attempt to say that as if accused A4 was going to bank in connection with these transactions but PW1 in the cross-examination categorically admitted that A4 was going to bank as Director and some persons from the company was coming to the bank on behalf of the company for the transactions made by the company and as such no inference can be drawn that accused A4 conspired with accused A1 in any manner and there is no evidence placed before the Court to prove that accused A4 was a partner in M/s.Sri

Venkatesh Enterprises or with M/s. Shruthi Agencies is a false entity and the evidence on record shows that other than bank officials no one will have access to the bank accounts and as such accused A4 cannot be tagged with the alleged falsification of accounts and the prosecution suppressed material fact about the payment of amount due in the loan account before filing of police report and this shows that the prosecution intentionally filed false case with registration of FIR only to coercive the payment amount due under the account which is normal business transaction, and even though amount was paid proceeded with the case to harass the accused and therefore, there is no material at all against the accused A4 that he played any fraud on the bank and gained wrongfully and as such prosecution failed to prove anything against the accused A4.

57.The case of the prosecution is that the accused A1 was working as branch Manager SBH, Old Bowenpally branch during period 1998-2000 made entries in CCA No.31 pertaining to accused A2 company, in order to tally the balance sheet which has to be sent to the Regional Office for perusal periodically and that entries which were not figuring in the ledger were all figuring in the day book and cash rolls maintained in the branch and therefore, the accused A1 abused his official position as branch manager and that he falsified the accounts in pursuance of the conspiracy with the accused A3 who is the Managing Director and accused A4 who is director of the accused A2

Page No. 24 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) company at the relevant point in time and that in pursuance of the criminal conspiracy the accused cheated the SBH to a tune of Rs.55 lakhs by way of showing undue favour to the accused A2 company by purchasing certain cheques issued in favour of the accused A2 by M/s.Venkatesh Enterprises drawn on Andhra Pradesh Mahesh Co-operative Urban Bank Limited and that the accused A1 purchased those cheques though no DP facility was provided to the bank by the Regional Office and out of those cheques 2 were local cheques whose amount aggregated to Rs.15 lakhs were returned dishonoured and the remaining four chques issued for Rs.10 lakhs each were reflected in DP register were out station cheques, and they were not sent for realization as per the registered post register, and they were not sent for national clearing to service branch, and these cheuqes were said to be given by the accused A4 to facilitate accused A1 bring the balance within the sanctioned limits.

58.In order to prove said aspect, the prosecution relied on the evidence of

PW1 who deposed that Ex.P1 was maintained in respect of the accused A2 company, and he used to make entries during course of business transactions and it will be tallied with general ledger weekly or fortnightly and tally work will be allotted to the clerks on routine basis, and he used to tally during his time and the branch manager used to do tally work in the subject ledger.

59.So he wants to say that the tally work of the Ex.P1 ledger with general ledger was made by the accused A1 against the practice of procedure in the bank, he also deposed that several bills were purchased and sent to customer for realization by the branch and most of the bills returned unpaid, and he informed the same to the branch manager, and he informed him that there are some disputes between the company and M/s.Sruthi Agencies and instructed him to reverse the entries by debiting cash credit account and credit to ODBCC account. He again deposed as if several bills were purchased and most of the bills were returned unpaid and though it was brought to the notice of Branch

Manager he ignored it as if dispute is pending between the accused A2 company and Shruthi Agencies.

60.He further deposed that CC day book register vide Ex.P3 contains details of all transactions pertaining to CCA in a particular day and clerks will maintain the said register and the Manager or accountant will check the entries in the ledger and tally the same at the end of the day. He further deposed that Ex.P2

ODBCC register pertaining to A2 company contained entries relating to

M/s.Sruthi Agencies, and they were authenticated by Mr.YVS Prabhakaram and that also contains debit entry for Rs.13.50 lakhs on 18.11.1999 at page 87 and

Page No. 25 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) it was entered by the accused A1 and Ex.P4 is the said entries and that the said entry was not posted under Ex.P1 ledger and posted at a later date.

61.He further deposed that Ex.P8 is the MICR clearing Register and on 31.03.1999 one cheque for Rs.12 lakh issued by AP Mahesh Co-Operative bank in favour of accused A2 was sent for collection and it was dishonoured and amount was realized and entry was in his hand writing, and he further deposed that on 31.3.1999 he posted entries in Ex.P1 ledger about 4 cheques and one debit entry as per instructions of accused A1 covered by Ex.P9 and P10 and

Ex.P10 was prepared by him and sent to the accused A1 and that accused A1 neither passed it nor rejected it nor sent back to him.

62.He also deposed that Ex.P11 and P12 cheques issued by accused A2 company and that they were passed by the accused A1 but not posted in Ex.P1 on the same day and that amount covered by those two cheques is taken into consideration the ledger debit balance of A2 shall be more than as shown on 10.09.1999 and that accused A1 did not obtain permission from concerned office to exceed the prevailed limit and that the balance as on 29.09.1999 was

Rs.44,04,269/- and that Ex.P16 is DP Register and concerned clerk will make entries in the DP register and it was verified by the branch manager and that the cheque for Rs.10 lakhs dated 25.03.1000 covered by Ex.P17 and cheque for

Rs.5 lakhs covered by Ex.P18 cheque were issued in-favour of accused A2 by

Venkatesh Enterprises drawn on AP Mahesh Co-operative Urban Bank, and these transactions entered under Ex.P1 are authenticated by A1 branch Manager and

Ex.P20 is four credit vouchers dated 31.03.2000 relating to M/s.Prime

Pharmatech Pvt Limited entries relating to cheque discounts. Ex.P16 register also contain signatures about these transactions.

63.Therefore, this part of evidence of PW1 discloses that the account books ie., Ledger, cash credit day book register ODBCC register MICR Clearing

Register, DP Register, Suspense account register, dispatch register in the bank will be maintained by concerned clerks in the branch, and they will be making entries in those registers basing on the day to day business transactions in the branch and those entries will be scrutinized and authenticated by the accountant or branch manager as per the practice followed in the branch in the course of business.

64.PW1 has already stated above, in the chief examination stated that entries which are shown to him were made by him, and they were authenticated by branch manager ie., A1. PW1 further deposed that the then accountant Mr.Janardhan also authenticated some entries.

Page No. 26 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

65.PW1 evidence shows that some other clerks were also making entries in the above registers basing on the work contingency and exigency. PW1 in the above evidence made an endeavor at every stage to say that the entries made by him were authenticated by branch manager or the then accountants, and he also made an attempt to say that those entries which are pointed to be a as false entries were made based on the instructions of the accused A1, from time to time.

66.Surprisingly PW1 in the chief examination itself at para 86 made a statement that the manager has admitted transactions beyond sanctioned limits because the company ie., A2 is having big account and the branch is small, and he was having good faith on the company and accepted transactions.

67.PW1 in the cross-examination deposed that Mr.Janardhan was working as accountant in the branch at the relevant point in time, and he was supervising officer and supervising his work in the branch.

68.He admitted that in his statement made to CBI police under section 161 of Code of Criminal Procedure stated that he did not state that his supervising officer was the branch manager. Therefore, PW1 in his chief examination tried to improve his version for the reasons best known to him probably to give an impression that everything was made and done on the instructions of accused

A1 alone.

69.It is pertinent to note down that Mr.Janardhan was arraigned as an accused in the case in FIR Ex.P40. The Investigating Officer PW13 in his chief examination stated that Janardhan was not prosecuted, as allegations made against him in the FIR were not established during investigation.

70.When he was cross-examined by the counsel for the accused A1 on this aspect, PW13 admitted that he was aware that Janardhan was working as an accountant in the branch at that time, and also that he has perused the Ex.P58 report and it was mentioned in Ex.P58 that he had given false picture in housekeeping statement about the position of CC Register submitted to the controller and that he had not verified certain cheques. The investigation officer was suggested that Janardhan was responsible for maintenance of Ex.P1 ledger, and he misled the accused A1 at the relevant point in time.

71.It is pertinent to note down that the prosecution produced Ex.P58 report stating that it is a report submitted by internal investigation team of Mr.

N.R.Tagore. It was marked in the evidence of PW13. The prosecution did not examine Mr. N.R.Tagore to speak about the contents of Ex.P58 report. PW13 in the cross-examination deposed that Ex.P58 does not contain signatures of Mr.N

R. Tagore on all pages, and he cannot say who signed on all pages and that

Page No. 27 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

Ex.P58 starts with page No.7 and ends with page No.19 and a suggestion was given to him that Ex.P58 was fabricated for the purpose of the case and that signatures on Ex.P58 were obtained after police report was returned by the

Court and PW13 further deposed that it does not contain information as to who submitted report to whom in the bank.

72.Therefore, the prosecution though filed Ex.P58 as internal investigation report did not examine any witness to prove above contents as required in law.

But a perusal of Ex.P58 shows that some irregularities were found on the part of the accountant as well as PW1 in the case in respect of the accounts of the accused A2 company maintained in the bank. In spite of the same PW13 simply says that no material was found against A2 to prosecute him, and another clerk ie., PW1 was cited as witness in the case.

73.PW1 in the cross-examination deposed that as clerk he was maintaining

Ex.P1 ledger, in the course of business and Smt.Aruna, Sesha Sai were other clerks at the relevant point in time, and he admitted that as per bank rules monthly housekeeping statement shall be prepared and will be sent to control regional office and it is the duty of accountant of the branch to prepare housekeeping statements.

74.As already stated above the investigating officer in the cross- examination admitted that as per Ex.P58 report some irregularities were found on the part of the accountant about the maintenance of housekeeping statements.

75.Here, it is pertinent to note that Mr. Janardhan was not cited as witness in the case though it was established that he was immediate supervising officer of PW1 and made certain authentications of entries made in the ledger and other bank records pertaining to accused A2 company and also submitted housekeeping statements to the regional office about financial transactions of accused A2 company.

76.Surprisingly, the investigating officer came with an allegation that accused A1 submitted statements to regional office with false information about the financial status of accused A2 Company from time to time.

77.PW1 further deposed that generally some borrowers in the branch may exceed the sanction limits during course of business, and they will deposit some cheques and the amount will be credited to their account and later it will be debited if cheques were dishonoured, the ODBCC register of accused A2 was never exceeded Rs.35 lakhs, and he made a fatal admission to the case of the prosecution that the accused A1 during course of business pertaining to the accused A2 was not aware of exceeding limits of various facilities.

Page No. 28 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

78.These admissions go to the route of the case of prosecution since it is the case of the prosecution that accused A1 was aware that the limits sanctioned to the accused A2 company were exceeded and to manage those limits he gave instructions to PW1 to make certain entries and not make certain entries in the register to maintain the limits as sanctioned.

79.PW1 further admitted that during course of business whatever entries reflected in ODBCC Register, CC Register were also reflected in Ex.P1 ledger and accordingly they have been reflected and that registers like ODBCC, LC

Register, Day book and Ex.P1 ledger will be maintained by staff of the branch and not by the branch manager, and he made another categorical admission that the accused has no dishonest intention with regard to transactions of accused A2 company and no letters were addressed to A1 at any point in time indicating that accused A2 that sanction limits were exceeded, he also admitted that the bills were handed over to the Manager in his capacity as

Manager of the bank and not in personal capacity and it was a practice followed in the branch and that some persons from A2 company visited the bank to attend the work of the company ad accordingly accused A4 attended branch sometimes on behalf of accused A2 company as he was director at that time. He also admitted that Ex.P56 dispatch register was maintained by clerks, and he is one among them, and he was maintaining dispatch register basing on the exigency of the work.

80.Therefore, the above evidence of PW1 shows that the accounts pertaining to accused A2 covered by Ex.P1 ledger is Ex.P2, P8, P16, P22, P24,

P56 registers and Ex.P57 peon delivery book were all maintained in the bank in usual course of business by the clerks and other staff in the branch and entries were made in those registers by the clerks of the branch including the PW1 and

Mr.Janardhan was the accountant at the relevant point in time and supervising the accounts, and he submitted housekeeping statements to the regional office about financial status of the accused A2 company and the entries made by the clerks were sometimes authenticated by the accountant and sometimes by the branch manager ie., A1 in the case, but PW1 in the chief examination came with a new version as accused A1 was supervising officer, and he was making entries as per his directions and instructions.

81.Surprisingly, PW1 at the same time deposed that accused A1 was having good faith on the company and accepted the transactions and that he was not aware of the existing limits for various facilities and that ODBCC, LC, day book and Ex.P1 were maintained by staff and not by the branch manager and that accused A1 has no dishonest intention with regard to the transactions of the

Page No. 29 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) accused A2 company, as such his evidence shows that PW1 for the reasons best known to him in the chief examination made an attempt to give a picture as if everything ie., all entries pointed out in the chief examination were either made by the accused A1 or at his instructions and that they were not properly maintained.

82.But in the cross-examination, I feel that he could not able to hide his feeling for speaking false hood against A1 came with statement as stated above which makes his evidence most unreliable and therefore, the evidence of PW1 is not inspiring any confidence to believe his statement made in the chief examination about the entries made in the registers as already pointed that they were all made on the instructions of accused A1 and that those entries were made purposefully and that to manage the sanction limits as alleged by the prosecution.

83.When coming to other evidence, it is the case of the prosecution that the accused A1 purchased six cheques aggregating to an amount of Rs.55 lakhs from the accused A2 company and thereby he committed irregularities and violated the rules though the branch was not provided with the authority to purchase cheques ie., on discount.

84.PW1 in his evidence was asked to depose about these transactions, and he deposed that cheques issued in favour of customer will be purchased by the bank on their request after deducting some service charges and proceeds will be credited to the customer credit and bills will be entered in demand purchase register and authenticated by the branch manager, and he identified

Ex.P16 Demand Purchase Register for the period 28.01.2000 to 31.03.2000 and that a chque for Rs.10 lakh dated 25.03.2000 was issued in favour of accused

A2 by M/s.Venkatesh Enterprises drawn on A.P.Mahesh Co-operative Urban bank limited was purchased by branch for discount and it was dishonoured and that Ex.P16 contains an entry under Demand purchase number 790 authenticated by accused A1, he also deposed that the cheque for Rs.5 lakh

dated 29.03.2000 issued in favour of accused A2 drawn on AP Mahesh

Cooperative Urban bank limited was also dishonoured and Ex.P16 contained an entry at DP 792 authenticated by Branch Manager and that Ex.P17 is cheque for

Rs.10 lakh Ex.P18 cheque for Rs.5 lakh and that Ex.P19 is credit voucher dated 31.3.2000 for Rs.14,95,500/- and that it was authenticated by A1, and they were entered in Ex.P1 ledger also, but he wants to say that they were not entered in Ex.P3 day book and he also deposed that Ex.P20 is four credit vouchers relates to accused A2 in respect of cheque discounts for Rs.9,90,480/- .

Page No. 30 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

85.The prosecution alleged that the accused A1 purchased these cheques amounting to Rs.55 lakhs though the bank was not having demand purchase power and that among six cheques two cheques are local, and they were dishonoured and the other four cheques were out stationed cheques drawn on

Mahesh Co-operative Urban Bank Limited, and they were not dispatched for realization and not entered as found in the dispatch register and that they were issued by accused A4 as if they were issued by M/s. Venkatesh Enterprises drawn in favour of A2 company only to maintain the limits to accommodate the accused A1 and the accused A4 is one of the partner in M/s. Venkatesh

Enterprises and that when the two local cheques were dishonoured, the accused A1 instead of debiting the amount in the ledger of the A2 company, debited the amount in the suspense register vide Ex.P25 entry.

86.PW1 in the chief examination deposed that amount of Rs.55 lakh was exceeded the sanction limit against actual limit of cash credited is of Rs.35 lakhs only. Here, it is pertinent to note down that PW1 did not depose that the branch was not having authority to purchase cheques on discount from the customer/borrowers of the branch. He deposed that the amount of Rs.55 lakh was exceeding the sanction limit of Rs.35 lakh. PW1 deposed that Ex.P24 is the suspense account register maintained for internal purpose and any amount advanced to any persons/suppliers for undertaking any work in the branch will be debited to suspense account. So, he wants to say that Ex.P24 contains entries with regard to amount paid by the bank to the suppliers of the bank and the accused A1 made entries about Ex.P17 and Ex.P18 cheques in Ex.P24 register instead of making entries in the account relating to the accused A1.

87.PW1 has already stated above, deposed that Ex.P16 is Demand Purchase

Register and it contained entries about Ex.P17 as well as Ex.P18 cheques and also about four cheques for Rs.10 lakhs each. PW1 deposed that concerned clerks will maintain DP register and it will be authenticated by the branch manager, so any authentication made by accused A1 as Branch Manager in

Ex.P16 will not ipso-facto became a fraudulent entry unless there is some material to show that it is a false entry.

88.Here, PW1 says that these six cheques were purchased from A2 company on discount during course of business transactions and entries were made in

Ex.P16 and authenticated by the Branch Manager. When coming to Ex.P24 suspense account register referring Ex.P25 entry dated 08.04.2000 in page No.3 as if it relates to Ex.P17 and P18 cheques. But this entry relates to an amount of Rs.5 lakh only, but there is no endorsement connecting this amount to

Ex.P18 cheque, therefore, merely basing on Ex.P25 which has no information

Page No. 31 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) referring Ex.P17 and P18 transactions, it cannot be said that these entries pertains to the cheques covered by them and further PW1 is not deposing that

Ex.P25 entry was made by the accused A1.

89.When coming to other four cheques Ex.P20 is the four credit vouchers

dated 31.03.2000 and according to PW1, the entries relating to them were

made in DP register vide Ex.P6. The case of the prosecution is that they were not dispatched to the concerned bank for collection, and they were not sent to

National Clearing House.

90.Therefore, the prosecution wants to say that it is only a paper transaction made to accommodate the accused A1 to maintain the limits. The prosecution did not produce the alleged four cheques before the Court and prosecution did not come with any explanation as to what happened to those cheques when entries were made in Ex.P16 DP Register. The prosecution relied on Ex.P56 dispatch register stating that no entries were found in Ex.P56. PW1 has already stated above deposed that the dispatch register and Ex.P57 will be maintained by clerks in the branch, so under what circumstances the entries relating to the above four cheques was not made either in Ex.P56 or in Ex.P57 is not established by the prosecution. PW1 did not depose that he did not make any entries in said registers, as those four cheques were not handed over to him for dispatch. The prosecution did not examine any other clerk who was present or handled those registers on the date of said transactions to say that those cheques were not handed over to him by the Branch Manager, for sending them to out station and therefore, no entries were made in those registers.

91.When coming to non sending cheques to National Clearing House the prosecution has examined Mr. Mallakarjun (PW5) who deposed that he does not have any idea about National Clearing process hence he did not support the case of the prosecution to establish that the disputed four cheques were not sent to National Clearing House for process. Nothing has been made out from his evidence say that this witness suppressed the truth to accommodate to the accused A1.

92.The prosecution allegation is that those six cheques were issued by accused A4 only to accommodate the accused A1 to maintain the limits and that accused A4 was partner in M/s.Venkatesh Enterprises, and he issued those six cheques though no amount was found in the account of M/s.Venkatesh

Enterprises and as such the two local cheques were dishonoured.

93.The prosecution in support of his case has examined Mr.Gopal (PW6) who worked as accountant deposed about Ex.P28 account opening form of

Page No. 32 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

M/s.Venkatesh Enterprises was produced and he deposed that Ex.P18 cheque was dishonoured twice and Ex.P29 relates to cheque dishonor memos.

94.The prosecution wants to say that Ex.P28 contains name of the accused

A4 as partner. The accused A4 denied the case of the prosecution. The prosecution did not produce any other material connecting accused A4 with

M/s.Venkatesh Enterprises. The investigating Officer did not take any steps to send the documents containing signatures pertaining to Venkatesh Enterprises to find out that accused A4 is one of the partner in that firm. Therefore, merely basing on Ex.P28 it is not possible to connect accused A4 with

M/s.Venkatesh Enterprises as the partner in that firm.

95.Further, it is not the case of the prosecution that M/s.Venkatesh

Enterprises is a fictitious entity floated by the accused A3 or accused A4 for the purpose of issuing cheques in favour of accused A2 Company to maintain sanction limits in the case.

96.In the above circumstances the case of the prosecution that these cheques were issued by accused A4 in favour of accused A2 company and presented with accused A1 and that accused A1 had knowledge that

M/s.Venkatesh Enterprises is an entity floated by accused A4 and that it was not having any funds in his account and accused A1 knowing fully well about all these circumstances purchased these cheques on discount to accommodate accused A2 company to maintain the sanction limit.

97.The prosecution examined PW3 who worked in SBH, Old Bowenpally branch, and he deposed about general procedure about the sanction of loan to a company and the responsibility of the branch manager at the time of sanction of the loan. Admittedly, in the case on hand, the subject account was taken over from Canara Bank and all the sanction limits were issued by the regional office.

98.In the evidence of PW3, prosecution filed Ex.P5 to P7, which relates to rules pertaining to advances and discretionary powers and also purchase of bills on discount. They are all general rules, and they do not contain any rule, which specifies the power of the Branch Manager regarding purchase of cheques on discount. In the cross-examination PW3 deposed that he was not aware of whether the accused A1 was the Manager at the time of sanction and who was the accountant and other officers in the branch and who were checking day to day entries and the entries would be checking post approval of regional office and when limits were exceeded statutory audit will be conducted every year.

99.Here, it is pertinent to note down that PW1 in his cross-examination he was questioned about periodical audits, and he deposed that periodical audits

Page No. 33 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) will be conducted in the branch and in any audit, no objection was raised regarding account of the accused A2 and the auditors did not raise any objection since it was a practice prevailed at that time.

100.The prosecution examined PW4 who worked as counter clerk deposed that PW1 and Mrs. Aruna were the clerks at that time and as counter clerk his duties were ledger posting outward and inward, clearing dispatch typing demand draft and any other work endorsed by the Manager and if a cheque is received for en-cashment, he will make an entry in the ledger and cheque will be sent to the Manager for authentication and after authentication it will be sent to cashier for payment.

101.He was asked about Ex.P1 ledger and the entry dated 30.11.1999 for

Rs.30.50 lakhs, and he said that he made that entry and it was authenticated by the accused A1. Ex.P10 entry was made by PW1 and Mr.Janardhan who was the accountant at that time and in his evidence Ex.P13 shown to him does not contain his hand writing or signatures against any of the entry and the cheque for Rs.35,000/- issued by accused A2 was passed by Mr. Janardhan though there is no sufficient balance in the account and in the cross-examination he deposed that other clerks were also attending the counter work in his absence.

102.I have already discussed at length about the evidence of PW1. The prosecution did not examine Smt. Aruna or Janardhan, further as I have already observed certain irregularities were found against name of Janardhan and P.W1 in Ex.P58 report. PW4 also deposed that audit was done during his tenure in

Bowenpally branch, and he did not remember whether auditors pointed out any irregularities in their report and quarterly audit will be conducted by higher authorities of the same bank.

103.The prosecution examined Mr. A.Venkata Ramaiah (PW8) who worked as

Deputy Manager, Region-II State Bank of Hyderabad from July 1999 to August 2002 deposed that at that time Region-II was monitoring irregularities reports relating to advances submitted by the branches and the branch manager has no discretionary power to permit or allow excess limits without permission by the sanctioning authority and if he exceeds his discretionary power, he shall submit irregularity report to controlling authority and in his evidence Ex.P30 to P32 were marked which relates to sanction of loan to the accused in the time one

Mr.P.Narasimha the then Branch Manager.

104.The crucial aspect deposed by him is that the branches are subject to inspection at quarterly intervals by the controlling authority and the then controlling authority was Mr.CNK Sharma (PW10) and he instructed him to visit the branch and conduct quarterly inspection in May 2000, and he visited the

Page No. 34 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) branch in May 2000 and observed that the account of accused A2 and noticed four cheques amounting to Rs.10 lakhs each discounted by the branch and particulars were dispatched but not available in discount purchase register and dispatch register and this discount was not permitted by controlling authority and not informed to controlling authority as this is a fraud was informed to

AGM, and he visited the branch on the same day around 3.30 pm and submitted report to Regional Office.

105.In the cross-examination he deposed that in his statement made to CBI officer that his duty was to verify the irregularities reports and control returns received from the branch and put them to the AGM. He admitted that Ex.P33 does not contain his signature, and he made categorical admission that his name is not mentioned in Ex.P33 and that in Ex.P33 there is no allegation of fraud and that the loan was secured.

106.So, PW8 in his chief examination gave a picture as if on the instructions of AGM, he visited the branch to conduct quarterly inspections in May 2000 and during inspection he noticed irregularities pertains to 4 cheques of accused A2 company, and he intimated the same to AGM, and he came to bank at 3:30 pm on that day and then submitted report to Regional Office under Ex.P33.

107.Here, it is pertinent to note down that Ex.P3 report shows that Manager exceeded his authority whereas this witness before the Court deposed that this discount was not permitted by controlling authority.

108.The prosecution has examined CNK Sharma (PW10). He deposed that he used to visit the branch for quarterly for every three months and Ex.P33 is the report submitted by him to the General Manager about the irregularities relating to the purchase of cheques pertaining to accused A2 and that accused

A1 purchased six cheques beyond his discretionary powers.

109.Here, it is pertinent to note down that he did not say that the accused

A1 has no power to purchase the cheques. He stated that accused A1 exceed his discretionary powers as if he is having some powers to purchase cheques.

He further deposed that out of them four cheques were not presented for payment and two local cheques were returned unpaid and amount was debited to suspense account instead of debiting amount to accused A2 account. I have already discussed the entry in suspense account register about two cheques and held that the register is not giving any information that Ex.P24 entry in Ex.P23 suspense account register pertaining to these two cheques.

110.In the cross-examination PW10 deposed that he visited Old Bowenpally branch during morning hours on the date of inspection and sent PW8 during afternoon and that he also deposed he visited branch on the same day at

Page No. 35 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) around 5.00 pm after PW8 informed about the cheques and based on information of PW8 he submitted Ex.P33.

111.So PW10 deposed different story that PW8 visited the branch in the morning, and he came to the branch in the afternoon whereas PW10 deposed that he visited the branch in morning and PW8 came to the branch in the afternoon and above all Ex.P33 does not contain any allegations against the accused A1 that he has committed fraud.

112.The allegation is that he has exceeded is powers as branch Manager and purchased cheques. Now PW8 before the Court changed his version for the reasons best known to him and made an attempt to say that it is a fraud played by the accused A1. Therefore, in the light of the above facts and circumstances the evidence of PW8 or PW10 will not inspire any confidence to accept the case of the prosecution that the accused A1 committed fraud while purchasing the above-discussed cheques on discount. At the best, if the evidence of PW8 and

PW0 is considered, their version is that he has violated rules by exceeding his powers. As already stated above PW1 categorically deposed, that accused A1 was not aware of the exceeding limits, and he was not having any fraudulent intention in respect of the account of the accused A2 Company.

113.In the light of the above discussion, the violations which are pointed out by the prosecution as if they are all made to falsify the accounts in pursuance of the criminal conspiracy and that the accused A1 made all those entries to accommodate the accused A2 to A4 to maintain sanction limits relating to CC account and ODBCC account is not established by the prosecution.

114.It appears that the accused A1 was found guilty in the departmental inquiry for misconduct, and he was removed from the service by imposing penalty of compulsory retirement and the investigation officer in the police report also stated that no sanction is required for prosecution of the accused

A1 as he was compulsorily retired from the service by the department.

115.Admittedly, there is lot of difference between misconduct and criminal misconduct. The investigation officer in the police report made those irregularities, which were considered as misconduct by the department, as criminal misconduct as if accused A1 has committed those irregularities with an intention to defraud the bank in pursuance of criminal conspiracy with the accused A2 to A4.

116.As already discussed above the prosecution witnesses deposed that accused A1 has no fraudulent intention and that he acted with good faith and all the records were maintained by the clerks in the branch, and they were verified by the then accountant Mr. Janardhan and submitted statement to

Page No. 36 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) regional office intimating about sanction limits in respect of accused A2 company.

117.Here, it is pertinent to note down that the accused during trial of the case as well as in the arguments made an attempt to say that none of the accused has no fraudulent intention to cheat the bank at any stage and that sanction limits and loan sanctioned to the accused A2 company was secured by collateral security as well as personal security to a tune of Rs.5 crores and that in the year 2001 itself the bank has filed recovery proceedings before The Debt

Recovery Tribunal treating it as civil dispute and thereupon, the matter was settled before the Debt Recovery Tribunal in the year 2004 before filing of police report. But the investigation officer for the reasons best known to him did not mention anything about the proceedings initiated by the bank for recovery of the amount and also about the payment of the amount due under the account and the matter was settled before the DRT and that the investigation officer suppressed payment of this amount before the Court only to maintain his case before the Court, and he did not conduct investigation fairly and suppressed the material fact causing prejudice to the accused.

118.Ex.P58 though not proved by the prosecution by examining concerned officer shows that account of the accused A2 was secured by collateral and personal securities of the directors of the company to a tune of Rs.4 crores worth of properties.

119.It is not the case of the prosecution that collateral securities provided by the accused A2 or personal securities provided by the directors of accused A2 company are fake or fictitious or false properties, in fact, the report shows that on verification it was found that those collateral securities were very much available for realization of the bank.

120.It is pertinent to note down that the investigating officer in the police report did not say anything about the recovery proceedings instituted by the bank for recovery of the amount due under the account pertaining to the accused A2 company. He made allegations and opined that the accounts were maintained falsely and wrongful loss was caused to the bank to a tune of Rs.55 lakhs.

121.It is pertinent to note down that police report was filed before the Court on 20.11.2014, the accused cross-examined the bank witnesses examined by the prosecution about the proceedings instituted by bank for recovery of amount due under the bank. PW1 in the cross-examination stated that he was not aware that a suit was filed by the bank for recovery of the amount and that

Page No. 37 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) he heard from third party that matter was settled and amount was paid by the accused A2.

122.PW3 deposed in the cross-examination that he was not aware of the suit filed for recovery of subject loan transaction from the borrower before the DRT and the matter was settled and case was withdrawn by the bank. PW8 deposed that the loan was secured, and he cannot say whether it was full secured and that he was not aware of the recovery application filed before the Debt

Recovery Tribunal, and he does not know about the happenings before the Debt

Recovery Tribunal.

123.PW9 in the cross-examination deposed that the bank filed an application

before the DRT for recovery of the loan amount from the accused A2 and Mr.

Sunil was the Branch Manager at the time of filing of application and that he is aware of that the matter was settled before the DRT.

124.The investigating officer PW13 in the cross-examination deposed that he did not come across during investigation that OA No.690/2001 on the file of

DRT, Hyderabad for recovery of the amount filed on 17.07.2001 and that it was compromised between the accused A2 and others and the bank filed full satisfaction memo dated 23.1.2004 before the DRT Hyderabad.

125.Therefore, except one witness, none of the prosecution witnesses coming forward to accept the fact that the bank filed recovery proceedings

before the DRT at Hyderabad in OA 690/2001 on 17.07.2001 and it was settled

and bank filed full satisfaction memo.

126.Here, it is also pertinent to note down that the accused A4 after his examination under section 313 of the Code of Criminal Procedure, filed an application under section 294 of the Code of Criminal Procedure along with certified copies of Tribunal proceedings asking the prosecution to admit those documents. The prosecution at that stage also not willing to admit the documents, which are certified copies of DRT Hyderabad. It shows that right from the beginning of the investigation, CBI always trying to suppress the truth regarding recovery of proceedings filed by the bank in the year 2001 and it was settled before the DRT at Hyderabad on 23.01.2004 ie., before filing police report.

127.This circumstance shows that the investigation officer simply relied on the internal departmental proceedings of the bank covered by Ex.P33 and P58 which speaks about the misconduct of the accused A1, developed them into criminal misconduct and to support those allegations made all attempts to suppress the above DRT proceedings from this Court and it is very clear that case was registered on the ground that fraud was committed, the investigation

Page No. 38 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) officer went on with the proceedings and filed the police report as if, the misconduct which is sufficient for departmental disciplinary proceedings also amounts to criminal mis-conduct as laid down under the Prevention of

Corruption Act, 1988 without knowing the difference between misconduct and criminal misconduct.

128.The prosecution in order to allege that there was a criminal conspiracy between the accused A1 to A4 contended that the accused A1 falsified the accounts pertaining to the accused A2 company to maintain the cash credit and

ODBCC limits and the accused A2 to A4 has issued cheques in the name of

M/s.Venkatesh Enterprises and also submitted bills drawn in the name of M/s.

Shruthi Agencies and that most of the bills presented on behalf of the

M/s.Sruthi Agencies were purchased for discount by the accused A1 were returned unpaid and that accused A1 purchased those bills to maintain the accounts limits and that M/s. Shruthi Agencies a fictitious entity.

129.I have already in detail discussed the case of the prosecution regarding the allegations pertaining to M/s. Venkatesh Enterprises and the role of accused A4 and held that the prosecution failed to prove that accused A4 was a partner M/s.Venkatesh Enterprises and the accused A1 had knowledge that accused A4 was a partner in M/s.Venkatesh Enterprises and that accused A4 issued those cheques drawn on the account of M/s. Venkatesh Enterprises to accommodate the accused A21 for falsification of the accounts.

130.I also in the above paras of the judgment in detail discussed the evidence produced by the prosecution with regard to its allegations pertaining to maintenance of ledger ODBCC register, ledger, day book, suspense account register, dispatch register and other documents produced by the prosecution and the entries made in the said registers with reference to the transactions of the accused A2 company by considering the evidence of PW1, PW3, PW4, PW5,

PW8, PW9 and PW10 who deposed about the above registers and the entries there in and upon considering their evidence and also the evidence of the investigating officers in the case, held that the evidence is in-sufficient and not establishing the case of the prosecution that the accused A1 has made entries in the above registers with any fraudulent intention to accommodate the accused A2 to A4 and to maintain the limits as sanctioned by the Regional

Office.

131.On the other hand, I have already held that the evidence produced by the prosecution create a doubt that the then accountant Janardhan was the person who was submitting housekeeping statements to the regional office about the transactions of the A2 company and the evidence of PW1 who has

Page No. 39 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) dealt many transactions pertaining to the accused A2 company is against the case of the prosecution and showing that accused A1 was not having any fraudulent intention at the relevant point in time and that it appears that the transactions alleged against the accused A1 were projected by the investigation officer as if they amount to criminal mis-conduct and to say that the accused

A1 caused wrongful loss to the bank the investigation officer for the reasons best known to him went to an extent of suppress the suit filed by bank for recovery of the amount before the Debt Recovery Tribunal Hyderabad and also settlement of the claim and payment of the same by the accused A2 company and the investigating officer it appears that has made an attempt to enlarge the misconduct alleged against the accused A1 into criminal mis-conduct by inflating certain instances based on the accounts maintained in the bank by the clerks and the accountants at the relevant point in time.

132.One of the such things relied upon by the investigation officer is purchase of bills presented by the accused A2 company from time to time and therein in the entries of M/s. Sruthi Agencies.

133.The prosecution made an attempt to say that number of bills were purchased by the accused A1, drawn in favour of Shruthi Agencies and that

Accused A1 though most of the bills were returned unpaid went on purchasing bills only to accommodate the accused A2 Company to maintain the ODBCC limits as sanctioned by the regional office and the investigation officer went to an extent of making allegation that Shruthi Agencies is a fictitious company.

Surprisingly he did not investigate as to who was the person behind M/s.Shruthi

Agencies if it is a fictitious entity and who has raised those bills creating a fictitious entity.

134.The prosecution in the evidence of PW1 produced Ex.P41 to P55 Over

Draft bills ie., OD BCC bills pertaining to accused A2 company drawn in favour of M/s.Shruthi Agencies on various dates during the period from 14.11.1998 to 28.12.1999.

135.PW1 in the chief examination while deposing about these bills stated that Director of M/s. Prime Pharmatech Pvt Limited submitted those bills to the branch Manager for discounting purpose and the Branch Manager handed over these bills for discounting, and he handled ODBCC Register vide Ex.P2 and all entries were authenticated by the accused A1, proceeds credited to the CCA of the accused A2, and he was sending bills vouchers in ODBCC register and the branch manager after authorizing proceeds will be credited to the cash credit account of Accused A2 and those respective bills were handed over to concerned clerks including him for dispatch, and he prepared envelop for

Page No. 40 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) delivering and then bills were dispatched to Shruthi Agencies through courier and thereafter bills were honoured by M/s.Shruthi Agencies, the proceeds were sent to SBH Old Bowenpally branch by way of cheque or Demand Draft after realization of the proceeds covered by Cheque or DD were credited to the

ODBCC account of the accused A2.

136.So, this evidence shows that everything was went on as per the procedure, but important aspect is that the bills were dispatched to

M/s.Shruthi Agencies through courier and some bills were honoured amounts were paid by way of cheques of drafts and proceeds were released.

137.So it goes against the case of the prosecution that M/s.Shruthi Agencies is a fictitious entity. PW1 never deposed that the bills sent to M/s.Shruthi

Agencies through courier were returned undelivered as no such addressee or no such entity existing.

138.Further, it is very clear that in some cases the drafts and cheques issued by M/s.Shruthi Agencies were also honoured and proceeds were realized. So, it is very clear that M/s.Shruthi Agency was having a bank account and it has issued drafts and cheques while honouring some bills. Surprisingly the investigating officer did not choose to investigate about the courier organization as to how and where those bills were delivered when M/s.Shruthi

Agencies is a fictitious entity. The investigation officer also did not investigate about the drafts and cheques issued in the name of Shruthi Agencies, and he did not investigate about the bank account of Shruthi Agencies to find out who was the person behind the bank account of M/s.Shruthi Agency if it is a fictitious entity.

139.Here, it is pertinent to note down that as per ODBCC register around 23 bills were in the name of Shruthi Agencies. PW1 in the chief examination deposed that most of the bills sent to Shruthi Agencies were not honoured and the same was reported to Branch Manager, and he instructed him to reverse the entry by debiting CCA of the accused A2, and accordingly reversed the bill amount to CC account and credited to ODBCC account. So he made an attempt to say that most of the bills were dishonoured to give an impression that only few were honoured but the accused A1 purchased those bills. But the document ie., ODBCC account register is against the testimony of PW1.

140.PW1 in the chief examination deposed that there are 27 entries in Ex.P2 register and among them 23 bills were raised on Shruthi Agencies and whenever the bills were returned unpaid the same will be marked in ODBCC account by rounding off serial number and amount will be debited in CC account of the

Page No. 41 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) respective customer and credited to ODBCC register of the respective customer or company.

141.When Ex.P2 register is verified, it is very clear that 23 entries out of 27 belonging to Shruthi Agencies and the remaining 4 bills belong to Shruthi

Agencies. Those 4 bills were not rounded off. It shall be presumed that these four bills were honoured. When coming to Shruthi Agencies, 23 entries under the entry Nos.14, 15, 16, 17, 18, 19, 20, 21, 22 and 23 entries not rounded off indicating that 11 bills were honoured out of 23 bills. So, the evidence of PW1 that most of the bills were unpaid is proved to be false since 50% or the bills were honoured by Shruthi Agencies.

142.The investigation officer instead of investigating about the courier service which delivered the bills to M/s.Shruthi Agencies and the bank which is having account of Shruthi Aencies and issued cheques and drafts to know whether M/s.Shruthi Agencies is a real entity or a fictitious entity has chosen a different method for the reasons best known to him.

143.The prosecution has examined PW2 Tax inspector who deposed that he looked after Domalaguda lower Tank bund, Ashoknagar, Chikkadpally as tax inspector and on the request of CBI he furnished information that premises bearing No. 1-2-336/221 is not in existence of MCH records of their circle as per report given by tax inspector.

144.Here, it is pertinent to note down that no field report given by tax inspector is placed before the Court. PW2 made an attempt to say that this door Number is not in existence in the records of his circle, as if it is a fictitious door number.

145.But falsity in his testimony in the chief examination is exposed in the cross-examination through Ex.D1 which was his statement made under section 161 of the Code of Criminal Procedure during investigation of the case to

P.W13. It shows that PW2 during investigation stated that filed verification conducted by him at Viveknagar for door No.1-2-336/221 does not exist and that it is existing in the jurisdiction of Gaganmahal area of Domalaguda.

146.But in the evidence he came with a version that it is not existing in the jurisdiction of Gaganmahal area of Domalaguda. The investigation officer did not choose to examine concerned tax inspector of Gaganmahal area of

Domalaguda to find out whether this door number was in existence or not in that area.

147.The prosecution has examined PW7 Smt. Balamani who worked as ACTO.

She deposed that Mr. Kasi Vishweswar Rao was their CTO and a letter dated 7.11.2003 shown to her in the chief examination bears his signature and as per

Page No. 42 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) the said letter on the request of CBI he furnished information that M/s.Shruthi

Agencies was not registered at Sultan Bazaar circle office and that CST

ABS/07/1/1985 was issued to M/.s.Decent Electrical at D.NO.5-1-611/1A4

Troop Bazaar, Hyderabad.

148.The prosecution did not choose to examine the person who addressed a letter to CBI. It is not known why he was not cited as witness when he addressed a letter to CBI on verifications of records and it is not known why some other officer ie., PW7 was cited as witness and asked to depose about the letter preventing the accused from cross-examination of the person who wrote letter.

149.The prosecution did not produce any ledger from sales tax office to prove that CST number was allotted to Decent electrical as alleged by the prosecution and also did not examine any person from Decent Electrical to speak that CST number was allotted to them.

150.It is pertinent to note down that PW7 in the cross-examination deposed that no letter was addressed to her by CBI, and she did not produce any document to CBI and no copy of the letter of CTO was marked to her, and she did not play any role in preparation or transmission of above letter.

151.This shows that PW7 has nothing to do with the verification of the CST number in the records of CTO, and she does not know anything about letter addressed by CBI. Therefore, the evidence of PW7 will not help the case of the prosecution in any manner even to allege that the CST number was not allotted to M/s.Shruthi Agencies.

152.The prosecution examined Mr.S.Mallaiah,(PW11) Postman in

Musheerabad. He deposed that his beat areas were Viveknagar,Chikkadpally,

Sanjeevanagar which are under the jurisdiction of Musheerabad post office area and Ex.P39 registered post letter addressed to M/s.Shruthi Agencies contained his endorsement.

153.Here, the investigation officer adapted a peculiar view of collecting evidence, instead of collection of evidence, he generated evidence. He addressed letter during investigation to M/s. Shruthi Agencies to know whether it was in existence. It is pertinent to note down that these bills were presented in the year 1998-99 and whereas this letter was addressed by the investigating officer in the year 2004 to know whether it was in existence in the year 1998 or 1999.

154.PW11 in the cross-examination deposed that as per Ex.P39 it was sent by

CBI police and that CBI police did not collect copy of the list of beat areas allotted to him. Therefore, his evidence also will not help the case of the

Page No. 43 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) prosecution to show that M/s.Shruthi Agencies was not existed in the given address in the year 1998-99. Hence, the evidence adduced by the prosecution will not carry the Court anywhere to say that M/s.Shruthi Agencies is a fictitious entity.

155.As already stated above there is no allegation in the police report or evidence produced in the trial that either accused A3 or A4 were the persons behind this Shruthi Agencies. On the other hand, the evidence of PW1 as already discussed above shows that bills sent through courier were delivered to

M/s.Shruthi Agencies at the relevant point in time and 50% of the bills were

honoured and the amounts were paid by way of cheques and drafts and this

evidence goes against the case of the prosecution that M/s.Shruthi Agencies is a fictitious entity.

156.Under the light of the above facts and circumstances, I have no hesitation to hold that the prosecution miserably failed to prove their allegations that M/s.Shruthi Agencies is a fictitious entity and that those bills were presented by the accused A2 to A4 to accommodate accused A1 to falsify the accounts in pursuance of criminal conspiracy.

157.In the light of the above facts and circumstances discussed by me and findings arrived by me, it is very clear that the prosecution failed to prove that there was an agreement between he accused A1 to A4 to do illegal acts to cheat SBH, Old Bowenpally branch by falsifying the accounts by submitting fake bills and cheques and that in pursuance of said criminal conspiracy A1 falsified the accounts pertaining to accused A2 company and that Accused A3 and A4 as Managing Director and Director respectively submitted cheques pertaining to M/s.Venkatesh Enterprises and bills pertaining to Shruthi Agencies to accommodate A1 to falsify the accounts to maintain the limits of Cash Credit account and ODBCC account of the accused A2 company.

158.The above facts and circumstances shows that the investigation officer did not conduct proper investigation to find out the role of accused A4 behind

M/s. Venkatesh Enterprises and the role of accused A3 or A4 in respect of

M/s.Shruthi Agencies and the investigation officer for the reasons best known to him made every attempt to suppress the recovery proceedings by the bank in the year 2001 and settlement of the claim in the year 2004 before filing of police report in the Court and during evidence also an attempt was made to suppress the same and all the facts circumstances makes out one thing very specific that is some irregularities were found during internal inquiries of the bank with reference to account of accused A2 company which may amounts to misconduct on the part of the accused A1, accountant P.W1 and other clerks

Page No. 44 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) working in the branch at that time and it is pertaining to note down that this case was not based on the report given by the bank and it was registered by CBI suo-moto on the basis of source information received by CBI and it is not known why the bank authorities did not choose to give any report to CBI when a serious fraud was noticed in the branch with regard to the account of accused

A2 company as alleged by the CBI.

159.So it is very clear that this case was developed based on the certain allegations pertaining to misconduct found during internal inquiries of the bank and the investigating officer has made every attempt to develop those allegations into criminal misconduct without knowing the difference between misconduct and criminal misconduct and probably he was under the impression that the fact of payment of amount due under the account before the Debt

Recovery Tribunal is also placed before the Court, the case may not stand to the scrutiny of the Court, made all efforts to suppress the same and it indicates that he did not conduct investigation not only properly but also fairly causing serious prejudice to the accused.

160.In the light of the above facts and circumstances as well as findings arrived by me, I answered the points 1 to 4 against the prosecution that the prosecution failed to prove its case for the offence punishable under sections 120-B, 420 of the Indian Penal Code against the accused A1 to A4, and the offence punishable under section 477-A of the Indian Penal Code, and the offence punishable under section 13 (2) r/w 13 (1) (d) of the Prevention of

Corruption Act, 1988 against the accused A1 beyond all reasonable doubt.

161.In the result, the accused A1 to A4 are found not guilty of the offence punishable under sections 120-B and 420 of the Indian Penal Code.

162.The accused A1 is found not guilty of the offence punishable under section 477-A of the Indian Penal Code and offence punishable under section 13 (2) r/w 13 (1) (d) of the Prevention of Corruption Act, 1988.

163.Hence, the accused A1 to A4 are acquitted under section 248(1) of the

Code of Criminal Procedure for the offence punishable under sections 120-B and 420 of the Indian Penal Code.

164.The accused A1 is acquitted under section 248(1) of the Code of Criminal

Procedure for the offence punishable under section 477-A of the Indian Penal

Code and offence punishable under section 13 (2) r/w 13 (1) (d) of the

Prevention of Corruption Act, 1988.

Page No. 45 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

165.The bail bonds of the accused A1 to A4 shall remain in force for a period of six months from the date of judgment as per section 437-A of the Code of

Criminal Procedure.

Dictated to the steno, transcribed and typed by him, corrected and

pronounced by me in the open Court, on this the 21st day of December 2018.

III ADDITIONAL SPECIAL JUDGE

FOR CBI CASES, HYDERABAD.

APPENDIX OF EVIDENCE.

LIST OF WITNESSES EXAMINED FOR

PROSECUTION:

PW1 Mr.Owk. Daniel PrasadCashier/Clerk, State Bank of Hyderabad, Old Bowenpally Branch, Hyderabad PW2 Mr.Ghouse Mohiuddin Tax Inspector, Circle No.3, MCH, Abids, Hyderabad in the year 2006.

PW3 Mr. K.G.Narsing Raoworked as Chief Manager (Advance), Regional Office, Region-II, Secunderabad. PW4 Mr. L.V. Sesha Sai worked as Typist Clerk, SBH, Bowenpally Branch, Secunderabad. PW5 Mr. J.Mallikarjuna Reddy worked as Assistant Manager, SBH, Service Branch, Abids, Hyderabad from 2002 to 2006.

PW6 Mr.Gopal Birla worked as Accountant, A.P. Mahesh Co-operative Urban Bank Limited, Sultan Bazar Branch, Hyderabad, from 2002 to 2005.

PW7 Smt. M.Balamani worked as Assistant Commercial Tax Officer, Sultan Bazar Circle, Abids Division, Hyderabad from 1995 to 2003. PW8 Mr. A.Venkataramaiahworked as Deputy Manager (Advances), Region- II, State Bank of Hyderabad, Hyderabad from July 1999 to August 2002. PW9 Mr. P.Satyanarayanaworked as Cashier Clerk, State Bank of Hyderabad, Old Bowenpally Branch, Hyderabad from May 2000 to June 2002. PW10 Mr. C.N.K.Sharma worked as Assistant General Manager, Region-II, State Bank of Hyderabad, from 1999 to March 2001.

PW11 Mr.S.Mallaiah Postman, Musheerabad Post Office.

PW12 Mr.Kilambi Alwar SwamyDeputy Superintendent of Police and Inspector of Police in CBI from 1999 to 2005.

PW13 Mr. Ravi Suman PrasadSub Inspector of Police, CBI, Hyderabad, from 1998 to February 2004.

Defence : Nil

Page No. 46 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

LIST OF DOCUMENTS MARKED FOR

PROSECUTION:

Ex.P1 Ledger sheets belonging to M/s.Prime Pharma Tech Private Limited vide A/c.No. CC 31. Ex.P2 OD BCC registers pertaining to M/s. Prime Pharma Tech Private Limited. Ex.P3 Cash Credit day book register for the period from 25.06.1999 to 04.06.2000. Ex.P4 Entry dated 18.11.1999 for Rs.13,50,000/- in Ex.P3 at page No.87.

Ex.P5 Copy of Chapter- III (Advances) in hand book on delegation of financial and administrative power updated up to 05.11.1999. Ex.P6 Copy of circular No.OPD/96-97/7, dated 16.07.1996 regarding sanction of advances in excess of discretionary powers. Ex.P7 Copy of Chapter-XXI relating to Bills and TT-purchase/discount and Bills for collections in Bank’s Book of Instructions Chapter-XV issued by State Bank of Hyderabad. Ex.P8 MICR Clearing Register of State Bank of Hyderabad, Old Bowenpally, Hyderabad for the period from 24.12.1998 to 19.04.1999.

Ex.P9 Four cheques dated 28.01.1999 for Rs.14,000/-, dated 01.01.1999 for Rs.5,000/-, dated 06.02.1999 for Rs.5 lakh, dated 24.03.1999 for Rs.1 lakh and debit voucher dated 20.02.1999 for Rs.2,98,767/- respectively. Ex.P10 Debit voucher dated 06.04.1999 for Rs.12 lakh relating to reversal of the amount relating entry dated 31.03.1999 in Ex.P1 ledger sheet. Ex.P11 Cheque dated 10.09.1999 for Rs.7,01,050/- issued in favour of yourself on the account of M/s.Prime Pharma Tech Private Limited. Ex.P12 Cheque dated 31.03.1999 for Rs.5 lakh issued in favour of APSFC on the account of M/s.Prime Pharma Tech Private Limited. Ex.P13 Day book for the period from 16.08.1998 to 24.06.1999.

Ex.P14 Relevant page No.145 and 146 relating to entries dated 31.03.1999 in Ex.P13.

Ex.P15 Transfer scroll for the period from 16.03.1999 to 04.06.1999.

Ex.P16 Demand Purchase Register for the period from 28.01.2000 to 31.03.2000. Ex.P17 The cheque for Rs.10 lakh dated 25.03.2000 issued in favour of M/s.Prime Pharma Tech Private Limited by Venkatesh Enterprises drawn on A.P. Mahesh Co-operative Urban Bank Limited, Sultan Bazar, Hyderabad.

Ex.P18 The cheque for Rs.5 lakh dated 29.03.2000 issued in favour of M/s.Prime Pharma Tech Private Limited by Venkatesh Enterprises

Page No. 47 of 49 Judgment in C.C No.39/2005 (III CBI COURT ) drawn on A.P. Mahesh Co-operative Urban Bank Limited, Sultan Bazar, Hyderabad, along with cheque return memo. Ex.P19 Credit voucher dated 31.03.2000 for Rs.14,95,500/-, authenticated by accused A1. Ex.P20 four credit vouchers dated 31.03.2000 relates to M/s.Prime Pharma Tech Private Limited in respect of a cheque discounts for Rs.9,90,480/- each purchased by the bank. Ex.P21 Debit voucher dated 13.05.1999 for Rs.9,07,500/-.

Ex.P22 ODBCC ledger for the period from 10.09.1998 to 16.09.2000 of M/s.Prime Pharma Tech Private Limited.

Ex.P23 Dispatch Register for the period from 05.10.1999 to 28.02.2002.

Ex.P24 Suspense Account Register maintained in the branch for internal purpose for the period from 02.04.2000 to 18.03.2001.

Ex.P25 Entry dated 08.04.2000 in page No.3 of Ex.P24 register.

Ex.P26 Relevant portion in Section 161 Cr.P.C.Statement of PW5.

Ex.P27 Relevant portion in Section 161 Cr.P.C.Statement of PW5.

Ex.P28 Accountopening form bearing A/c.No.828 of M/s.Venkatesh Enterprises.

Ex.P29 Cheque dishonour memos dated 30.05.2000 and 07.04.2000 respectively issued by A.P. Mahesh Co-operative Urban Bank Limited, Sultan Bazar Branch, Hyderabad.

Ex.P30 Loan proposal dated 29.03.1998 along with opinion report of Canara Bank, two valuation reports, Chartered Accountant certificate, loan outstanding certificate of Canara Bank, Memorandum of Association and Article of Association of M/s.Prime Pharmatech (India) Limited.

Ex.P31 Communication of sanction dated 21.07.1998 issued by Regional Office to the Old Bowenpally branch.

Ex.P32 Sanction letter dated 10.09.1998 conveying the sanction of limits to M/s.Prime Pharmatech (India) Limited by the branch manager Mr.Y.V.S.Prabhakaram. Ex.P33 Quarterly report dated 26.05.2000 submitted to General Manager (Operations).

Ex.P34 Reconstructed ledger for the period from September 1998 to May 2000 relating to CC 31 of M/s.Prime Pharmatech (India) Limited. Ex.P35 Bank Transfer Scroll register for the period from 30.12.1998 to 14.03.1999.

Ex.P36 Bank’s Payment Register for the period from 07.02.1999 to 11.06.1999.

Ex.P37 Suspense Accounts Register for the period from 27.11.1998 to 16.11.1999.

Page No. 48 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

Ex.P38 Bank Transfer Scroll Register for the period from 31.08.1999 to 23.11.1999.

Ex.P39 Register post letter addressed to the Director, Shruthi Agency, 1-2- 236/221, Vivek Nagar, Chikkadpally, Hyderabad.

Ex.P40 Original FIR in R.C.No.13(A)/2003.

Ex.P41 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 14.11.1998 for Rs.1,72,600/- drawn in favour M/s.Shruthi Agencies.

Ex.P42 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 15.12.1998 for Rs.3,47,750/- drawn in favour M/s.Shruthi Agencies. Ex.P43 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 17.12.1998 for Rs.3,77,250/- and dated 19.12.1998 for Rs.4,21,250/- drawn in favour M/s.Shruthi Agencies. Ex.P44 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 23.01.1999 for Rs.10,06,000/- drawn in favour M/s.Shruthi Agencies.

Ex.P45 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 22.03.1999 for Rs.22,82,880/- drawn in favour M/s.Shruthi Agencies. Ex.P46 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 28.03.1999 for Rs.8,40,000/- drawn in favour M/s.Shruthi Agencies. Ex.P47 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 29.03.1999 for Rs.14,26,800/- drawn in favour M/s.Shruthi Agencies.

Ex.P48 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 29.03.1999 for Rs.2,05,000/- drawn in favour M/s.Shruthi Agencies.

Ex.P49 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 25.09.1999 for Rs.5,43,920/- drawn in favour M/s.Shruthi Agencies.

Ex.P50 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 27.09.1999 for Rs.7,95,800/- drawn in favour M/s.Shruthi Agencies.

Ex.P51 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 29.09.1999 for Rs.11 lakh drawn in favour M/s.Shruthi Agencies. Ex.P52 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 23.03.2000 for Rs.8,50,750/- and Rs.9,22,500/- drawn in favour M/s.Shruthi Agencies. Ex.P53 Delivery challan bearing No.148 dated 22.03.1999 of M/s.Prime Pharma Tech Private Limited in favour M/s.Shruthi Agencies along with covering letter.

Page No. 49 of 49 Judgment in C.C No.39/2005 (III CBI COURT )

Ex.P54 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 27.12.1999 for Rs.11,78,750/- drawn in favour M/s.Shruthi Agencies containing invoice No.126 and delivery challan No.115.

Ex.P55 Overdraft Bills in Course Of Collection (ODBCC) bill pertaining to M/s.Prime Pharma Tech Private Limited dated 28.12.1999 for Rs.12,49,475/- drawn in favour M/s.Shruthi Agencies containing invoice No.127 and delivery challan No.116.

Ex.P56 Register relating to register post and courier dispatch maintained by SBH, Old Bowenpally Branch for the period from 10.01.1997 to 28.01.2002. Ex.P57 Peon delivery book of SBH, Old Bowenpally Branch for the period from 20.03.1999 to 29.06.2001. Ex.P58 Internal investigation report of Mr. N.R. Tagore, Manager, Vigilance Department, SBH Head Office, Hyderabad.

Ex.P59 Application form along with annexures for credit facilities of over above Rs.15 lakh (Rupees fifteen lakh only) of M/s. Prime Pharmatech (India) Private Limited submitted to SBH, Old Bowenpally Branch, Secunderabad.

Ex.P60 Carbon copy of invoice bearing No.098 dated 18.12.1998 of M/s. Prime Pharmatech (India) Private Limited.

Ex.P61 Cheque bearing No.560825 dated 05.05.1999 for Rs.35,000/- issued by M/s. Prime Pharmatech (India) Private Limited on CC A/c.No.31 in favour of Mr. Mahendra palviya.

Ex.P62 Credit voucher dated 18.11.1999 for Rs.13,50,000/- of SBH, Old Bownpally, relating to CC A/c.No.31 of M/s. Prime Pharmatech (India) Private Limited in favour of UTI Bank Limited.

Ex.P63 Copy of SBH Bank’s Book of Instructions Chapter-I Annexure-II.

Ex.P64 Courier service book register for the period from 03.04.1998 to 05.10.1999 of SBH, Old Bowenpally Branch, Secunderabad.

Defence :

Ex.D1 Relevant portion in Sec.161 Cr.P.C. Statement of PW2

Material Objects: Nil.

III ADDL. SPECIAL JUDGE FOR CBI CASES,

HYDERABAD.

IN THE COURT OF III ADDL. SPL. JUDGE FOR CBI CASES,

HYDERABAD

PRESENT: SRI B.V.L.N.CHAKRAVARTHI Ill ADDL. SPL. JUDGE FOR CBI CASES

HYDERABAD

DATED: THIS THE 14T DAY OF DECEMBER, 2018.

Crl.M.P.1034 of 2018

In

C.C.No.12 of 2007

Between

Smt.C.Lalitha W/o.Late C.V.Rao aged: 66 years, H.No.18-1-636, Gandhi Near Municipal Office, Tirupathi Petitioner/ Accused No.2

AND

State through CBI, Hyderabad... Respondent/Complainant

ORDER

Counter filed by the prosecution

Heardthecounselthe

forpetitionerand

in-chargepublic prosecutor,

Perused the record.

This is an application filed by the petitioner/A2 under section 452 of Cr.P.C,for return of sale deed which was marked as Ex.P28, share certificates which were marked as Ex.P107 and Ex.P109, STDRs which weremarkedasEx.P13, Ex.P15,Ex.P36Ex.P39and toRDP No.97/DRK/0104660which was marked as Ex.P19 during trial of the main case for the prosecution.

The petitioner case is thatsale deed whichwas marked as Ex.P28, share certificates which weremarkedasEx.P107 and Ex.P109, STDRs

Ex.P36Ex.P39 andRDP were marked asEx.P13,Ex.P15,to which marked asEx.P19belongstothe No.97/DRK/0104660whichwas of theaccusedandwhileso,CBI whothewifeNo.1 petitioneris conducted search at the residenceof accused on06-04-2005 and seized the above documents alongwith other documents and therefore, they to the petitioner as the case proceedingsagainst the maybe returned by theHon’bleHigh Court and the case accusedNo.2was quashed was abateddueto deathof proceedings againsttheaccusedNo.1 accused No.1.

The prosecution in the countermentionedthatthe charge against accused No.1 was abated duetodeath and accused No.2 was discharged has noto return the items and therefore, the prosecutionobjection may be returnedto the mentionedthepetitioner and theitems by petitioner.

The case proceedings against the accusedNo.1 was closed on 11- s abated due to death on 12-06-2018 as per the report filed by 07-2018 a ‘The case against accused No.2 was the prosecutionin the main quashed bythe Hon’ble HighCourtas per order dated22-09-2015 in

CrL.R.C.No.2304 of 2012.

sale deed which was marked as Ex.P28, share certificates which were marked asEx.P107 andSTDRs which were marked as Ex,.P109, Ex.P13, Ex.P15, Ex.P36 to Ex.P39 andRDPNo.97/DRK/0104660 which

It is already stated above that the prosecution was marked as5x.P19, reported no objectionforreturnof the above documents to the petitioner.

The petitioner filedcertifiedcopiesof above mentioned documentsfor substitution for record purpose and future reference.

In the above circurances the petition is allowed. Return sale deed which was marked as Ex.P28, sharertificates which were marked x.P107 and'DRs which were marked as Ex.P13, Ex.P15, .P109,

P36 to Ex.P39 and RDP No.97/DRK/0104660 which was marked as Ex Ex.P19 to the petitioner on due acknowledgement and identification.

Accordingly, the petitionis allowed.

Directly typed tomy dictation, corrected and pronounced by me in the opencourt,onthis the 14! day of Deeember 2018

Sd/-

Special Judgefor CBICases,

Hyderabad.

TRUECOPYi.

Ill Addl, Spl.for CBI Cases, J iGerri ad: Per cai c ‘Slyderatse.

IN THE COURT OF III ADDL. SPL. JUDGE FOR CBI CASES,

HYDERABAD

PRESENT: SRI B.V.L.N.CHAKRAVARTHI IllADDL. SPL. JUDGE FOR CBI CASES

HYDERABAD

DATED: THIS THE 147DAYOF DECEMBER, 2018.

Cri.M.P.1033 of 2018

In

C.C.No.12 of 2007

Between

Dr.C.Yamini Devi, W/o.Dr.P.Suresh aged: 43 years,H.No.18-1-61 Ground Floor, Bhavani Nagar, TirupathiPetitioner/Third Party

AND

State through CBI, HyderabadRespondent/Complainant

ORDER

Counter filed by the prosecution.

Heardthecounselfortheandin-chargepublic petitioner prosecutor

Perused the record

This is an application filed by third party/petitioner under section of Cr.P.C.for return of sale deed which was marked as Ex.P30 452 duringtrial ofthe main casefor the prosecution.

Theis thatEx.P30saledeedbelongsthe petitionercaseto petitionerwho is the daughterofthe accusedNo.1 and A2 in the case andit was keptin the safe custody of the petitioners mother as the

petitioner andher husband

areemployeesandwillbe outof the residence for most of time and while so, CBI conducted search at the residence of accused on 06-04-2005 and seized the document along with other documents and therefore, it may be returned to the petitioner as the case proceedings againstthe accusedNo.2 was quashed by the

Hon'ble High Court and the case proceedings against the accused

No.1 was abated due to death of accused No.1

The prosecution in the counter mentioned that the charge against accused No.1 was abated due to death and accused No.2 was discharged andtherefore,theprosecution hasno objection to return the item mentionedby the petitionerandtheitembereturnedto the may petitioner.

‘The case proceedings against the accused No.1 was closed on 11 07-2018 as abated due to death on 12-06-2018 as per the report filed by the prosecutionin the main case. The case against accused No.2 was quashedbythe Hon’ble High Court as per order dated 22-09-2015 in

Cri.R.C.No.2304 of 2012.

Ex.P30 isa sale deed dated 03-10-2001 executedfavourof in

C.Yamini Devi W/o.P.Suresh who is the present petitioner and daughter of accused No.1theis alreadyabove that the incase.Itstated prosecutionreportedno objectionfor return of the document to the petitioner. The petitioner filed certified copy of Ex.P30 for substitution for record purpose and future reference

QA

In the above circumstancesthe petitionis allowed. Return Ex.P30 iue., sale deeddated 03-10-2001 executed in favour of C.Yamini Devi

and

dueacknowledgement thepetitioneron W/o.P.Sureshto identification.

Accordingly,the petitionis allowed.

me in the rrected and pronouncedby typed to mydictation, Directly opencourt, on this the 14" day of De:ember 2018.

Sd/-

Special Judgefor CBI Cases,

Hyderabad.

TRUE COPY

(yen

Ill Addl. Spl. JjorCBICases,

agatt

baer Cet Hyderabad

@

IN THE COURT OF III ADDL. SPL. JUDGE FOR CBI CASES,

HYDERABAD

PRESENT: SRI B.V.L.N.CHAKRAVARTHI Ill ADDL. SPL. JUDGEFOR CBI CASES.

HYDERABAD

DATED: THIS THE 247 DAY OF DECEMBER, 2018.

Cri.M.P.1099 of 2018

In

C.C.No.12 of 2007

Between

G.Subashini W/o.C.Ramesh aged:41years, H.No.18-1-636, GandhiNagar, Near Municipal Office, Tirupathi.

_Petitioner/Third Party

State through CBI, Hyderabad... Respondent/Complainant

Counter filed by the prosecution.

Heardthecounselfortheandin-chargepublic petitioner prosecutor.

Perused the record.

This is an application filed by third party/petitioner under section 452 of Cr.P.C. for return of two FDRs bearing Nos.798796 and 798795 which were mentioned at SI,No.9 and 10 in Annexure-A of the search list marked as Ex.P1.

id solt"6f the accused No.1 and A2 in the case was living in the oyf house of accused and CBI Police during search covered by Ex.P1 seized the above two FDRs also but nothing was mentioned in the Police Report and they were not relied upon during trial also and they are with CBI and therefore, respondent/CBI may be directed to return the above two

FDRs to the petitioner as they are no longer required for the case and as the case proceedings against the accused No.2 was quashed and accused

No.1 was abated as died.

The prosecution in the counter mentioned that the charge against accused No.1 was abated due to death and accused No.2 was discharged and therefore, theprosecution has no objectionto returnthe items mentioned by the petitioner.

The case proceedings against the accusedNo.1 was closed on 11-07-2018 as abated due to death on 12-06-2018 as per the report filed by the prosecution in the main case. The case against accusedNo.2 was quashed bythe Hon’ble High Court as per order dated 22-09-2015 in

Crl.R.C.No.2304 of 2012.

Intheabovecircumstancesthepetitionisallowed.

Respondent/CBI is directed to return theabove two FDRs bearingNos.

798796 and 798795 which are in the name of petitioner immediately on due acknowledgement and identification and to intimate the Court.

Accordingly, the petition is allowed.

Directly typed to my dictation, corrected and pronounced by me in the open court,onthis the 24» dayof December 2018.

Sd/-

III Addl. Special Judge for CBI Cases, Hyderabad.

TRUE COPY

(ie

2

for CBI Cases,